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- Title
The Effects of Internal Audit on Performance of Ethiopian Financial Institutions.
- Authors
Berhe, Abraham Gebregiorgis; Mihret, Asmamaw Getie; Ali, Mohammed Seid
- Abstract
A company's accounting control practices is widely believed to be crucial to the success of an enterprise as it acts as a powerful brake on the possible deviations from the predetermined objectives and policies (Kiabel, 2012). A strong relationship exists between internal audit quality and firm performance with opportunities of high growth (Hermanson and Rittenberg, 2003; Hutchinson and Zain, 2009). However, (Mihret, James and Mula, 2010; Kiabel, 2012; Ejoh and Ejom, 2014) found that where internal auditing exists, does not significantly impact these enterprises' financial performance. Due to the inconsistencies in the extant research, recommendation from different researchers, and because of its contribution to the Ethiopia Growth and Transformation Plan (GTP) where creating efficient, effective, transparent and accountable financial system is among the strategic direction being pursued during the plan period through enhancing the capacity of internal auditing (MoFED, 2014), this study proposed to investigate the effects of internal auditing on financial performance of Ethiopian financial institutions. This research has adopted quantitative research approach, and questionnaires were collected from the head offices of financial institutions. Spearman's zero order correlation and spearman's partial correlation was run to test the hypotheses. The findings of the study reveal that there is no association between the internal audit effectiveness and ROA. Moreover, no correlation exists between the internal audit effectiveness and ROE.
- Subjects
INTERNAL auditing; AUDITING of corporations; FINANCIAL institutions; FINANCIAL performance; CORPORATE profits
- Publication
Journal of Finance, Accounting & Management, 2016, Vol 7, Issue 2, p1
- ISSN
2153-2818
- Publication type
Article