The Effect of Corporate Governance on the Independence of Internal Audit Function in Private Commercial Banks in Addis Ababa
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Date
2025-11-09
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A.A.U
Abstract
This study aimed to investigate how various Corporate Governance factors influence the through 117 structured questionnaires distributed among bank management and 10 interview questions directed at the management of six banks, alongside responses from 111 bankers, specifically internal audit department managers. Ultimately, 111 completed questionnaires were
obtained from key participants, including Internal Audit managers, heads of inspections, and audit division officers. Utilizing a census approach, the research surveyed the entire target population of Internal Audit managers, heads of inspection, and risk managers from the six selected private commercial banks in Ethiopia, comprising a total of 127 respondents. This
method effectively reduced sampling error by encompassing all relevant individuals, thereby ensuring a thorough collection of data regarding the influence of Corporate Governance on Internal Audit independence. The structured questionnaires employed a five-point Likert scale,
which provided detailed insights and enhanced the reliability and validity of the results. Data analysis was conducted using The SPSS version 25 statistical software. A regression model was applied to examine the relationship between The Internal Audit function and the level of
Corporate Governance factors, with a significance test conducted at a 95% confidence level. The findings indicated a positive linear relationship between the independence of The Internal Audit function and several Corporate Governance factors: Corporate Governance setting (CGS),
senior management support (SMS), effectiveness of the audit committee (EAC), impact of the remuneration and nomination committee (ERNC), influence of technological advancement (ETA), and stakeholder engagement (SA) concerning Internal Audit staff within private commercial banks in Addis Ababa, Ethiopia. Based on These findings, The study recommends
Corporate Governance factors on the independence of Their audit functions. Additionally, it is advised that These departments stay updated on The Corporate Governance elements that affect Their independence to maximize The value-added services provided by Their Internal Audit functions.
KEY WORDS: Corporate Governance, senior management, independence, Internal Audit,Remuneration & Nomination committee, audit committee effectiveness, Technological advancement Stakeholder’s engagement, Internal Audit staffthat The Internal Audit departments of private banks pay attention to the implications of