DETERMINANTS OF INTERNAL AUDIT EFFECTIVENESS: A STUDY OF ETHIOPIAN PUBLIC ENTERPRISES

Abstract

The objective of this study is to investigate the determinants of internal audit effectiveness in public enterprises of Ethiopia. The research is explanatory type and it used quantitative research approach. Primary data through questionnaire is used to conduct this research. 100 participants from both internal auditors and senior management of the sample organizations were participated in responding the questionnaire. The questionnaires’ was adopted and modified from earlier researchers that were studied on effectiveness of IA and its determinants and those questionnaires are prepared in the form of Likert –Scale. The study revealed that all of the four independent variables aggregately contributed 79% to internal audit effectiveness. That means, the effect of these four independent variables contributed for the dependent variable; IAE were 79%, and the remaining 21% were other variables that are not included in this study. The regression result indicate that organizational independence, management support and adequate and competent internal audit are positively and significantly contribute to the Effectiveness of Internal Audit function. However, availability of strong audit committee is negatively related to internal audit effectiveness in case of Ethiopian Public Enterprises. The research implies that in order to have effective internal audit function in identifying non compliance activities and adding values, Ethiopian public enterprises should excel on organizational independence, management support and adequate and competent internal audit. Besides, public enterprises should enhance and give grate attention to avail strong audit committee. As in most studies, generalisability of the conclusion is limited in this research. It is recommended that the future researchers might conduct another study in this subject matter by using other variables that are not covered in this research, but tested by earlier researchers in different case study areas(organizational setting, IA quality, Auditee attribute).