ST.

MARMYS UNIVERSITY COLLEGE

Effectiveness of Internal Auditing In Discharging Its Mandate

(The case of Demba Gofa Woreda Finance and
Economic Development Office)

A Research Proposal Submitted in Partial Fulfillment of the

Requirement for the Bachelor of Arts (B.A) Degree in Accounting

BY:-

NAME: PAWLOS TOILO TOGA

I.D.No: D4AC73998/00

SUBMITTED TO:-

DEPARTEMNT OF ACCOUNTING

October, 2011
Sawla, Ethiopia
 Abstract
In the case of Demba Gofa Woreda Finance & economic development effectiveness of internal auditing in discharging its mandate the
general objective of doing this research is to assess whether the internal audit fulfilling its given mandate or not and to come up with
recommendation based on finding of the study in addressing.

The result of the study will be significant for company in building up to maintain the internal audit role & to overcome the problems
of internal audits.

To conduct the study the researcher will use both primary and secondary data to get full information by using interviews,
questionnaires , documents & the office different reports and books, i.e. published and unpublished.

And also the researcher will use simple random sampling technique for the advantage of low cost, less time consuming descriptive
data analysis will be selected to transform raise data in to a form that will make it easy to use less time consuming descriptive data
analysis will be selected to transform raise data into a form that will make it easy to use.

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 Acknowledgment

First of all I thank the peaceful & merciful My God for his and who gives me the patience and endurance to finish this research paper.
Secondly I thanks from the deepest inside of my heart to the department of accounting for help and guidance.
My Special Gratitude: goes to my family for provides moral & material support.
Last but not least I thanks from the deepest inside of my heart to Demba Gofa Woreda finance office & Staff members.

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 Table of content
Contents Page
Abstract………………………………………………………………………………………I
Acknowledgment……………………………………………………………………………II
Table contents ……………………………………………………………………………..III
Table list …………………………………………………………………………………..VI
CHAPTER ONE:
1. INTRODUCTION ……………………………………………………………………..1
1.1. Backgrounds of the Study……………………………………………………1
1.2. Statement of the Problem…………………………………………………….3
1.3. Objectives of the Study………………………………………………………..4
1.4.1. General Objective ………………………………………………………4
1.4.2. Specific Objectives ……………………………………………………..4
1.4. Scope of the Study………………………………………………………………5
1.5. Significance of the Study………………………………………………………6
CHAPTER TWO:
2. LITERATURE REVIEW……………………………………………………………….7
CHAPTER THREE:
3. METHODOLOGY AND DATA COLLECTION …………………………………….9
3.1. Source of Data and Method of Data Collation…………………………….9
3.2. Data Analysis and Presentation……………………………………………. 10
CHAPTER FOUR:
4. Data Presentation, Interpretation and Analysis…………………………………13
CHAPTER FIVE:
5. Summary, Conclusion and Recommendation
5.1. Summary ……………………………………………………………………... 21
5.2. Conclusion ……………………………………………………………………. 23
5.3. Recommendation ……………………………………………………………... 24
Bibliography ……………………………………………………………………... 25
Appendix……………………………………………………………………….. 26

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 CHAPTER ONE

INTRODUCTION

1.1. Background of the Study

The Ministry of Finance and Economics Development (MoFED) and Regional Bureau of Finance and Economics Development
(BoFEDs) are established to carry out their developmental activities under their jurisdiction. Therefore, the legal base on which these
sectors now operate are governed by their respective proclamation number 57/1996. The Ministry of Finance and Economic
Development is responsible to formulate development policy and plan the enable realization of fundamental economic transformation,
and follow-up its implementation. The ministry is also responsible to introduce a system of external economic cooperation based on
the permanent interest of the country and to establish efficient and effective system of public finance administration of the federal
government. The council of ministers, Financial Regulation No 17/1997 gives the Federal Ministry of Finance and Economic
Development the power to formulate and distribute directives that detail the government financial policies and to develop and
maintain appropriate standards of work and conduct of internal audit for application throughout all public bodies.

The Southern regional state proclamation No 56/98 establishes the basis of internal audit and internal control of the Regional
Government. Bureau of Finance and Economic development /BOFed/ is responsible to:
 Formulate and distribute directives that details based on the Federal Governments Financial policies in all areas of the
Government finances.
 Develop and maintain appropriate standards of work and conduct for application throughout all public bodies internal audit
functions.

Therefore in order to achieve the appropriate standards of block and proper utilization of public resources BOFed has institutionalized
the internal audit section in its organizational structure as one key department.

According to institution of Internal Auditors (IIA) internal auditing is defined as an independent, objective assurance and consulting
activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing
a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes
(MOFED Internal audit standards and code of ethics for internal auditors and internal audit procedural manual).

Although internal auditors can be a valuable advisory resource on internal control, the internal auditor should not be a substitute for a
strong internal control system. A system of internal control is the primary response to risks.

Internal auditing may analyze strengths and weaknesses of an organization’s internal control, considering its governance,
organizational culture, and related threats and opportunities for improvement which can affect whether the organization is able to
achieve its goals. The analysis assesses whether risk management identifies the risks and puts controls in place to manage public funds
in an effective and efficient manner.

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1.2. Statement of the Problem

An effective internal audit function plays a key role in assisting the management to discharge its governance responsibilities. By
providing unbiased, objective assessments of whether public sector operations and resources are responsibly and effectively managed
to achieve intended results, the auditor can help the public sector organization achieve accountability and integrity, improve
operations, and instill confidence among citizens and stakeholders. Therefore, in many cases of existence of internal auditing in public
organizations is mandatory.

The nature of internal auditing and the role of providing unbiased and accurate information on the use of public resources and services
delivered require the internal audit activity to perform their duties without restrictions-free from interference or pressures from the
organization being reviewed or the area under audit.

The internal audit is considered to be an essential part of the accountability and control in an organization. This role is fulfilled if
internal audit section is effective in discharging its mandates. To be effective, at a minimum the government internal audit sections
need:
(a) Sufficient independence
(b) Adequate supporting environment in assisting audit functions;
(c) Adequate legal support and coverage
(d) Adequate remuneration to attract and retain caliber personnel;
(e) Suitable organizational capacity,
(f) Adequate implementation and follow-up mechanisms on audit findings and recommendations.

Although shortage and absence of one or more of the above factors may affect the effectiveness of the internal audits, most developing
countries lack these conditions. In general, the major problems are:
(1) Inability to fulfill its mandates due to inadequate capacity and problems in exercising of independence to discharge its mandates,
(2) Inadequate implementation of audit findings and recommendations which will need detail assessments.

Despite the highest responsibility assigned to the Demba Gofa Woreda Finance and Economics Development office the importance
and relevance of government internal audit role for effective functioning of accountability and transparency in organizational
operations, the effectiveness of internal audit has been weakened by different factors such as inadequate information, inappropriate
structure and lack appropriate auditing systems and procedures.

To assess the effectiveness of internal auditing in achieving its objectives, the following questions have to be addressed.

(a) What are factors of the problems that affecting the day to day activity of internal audit?
(b) Is there appropriate auditing manuals and procedures?
(c) Is the organizational setup of internal audit section is appropriate to carry out the audit activities?
(d) How is the management support and commitment for the effectiveness of internal control system?

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1.3. Objectives of the Study

1.3.1. General Objective

The General objective of the study is to assess whether the internal audit is fulfilling its given mandate or not by examining the
existing internal audit performance and operation of the Office.

1.3.2. Specific Objectives

Specifically the objectives of the study are:
 To check practically how far the audit results are helping the management in discharging their responsibilities in
efficient and effective manner.
 To examine the timeliness of audit works (assignments or projects accomplishment) and audit reporting, and the
adequacy of its audit coverage.
 To assess the independence and objectivity of the internal audit section
that enables it to discharge its mandates.
 To assess the organization set up of the section and forward possible recommendations.
 To assess the appropriateness of internal audit working manuals and procedures.
 To assess the management support, commitment and respect for the value of internal.

1.4 The Scope and Limitation of the Study

Since the audit function is carried out by the internal audit section in the Demba Gofa Woreda office of Finance and Economic
Development, this study mainly focuses on assessing the activities of the section from 2006 to 2011 for the investigation of the
internal audit problem.
The following limitations may be encountered to conduction the study.
Due to its complexity, lack of resources and time among several factors, some data variables will be taken for the study.
Lack of well organized and timely information and data to conduct the study on time the reasonable time.
The coordination and support from management and staff may be limited.
Due to the complexity of the study and time scarcity the study covers 5 years performance and data of the section. So that
the study may not reflect the overall problem of the section.

1.5. Significance of the Study

Significance factors that affect the effectiveness of the internal audit activities are:
 lack of well established organizational structure and qualified experts,
 lack of effective working manuals and procedure,
 weak management support and commitment,
 absence of well organized and up to date information etc.
 unless proper strategies are proposed and implemented to avoid or reduce the negative impact of these problems,
 the audit function may not play its role effectively. Therefore, this study may save time and cost that would be spent to assess
problems by the office.
Therefore, the study may serve as stepping-stone for assessing the main problems that hinder the internal audit activity and serves as
an input for the future effort in strengthening the internal audit system of the office in discharging its responsibility

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 CHAPTER TWO

LITERATURE REVIEW

According to Saunders, etal, (2007, p. 526) explanation “the main purposes of your literature review are to set the study within its
wider context and to show the reader how your study supplements the work that has already been done on your topic .” Therefore,
different books (literatures) will be reviewed to describe the history and background of internal audit, the meaning and importance of
internal audit and its problems and also includes policy and internal audit performance review of the bureau with comparative
analysis. Different policy documents and working manuals will also be reviewed in order to show the responsibilities and mandate of
internal audit in public sectors.
The term internal audit refers to the examination of accounts of business concerning its employees specially, appointed for the
purpose, errors and irregularities when they have already been committed and could not be prevented or detected by internal check
arrangements. Basically, internal audit is considered as a service activity, it represents an imported tool of management. The
traditional view of internal audit is of ensuring proper maintenance of guarding the assets of the enterprise. The internal audit modern
concept may extend to review of all operations of the enterprise as well as evaluation of the effectiveness of the management
(Auditing D. P. Jain 1993 and 1996).
Internal audit is a part of whole system of internal control, but is not an integral check. Two essential features of internal audit may be
that it should operate independently at the internal check and in no circumstances should it divert any one of the responsibilities placed
upon him (council of the institute of chartered accountants of England and Wales Auditing D. P. Jain 1993 and 1996).
Internal audit is an independent appraisal of activity within an organization for review of a clouting financial and other operations and
record of a concern by its employees selected specially for this purpose. Internal audit is an audit conduct on the behalf of the
management of an enterprise with the objective of assisting the management to discharge its responsibilities effectively. It involves an
examination and evaluation of various activities of an enterprise. The exact scope of internal in a particular situation is determined by
the management in the content of its specific requirements (Kamal GUBTA and Ashok Arora, 1996 &2000)

Internal auditing is a systematic and independent examination of data, statements, records, operation and performance (financial or
otherwise) of an enterprise for a stated purpose. Internal auditing is an independent objective assurance and consultant activity
designed to add value and improve systematic and disciplined approach to evaluate the effectiveness of risk management control and
governance process (Kamal Gubta and Ashok Arora, 1996 & 2000).
The Ministry of Finance and economic Development /MoFed) stated that:-
1. Internal control system includes all the policies and procedures adopted by head of the public body to assist in achieving
its objective and ensuring, as far as practicable, the orderly, economical, efficient, and effective conduct of its operations,
including adherence to internal policies, government’s policies, rules and regulations, the safe guarding of assets, the
prevention and detection of fraud and error, the accuracy and completeness of the accounting records, and the timely
preparation of reliable financial & management information and fairly disclosing that data in a timely report.

2. It is a responsibility of the head of the public body to determine the internal control system, which is appropriate to the
public body. The nature and extent of controls will vary between public bodies and also from one part of public body to
another. The controls used will depend on the nature, size and volume of activities, the degree of control which
management is able to exercise personally, geographical distribution, and many of other factors. The choice of controls
may reflect a comparison of the cost of operating individual controls against the benefits expected to be derived there from.
3. Internal control system comprises the control environment and control Procedure.
Control environment means the overall attitude, alertness and actions
of the management regarding internal control and their importance in the
Public body.
4. The control environment encompasses the management style and culture, and values shared by all employees; it provides
the background against which the various controls are carried out. However, a strong control environment does not, by
itself, ensure the effectiveness of overall internal control system. (MoFed internal Audit Standards & code of ethics for
internal auditors and internal audit procedural manual, 1998 E.C.)

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 CHAPTER THREE

METHODOLOGY AND DATA COLLECTION

3.1 Source of Data and Method of Data Collation

In this study both primary and secondary data will be gathered for analytical purpose. The study was conducted both in the office
while secondary data were gathered from different sources.

In this research survey is particularly essential to collect data from 15 sampling population through questionnaire. The researcher used
simple random sampling technique. This method will help the researcher to collect quantitative data by using descriptive statistics. In
the survey the researcher learns and collects data regarding management and staffs’ belief on the internal audit activities, the audit
opinions, satisfaction and what they like and dislike. Documentary review type research will be applied, which is basically designed to
examine the effectiveness of the internal audit section in discharging its responsibility.

In evaluating the effectiveness of the internal audit section in discharging its responsibilities; the following variables will be used as
factors to judge the effectiveness of the internal audits:
(1) Its factual independence and objectivity
(2) The timeliness of audit work accomplishments and reporting
(3) Timely implementation of audit findings and recommendations
(4) The management perception on the audit findings and actions taken. Based on each variable, information will be collected through
survey and/or documentary review methods. Information about those problems hindering the effectiveness of the Demba Gofa
Woreda office of Finance and Economic Development internal audit section will be assessed based on the presumption and the
experience of the researcher, questionnaires conducted to audit staffs, office heads, process leaders and other staffs, and secondary
sources.

In this research, primary and secondary data will be used. Using primary data the researcher will use an interview (both close and open
ended questionnaire) to measure the effectiveness of internal audit performance and activities. The interview particularly will focus on
Demba Gofa Woreda Finance and Economics Development office staffs (including office heads, process leaders, internal auditors,
other staffs).

This is important to collect data about the management perception about the effectiveness of internal audit performance and report for
decision making.

Using secondary data the literature review will be used to define internal audit and factors that affects and contributed to the
effectiveness of internal audit and also includes regional and national policies and procedure manuals and offices internal audit
performance review with comparative analysis. Data for internal audit performance, management and staffs perception about the
effectiveness and the internal audit section performance history and audit reports will be analyzed. Data about the background, the
legal basis, powers and duties, and organizational structure of the office will also be gathered through secondary sources.

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3.2 Data Analysis and Presentation
Both quantitative and qualitative methods will be used to analyze the data. So as to analyze the majority of data obtained through
questionnaire, descriptive analysis will be utilized. By applying descriptive analysis such as table with numerical and percentage etc.
one can compare and contrast different categories of sample units with respect to the desired characters so as to draw some important
conclusions to see the effectiveness of internal audit (audit findings, audit reports, auditing systems, staff and management respect) in
decision making.

The data gathered via interviews and document consultations will be analyzed qualitatively. Still the data collected via open-ended
questions of the questionnaire will be processed through qualitative discussions. Then discussions comparing and contrasting the data
obtained via these all tools and the information narrating the theoretical issues from literature review will be held. Finally, based on
the findings of the study and discussions made, conclusions will be drawn and interventions to alleviate the problems will be
suggested

CHAPTER FOUR

DATA PRESENTATION, INTERPRETATION ANDANALYSIS

This study is based on the data collected from the employees of Demba Gofa woreda finance and economic development office one of
the main sources of this paper was questionnaires distributed to the employees if the organization and using interview or face to face

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communication with the employees of the organization. In Demba Gofa woreda finance and economic development office there are 45
/fourth five / employees. From this 43/fourth three/ are permanent employees and 2/two/ employees are contract employees.
The researcher used simple random sampling techniques to give equal chance for the respondents. By using this researcher was a
distributed questionnaire to 15/ fifteen / employees of the office /organization/.
Respondents response factors that affecting the effectiveness of internal audit in discharging its mandate most of the respondents
replied that the major factor affecting the effectiveness of internal audit are stated in the following ways :-
(a) Insufficient independence
(b) Inadequate supporting environment in assisting audit functions;
(c) Inadequate legal support and coverage
(d) Inadequate remuneration to attract and retain caliber personnel;
(e) Unsuitable organizational capacity,
(f) Inadequate implementation and follow-up mechanisms on audit findings
and recommendations.

Table 4.1. Background of the Respondents

The questionnaire is distributed for 15 respondents from that of total population size the following table summarized the profile
of the respondents.
4.1.1. Age and Sex
Age Group Number of Respondents
Male (M) Female(F) Percent (%)
19-25 2 - 13.33%
26-30 3 2 33.34%
31-45 4 2 40%
>45 1 1 13.33%
Total 10 5 100%
Average 66.67% 33.33%

From the above table, we can understand that 66.67% of the respondents are males and the remaining 33.33% are females.
Those who are between 26-30 and 31-45 ages consist 73.34% of the respondents. The remaining percentage is age between 19-
25 and more than 45, from this what we are observe is all most all respondents matured age to respond the questionnaires.

4.1.2 Marital statutes of Respondents

Marital status Number of respondents Percents

Married 8 53.33%

Single 6 40%

Divorcee 1 6.67%

Total 15 100
From the table
53.33% of the respondents are married , 40% 0f the respondents are single , the remaining 6.67% of the respondent are divorced.

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4.1.3. Educational level of Respondents
Level of Respondents Number of Respondents Percent(%)

Secondary _ _
Certificate 2 13.33%
Diploma 8 53.33%
Degree 5 33.34%
Total 15 100

From table 4.1.4 we understand that about 13.33% of the respondents certified in some professions, 53.33of the respondents graduated
up to college, the remaining 33.34% from university and there are no respondents in secondary. This indicates that all most all
respondents are intellectual and we can say, they have a potential to respond the questionnaires by reading and writing.
4.1.5. Work Experience of the Respondents
Work Experience Number of Respondents Percents

1-5 years 2 13.33%

6-10 years 6 40%
11-15 years 4 26.67%
Above 20 years 3 20%
Total 15 100

From table 4.1.5 above, we understand that from the total respondents 6(40%) of the respondents have 6-10 service years and the
remaining 2(13.33%) have 1-5 service year. It indicates that all most all respondents are experienced and easily respond the
questionnaire as intended.

Table 4.2. Importance of internal audit

Item no Item Alternatives No of Respondents Percent

2.1. Do you have better understanding Yes 13 86.67%

on the importance of internal audit
in achieving the organization goal?

No 2 13.33%
Total 15 100

As the above table shows that from the total respondents 13(86.67%) of the respondents replied that have a better understanding on the
importance of the internal audit in achieving the goal of the organization. The remaining 2(13.33%) replied have understanding.
Respondents replied the following are some of the roles that internal audit played:-
Assessment of the actual performance with budgets
Evaluates the managements in discharge its governance responsibilities
Responsibly and effectively managed scarce resources to achieve the intended results.
Evaluates source documents, improve operation and taking corrective action ...etc.

Table 4.3. Organizational structure of internal audit section

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 Item Items Alternatives Number of respondents Percent
no
2.3. Do you have knowledge about the Yes 15 100%
organizational structure of internal audit
section
No - -
Total 15 100

It can be seen that from the above table the total of the respondents 15(100%) replied that have knowledge about the organizational
structure of internal audit section.
Respondents are replied that the internal audit section is responsible to :-
 Internal audit job processes has own job processes leader
 Is responsible to the head of the organization and
 Internal audit job processes leader was the members of management

Table 4.4. Comfortbility of Existing Structure

Item Items Alternatives No of respondents Percent
no
2.5 Is the existing organizational structure of internal audit is Yes 7 46.67%
comfortable to effectively discharge its mandate
No 8 53.33%
Total 15 100

It can be seen that from the above table, 8(53.33%) of the respondents replied that the existing organizational structure of internal
audit not comfortable .the remaining 7(46.67%) of the respondents replied that the existing structure is medium in confortable.

Table 4.5. Internal Audit perform its mandate Independently

Item Items Alternatives No of respondents Percent
no
5 Did the section perform its mandate independently without Yes 2 13.33%
the involvements of management interest?
No 13 86.67%
Total 15 100

It can be seen from the above table , from the total respondents 13(86.67%) of the respondents replied that the internal audit section
does not perform its mandate independently without the involvements of management interest.
Respondents replied that the following are factors that affect the effectiveness of internal audit that discharge its mandate
independently:-
 Insufficient independence
 Inadequate legal support and coverage
 Managements force as they intended

Table.4.6.Managements and Staff perception on audit function and finding

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Item Items Alternatives No of respondents Percent
no
6 Do you believe that the managements and staff are highly Yes - -
concerned for audit function and finding?
No 15 100%

Total 15 100

It can be seen from the above table the total respondents 15(100%) replied that the managements and staff have negative perception
about audit function and finding.

Table 4.7. Internal audit staff perform their responsibility

Item Items Alternatives No of respondents Percent
no
7 Are the internal audit staff perform their responsibility in Yes 15 100%
an ethical and professional manner?
No - -
Total 15 100

In the above table the total respondents 15(100%) replied that the internal audit staff perform their responsibility in an ethical and
professional manner.

Table 4.8.Action taken on audit finding

Item Items Alternatives No of respondents Percent
no
8 Did the management take immediate action on audit Yes - -
finding?
No 15 100%
Total 15 100
Table 4.8 shows that the total respondents 15(100%) replied that the managements did not take immediate follow up and action on
audit finding

Table 4.9.Internal audit procedures and manuals

Item Items Alternatives No of respondents Percent
no
9 Does the office have appropriate and clear auditing Yes 2 13.33%
manual?
No 13 86.67%
Total 15 100
It can be seen from the above table , from the total respondents 13(86.67%) of respondents replied that there is no appropriate and
clear auditing manual. The remaining 2(13.33%) of respondents replied that the office have a clear auditing manual.

Table4.10 Working paper and formats

Item Items Alternatives No of respondents Percent

10
no
10 Does the office have its own internal audit working paper Yes - -
and formats?
No 15 100%
Total 15 100

It can be seen from the above table , the total respondents 15(100%) respond there is no have own working paper and formats for
internal audit section. It indicate that internal audit section not perform their function properly.

Table4.11 Availability of material and budgets

Item Items Alternatives No of respondents Percent
no
11 Did material and budget are available on time? Yes - -

No 15 100%
Total 15 100

It can be seen from the above table . the total respondents 15(100%) responde that the material and budget are not available on time .

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 CHAPTER FIVE

5. SUMMARY, CONCLUSION AND RECOMMENDETION

5.1. SUMMARY

The objective of this study was to analysis the effectiveness of internal audit in discharging its mandate in Demba Gofa woreda
finance and economic development office.
Accordingly the following specific questions formulated:-
(a) What are factors of the problems that affecting the day to day activity of internal audit?
(b) Is there appropriate auditing manuals and procedures?
(c) Is the organizational setup of internal audit section is appropriate to carry out the audit activities?
(d) How is the management support and commitment for the effectiveness of internal control system?
In order to attain the desired objectives, the researcher used primary and secondary sources of data. The primary sources of data were
obtained from employees of the organization through interview or face to face communication and questionnaires distributed to the
employees of the organization. The secondary sources of data were obtained from internal or external sources. The researcher used
simple random sampling techniques and finally the data was analyses. The data obtained were analyses by using editing, percentage,
classification and present in tabulation form.
Depending on the result of analyses made the following major finding were obtained;-
 Regarding on the background of the respondents 66.67% are male and 33.33% are female.
 53.33% are married and 6,67% are taken divorce for marital status is the highest and the lowest percentage
 For educational level and work experience of the respondents take maximum and minimum percentage are 53.33% of
respondents have diploma and 13.33% of respondents have certificate and 40% of respondents have 6-10 year work
experience and 13.33% of respondents have 1-5 years work experiences.
 The research analyzed the respondents concept about internal audit section including :the understanding on the
importance of internal audit in achieving the office goal ,knowledge about the organizational structure of internal audit
section, suitability of the existing structure and the managements involvement in section function .
 Respondents replied that:-
 The managements and staff have a negative perception on internal audit function and finding.
 Also the managements did not take immediate action on audit finding.
 The internal audit staff performs their responsibility in an ethical and professional manner.
 Material and budget that are important to carry out internal audit function but did not available on time.
 Lack of appropriate, updating, clear, internal audit manual and working paper and formats in the organization.

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5.2. CONCLUSION

This paper is set out to investigate the effectiveness of internal audit in discharging its mandate in Demba Gofa woreda finance and
economic development office and the overall problems that hinder the effectiveness of the organization to achieve its target in the
country. From the above findings the researcher can arrive at the following conclusions.

 lack of well established organizational structure and qualified experts,

 lack of effective working manuals and procedure,
 weak management support and commitment,
 absence of well organized and up to date information etc.
 unless proper strategies are proposed and implemented to avoid or reduce the negative impact of these problems,
 the audit function may not play its role effectively
 Inability to fulfill its mandates due to inadequate capacity
 problems in exercising of independence to discharge its mandates,
 Inadequate implementation of audit findings

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5.3. RECOMMENDATIONS

Many issues are discussed concerning internal auditing potentially recommendation are given. The forwarded recommendations are
applicable for the organization.

The role of providing unbiased and accurate information on the use of public resources and services delivered require the internal
audit activity to perform their duties without restrictions-free from interference or pressures from the organization being reviewed or
the area under audit.

The internal audit is considered to be an essential part of the accountability and control in an organization. This role is fulfilled if
internal audit section is effective in discharging its mandates. In relation to the problems of factors affecting effectiveness of internal
audit in discharging its mandate the following recommendations are forwarded:-

The internal auditing needs:-

 Sufficient independence
 Adequate supporting environment in assisting audit functions
 Adequate legal support and coverage
 Adequate remuneration to attract and retain caliber personnel
 Suitable organizational capacity,
 Adequate implementation and follow-up mechanisms on audit findings.
 Material and budget available on time

BIBLIOGRAPHY

1. American Accounting Association. (2001). Independence and Objectivity: A Framework for Internal Auditor, IIA
Research Foundation.
2. Federal Democratic Republic of Ethiopia, Office of the Federal auditor General (May, 2006). Ethiopian Government
Auditing Standards, Revised. Addis Ababa.
3. Federal Democratic Republic of Ethiopia, Office of the Federal Auditor General (May, 2006). Ethiopian Government
Financial Audit manual, Revised. Addis Ababa.
4. Institute of Internal Auditors (IIA). (2006). The Role of Auditing in Public Sector Governance, Florida, USA.
5. Institute of Internal Auditors (IIA), 2008. International Standards for the Professional Practice of Internal Auditing.
Accessible on-line at.
http://www.theiia.org/guidance/standards-and-guidance/ippf/standards/.

14
 ST.MARYS UNIVERSITY COLLEGE
DEPARTMENT OF ACCOUNTING
QUESTIONAIRE

This questionnaire has been developed only for the analysis of the effectiveness of internal audit in discharging its mandate in Demba
Gofa office of Finance and economic Development. The purpose of the questionnaire is for the preparation of research paper for the
partial fulfillment of the requirement for BA degree in accounting from St.Marys University College. Please tick ‘x’ for your
appropriate response in the box provide for each questions and write your answer on the space provided for descriptive type questions.
1. Personal information:
A. Sex a) Male b) Female
B. Age a) 19-25 b) 26-30
c) 31-45 d) above 45
C. Educational Status
a) First Degree and above b) Diploma
c) Secondary d) certificate
D. Marital Status
a) Single b) Married
c) Divorced
E. Work experience
a) 1-5 years b) 6-10 years
c) 11-15 years d) > 20 years

2. Do you have better understanding on the importance of internal audit in achieving the institutional goal of Finance and
Economics development office?

a) Yes b) No
3. Do you have knowledge about the organizational structure of internal
audit section?
a) Yes b) No

4. Is the existing organizational structure of internal audit is comfortable

to effectively discharge its mandate?
a) Yes b) No
5. Did the section performed its mandate independently without the involvement
of management interest
a) Yes b) No

6. Do you believe that the management and the staff are highly concerned for
audit functions and findings?
a)Yes b) No
7. Are the internal audit staffs perform their responsibilities in an ethical
and professional manner?

a) Yes b) No
8. Did the management take immediate action on audit findings?
a) Yes b) No
9. Does the office have appropriate and clear auditing manual?
a) Yes b) No

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10. Does the office have its own internal audit working papers and formats?
a) Yes b) No
11. Did materials and budget that are important to carryout internal audit functions
are available on time
a) Yes b) No

THANK YOU IN ADVANCE FOR YOUR COOPERATION

DECLERETION

I Undersigned declare that this thesis is My original work & has not been presented for a Degree in any University & all of
the materials used for this study have been only acknowledge.

PAWLOS TOILO TOGA ________________ ____________

Name of Student Signature Date

This thesis has been submitted for examination with my approval as a university

_____________________________ __________________ _____________

Name of Advisor Signature Date

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