FACTORS AFFECTING EFFECTIVENESS OF INTERNAL AUDIT FUNCTION: THE CASE OF SELECTED ETHIOPIAN BUDGETARY PUBLIC SECTORS

Abstract

This study explores the factors affecting effectiveness of internal audit function in selected Ethiopian budgetary public sectors. The thesis has identified and analyzed the important variables and addressed major research questions raised under each specific objective, andtested hypotheses regarding effectiveness of the internal audit function in those selected public-sector offices. Convenience sampling technique was used to select 18 Ethiopian budget arypublic sectors (ten Federal ministries and eight public universities) out of total 55. A total of 72 respondents were selected through purposive sampling for finance, audit director, auditors and accountants to fill the self-administered questionnaire. Four respondents per office were picked from 18 offices. Using Likeret-Scale type that shows respondents’ agreement or disagreement by constructing into five point scale, 69 respondents that correctly completed and returned thequestionnaire formed the actual sample size for the study. Multi regression model was used indata analysis and test of hypothesis. The study found out that competence of IA, and independence of IA were statistically positive and significant at (p<0.01) whereas, quality ofIA wa statistically positive and significant at (p<0.05) among the explained variablesindicating strong association between these independent variables and the dependent variable i.eIA effectiveness. Based on the key findings, the study recommends that the internal auditorshould have maximum independence from the organization they work for, need to collectively possess or develop their knowledge or skills through appropriate professional training. Also, a similar study with a wider scope should be carried along with a study to identify the drivers of effectiveness of internal audit in public sector institutions in the future.