INTERNAL AUDIT EFFECTIVENESS IN THE PUBLIC SECTOR, CASE STUDY IN ETHIOPIAN AGRICULTURAL TRANSFORMATION AGENCY

Abstract

The main purpose of this study is to draw inferences from the results of Ethiopian public body- Agricultural Transformation Agency case study on the factors that influences the effectiveness of Internal Audit. The internal audit function of the Agency examined using an analytical framework derived from the literature and legal documents. The case study approach strategically employed since it enables the study of detailed analysis using multiple sources of data in order to cross-validate results through triangulation. Research evidence was gathered distributing questionnaires to auditee. The auditee are staff working within the Agency in the area of Finance, Human Resource, Logistics and Procurement. The other tool employed to gather data is review of various empirical literatures, legal documents, internal and external audit reports and interview. Qualitative and quantitative (Mixed) approaches were employed to analyze and interpret the filled in data. The researcher concluded that legal framework laid by the government for internal audit function to be effective is one measure, audit findings with same content repeated from year to year, management not committed to take corrective action and response of majority auditee pertinent to this is neutral, the Agency not staffed with adequate number of internal auditors, scope of audit function limited, the interviewee tells us there are some gaps on factors that influences the effectiveness of IA. Result of the study highlights that the effectiveness of internal audit influenced by: (1) organization setting, (2) independency (3) management support, (4) competency, and (5) internal audit quality. This study provides useful information to practitioners and academics who are interested to identify further factors which can influence the effectiveness of internal audit, as well as to senior management team of the organization to take the required action on those gaps identified and recommendation forwarded.