DETERMINANTS OF INTERNAL AUDIT EFFECTIVENESS IN THE CASE OF ETHIOPIAN PRIVATE COMMERCIAL BANKS

Abstract

The purpose of this study was to investigate the determinants of internal audit effectiveness in Ethiopian private commercial banks. Specifically, to show the influence of management support, management’s perception of IA’s values, organizational independence, adequate competent internal audit staff, and presence of approved internal audit charter on the internal audit effectiveness of private banks. For the purpose of this study six sample private banks were selected based on the NBE’s Report that classified banks per peer groups namely Awash International Bank S.C, NIB international bank S.C, Lion International bank S.C, Bunna International Bank S.C, Addis International Bank S.C and Enat banks .The Internal audit staffs in the respective banks were the source of the required data to the researcher. The study employed a combination of descriptive and explanatory research methods. The Sample size of 116 was determined from the total population 164 using Taro Yamane's Formula and the questionnaires were distributed to the selected samples by random sampling method. The collected data was analyzed through Excel and SPSS and the findings were described statistically and also presented using Tables. Thus, based on the result of the regression output all of these five factors contribute to internal audit effectiveness in private banks positively and significantly and making 82.9% contribution to internal audit effectiveness. Thus, private banks should understand which factors highly affect the effectiveness of their internal audit in order to enhance their audit team effectiveness. It is recommended that if similar research will be done in the future so as to find other factors which have impact on internal audit and also to include other private banks which were not included in this study.