ASSESSMENT OF INTERNAL AUDIT EFFECTIVENESS THE CASE OF 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 theperformance of their activities. In line with this, the effectiveness of audit activity is influenced byvarious factors and identifying these factors and treating them accordingly should be the centralpromises of the internal audit process in order to maintain effective audit of high quality atsatisfactory levels. This study was aimed or conducted to assess the internal audit effectiveness in commercialbank of Ethiopia. The study employed quantitative survey research design to gather data from the target population (i.e. 104 respondents of all internal audit staffs have been taken). Based on this fact, both primary and secondary data were used. Descriptivestatistical tools such as tables and percentages are used in analyzing the data collected. Accordingto the study, it is confirmed that career and advancement, professional competence, quality of auditwork, independence of internalaudit and top management support and lack of periodic revision of the guide line and noncomplianceof auditors to some extent to the guide line were found to be the issues that areaffecting effectiveness of audit activity in the study area, where as organizational independence wasfound to have positive impact on audit effectiveness in the process. Finally, based on the findingspossible recommendations were given. These include, maintaining guide line that is prepared inaccordance with the international standards which is customized to the current existing system;providing appropriate programs for training and developing the internal auditors by allotting somepercentage 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 thetop management; providing training and development programs to keep up to date in the field, and providing all the required physical resources.