DETERMINANTS OF INTERNAL AUDIT EFFECTIVENESS: A CASE STUDY ON SELECTED GC-1 PRIVATE CONSTRUCTION COMPANIES IN ETHIOPIA

Abstract

The main purpose of this study is to investigate the determinants of internal audit effectiveness of the GC-1 Private construction companies in Ethiopia. This investigation is focused on 14 purposely selected GC-1 Private construction companies in Ethiopia that are expected to represent all other GC-1 Private construction companies. The Internal Auditors and Managers of the companies (General Managers and Deputy General Managers) of the selected GC-1 Private construction companies are the source for the required data to the researcher through the questionnaires administered. In Addition, the finding of this study is to show the direct relation effects of involvement of internal auditors in management activity, Auditor Skill, Management Support, Reporting structure and Management View with the internal audit effectiveness on GC-1 Private construction companies in Ethiopia. According to the regression output the involvement of internal auditors in management activity is negatively related and statistically significant with IAE. Internal Auditor Skill, Management Support and Direct Reporting structure of internal auditor were contributed for the internal audit effectiveness in the GC-1 Private construction companies’ positively related and statistically significant. And management view for internal auditors also positively related with the IAE but its contribution for the internal audit effectiveness were statistically not significance. All of these five independent variables are make 67.4% of the contributions for internal audit effectiveness in the GC-1 Private construction companies. The Private construction companies should understand that the contributions of these variables are collectively significant to identify any noncompliance activities in their companies and to add values for the internal audit effectiveness in their company.