ASSESSMENT OF INTERNAL AUDITING PRACTICE IN DASHEN

BANK JIMMA BRANCH

RESEARCH PAPER SUBMITED IN PARTIAL FULFILMENT OF

REQUIREMENT FOR BA DEGREE IN ACCOUNTING

SUBMITTED BY:
ADEM GOSHU
ADVISOR : KENENISA LEMI (MBA)

JIMMA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING

MAY, 2012
JIMMA ETHIOPIA
 ACKNOWLEDGEMENT

First of all I would like to thank you the almight Allah for giving me strength
and patience .

Second I would like to express my deepest gratitude to my advisor Kenenisa

Lemi for his unreserved follow up, constructive comments and overall
partners that helped me preparing this research paper. My special thanks also
to my friends for his unreserved moral and financial support.

I
 ABSTRACT

This study was conducted to asses internal auditing practice in Dashen Bank
in Jimma branch. Internal auditing help an organization accomplish its
objectives by brining a systematic discipline to evaluate and improve the
efficiencies of risk management control and governance process. The study
fried to asses the factors, strength and weakness with regard to internal audit
in Dashen bank of Jimma branch. The data relevant to the study was collected
from primary and secondary source of data. Primary data collected through
questionnaires and secondary sources from journals written documents and
reports. Based on the conclusion and the finding the internal auditing practice
of Dashen bank in Jimma branch relatively better and follow the theoretical
aspects of internal audit practice.

II
 Table of Contents
Acknowledgement I
Abstract II

CHAPTER ONE

1. Introduction 1
1.1. Background of the study 1
1.2. Background of the organization 1
1.3. Statement of the problem 2
1.4. Objective of the study 3
1.4.1. General objective 3
1.4.2. Specific objectives 3

1.5. Significance of the study 4

1.6. Scope of the study 4
1.7. Limitation of the study 4
CHAPTER TWO
2. Review of Related literature 5
2.1. Definition and Nature of Internal Audit activity 5
2.2. Evaluation of Auditing 6
2.3. Definition of Internal Auditor 6
2.4. Objective of Internal Auditing 7
2.5. Effective of Internal Auditor’s work on the Audit 8
2.6. Professional Qualification to perform independent Audit 8
2.6.1. Importance of the Auditors Independence 8
2.6.2. Integrity and Objectivity 9
2.6.3. Due professional care 9

2.7. Internal control 10

2.7.1. Objective of Internal control 10
2.7.2. Internal control documentation 11
2.7.3. Limitation of internal control 11

2.8. Audit practice in Relation to internal control 12

III
 2.9. Elements of Internal control 13
2.9.1. Control Environment 13
2.9.2. Risk Assessment 13
2.9.3. Control Activities 14
2.9.4. Information and communication 14
2.9.5. Monitoring 15

CHAPTER THREE
3. Research Methodology16

3.1. Data Collection instrument 16

3.2. Sampling techniques 16
3.3. Data Analysis 16
CHAPTER FOUR
4. Data Presentation and Analysis 17
4.1. Background of Respondents 17
4.1.1. Analysis of responses to the questionnaire 18
4.1.2. Analysis of interview responses 25
4.2. General discussion 26
CHAPTER FIVE

5. Summary, Conclusion and Recommendation

5.1. Summary 28
5.2. Conclusion 28
5.3. Recommendation 29

Reference 30

Appendix 31
IV
 List of tables

Page

Table 4.1. Background information of respondents ---------------- 17

Table 4.2. ---------------------------------------------------------------------- 19

Table 4.3. Application of internal control practice ---------------------- 22

Table 4.4. Respondents response about the limitation internal control

have in the bank --------------------------------------------------- 23

Table 4.5. -------------------------------------------------------------------------- 24