FACTORS AFFECTING INTERNAL AUDIT EFFECTIVENESS: A CASE OF COMMERCIAL BANK OF ETHIOPIA ADDIS ABABA BRANCH OFFICES

Abstract

The main purpose of this study is to investigate the determinants of internal audit effectiveness in the Commercial Bank of Ethiopia. The research design is focused on 15 selected Grade 4 branch offices that are expected to represent all other branches. The management teams and the internal auditors of the branch offices are the source for the required data to the researcher through the questionnaires administered. Census method was used to conduct the research. Data was then analyzed on quantitative basis using descriptive statistics, Pearson’s correlation and linear regression analysis. The finding of this study is to show the direct relation effects of auditors’ competency, organizational independence, management support and organizational setting on the bank. The result showed that there is no statistical significance negative relationship between competency, management support and internal audit effectiveness. Besides the result showed that there is no statistical significance weak positive relationship among organizational setting and internal audit effectiveness. The researcher found that there is strong significant positive relationship between organizational independence and internal audit effectiveness. All of these four independent variables are making 34.5% of the contributions for internal audit effectiveness in the Commercial Bank of Ethiopia branch offices. The Commercial Bank of Ethiopia board of directors should understand that the contributions of these variables were collectively significant to identify any noncompliance activities in their office and to add values for the IAE in the Commercial Bank of Ethiopia.