Internal audit and financial performance of selected commercial Banks in Mogadishu Somalia
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Date
2019-08
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Kampala International University, College of Economics and Management
Abstract
This study was set to find out the effect of internal audit system on Financial performance of commercial banks in Mogadishu, Somalia, three specific objectives guided this study and these were
i) determining the effect of internal audit standard on the financial performance in commercial banks
Mogadishu Somalia; ii) to establish the effect of professional competency on the financial
performance in commercial banks Mogadishu Somalia and (iii) to identify the effect of internal control
on Financial performance of commercial banks in Mogadishu Somalia. The study based on a cross
sectional research design. Quantitative approaches were employed to conduct this study. The target
population was 150. The sample size of the study consisted of 109 respondents from the target
population. Secondary data was obtained from recorded documents, earlier studies and some
publications on internal audit and financial performance of commercial banks in Mogadishu, Somalia,
whereas some of the information was obtained from the internet. The coded data was entered into
the Computer, checked and statistically analyzed using the statistical package for social scientists
(SPSS) software package to generate descriptive and inferential statistics. Descriptive analysis was
applied to describe the primary variable and associated indicator items related to the study
objectives. The findings indicated that internal audit standard significantly affects financial
performance of commercial banks in Mogadishu Somalia; there is a significant effect professional
competency has on financial performance of commercial banks in Mogadishu Somalia; findings of this
study proved a positive significant effect internal control has on financial performance of commercial
banks in Mogadishu Somalia. The researcher concluded that; applying of internal audit standards as
an internal auditing can lead to the improvement in the financial performance of commercial banks
since it increases on the quality and efficiency during internal auditing, the financial performance of
commercial banks can be improved once professional competency is effectively worked on because it
helps to increase the customer responsiveness by reducing the demand gap thus giving satisfaction
to the end customer by availing the desired financial services when needed, internal control should
base on customer orders, sales forecasts and manufacturing policy in order to stimulate customer
demand which leads to the improvement in the financial performance of commercial banks. It was
recommended that; the commercial banks’ owners should develop a good system to monitor, record
and track all the business transactions so that there is effectiveness in internal auditing and ensure to
cover loopholes in the system to enhance financial performance of commercial banks. The study
contributed to knowledge by; providing evidence to support the fact that internal auditing can
improve the state of financial performance of commercial banks in Mogadishu. The research gap that
has been filled by this study, it is the fact that the study covered both the content and geographical
gap of internal auditing and financial performance of commercial banks. Another important revelation
that can be attributed to this study is that it is now clear that internal auditing is somehow lacking
among commercial banks in Mogadishu Somalia, little is done through to improve financial
performance of these banks in Mogadishu Somalia.
Description
A dissertation submitted to the College of Economics and Management in partial fulfillment of the requirements for the Award of Master Degree in Business Administration of Kampala International University
Keywords
Internal audit, Financial performance, Commercial Banks, Somalia