ABSTRACT: The study aimed to establish the influence of internal audit independence on the financial risk ofsugar manufacturing firms in western Kenya.Agency theory, fraud diamond theory, and role conflict theory wereadopted by the study.The study was anchored on interpretivism research philosophy and explanatory researchdesign. The study targeted 200 respondents, including internal auditors, finance officers, and accountants fromeight operating sugar manufacturing firms in western Kenya. The study employed proportionate sampling to get thesample size of 132 respondents from the sugar belt. The use of questionnaires collected primary data. Bothdescriptive and inferential statistics were obtained. Descriptive statistics consisted; of the use of mean, standarderror of the mean, and standard deviation. Inferential statistics included the use of a multinomial logistic regressionmodel. The results indicated that internal audit independence had a significant positive influence on financial riskthrough involvement with a p-value of 0.012<0.05 and a likelihood of 1.820 times and also through programminggiven the p-value of 0.046<0.05 and an increase in possibility of 1.653times. The study, therefore, recommendedstrengthening the internal audit section through internal audit independence, as this will significantly reducefinancial risk.

KEYWORDS: internal audit independence, financial risk, sugar manufacturing firms, western kenya