DETERMINATS OF INTERNAL AUDIT EFFECTIVENESS: DETERMINATS OF INTERNAL AUDIT EFFECTIVENESS: DETERMINATS OF INTERNAL AUDIT EFFECTIVENESS: A STUDY WITH REFERENCE TO WOLAITA ZONE

Abstract

The main purpose of this study was investigating determinants of internal audit effectiveness with reference to wolaita zone, SNNPRS. To conduct the study, the researcher used deductive type of research approach and explanatory type of research design as it was conducted to investigate cause and effect relationship between dependent and independent variables. As a result, the study primarily focused on 11 purposively selected governmental sectors with good potential and well organized manpower and internal auditing activities. To select respondents that enable collect reliable data, purposive sampling was also applied in each and every purposively selected woreda and sector. In other words, only respondents that can provide reliable data out of employees of purposively selected sector in purposively selected woreda or city administration were chosen to distribute Amharic version of questionnaire. Thus, two types of questionnaires were prepared and distributed (one type to top management team members & the other type of questionnaire to internal audit officers) so that the required primary data could be collected. Internal audit independence, management support, adequate and competent internal audit staff, sufficiency of budget, level of objectivity and approved IA charter were hypothesized determinants that have been tested using collected primary data in the study area and all of these six determinants were proposed to have positive and statistically significant impact on IAE. Out of these determinants, internal audit independence and sufficiency of budget were investigated by the study to have positive and statistically significant contribution to IAE. However, determinants like adequate and competent internal audit staff, level of objectivity and approved IA charter were investigated to have insignificant positive contribution to IAE. Beta sign to management support showed that the variable has negative and insignificant contribution to IAE. According to results of regression analysis, 60.5% of the study is explained by the model and it showed that all of the variables collectively could play crucial role to sustain effectiveness of internal audit functions in governmental sectors in the study area. Finally, analysis results revealed that all concerned bodies should give special attention to increase independence of internal audit work process and to assign sufficient budget to IA work process.