Internal Audit Effectiveness and the Financial Performance of Non-banking Financial Institutions in Ashanti Region of Ghana

Abstract

The study was conducted to assess the internal audit effectiveness and its relatedness with financial performance of selected non-banking financial institutions in the Ashanti Region of Ghana. The study adopted an observational cross-section descriptive survey approach aimed at ensuring the thorough capture of details on the internal audit efficiency and financial performance situations without influencing the study environment. Purposive sampling technique was employed in collecting information from the staff of thirteen selected non-banking institutions. Close ended semi-structured questionnaires were used in obtaining data on issues pertaining to internal audit effectiveness whilst open-ended questionnaires were used to obtain data on financial performance indicators. Responses from questionnaire administration were analyzed using the Statistical Package for Social Sciences (SPSS) analytical tool, version 16.0. Both descriptive statistics and inferential statistics were obtained for the purpose of the study. The study found a significant level of internal audit competency (around 55 percent), a fair level of management support to ensure non-banking financial institutions' internal audit effectiveness, and a high positive association between internal audit competency and non-banking financial institutions' financial performance. Internal audit independence was also found to be positively related to financial performance. It was thus recommended that board and management of non-banking financial institutions ought to maintain adequate audit staff size, and strictly adhere to strategies aimed at promoting internal audit competence, independence and management support systems