Determinants of internal audit effectiveness in Ethiopian selective private banks: the perception of internal auditors.

Abstract

There is a lack of mutual understanding regarding the effectiveness of internal auditing, even though it is a crucial part of business management and the cornerstone of organizations' safe and sound operation. This study aims to evaluate the factors that influence internal audit effectiveness in private commercial banks in Ethiopia. The major objective of this study is to investigate determinants of internal audit effectiveness for Ethiopian private commercial banks. After reviewing relevant literature, the researcher decided to use an explanatory study design. Employees of internal auditors at the head offices of private commercial banks were included in the survey-based study, which also included quantitative research methods. The quantitative study approach is predicated on 32 useful questions that were gathered from 157 respondents from selected private banks (established before 2020). Primary data was used to study this research which was collected through questionnaire and the data was analyzed using SPSS software based on the linear regression model. The competency of internal auditors, inexpediency of internal auditors, organizational setting and information technology tools significantly affect internal audit effectiveness on value adding roll, increase department performance and organizational performance. But the other factor management support from the predictors included in this study that, when we look at the results, becomes irrelevant for the effectiveness of internal audit. The study's researcher primarily advised Ethiopian private commercial banks to improve the efficacy of internal audit by focusing on maintaining and strengthening the organization settings, which in turn improves bank performance overall. assuring independency of internal auditors in terms of giving their freedom to do their work independently, also private banks should think about placing competent and adequate staff in their offices as it is essential to the efficient execution of the internal audit function. and having support in using ITT to enhance the efficacy of IA function.