Determinants of Internal Audit Effectiveness (IAE) in the Ethiopian Public Enterprise, Case of Southern Region

Abstract

Due to political, technological and economic changes in the last decades resulted in the rise of business risks, the economic instability and the important increase of financial fraud scandals have necessitated the use of internal audit for companies (Bekiaris et al., 2013; Vinary and Skaerbaek; 2014; Tsipouridou and Spathis, 2014; Gbadago, 2015). Therefore, it is of great importance to identify the factors affecting internal audit in order to be effective. Previous studies have used different approaches to investigate internal audit effectiveness, as effective internal audit is influenced by series of factors. Moreover, factors and measurement of internal audit effectiveness have been used differently by the researchers (Arena and Azzone, 2009) and until now, there is no consensus regarding the most appropriate framework for internal audit effectiveness (Endaya and Hanefah, 2013). Thus, effectiveness of internal audit is a dynamic process and a matter of considerable debate.Public sector offices are part of the public body which is partly or wholly financed by government budget and concerned with providing basic government services to the whole society (Ministry of Finance and Economic Development (MoFED, 2004). The compositions of the public sectors are varied by their function and purposes, but in most cases, they are designed in order to enable the public sectors to achieve their goals.

The public sector provides services such as banking service, financing, education, communication service, healthcare, police, transportation, electric services, security and so on, which benefit all of the society and encourage equal opportunity to benefit from those services provided (Mihret and Yismaw, 2007). This research was focused on the determinants of Internal Audit Effectiveness in SNNPR Public sector office found in Hawasa mainly regional government offices. Mostly, the efficiency and effectiveness of the management operations in public sector are ensured by the effectiveness of its employees. Internal audit which are the focus of this study and also the key employee of public offices, are expected to work independently and objectively to enhance high quality of public services, achieve good internal control system, avoid corruption, ensure good corporate governance system, promote accountability and greater transparency (Coram et al, 2008; Van Peursem 2005; Belay, 2007).

DOI: 10.7176/JRDM/52-02