Factors Affecting Internal Audit Effectiveness in Wegagen Bank S.C (The Case of Head Office Unit)

Abstract

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. The main purpose of this study was to examine factors affecting internal audit effectiveness in private commercial bank the case of Wegagen Bank S.C. Head office unit. Descriptive & explanatory research design was employed. A cross sectional data was collected using representatives of the sample respondents by using convenience sampling technique; there by 260 out of 741 survey questionnaires were drawn to collect from the sample respondents. To analyze the collected data both descriptive & inferential statistics of multiple linear regressions were employed. The finding of this study regarding to reliability of this study, shows mean average of variables obtained at (r=0.933) which is consistent, the correlation coefficient also shows ‘strong correlation’ i.e. organizational structure, (r=0.715), independence & objectivity of internal auditors, (r=0.517), competence of internal auditors(r=0.728), top management support (r=0.814), existence of audit committee (r=0.874), approved audit charters,(r=0.833). The beta coefficient shows that, organizational structure (β= 0.068), independence & objectivity of internal auditors (β= -0.068), competency of internal auditors (β=0.090), top management support (β=0.124), existence of audit committee (β=0.415), approved audit charters (β=0.386) and audit work quality (β= -0.088), while since pvalue of all variables were p<0.05, hence, all the hypothesis testing were accepted. Regarding to the model summary of this study shows that, the correlation coefficient (r=0.962), coefficient of determination (r=0.925) & adjusted R squared (adj-r2=0.922). In conclusion, independency & audit work quality was negatively influenced internal audit effectiveness. Moreover to this, regarding to descriptive & inferential statistics of the study all the respondents were replied with disagreement option for all the variables and the diagnosis of assumptions in regression model shows that all the assumptions were not violated. Hence, it is recommended that the bank should observe the necessary measures needed to improve the practice of the internal auditing activities' dimensions towards internal audit effectiveness.