ABSTRACT

This research work highlights the result of a research carried out to examine the effect of internal audit on the organizational performance in SOWEDA Buea. The study seeks to answer the question of internal audit on the organizational performance in SOWEDA. .the primary method of data was carrying out substantial aspect of the study involved collecting data through the instrumentation of questionnaires. A sample of 40 was collected in the organization. The study was carry out in a period of six months and it was carried out in Buea municipality of south west region   The data collected were classified and analyzed using the  descriptive and  linear regression analysis with the help of Statistical Package for Social Sciences (SPSS) version 26. The hypothesis was tested through using linear regression and the result shows that. This result showed that internal audit affects the organizational performance in SOWEDA Buea. Hence, the null hypothesis was rejected and the alternate hypothesis accepted. Based on the findings  it was recommended that the financial and accounting and reporting procedures need to be enhanced this can be made possible by allowing further training for the staff in the accounts sections and close supervision of the audit department on the activities of accounts and finance through regular audits and checkup.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Organizations rely on internal audit as one of the main functions of the consulting activity that adds value to institutions (Hazaea, Tabash et al., 2020). The IA function began with the aim of combating fraud by verifying organization financial operations, The IA functions in management and planning play a fundamental and important role in promoting and improving good governance (Christopher, 2019). Internal audit is one of the internal control mechanisms to improve and strengthen organizations performance (Kotb et al., 2020).

Weak governance systems that led to various corporate scandals in the US (i.e. Enron, WorldCom, Tyco) resulted in the enactment of the Sarbanes-Oxley Act 2002, a leading piece of legislation calling for increased governance of US listed corporations while exerting a significant influence over corporate governance systems in countries around the world (AL Hares, 2019). The Institute of Internal Auditors (IIA) also reiterates that internal audit can help organizations achieve their objectives through a systematic and disciplined approach to evaluating the effectiveness of risk management, control, and governance processes (IIA, 2020). Internal auditors are expected to detect and report corruption, negligence or abuse of authority. Such audits are termed compliance audits as they seek to ensure the adherence to laws, regulations, policies, procedures and organizations’ codes of conduct. Turetken et al. (2019), in their synthesis of relevant IA literature, argued that compliance with the International Standards for the Professional Practice of Internal Auditing (ISPPIA) of the IIA could serve as a guideline to measure IA effectiveness and proposed internal auditor objectivity and proficiency as essential dimensions of IA effectiveness.

Internal audit is described as an important component of effective internal controls that provides reasonable assurance regarding the attainment of operational, reporting, and compliance objectives (Boskou et al., 2019). It can aid in the evaluation of a company’s efficacy and efficiency, as well as the promotion of continual development. Second, accounting information transparency is defined as the widespread availability of relevant, visible, credible, reliable, and honest information about a publicly-traded company’s periodic financial and operational performance, financial position, investment opportunities, accounting policies, governance, value, and risks (Iordache, 2020). Organizational performance is seen as the methods, techniques, processes, and structures for leading, managing, and controlling business activities with the ultimate purpose of achieving organizational goals and long-term stakeholder value (Puni & Anlesinya, 2020). It ensures that firm responsibilities are met and exceeded, which helps to facilitate, create, and sustain stakeholder confidence (Garfatta, 2021)

1.2 Statement of the Problem

SOWEDA are now moving toward higher levels of transparency and hence each management department must demonstrate accountability in the use of money and efficiency in the delivery of services. Internal audits provide a number of important services to SOWEDA Company. These include detecting and preventing fraud, testing internal control, and monitoring compliance with company policy and regulation, and these services or functions of Internal Audit are intended to spearhead growth and efficiency of the SOWEDA Company. However there has been laxity in implementation of internal audit findings and recommendations due to lack of understanding of assessing skills and methods, identifying corrective actions and losing them out and poor management decisions making in the SOWEDA Company.

According to the results of Christopher (2019), the performance gap in internal audit functions arises due to a lack of clarity of vision in terms of the organizational position of internal audit (such as a member of the board of directors versus a management partner), the internal audit  function such as (assurance versus consulting),lack of communication  the financial or accounting skills and experiences of the internal auditors and the extent their membership in the IIA, and the extent to which the internal auditors comply with the standards that regulate the IA profession when performing their duties. Thus, weak internal auditors’ functional arrangements and characteristics are among the main reasons for ineffective internal auditing (Hazaea, Zhu et al., 2020). As a result of the internal audit  gaps and the reasons that contributed to this gap, this paper aims to analyse how internal audit  research can be developed and the future research directed towards the actual and significant role that IA can play efficiently to ensure effective organizational performance .

Also, Akande (2019) analyzed the effect of internal audit on financial performance of commercial banks. And more specifically, this study aimed at detecting the level of internal audit function of these commercial banks operating in Nigeria, and its effect on their financial performance. Enekwe et al (2020) reviewed the effect of internal audit quality on the financial performance of listed manufacturing companies in Nigeria. In this study, the authors examined the effect of internal auditor and audit committee independence on return on assets (ROA). The results of the study showed that internal audit quality influenced positively and significantly the financial performance. From the above studies, we have seen that different studies have been conducted base on internal audit but for purposes of this study we will examine how internal audit affect organizational performance.

1.3 Research Question

Base on the above the main research question is;

How does internal audit affect organizational performance in SOWEDA Buea?

The specific research questions are;

How does quality assurance affect organizational performance SOWEDA Buea?

How does risk management affect organizational performance SOWEDA Buea?

How does internal control affect organizational performance SOWEDA Buea?

1.4 Objectives of the Study

Main objective

To examine how internal audit affect organizational performance SOWEDA Buea

Specific objective

To evaluate the effect of risk management on organizational performance SOWEDA Buea

To examine the effect of internal control on organizational performance SOWEDA Buea

To determine the effect of quality assurance on organizational performance SOWEDA Buea

1.4 Hypothesis of the study

H0: Internal audit does not significantly affect organizational performance SOWEDA Buea