Internal Audit Practice and its Effect on Company Performance: Case Study in Ethiopian Shipping and Logistics Service Enterprise
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Date
2019-03
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Addis Ababa University
Abstract
Theoverall objective of this study was to assess internal audit practice and its effect on company
performance with focus to Ethiopian Shipping and Logistics Service Enterprise. The specific
objective includes examining the effect of risk management practice and assessing the effect of
internal control system in enterprise performance as well as describing the internal audit
practice of the enterprise. The research used both explanatory and exploratoryresearch
methods. The primary data was collected using likert scale questionnaires distributed to
management members and internal audit department staffs and secondary data through
document review of internal audit policy and charter and internal audit report. The dependent
variable was company performance measured in terms of profitability and the predictor or
independent variables were risk management process, internal control system and internal audit
practice. The target population was 90both from management and internal audit staffs. The
researcher utilized purposive sampling techniques to select the participants. The descriptive
statistics was used to analyze the internal audit practice of the enterprise and inferential
analysis (multiple regression analysis) to determine the cause and effect relationship between
internal audit activity and organizational performance and to test the hypothesis.According to
the regression output the internal audit practices affect the company performance significantly
and positively. The remaining two variableswere positively related with company performance
but their contribution was statistically insignificant. All these three independent variables are
making 41.98%of the contribution for company performance. Thus, the researcher
recommended that the enterprise managements and board of directors should work closely with
the internal audit department,provide appropriate information and facilitating all the necessary
short and long term trainings in different disciplines that would enable the internal audit staffs
to perform the value adding activity within the enterprise. The internal audit department should
alsoapply the standards available in the internal audit policy and charter such as performing
risk assessments annually and their scope of workshould be extended to enterpriserisk
management process. Moreover,the activity of internal audit should be assessed externallyby an
independent reviewer as per the company policy.
Description
A thesis submitted to the department of Accounting and Finance,
College of Business and Economics, Addis Ababa University, in partial
fulfillment of the award of Master of Science (MSC) degree in
Accounting and Finance.
Keywords
Internal Audit Practice, internal control system & Enterprise performance, Risk management practice