Internal Audit practices and challenges: The case of some selected private limited companies in Addis Ababa

Abstract

More than one thousand Private companies registered as a large tax payer in Ethiopia, most of them established internal audit department with a maximum of two employees.There are few studies about internal audit practice and its challenge in Ethiopia especially in public and banking sectors. The purpose of this paper is to assess the practice and challenges of internal audit practice in the private limited companies other than public and banking sectors and increase internal audit effectiveness by increasing the awareness level of owner managers. The researcher used Descriptive quantitative design. A simple random sampling technique used for the study. The case studies of One Hundred companies, 200 employees, participate on mailed questioner and 10 companies, 20 employees, participate on direct interview. Out of this 175 questioners returned. The data analyzed by using tables and Narrative analysis was used to explain qualitative result of the study. The major finding of the study was low practice and high challenge of internal audit in private limited companies in Ethiopia’. This is because most private companies organized and managed by family members who have low level of formal education and insufficient knowledge towards the importance of internal audit.