Determinants of Internal Audit Effectiveness in Ethiopian Private Banks: the case of selected Private Commercial Banks

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Date

2025-03-05

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A.A.U

Abstract

Given the crucial role of internal audit in strengthening internal controls, managing risks, and improving corporate governance, it is essential to investigate the factors that contribute to its effectiveness. The primary goal of this study was to identify the factors that influence the effectiveness of internal audit functions in Ethiopian banks. Then, this study examines the bond between “internal audit effectiveness/success and several key issues”. The questionnaires were structured using a Likert-scale and distributed to 199 internal auditors at the selected banks. The collected data was then analyzed using Stata statistical software. Furthermore, “relevant documents were reviewed to gather further insights”. Hence, the study findings demonstrate that internal auditor competence, independence and objectivity of audit function, “board & management support”, “audit-committee existence”, and RBIA methodology are all significant factors influencing the effectiveness of internal audit in Ethiopian commercial banks. The study recommends that Ethiopian commercial banks prioritize the factors identified in the research to improve the efficiency and effectiveness of their internal audit functions. By focusing on these factors, banks can strengthen their management of risk, “internal controls”, and “corporate governance practices”. In addition, the investigator suggests that future research should explore additional factors that may influence the internal audit effectiveness in Ethiopian banking-industry.

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