ASSESSMENT OF INTERNAL AUDIT EFFECTIVENESS IN COMERCIAL BANK OF ETHIOPIA

Abstract

Well performing internal audit function is one of the strongest means to help an organization to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes as well as to produce effective audit of high quality. As a result, in many countries it has received an increasing attention as an important component of government financial management and as a tool for improving the performance of their activities. In line with this, the effectiveness of audit activity is influenced by various factors and identifying these factors and treating them accordingly should be the central promises of the internal audit process in order to maintain effective audit of high quality at satisfactory levels. This study was meant to assess the internal audit effectiveness in commercial bank of Ethiopia. Based on this fact, both primary and secondary data are used. Descriptive statistical tools such as tables and percentages are used in analyzing the data collected. According to the study, it is confirmed that career and advancement, professional competence, quality of audit work, and top management support and lack of periodic revision of the guide line and noncompliance of auditors to some extent to the guide line were found to be the issues that are affecting effectiveness of audit activity in the study area, where as organizational independence was found to have positive impact on audit effectiveness in the process. Finally, based on the findings possible recommendations were given. These include, maintaining guide line that is prepared in accordance with the international standards which is customized to the current existing system; providing appropriate programs for training and developing the internal auditors by allotting some percentage of the total time of the work for continuing education and certification in CIA, CISA, CFE and ACCA; providing the internal audit process all the necessary support required from the top management; providing training and development programs to keep up to date in the field, and providing all the required physical resources.