ABSTRACT
Financial performance requires appropriate internal audit practices to enhance efficiency.
For the purpose of this study the researcher sought to determine the effect of internal
audit on financial performance in commercial bank (Stanbic bank). Internal audit was
looked at from the perspective of internal audit standards, professional competency,
internal controls and independence of internal audit. The study selected one senior
manager in the finance department. The researcher administered a survey questionhaire
to each member of the target population since it was the most appropriate tool to gather
information. Quantitative analysis and regression analysis were used as data analysis
technique. Descriptive statistics such as mean, standard deviation and frequency
distribution were used in the analysis of data. Data presentation was done by use of tables
for ease of understanding and interpretation. From the findings, the study concludes that
internal audit standards, independence of internal audit, professional competency and
internal control had a positive relationship with financial performance of commercial
banks, the study found that a unit increase in internal audit standards would lead to
increase in financial performance of commercial banks, a unit increase in independence of
internal audit would lead to increase in financial performance of commercial banks, a unit
increase in professional competency would lead to increase in financial performance of
conunercial banks and further unit increase in internal control would lead to increase in
financial performance of commercial banks. The study recommends that management in
commercial bank (stanbic bank) should adopt effective internal audit practices such as
internal auditing standards, independence of internal audit, professional competency and
internal controls to enhance financial performance of the banks.
ABSTRACT
Financial performance requires appropriate internal audit practices to enhance efficiency.
For the purpose of this study the researcher sought to determine the effect of internal
audit on financial performance in commercial bank (Stanbic bank). Internal audit was
looked at from the perspective of internal audit standards, professional competency,
internal controls and independence of internal audit. The study selected one senior
manager in the finance department. The researcher administered a survey questionhaire
to each member of the target population since it was the most appropriate tool to gather
information. Quantitative analysis and regression analysis were used as data analysis
technique. Descriptive statistics such as mean, standard deviation and frequency
distribution were used in the analysis of data. Data presentation was done by use of tables
for ease of understanding and interpretation. From the findings, the study concludes that
internal audit standards, independence of internal audit, professional competency and
internal control had a positive relationship with financial performance of commercial
banks, the study found that a unit increase in internal audit standards would lead to
increase in financial performance of commercial banks, a unit increase in independence of
internal audit would lead to increase in financial performance of commercial banks, a unit
increase in professional competency would lead to increase in financial performance of
conunercial banks and further unit increase in internal control would lead to increase in
financial performance of commercial banks. The study recommends that management in
commercial bank (stanbic bank) should adopt effective internal audit practices such as
internal auditing standards, independence of internal audit, professional competency and
internal controls to enhance financial performance of the banks.
TABLE OF CONTENTS
DECLARATION
APPROVAL
DEDICATION iii
ACKNOWLEDGEMENT iv
LIST OF ABBREVIATIONS v
TABLE OF CONTENTS vi
LIST OF TABLES ix
ABSTRACT x
CHAPTER ONE 11
1.1 Background of Study 11
1.2 Problem Statement 13
1.3 Research Objective 13
1.4 Specific Objectives 13
1.5 Research Questions 14
1.6 Significance of the Study 14
1.7 Scope of the study 14
1.8 Conceptual Framework 15
CHAPTER TWO 16
LITERATURE REVIEW 16
2.1 Review of Theories 16
2.2 Review of Empirical Studies 18
2.3 Determinants of Internal Audit 21
CHAPTER THREE 26
vi
METHODOLOGY .26
3.1 Research Design 26
3.2 Target Population 26
3.3 Sample Size 26
3.4 Data Collection techniques 27
3.4.1 Questionnaire 27
3.4.2 Interviewing 27
3.5 Validity and reliability 27
3.6 Data Analysis 28
3.7 Ethical considerations ... 28
3.8 Limitations of the Study 28
CHAPTER FOUR 29
DATA ANALYSIS AND INTERPRETATION 29
4.1 Data Presentation 29
4.1.1 Demographic Information 29
4.1.2 Professional Competence 31
4.1.3 Internal Controls 33
4.2.4 Internal audit Standards 35
4.2.5 Independence of Internal Audit 37
CHAPTER FIVE 40
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 40
5.1 Sun~mary 40
5.2 Conclusion 43
5.3 Recommendations 44
v~ I
5.4 Areas for further study.44
REFERENCES 45
APPENDICES 48