An Evaluation of Quantitative Audit Materiality of Corporate Philanthropy by Kenyan Listed Firms

Abstract

There is currently no regulatory body or organized civil rights group that monitors the materiality of the cost of corporate philanthropy (CP) which has created a gap that is being exploited by many corporates to make no or insignificant donations to the public which is a potential source of conflict between the society and corporates. The current research has imported the auditing concept of quantitative audit materiality and applied it in the field of CP to test the materiality or significance of corporate philanthropy by listed firms in Kenya during the year 2013 with intention to monitor the significance of corporate philanthropy by Kenyan corporates. Purposive sampling technique was employed to select 16 out of 62 listed firms in Kenya where there was cost of corporate philanthropy reported by the firms. Descriptive statistical analysis and paired samples t-test were employed to analyses for significant or materiality of corporate philanthropy. The overall findings indicated that Kenyan firms made immaterial corporate donations with respect to their profit before tax (PBT). The study thus recommends for enactment of regulations to govern the matter of corporate donations in Kenya.