Factors Determining Effectiveness of Internal Audit in Ethiopian Commercial Banks
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Date
2016-06
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Addis Ababa University
Abstract
Internal audit has an important role in helping a firm to achieve its objective when it is
implemented, operated, and managed effectively. Organizations which effectively implemented,
operated and managed internal auditing were better able to identify their business risks and
system inefficiencies for the sake of taking corrective actions and improvement in the process.
The overall objective of the study is to identify the factors determining the effectiveness of
internal audit in Ethiopian commercial banks. The study used purposive sampling method and
covered the head office internal auditors of Ethiopian Commercial Banks. The study adopted
mixed research method by employing quantitative and qualitative research methods. The
quantitative research method used through 147 usable self administered questionnaires. These
questionnaires were constructed in 5-point likert scale, distributed to internal auditors of
Ethiopian Commercial Banks, and analyzed using SPSS statistical software. The qualitative
research method used through personal interview with internal audit dir ectors of Ethiopian
commercial banks and selected documents review. According to the results of the study;
independence of internal audit, competence of internal audit team, and management supports
were strong and statistically significant effect on the effectiveness of internal audit regarding on
value adding role, enhance department performance, and enha nce organizational performance. In
this regard, independence of internal audit, competence of internal audit teams and management
supports were the factors determining effectiveness of internal audit in Ethiopian commercial
banks. The researcher mainly recommended; give attention on the development of certified
personnel, top management and IA team work collaboratively in changing audit culture, and to
work in using IA softwares.
Key words: Internal Audit, Ethiopian Commercial Banks, and Effectiveness of Internal Audit
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Keywords
Internal udit, Ethiopian commercial banks, Effectiveness of Internal audit