The main purpose of this study was to examine factors affecting internal audit effectiveness: Evidence from Microfinance institutions operating in Hawassa city, Sidama Ethiopia. Effective internal audit function could be a major asset for improving public confidence in financial reporting and corporate governance. Also it add value and improve an organization’s operations. Ensuring the effectiveness of internal audit on MFIs is also important to improve internal control system and better performance. Thus, to examine effectiveness of IA in MFIs operating in Hawassa city, the study used mixed research design with quantitative approach. Management support, independence of internal audit, having approved internal audit charter, adequate and competent internal audit staff, and quality of internal audit are used as explanatory variables while, internal audit effectiveness considered as explained variable. Population was all MFIs currently operating in Hawassa city. The targeted populations were 54 respondents and all of them selected as Sample size based on judgmental sampling method because the researcher believes that, these respondents can provide in depth information about the study variables and respective indicating. The primary data used to collect information from targeted respondents and close ended questionnaires were distributed to selected respondents. Both descriptive and inferential statistics were used to analyze the data. Correlation and regression analysis were used to identify the relationship between dependent and independent variables. The SPSS data analysis tool has used and the findings were described and statistically presented using table, mean, frequency, standard deviation, percentage and graph. The result of Pearson correlation shows that all those factors included in this research has positively related with internal audit effectiveness. Besides the management support, adequate and competent internal audit staff and quality of internal audit has positively and significantly correlated with internal audit effectiveness. The result of regression identified that, Management support, Independence of internal audit, having approved internal audit charter, adequate and competent internal audit staff, and quality of internal audit were contributed to internal audit effectiveness in MFIs is positively and significantly and it making 23.9%. Thus, MFIs should understand which factors highly affect the effectiveness of their internal audit in order to enhance their audit function effectiveness. It is recommended that if similar research can be done in the future so as to find other factors which have impact on internal audit effectiveness and also to include other banks and insurances which were not included in this study.
| Published in | American Journal of Theoretical and Applied Business (Volume 8, Issue 2) |
| DOI | 10.11648/j.ajtab.20220802.11 |
| Page(s) | 19-29 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2024. Published by Science Publishing Group |
Internal Audit, Internal Audit Effectiveness, Microfinance Institution, Sidama Region
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APA Style
Aklilu Assefa Adato. (2022). Factors Affecting Internal Audit Effectiveness: Evidence from Microfinance Institutions Operating in Hawassa, Sidama Region, Ethiopia. American Journal of Theoretical and Applied Business, 8(2), 19-29. https://doi.org/10.11648/j.ajtab.20220802.11
ACS Style
Aklilu Assefa Adato. Factors Affecting Internal Audit Effectiveness: Evidence from Microfinance Institutions Operating in Hawassa, Sidama Region, Ethiopia. Am. J. Theor. Appl. Bus. 2022, 8(2), 19-29. doi: 10.11648/j.ajtab.20220802.11
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Download@article{10.11648/j.ajtab.20220802.11,
author = {Aklilu Assefa Adato},
title = {Factors Affecting Internal Audit Effectiveness: Evidence from Microfinance Institutions Operating in Hawassa, Sidama Region, Ethiopia},
journal = {American Journal of Theoretical and Applied Business},
volume = {8},
number = {2},
pages = {19-29},
doi = {10.11648/j.ajtab.20220802.11},
url = {https://doi.org/10.11648/j.ajtab.20220802.11},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20220802.11},
abstract = {The main purpose of this study was to examine factors affecting internal audit effectiveness: Evidence from Microfinance institutions operating in Hawassa city, Sidama Ethiopia. Effective internal audit function could be a major asset for improving public confidence in financial reporting and corporate governance. Also it add value and improve an organization’s operations. Ensuring the effectiveness of internal audit on MFIs is also important to improve internal control system and better performance. Thus, to examine effectiveness of IA in MFIs operating in Hawassa city, the study used mixed research design with quantitative approach. Management support, independence of internal audit, having approved internal audit charter, adequate and competent internal audit staff, and quality of internal audit are used as explanatory variables while, internal audit effectiveness considered as explained variable. Population was all MFIs currently operating in Hawassa city. The targeted populations were 54 respondents and all of them selected as Sample size based on judgmental sampling method because the researcher believes that, these respondents can provide in depth information about the study variables and respective indicating. The primary data used to collect information from targeted respondents and close ended questionnaires were distributed to selected respondents. Both descriptive and inferential statistics were used to analyze the data. Correlation and regression analysis were used to identify the relationship between dependent and independent variables. The SPSS data analysis tool has used and the findings were described and statistically presented using table, mean, frequency, standard deviation, percentage and graph. The result of Pearson correlation shows that all those factors included in this research has positively related with internal audit effectiveness. Besides the management support, adequate and competent internal audit staff and quality of internal audit has positively and significantly correlated with internal audit effectiveness. The result of regression identified that, Management support, Independence of internal audit, having approved internal audit charter, adequate and competent internal audit staff, and quality of internal audit were contributed to internal audit effectiveness in MFIs is positively and significantly and it making 23.9%. Thus, MFIs should understand which factors highly affect the effectiveness of their internal audit in order to enhance their audit function effectiveness. It is recommended that if similar research can be done in the future so as to find other factors which have impact on internal audit effectiveness and also to include other banks and insurances which were not included in this study.},
year = {2022}
}
TY - JOUR T1 - Factors Affecting Internal Audit Effectiveness: Evidence from Microfinance Institutions Operating in Hawassa, Sidama Region, Ethiopia AU - Aklilu Assefa Adato Y1 - 2022/04/29 PY - 2022 N1 - https://doi.org/10.11648/j.ajtab.20220802.11 DO - 10.11648/j.ajtab.20220802.11 T2 - American Journal of Theoretical and Applied Business JF - American Journal of Theoretical and Applied Business JO - American Journal of Theoretical and Applied Business SP - 19 EP - 29 PB - Science Publishing Group SN - 2469-7842 UR - https://doi.org/10.11648/j.ajtab.20220802.11 AB - The main purpose of this study was to examine factors affecting internal audit effectiveness: Evidence from Microfinance institutions operating in Hawassa city, Sidama Ethiopia. Effective internal audit function could be a major asset for improving public confidence in financial reporting and corporate governance. Also it add value and improve an organization’s operations. Ensuring the effectiveness of internal audit on MFIs is also important to improve internal control system and better performance. Thus, to examine effectiveness of IA in MFIs operating in Hawassa city, the study used mixed research design with quantitative approach. Management support, independence of internal audit, having approved internal audit charter, adequate and competent internal audit staff, and quality of internal audit are used as explanatory variables while, internal audit effectiveness considered as explained variable. Population was all MFIs currently operating in Hawassa city. The targeted populations were 54 respondents and all of them selected as Sample size based on judgmental sampling method because the researcher believes that, these respondents can provide in depth information about the study variables and respective indicating. The primary data used to collect information from targeted respondents and close ended questionnaires were distributed to selected respondents. Both descriptive and inferential statistics were used to analyze the data. Correlation and regression analysis were used to identify the relationship between dependent and independent variables. The SPSS data analysis tool has used and the findings were described and statistically presented using table, mean, frequency, standard deviation, percentage and graph. The result of Pearson correlation shows that all those factors included in this research has positively related with internal audit effectiveness. Besides the management support, adequate and competent internal audit staff and quality of internal audit has positively and significantly correlated with internal audit effectiveness. The result of regression identified that, Management support, Independence of internal audit, having approved internal audit charter, adequate and competent internal audit staff, and quality of internal audit were contributed to internal audit effectiveness in MFIs is positively and significantly and it making 23.9%. Thus, MFIs should understand which factors highly affect the effectiveness of their internal audit in order to enhance their audit function effectiveness. It is recommended that if similar research can be done in the future so as to find other factors which have impact on internal audit effectiveness and also to include other banks and insurances which were not included in this study. VL - 8 IS - 2 ER -
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