Internal Audit Function and Corporate Governance: In Commercial Banks
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Date
2011-06
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Addis Ababa University
Abstract
This research paper examined the role of IAF in corporate governance effectiveness in the
case of 13 purposely sampled commercial banks by adopting concurrent mixed research
approach. Quantitative methods were used through survey of internal auditors, and
interviews and documentary sources taken under the qualitative methods. From the total
of 105 questionnaires were distributed to internal auditors, 78 had collected and 8
interviews were conducted with vice-presidents of 8 banks.
The main findings of the study were that the rates of implementation to audit
recommendation by management, attributes of IAF (or the policy for hiring and training,
experience and professional certification of internal auditors), and use of IAF working
papers by external auditors in the banks were low. Thus, an IAF of the banks don’t
possess quality and its positive impact on corporate governance effectiveness is
questionable, though IA practices were maintaining independence and it is value-added
activity. Management of the banks need to take corrective action to audit
recommendations and have to afford adequate attention to the proficiency of internal
auditors to better equip an IAF quality and its role in corporate governance effectiveness.
This finding indicated that extensive research should be taken in the quality of IAF and
its role in corporate governance mechanisms and their interrelationships.
Key words: Internal audit; internal audit function; quality internal audit
function; corporate governance; commercial banks
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Keywords
Internal audit; internal audit function; quality internal audit function; corporate governance; commercial banks