The Effect of Internal Audit on Financial Performance of Company; The Case of Ethiopian Airlines Group

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In the area of information, internal audit is established as an essential means for the exact management of any business economic resources. However, the necessity which issues from the administration, for distinguished management of the available resources, incalculable expenses, limitation and evasion of misconduct, imposes internal auditing as a key factor in the business management effort. The overall objective of this study was primarily concerned with exploring Internal Audit impact on airline company the case of EAL. The specific objective includes evaluating the structure of company’s overall Internal Audit system, identifying challenges facing the internal audit system assessing the effect of internal audit on the financial performance of EAL through its activities/function impact and assessing the effect of internal audit on the financial performance of Ethiopian Airlines through management tools. The motive was to provide comparative empirical support for policy formulation, implementation and rectification with regard to the effectiveness and challenges of IA whilst contributing to the limited body of knowledge on auditing in airline business especially in Ethiopia perspective and Africa in general. The research used Explanatory (Causal) research method, the primary data was collected using Likert scale questionnaire distributed to internal audit and finance department staffs and interview with higher managements were also conducted. Secondary data through review of documents, internal audit policies, charter and reports. Judgmental and Simple random sampling techniques were used in selection of the sample. Both descriptive and inferential analysis were applied. According to the regression output the internal audit activities affect the company financial performance significantly and positively. Finally, a conclusion and recommendation have been made based on the result got from the study.



Internal audit activities/functions, Financial performance