DETERMINANTS OF INTERNA AUDIT EFFECTIVENESS STUDY ON SELECTED PRIVATE BANKS IN ETHIOPIA

Abstract

This study aims to investigate the determinants of internal audit effectiveness in the selected private banks in Ethiopia. The study used survey method and covered the internal auditors of selected private banks in Ethiopia and adopted quantitative research approaches. The quantitative research method is based on 35 practical self administered questionnaires collected from 99 respondents selected randomly from three private banks. These questioners were developed in 5- point likert scale distributed to internal auditors of selected private bank in Ethiopia (Dashen bank, Awash international bank and Addis international bank) and analyzed using SPSS version 20 statistical software. A linear regression model was used to analyze the relationship between internal audit effectiveness and factors affecting internal audit with in a test of significance of 95% confidence level. The study revealed that there is positive linear relationship between internal audit effectiveness and organizational independence, management support, adequate and competent internal audit team and presence of approved internal audit charter. According to the regression output the organizational independence, management support and presence of approved internal audit charter were contributed internal audit effectiveness in the private bank significantly and positively. The adequate and competent of internal auditors were positively related with the internal audit effectiveness but their contributions for the internal audit effectiveness were statistically not significance. This finding justifies the need for an integrated approach between private banks and concerned government authorities and institutions to equip their employees with training and development and to share experience in developing standardized charters of auditing.