Assessment of Effective Internal Audit Practice: The Case of Local Construction Companies in Addis Ababa
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Date
2020-03
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Publisher
A.A.U
Abstract
The purpose of the study was to investigate determinants of internal auditing effectiveness in
selected private construction companies. It was delimited to Yotek, Sunshine, Yencomad and Sur
Construction Companies. descriptive research design was employed to conduct the study. Both
random and non-random sampling techniques were used to select sample respondents out of the
target population. With these techniques, the companies’ executives, department heads, internal
auditors and administration personnel of the companies were selected. The total sample size of
the study was 72. Primary and secondary source of data were used in the study. Data for the
study was collected by making use of questionnaire, interview and document analysis. Both
qualitative and quantitative methods of data analysis were employed to analyze the data. As
the result, the study concludes that the major qualities of the companies auditing to be
independence of auditors and they conducted the audits objectively as well as the audits were
conducted in line with the working laws and in ways that conform to the established policies,
regulations and procedures. It also concludes that the audits were effective in the fact that it
enabled the companies meet their objectives and goals, as well as enabled them monitor their
major business activities, transactions and inventories, and maintained safe and efficient cash
handling. The key role players to the effectiveness of the audits performed in the companies were
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the audit staffs and top managements. The presence of quality internal audits and the auditors’
competence in performing the audits were factors that contributed to the auditing effectiveness.
The presence of moderately effective internal auditing had brought about positive impacts to the
companies. The major impacts include that it helped the companies improve their operations, the
effectiveness of risk management and examine the extent to which financial and material
resources were effectively utilized. Moreover, the study concludes that absence of regular follow
ups by audit staff and failure to give immediate responses towards audit findings by top
management and the fact that audit reviews not conducted on due time were the major problems
observed in the companies. As the result, it recommends that in order to enhance the
effectiveness of internal audit functions, companies need to work to have quality internal audits
which cover all aspects organizational issues. Besides, business firms need to establish
appropriate organizational culture which is helpful to accomplish its objectives by bringing a
systemic, disciplined approach to improve the effectiveness of risk management, control and
governance process. For the maintenance of a sound and effective auditing, top management
need to cooperate and provide supports to the firm’s internal auditors in different aspects they
may find to be helpful to conduct their auditing activities. Moreover, they need to support the
auditors by providing trainings so that they would update and improve their skills, as well as
introduce themselves with new technologies of the time.
Description
A thesis submitted to the School of Graduate Studies of
Addis Ababa University
In partial fulfillment of the requirements for the Degree of
Masters of Science in Accounting and Finance
Keywords
Internal audit, Internal Audit effectiveness