The Effect of Internal Audit on Effectiveness of Financial Management:the case of Ethiopian Trading Business Corporation Consumer Products Trade Business Unit (Alle Bejimila)

Abstract

Objective: Investigated the effect of internal audit on effectiveness of financial management: the case of Ethiopian trading business corporation consumer products trade business unit (Alle Bejimila). Research Methodology: Primary and secondary data sources were used. Mixed research approach is employed to triangulate data collected from questionnaire, interview and document analysis. Descriptive and explanatory research design were used to describe the and explain the different variables. The data were analysed through descriptive statistics and presented by frequency, %, pie chart and bar graph while inferential statistics such as Pearson correlation coefficient and multiple linear regression were employed to show the relationship between independent and dependent variables. Findings: Internal audit team has an appropriate programme of continuing education through participating in professional development training programmes. The study identified that management decision making process is strongly affected by reports and internal audit conducted based on international standard. Moreover, the study addressed that internal audit participates in major decisions affecting the internal audit unit, designing systems, autonomous and independent of internal audit and internal auditors also have taken the authority in the organization. Internal audit unit was highly regarded and respected within the organization. In the context of management support, the study identified that top managers provide attention to internal auditor but assign small budget was allocated to run the tasks. Conclusion: The study concludes that internal audit proficiency, quality of audit work, organizational independence and management support have a significant effect on effectiveness of financial management. Recommendation: The study recommended that the organization can provide quality training, created smooth relationship between top management and staffs reduce interference and other can be performed to ensure effective financial management.