The Role of Internal Audit in Promoting Good Governance: The case of Dashen Bank

Abstract

This research examined the role of Internal Audit Function in promoting good governance at Dashen bank. The researcher observed that top management in Dashen bank does not sufficiently support IA. The IAF in Dashen bank faces a perception and, to some extent, a credibility problem as a value adding unit of the organization. Internal Auditors are seen more as fault finders rather than solution providers. Repetitive audit routines, inability to insist on implementation of audit recommendation & insufficient resistance to Mgt. involvement in its activities due to fears of losing promotion opportunities and job security, structural problem (reporting relationship) in the form of assigned task that impair the auditor independency and non-value added internal audit report. Hence, it becomes important to examine the extent of manager’s perception of the contribution of internal audit to promote good corporate governance, essential support expected from internal audit and required changes at Dashen bank in relation to IAF. To achieve the objective of this study, in addition to questionnaire from a sample of 109 individuals comprising staffs and board members data was collected through interviews and other documents. These respondents were selected using stratified random sampling method and the data collected from the questionnaire were analyzed using SPSS. The result of this study indicate that IA practices of the bank are not at a level which is convincing as value-added activity, low implementation of audit recommendation, audit charter not well communicated, IAF is not independent in fact and Mgt.do not sufficiently support role of IAF. The findings of this study also indicate that IAF needs to enhance the scope of its activities and there is a need for the introduction of additional tasks. Based on the findings of the study, the researcher forwards recommendations that will help management of the bank in its effort of establishing good corporate governance at Dashen bank.