Internal Audit Quality and Its Impact on Public Sector Organizational Performance: Evidence from Sector Bureaus of Southern Ethiopia

Abstract

The quality of internal audit plays a significant role in enhancing organizational performance of public sector bureaus. So, the objective of this study was to examine the effect of internal audit quality on organizational performance of public sector selected bureaus in southern Ethiopia. To this end, the researcher employed quantitative research approach with explanatory research design where the effect caused by the independent variable on the dependent variable is observed through regression analysis. The primary data was collected using structured questionnaire from 112 respondents out of total 148 respondent's selected using simple random sampling technique from bureaus of southern Ethiopia. Then, both descriptive and inferential statistics analysis (multiple linear regression) have been done through SPSS version 21.0 and E-views version 9 in order to get the reliable research findings. Consequently, the result of regression analysis showed that, four variables such as independency of internal audit (positive), competency of internal audit staff (positive), management support (positive), and formal mandate of internal audit (positive) and statistically significant out of eight variables incorporated in the model. Whereas, other explanatory variables like objectivity, internal audit standard, competent leadership and unrestricted access to audit evidence were not statistically significant respectively. Based on the findings of the study, the researcher forwarded possible recommendations for bureaus to work on independency of internal audit, competency of internal audit staff, management support, and formal mandate of internal audit due to the fact that they are statistically significant and has positive influence in improving internal audit quality on one hand and organizational performance of bureaus on the other hand.