THE ROLE OF INTERNAL AUDITING IN PROMOTING GOOD GOVERNANCE IN AN ORGNIZATION: A CASE STUDY OF REGIONAL ADMINSTATIVE SECTRETARY (RAS) OFFICE; MBEYA: By PASCALY V. COSMAS & Stewart Mbegu

THE ROLE OF INTERNAL AUDITING IN PROMOTING GOOD GOVERNANCE IN AN ORGNIZATION:

A CASE STUDY OF REGIONAL ADMINSTATIVE SECTRETARY (RAS) OFFICE: MBEYA

By

PASCALY V. COSMAS 

A Research Report Submitted in Partial Fulfillments of the Requirement for Award of Bachelor Degree of Accounting and Finance (BAF) of Mzumbe University

2021 

ABSTRACT

There has been growing recognition in recent years of the importance of good governance in ensuring sound financial reporting and deterring fraud. Well performed internal audit function is one of the strongest means to monitor and promote good gopvernance in an organization. As a result in many organization it has received an increasing attention not only as an important component of prudent financial management of organization and as a monitoring device. 

The purpose of this study was to examine the role of the internal auditing in promoting good governance in an organization. Also the researcher recognized the challenges faced by internal audit in promoting corporate governance.

The researcher used case study as the research design of the study to achieve appropriate data of the study, taking RAS Office at Mbeya region as a case under concern. Both primary and secondary methods of data collection were used in data collection; those include documentary review, questionnaire, and observation. Simple randomly and purposive sampling technique were used to select sample of 24 from targeted population of 24 respondents. The data were systematical analyzed with the help of Excel package while presentation of data was done in terms of frequencies and percentage in form of table and graphs.

The findings revealed that internal audit plays a vital role on promoting good governance at RAS office, Mbeya region, but also internal audit uncounted by several challenges in promoting good governance; these include lack of independence, time limit, understaffing, inadequate management support and unreliable monitoring process for auditing.

The study concluded and recommended that the internal audit is helpful in organization since it has significant impact on performance of good governance; however, there are indices of challenges which affect the effective’s implementation and enhancement of internal audit strategies. That’s to say the board and management should offer the necessary support, appreciate the increase status and role of internal audit in promoting good governance practices.

 

CHAPTER ONE

INTRODUCTION

1.0 Chapter Overview

This chapter mainly gives a brief detail about background of the problem, statement of the problem, objectives of the study, significance of the study, limitations of the study and scope of the study. The study will base on “The roles of internal auditing in promoting good corporate governance in an organization”. 

1.1Background of the Problem

Good Governance has in the recent pat moved up sharply on the agenda following numerous corporate financial scandals and the ensuing business failures that have cost investors billions of shillings and devastated the lives of millions of employees who had invested their saving in these companies. The organization frauds following in the footsteps of the Asian financial crisis of the late 1990s are optimized by Enron, WorldCom, Global Crossing and Tokyo in the USA as well as Vivendi, Parmalat and others in Europe. These scandals have shaken investors’ confidence to the core and called into question the honesty and integrity among Organization Management (KPMG, 2004).

These recent events have therefore highlighted the critical role of organization in promoting good governance. In particular, Managements are being charged with ultimate responsibility for the effectiveness of their organizations’ internal control systems. An effectiveness Internal Audit function plays a key role in assisting the Management to discharge its governance responsibilities. Yet how does the Management and its Auditor’s satisfy itself that Internal Audit is functioning effectively and efficiently? (Sarens, 2007).

Good governance developments both in Tanzania and internationally have reaffirmed the Mnagements’ responsibility for ensuring the effectiveness of their organizations’ internal control framework. These developments have highlighted the key role that internal audit can play in supporting the Management in ensuring adequate oversight of internal controls and in doing so form an integral part of an organization’s good governance framework.

In this period of financial reporting failure and increased regulatory scrutiny, the internal auditor group has an exceptional opportunity to contribute towards improving both financial reporting and good governance. The organization’s board and management must reaffirm or improve internal audit’s independence and scope of inquiry.

1.2 Statement of Problem

Now day’s democracy requires a government to be accountable in its use of public funds and in providing effective, efficient and economical service delivery. Efficient management and quality of governance at all level in an organization is seen as one of the ways creating wealth and employment in a nation. Without investment, public sector corporations will stagnate and collapse. If business enterprises do not prosper, there will be no economic growth, no employment, no taxes paid and invariability the country will not develop. It is important, therefore, for public organization to be well governed and managed so that they can attract investments, create jobs and wealth and remain viable, sustained and competitive in the global market place. (Moeller, 2004)

The crisis in the public sector has often been associated with poor management (Ikiara, 2000). Central to the management of public organization is the issue of good governance. There has been public outcry since the 1990s due to massive financial scandals and frauds in the public sector such as External Payment Arrears account (EPA), Richmond Scandals of Tanzania Electric Supplies Company, and Escrow in 2007,

One will be tempted to ask “why didn’t the internal auditors blow the whistle?” This is because an internal audit function could be viewed as a “first defense” against inadequate governance and financial reporting (Zekele, 2007). The internal audit function has been described as the “window into the whole company” (Tapestry, 2004) and thus serves as the “eyes and ears of management” (Sawyer, 2014). Further, according to Faukner “When things go wrong and there is a organization collapse, the question raised is where were the auditors?”(Faukner, 2006)

Good governance concerns in public sector enterprises have not been adequately addressed. Top management positions in the public sector have, if not in most cases, been awarded based on political patronage and not on efficiency (Ikiara, 2000).  It is often recognized that an internal audit department should be able to provide independent and objective opinions on the organization’s operations. It will report regularly these to the Management.   

1.3 Objective of the Study

1.3.1 Main Objective

The purpose of the research study was to examine the role of internal auditing in promoting good governance in an organization.

1.3.2 Specific Objective

i. To examine the Internal Audit roles on promoting good corporate governance

ii. To identify strategies for enhancing the effectiveness of internal audit function towards good governance.

iii. To examine the challenges faced by internal audit in promoting good  governance

1.4 Research Questions

i. To what extent does the internal audit affect good governance?

ii. What are the challenges faced by the internal audit department in promoting good governance?

iii. What are the strategies for enhancing the effectiveness of internal audit function at RAS Office Mbeya?

1.5 Significance of the Study

The findings of this research study are importance and effectiveness of the internal audit function in promoting good governance is of the value to them. This is because they are interested in establishing whether internal audit function adds value to the accuracy of financial statements and reporting disclosure of institutions in the public sector organization, especially so to the policy makers concerned with regulation governing the internal auditing function, and enabling  those charged with the responsibility I the management of public affairs that the management systems in place have adequate internal controls to promote transparency, accountability and in enhancing good  governance mechanism.

Others to benefit from the study includes: -

1.5.1 Academicians and Researchers:

The highlight of the importance and the effectiveness of the internal audit function in promoting good governance is of value to them. This because they are interested in establishing whether internal audit function adds value to the accuracy of financial statements and reporting disclosures of institutions and may use the finding as references in further relevant studies.

1.5.2 Donors and the General Public:

The donors and the public should be made aware of the importance of good governance and the internal monitoring mechanisms that the public administration has instituted to ensure public funds are utilized for the intended purposes. Internal auditors are watchdogs to the operations of management and, their independent and effectiveness are of great importance to the donors and the public.

1.5.3 Internal Audit Managers

The research findings are useful to managers of internal audit department as the results make them appreciate their role and place in promoting good governance practices and be an eye opener for the performance improvement. 

1.6 Limitation of the Study or Area

The researcher to some extent was restricted by the following constraints;

1.6.1 Information constraints

 That there was no room of getting enough data and information in due cause performing different tasks sometimes of different department during field period and some staff members were reluctant to provide some information.

1.6.2 Corporation constraints

Some of the staffs were so busy in such a way that they did not put off discussion hence delayed the availability of relevant data. There is no success without challenges faced by researcher, the researcher remained determined as stayed persistent in achieving a successful study and used extra time in order to collect data.

1.7 Scope of the Study or Area

The study was focused on the role of internal audit, strategies for enhancing the effectiveness of internal audit function and challenges faced by internal audit on promoting good corporate governance. The study was conducted in Mbeya region, with reference to Regional Commissioner’s Office as a case study, as the nature and methodology of the study was based on case study method.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction 

This chapter covers literature review whereby it presents the definition of the key terms, theoretical literature review, empirical literature review and conceptual framework.

2.1.1 Internal Audit

 Traditionally, the internal audit function was designed to safeguard firm’s assets and assist in the production of reliable accounting information for decision-making purposes (Ibrahim, 2011). 

 Nowadays, the role of internal audit has been dramatically altered. In this concept, one of the most comprehensive definition is given by (Sawyer,2003) who stated that internal auditing is “a systematic, objective appraisal by internal auditors of the diverse operations and controls within an organization to determine whether (1) financial and operating information is accurate and reliable, (2) risks to the enterprise are identified and minimized, (3) external regulations and acceptable internal policies and procedures are followed, (4) satisfactory operating criteria are met, (5) resources are used efficiently and economically and (6) the organization ’s objectives are effectively achieved – all for the purpose of consulting with management and for assisting members of the organization in the effective discharge of their governance responsibilities”. This definition shows that the role of internal audit has been dramatically shifted from compliance assurance and assets safeguarding to value-added assurance and consulting services through its role in monitoring, evaluating, and improving risk management, control, and governance process which are critical to preserving and enhancing stakeholders value (Bou-Raad, 2000). 

 According to the Institute of Internal Auditors,” Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organizations operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes”. (IIA, 2004) 

 This definition actually seeks to demonstrate the depth and breadth of the internal audit activity within an institution as against the previous orientation of reviewing payment transactions over the years. Modern internal audit covers all activities of the organization. Therefore, the scope of internal audit is no longer restricted to the process and systems in the accounts and finance function. 

  2.1.2   Role of Internal Auditor in Governance 

 The value of the modern-day internal auditor lies in his/her ability to help management to achieve its’ objectives. According to a research conducted by the Institute of Internal Auditors, UK (IIA). “Improved attitudes toward internal audit are built on a belief that internal audit functions are creating greater value for their organizations”. (IIA, 2004)

 As per the definition above by the Institute of Internal Auditors (IIA), an internal audit function could be viewed as a” first line defense” against inadequate organizational governance and financial reporting. With appropriate support from Management the internal audit staff is in the best position to gather intelligence on inappropriate accounting practices, inadequate internal controls and ineffective good governance. 

 Internal Audit is seen as a change agent to move management to a new way of thinking. Internal Audit examines governance at different levels. The team has incorporated information from the IIA’s paper on “Internal Audit’s Role in Governance.” The Audit pointed out that effectiveness does not have to be aggressive – Internal Audit has to be fearless in its reporting standards and yet objective

Figure 2.1: Nature of Internal Audit Activity

          

 

 

 

Source: Hermanson.L. & Rittenberg.E. (2003) 

 2.1.3 Factors for the Effectiveness of Internal Audit Activity 

 The professional guidance of the Institute of Internal Auditors (IIA), states that an effective internal audit activity strengthens governance by materially increasing stakeholders ability to hold management accountable. Auditors perform an especially important function in those aspects of governance that are critical in the banking sector for promoting credibility, equity and appropriate behavior of high-level bank officials, while reducing the risk of financial corruption. Therefore, it is crucial that internal audit activities are configured appropriately and have a broad mandate to achieve these objectives.  The audit activity must be empowered to act with integrity and produce reliable services, although the specific means by which auditors achieve these goals vary. At a minimum internal audit activity need (IIA, 2006) organizational independence, audit charter, unrestricted access to any forms of audit evidence, stakeholders support, audit standards and unlimited scope. 

2.1.3.1 Organizational Independence 

 Organizational independence allows the audit activity to conduct work without interference by the unit under audit. The audit activity should have sufficient independence from those it is required to audit so that it can both conduct its work without interference and be seen to be able to do so.  A formal mandate (Existence of approved audit charter) 

 As per the IIA pronouncements, in every type of entity, the Management should develop appropriate audit charter or other basic legal documents which establish the audit activity’s, powers and duties. The existence of proper audit charter helps the audit function to perform its role independently of management influence and objectively.  

2.1.3.2 Unrestricted Access  

Audit should be conducted with complete and unrestricted access to all forms of audit evidences like employees, property and records. 

2.1.3.3 Sufficient Funding 

 The audit activity must have sufficient funding relative to the size of its audit responsibilities. This important element should not be left under the control of the unit under audit, because the budget impacts the audit activity’s capacity to carry out its duties.  

2.1.3.4 Competent Leadership 

The management of the internal audit function is critical to its effectiveness. In many organizations, management of the internal audit function is often poor with lack of planning and weak personnel management system. Moreover, management is constrained by the institutional management for internal audit function, which often compromise the role of the internal audit as an aid to internal management (Diamond, 2002) 

2.1.3.5 Unlimited scope 

 The IIA audit standard described the scope of the IAF as a tool of management where the internal audit function closes the loop in the banking sector management cycle to ensuring the efficient and effective use of resources. For many parts of the world, the internal audit has often been, and continues to be defined rather narrowly focusing on financial compliance and regularity, rather than broader management issues. Moreover, governance problems and lack of professional competence also constraints the internal audit function to this role and hinders its ability to generate timely and relevant reports (Diamond, 2002). 

 Internal audit quality, which is demonstrated by the office's capability to provide useful audit findings and recommendations, is one of the most prominent factors on which audit effectiveness is anchored. The performance standards of the IIA require the auditor to plan and perform the work such that he or she would be able to arrive at useful audit findings and forward recommendations for improvement. The office's ability to properly plan, perform and communicate the results of audits is a proxy for audit quality. Therefore, audit quality is arguably a function of extensive staff expertise; reasonableness of the scope of service; and effective planning, execution and communication of internal audits.

2.1.4 Internal Audit Charter

The internal audit activity charter is a formal document that specifies the internal auditors’ authority and responsibilities. The Charter is important to management, the people being audited and the staff, the endorsement of the Internal Audit activity charter by IIA underscores the importance of the internal audit function in organization operations.  There should be continued cooperation from management as internal auditors fulfill their important responsibility to the management (IIA Manual, 2002).

Performance Standard describes the nature of internal audit activities and provides quality criteria against which the performance of these services can be measured. Performance Standard 2130 on the Governance states that “the internal audit activity should contribute to the organizations governance process by evaluating and improving the process through which; values and goals are established and communicated, the accomplishment of goals is monitored, accountability is ensured, and values are preserved. It further provides that internal auditors review operation and programs to ensure consistency with organizational values and goals of the organization, (Standard for the Professional Practice of Internal Auditing, 2000)

2.1.5 Good Governance

 The issues of good governance have attracted the attention of scholars on a broad scale over the last three decades, even though these issues have long existed (Okpara, 2011). Good governance systems are defined in a variety of contexts (Pergola, 2011). In this respect, Hussey defines good governance as the manner in which organizations are managed and the nature of accountability of the managers to the owners. (Hussey, 2012)

 Hence, the (OECD, 1999) defines good governance as “A set of relationships between a organizational’s management, its board, its emloyees and other members. Good governance also provides the structure through which the objectives of the organization are set, and the means of attaining those objectives and monitoring performance are determined. Good governance should provide proper incentives for the management to pursue objectives that are in the interests of the organization and emloyees and should facilitate effective monitoring; thereby encouraging firms to use resources more efficiently”. 

 More recently, (Roe, 2004) defines good governance as the relationships at the top of the management, the senior managers, and the employees. In his opinion institutions of good governance are those repeated mechanisms that allocate authority among the three and that affect, modulate and control the decisions made at the top of the management. The above definition of good governance indicates idea of objectives correspondence, incentives, monitoring and control (Staciokas et al, 2005).  

Various scholars and practitioners define ‘good governance’ differently. Economists and social scientists, for instance, tend to define it broadly as “the institutions that influence how business corporations allocate resources and returns”; and “the organizations and rules that affect expectations about the exercise of control of resources in organization.” (Jeswald, 2004). This definition encompasses not only the formal rules and institutions of good governance, but also the informal practices that evolve in the absence or weakness of formal rules.  

 Organization managers, investors, policy makers, and lawyers, on the other hand, tend to employ a narrower definition. For them, good governance is the system of rules and institutions that determines the control and direction of the organization and that defines relations among the organization’s primary participants. The definition used in the United Kingdom’s 1992 Cadbury Report is widely cited from this perspective, and it reads: “Corporate governance is the system by which businesses are directed and controlled.” (Cadbury Report). This narrower definition focuses almost exclusively on the internal structure and operation of the organization’s decision-making processes, and is central to public policy discussions about good governance in most countries. 

 It is to be noted that good governance differs from corporate management. As Fernando notes: Good governance is not just corporate management; it is something much broader to include a fair, efficient, and transparent administration to meet certain well-defined objectives. It is structuring, operating and controlling a company with a view to achieving long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers and to comply with the legal and regulatory requirements, apart from meeting environmental and local community needs. (Fernando, 1997). 

 Good governance is essential due to the separation of ownership and control in publicly held companies. In organizations, Central Government (principals) delegate decision making rights to management (agents), expecting agents to act in the best interest of the principals, however, the “agency problem” arises when the agents do not make their decision to the best interest of the principal or the agents are engaged in self-interest at the expense of shareholders interest. Therefore, instituting good governance is primarily aimed at minimizing the potential loss of shareholders due to conflict of interest between shareholders and management. As a primary means of reducing this conflict of interest, the shareholders of corporations elect and appoint members of board of directors in order to monitor the actions of management and make strategic decisions about the corporation on behalf of the shareholders. Good corporate governance improves economic efficiency and growth as well as enhances investor confidence. It also increases access to external financing by firms, lowers cost of capital and increases operational performance. Many scholars indicated that investors are willing to pay large premiums for companies with effective corporate governance. Hence, it can be argued that good corporate governance will lead to increase in firm value as well as better firm performance. (OECD, 2005)

 Generally, governance refers to all the strategic plans of the organization to demonstrate its commitment to quality and excellence. They reflect the strategic thinking and orientation of the Board and Management to achieve the objectives of the organization. However, every decision and program carry with it an element of risk of non-achievement, due to uncertainties associated with the implementation of programs. Some of the risks are reputational, financial, and operational and information technology related. It would therefore be appropriate to have a structured way of identifying events that would impact negatively on the ability of management to achieve their objectives and also to take advantage of opportunities and other events that could be leveraged to achieve those same objectives. Internal auditors are experts in creating and promoting a risk management culture that is necessary to the effective implementation of the risk management framework. They can also assist in monitoring the framework

2.1.6 Importance of Corporate Governance

Reduce costs of an organization, the organization costs reduced when tasks are streamlined the organization can eliminate the waste from scraps, rework and any other costly inefficiencies, (Fiss, 2008). 

According to OECD, governance can improve access of emerging market companies to global portfolio equity. Evidence indicates that well-governed receive higher market valuations. Improving corporate governance will also increase all of the capital flows to companies in developing equity and debt for public securities markets and private companies’ sources. (OECD, 2005)

Companies that demonstrate good corporate governance have easier access to the world’s capital markets and boost investor confidence (Kibet, 2008). Improved governance structure help ensure quality decision making, encourage effective succession planning for senior management and enhance the long-term prosperity of the company independence its source of finance.

Good corporate governance aims at increased profitability and efficiency of an organization and their ability to create wealth for shareholder, increased employment opportunities with better terms for workers and increased benefits for shareholders. The transparency, accountability and probity of business enterprises make them as acceptable as earning, honest and legitimate wealth creating organs of society.

As far as the public sectors is concerned, efficient use of resources and accountability strength in stewardship of these resources, improved management and service delivery contribute to improving people’s lives. Effective governance is essential for building confidence in public sectors enterprises, which is it necessary if they are to be effective in meeting their objectives. Further proper corporate governance precludes corruption. As noted by the Center for Corporate Governance, good governance ensures manager and corporate boards are accountable for their actions and decision and they will be more responsive to social and shareholder’s needs. (Center for Corporate Governance, 2006)

The multilateral and donor agencies insist on good corporate governance so as to avoid being associated with companies with poor corporate governance. Public attention through high profile corporate scandals and collapse has forced government, regulators and boards of corporate to carefully reconsider fundamental issues of corporate governance as essential for public economic interest.

2.1.7 Internal Audit and Corporate Governance 

 The contribution of internal auditing to corporate governance is depicted via demarcating the relationship between internal audit and key practices of corporate governance. The governance practices considered in this study include the board of directors and the audit committee. 

 In this concept, it is a fact that the Board of Directors has been recognized as the key player in corporate governance by regulators and governance committees around the world (US Congress, 2002). Because of the fact that the Board of Directors is ultimately responsible for the entity’s accomplishment of its objectives, the internal auditor’s contribution is to providing information to that group (Colbert, 2002). Apart from the above, internal audits role is crucial to assisting the Board of Directors in its governance self-assessment. 

Based on the Audit Committee, on the one hand internal auditing contribute to corporate governance by: bringing best practice ideas about internal controls and risk management processes to the audit committee, providing information about any fraudulent activities or irregularities (Rezaee et al, 1993), conducting annual audits and reporting the results to the audit Committee and encouraging audit committee to conduct periodic reviews of its activities and practices compared with current best practices to ensure that its activities are constituent with leading practices (Karagiorgos et al., 2010). From the other hand, an effective audit committee strengthens the position of the internal audit function by providing an independent and supportive environment and reviews the effectiveness of the internal audit function. More precisely, the audit committee should review with management and chief audit executive the plans, activities and organizational structure of the internal audit function; ensure that there are no unjustified limitations and review the effectiveness of the internal audit function (Sawyer, 2003). As it is mentioned before, internal auditing is a critical component of an organizations management and a foundation for its safe and sound operations (Drogalas et al., 2005; Karagiorgos et al., 2010)

2.1.8 Corporate Governance in Tanzania

 According to Mkono, the Company Act (CA) and the Public Corporations Act 1992 provide the regulatory framework for corporate governance in corporations, both private and public, and public companies. Tanzanian companies tend to have a unitary board structure comprising of a balance of executive and non-executive directors, with a minimum of two directors. Directors are appointed by shareholders at the annual general meeting and must upon appointment, sign and deliver for registration at the Companies Registry consent in writing to act as directors. Subject to the CA and limitations by shareholders’ resolutions, the articles of the company specify the scope of the directors’ powers and duties, which involve managing the company’s affairs. 

The directors’ duties are laid down in the company’s articles and their appointment letter. However, their statutory duties include a duty to disclose any remuneration they receive and to disclose any interests they might have in contracts entered into by the company. Although a director’s liability depends on the company’s memorandum, the CA restricts any clauses that exempt any director from any liability that, by virtue of any rule of law, would attach to them in respect of any negligence, default, breach of duty or breach of trust. As for the shareholding structure of the company, the CA provides that a private company must have a minimum of two members to be able to carry on its business. The general powers of shareholders are stipulated in the company’s articles. These include voting powers at any general meeting, and power to approve decisions made at director level. Minority shareholders are protected under the CA. They are entitled to apply for court intervention if they believe that they are oppressed or the company is being mismanaged. Corporate governance principles in relation to internal control of business risks are also provided under the CA, which stipulates that every company

keeps proper accounts for all sums of money received and expended, its sales and 

purchases, and its assets and liabilities. Furthermore, all companies must appoint auditors at the annual general meeting, who will incur civil liability for professional negligence if the audited accounts are inaccurate, and will be criminally liable if they intentionally circulate false accounts (Mkono & Co, 2005).

2.2 Theoretical Literature Review

This study is underpinned with two theories; Agency Theory and Institutional Theory.

2.2.1 Agency Theory

The agency's theory was developed by Jensen and Meckling who considered it a nexus to contracts between the organization's different stakeholders. They acknowledged that the owners and managers of an organization can vary from the organization's best interests. The agent seeks to maximize personal gains by fulfilling the economic goals of the principal and as a result the level of commitment of the agent depends on perceived value for the achievement of the main objectives. The philosophy of the organization is based on the relationship between the agencies.(Jensen & Meckling, 1976) they suggested that the partnership between an entity 9 entails one or more individuals (the principal) engaging a different person (the client) on their behalf to provide some service, including the transfer of certain decision making authority to a delegate. Perhaps, employer and employee are the most identifiable type of agency relations. The relationship between the principal and the contract-based agent is thus a focus of theory of the agency. Principal seeks to optimize the rewards while also decreasing the agent's compensation. The company wishes to increase its profits, on the other hand. The study covers the Agency's theory because it relates to understanding the need for an organization's internal audit mechanism and its characteristics, such as the size and scale of its activities.

 2.2.2 Institutional Theory

The theory of institutional institutions is about how institutions preserve credibility in their social contexts through cultural differences, norms, expectations and demands from various factors such as clients and regulatory bodies (Berthod, 2016). Fiss demonstrates that institutional theory is innovative enough to add to corporate governance researchers ' expertise by offering insight into the nature of governance and systems of control. (Beasley et al, 2009), for instance, suggest that institutional theory indicates that systems of government are often largely symbolic or ceremonial; their authority is central, but their formalization is loosely coupled with substantive control. In fact, most institutional frameworks like the audit committee are only designed to meet social expectations (Kalbers & Fogarty 1998; Cohen et al., 2004).In addition, the 10 two principal functions of the board of directors are linkage and administration, according to institutional theory (Stedham & Beekun, 2000).The theory of institutions provides strong claims as to why and how companies do things (Berthod, 2016).It also emphasizes the need for companies to fulfill their social responsibilities while they fulfill their goals (Umanto et al., 2015).The study's relevance to this theory lies in the need to comply with existing standards and regulations in order to improve organizations productivity and promotion of corporate governance (Endaya&Hanefah, 2013; Joksimovic & Alseddig, 2017)

2.3 Empirical Literature Review

Researcher in several parts of the world has studied a lot about the corporate governance and every researcher ended with different conclusion and sometimes unique conclusions and recommendation. In this study of the role of internal audit in promoting good corporate governance in an organization, researcher made review of different studies with regards of the corporate governance. It is the intention of this study to investigate these roles and identify the relative importance of each of them and measure the performance of RAS’s Internal Audit unit in light of promoting good corporate governance. 

The much publicized corporate collapses of the past few years have focused global attention on the need for strong corporate governance. Simultaneously, the Sarbanes-Oxley Act of 2002 and the new expanded role of internal audit preoccupied researchers and scientists. 

(Paape et al, 2003), explores the relationship between internal audit and corporate governance. The survey data are collected from the largest companies of 15 European Union countries. To accomplish the survey 332 questionnaires were sent; of which one hundred and five were answered (response rate 32%).The basic result of this research is the differences during internal auditors work and the perception of the role of internal auditors to corporate governance by country. Hence, it is a fact that there is lack of internal audit and audit committee on 50 companies and business managers are unaware of the recommendations and regulations on corporate governance. Finally, compliance with regulations and procedures viewed as the main purpose of internal audit, while the implementation of operational controls is considered as the main contributor of internal control. 

Research on the relationship between audit committee and internal audit was conducted by Goodwin. The survey used questionnaire, addressed to internal auditors of financial institutions (public and private sectors) from Australia and New Zealand, who were members of the Institute of Internal Auditors. More precisely, 370 questionnaires were sent and 120 responses were received, giving an overall response rate of 32%. Of the responses, it is concluded that independence and accounting experience have a complementary impact on audit committee relations with internal audit. Hence, the differences observed between the two countries and the private and public sectors are stressed. (Goodwin, 2003).

 One year later, (Leung et al, 2004), investigated the role of internal audit in corporate governance in Australia. Questionnaires were sent to internal auditors and directors of Australian financial institutions. Research objectives were the identification of internal audits objectives, the determination of the internal control’ nature and the importance of corporate governance within the economic units. The main output from their research was the fact that the culture and the support of the Board of Directors are key factors that directly affects internal audits effectiveness. In this context, (Gramling et. Al, 2004) explored the relationship between internal audit and corporate governance. The most important finding of this study was the catalytic role of internal auditing in the effective corporate governance. 

More recently, (Christopher et.al, 2010) presented a critical analysis of the independence of the internal audit function through its relationship with management and the audit committee. 

Results are based on a critical comparison of responses from questionnaires sent out to Australian chief audit executives (CAEs) versus existing literature and best practice guidelines. With respect to the internal audit functions relationship with the audit committee, significant threats identified include CAEs not reporting functionally to the audit committee; the audit committee not having sole responsibility for appointing, dismissing and evaluating the CAE; and not having all audit committee members or at least one member qualified in accounting. In the same period, Sarens and Christopher explored the association between corporate governance guidelines, risk management and internal control practices. Data for the study were collected through a questionnaire that was sent out to chief audit executives in Australia and Belgium. The paper finds that the weaker focus of the Belgian corporate governance guidelines on risk management and internal control is associated with less developed risk management and internal control systems in Belgian companies than in Australian companies. 

Finally, Ibrahim El-Sayed Ebaid explore the nature and characteristics of internal audit function in Egyptian listed firms and assess its ability to fulfill its role in corporate governance. The study has been carried out through a questionnaire survey. The results showed that internal audit function in Egyptian listed firms, in its current status, faces many difficulties that affect negatively its effectiveness in corporate governance. Therefore, extensive efforts should be made to enhancing the internal audit profession in Egypt. (Ibrahim, 2011)

2.4 Conceptual Framework

The conceptual framework is a construction of scientifically interconnected component such as narrative statement or mathematical equation that explicates the idea of something in the easiest way. Conceptual framework is the way of classifying variables into several classifications which comprises of dependent variable and independent variables. It enables researchers to assess needs, problems and the opportunities within the defined environments. It also assists to examine whether the existing goals and priorities are familiar to the targeted group. It describes relationship between concepts and variables. (Njuwa, 2013)

2.4.1 Independent Variable

Independent variables are variables which cause changes or pressurize others to change, their chance cause a change in other variables. These variables are persistently deployed so as to study the effect it has on the other variables of the study (Kothari, 2004). These variables cannot have affected or influenced by any other variable of the study, for that case they called ‘independent’ (Adam, 2008). Independent variable of this study were roles and strategic of the internal audit.

2.4.2 Dependent Variable

Dependent variables are a variable whose changes result from outside causes, it is the variable that is influenced by other variables. This is variable affected by the changes in independent variable (Kothari, 2004). It is called the dependent variable because it ‘depends’ on the independent variables (Adam, 2008). The dependent variable of this study was corporate governance.

Figure 2.1 Conceptual Framework

Independent Variables Dependent Variable

                                                                                                             

                                                                                                                     

                  

Source: Researcher Design Basing on Literature Review (2021)

                                             

CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Introduction 

This chapter describes the study designed and how it was conducted. It covers the area of the study, research design, and size of population, sample population, sampling procedures or techniques, data collection methods and data analysis techniques.

3.1 Research Design

In step with Kothari a study describes is the arrangement of condition and evaluation of records in a way that aim to combine importance to the research purpose with economy in method. (Kothari, 2008).In reality, research design is a conceptual shape with which studies is carried out. It's the shape for accumulating, measuring and analyzing facts. The researcher used this case study because this research design is less expensive compared to other methods of data collection as well as it gives a wide space of options to researcher in choosing data collection methods to be used such as interview, questionnaire and observation (Kothari, 2004). Therefore, the researcher was in position to get reliable data from the various sources within the organization.

 3.2 Area of the Study

The study was conducted in Mbeya region, with reference to Regional Commissioners Office as a case study. This area was selected by the researcher due to the fact that is among o the public organization which have internal audit which insure the corporate governance maintained. The unity of enquiry was the staff in Department of Accounting and Finance, Internal Audit unit, Human resource and other staff within the office of the RAS.

3.3 Study Population

The targeted population in this study was staff working in the RAS Office at Mbeya. Population refers to the huge number of individuals from which the sample is taken so that it can be studied. It includes all elements, individuals or units that meet the selection criteria for a group to be studied and from which a representative sample is taken for detailed examination, (Kothari, 2004).

3.5 Sample size and Sampling Techniques

3.5.1 Sample size

According to Kothari, defined Sample is a set of respondents selected from a larger population for collecting information. Kothari,  expressed when dealing with sample the researchers normally selected few items among many for the aimed of sufficed the study. (Kothari, 2005), Hence sample is referred as some representative of the population that is taken from larger group and studies that are to be tasted and questioned so that to get information. In selecting the sample size both purposive and random methods were used. Those who were knowledgeable on the subject matter were selected purposively. An optimum sample size is the one that is reliable, efficient, and flexible and also a true representative. Sample size defined by (Kothari, 2004) as the number of items to be selected from the targeted population. For this case, the researcher decided to choose a sample size calculation which formulated by the statistician Tara Yamane in 1967 to determine the sample size of the population given. From the method, a sample size of twenty-four (24) respondents was obtained from targeted population of thirty-two (25). Hence the higher the population is the higher the errors occurred and the low the population lead to the low of errors might occurred. The 24 Respondents concerned in this study comprised.

 The formula is given as;

Whereas;

n= sample size

N= Selected population size

e= marginal error (5%)

Thus:

n=     25

1+25(0.05)2

n= 24 respondents

Table 3.1 Distribution of the Sample Size

Targeted population Sample size

25 24

Source: Researcher findings (2021)

3.5.2 Sampling techniques

The sampling technique is the approach used by the researcher to come up with sample for the study (Ofanson, 2007). The interested party had been selected by using simple random sampling. The sample size selected helped the researcher to obtain high quality information for accomplishment of this study. The larger the sample the higher is the reliability of the findings.

3.6 Types and Sources of Data

In conducting this study, the researcher used both primary and secondary data.

3.6.1 Primary Data

Primary data are data which direct collected from field or in other hand known as first hand data collected from various procedures like interviewing, observation and questioners. This data was collected directly from the respondents as it comprises fresh information collected from respondents. However, this was done through questionnaire and interviews which allowed the researcher to obtain reliable information for the study. The questionnaire and interview data obtained by filled with RAS Mbeya staffs.

3.6.2 Secondary Data

Secondary data are data which has been collected or gathered and complied for another purpose. They comprise not only the records which have been published and reports but also the records which have not been published (Kothari, 2004). It consists of reports such as annual reports, census reports and company’s financial statements of which researchers can use their data to conduct studies (Kombo & Tromp, 2006)

The researcher obtained secondary data from the review of information from library, internet sources including online journals, books also some of the secondary data were obtained direct from the documents of Audit department RAS Office Mbeya. These data were so important in giving additional information and gathering sufficient and relevant required data to the study.

3.7 Methods of Data Collection

Data collection refers to as the gathering specific information aimed at providing a refitting some factor. The researcher used different types of data collection methods to gather the data needed, both quantitative and qualitative data were collected in form of primary data and secondary data. The researcher preferred to use mixed methods of data collection in the study in order to increase the reliability and validity of the data, because based on one method of data collection may lead to low reliability and validity of the presented data (Bryman & Bell, 2007) 

3.7.1 Primary Data Collection

According to Kothari primary data are data which are collected for the first time concerning the study,(Kothari, 2004) Primary data collection is collected through various sources of data during the research timed, the method which researcher used to collect primary data are; questionnaire and observation.

3.7.1.1 Observation

This is the method used to collect primary data. In order for the observation to take place the observer must be present when the event happens. Data is obtained by seeing, hearing, touching and smelling. To make observation successful, one has to adhere to some conditions, ( White, 2002) outlines some of the important conditions to be observed for the success of Observations as; accurate reporting and description of topic under investigation Free access to all aspects of the investigation plenty of time for the observations to take place. In this research the researcher used this tool in the process to find out how the corporate governance system operates this was so because the researcher is part of the organization thus could easily find out some facts by simply observing.

3.7.1.2 Questionnaire

Questionnaire, is a data collection technique consisting of series of predetermined questions, each associated with a number of alternative answers, from which the respondents provides an opinion honestly and freely as possible, (White, 2002). Questionnaire were provided to selected staff from the different  department .The researcher decided to use this method because It is less cost in term of money in its implementation, It saves time and researcher felt that it would give respondents enough time to give well thought out answers and also respondents that were not easily approachable could be easily approached. The researcher used both open ended questionnaire (yes or no) and close ended questionnaire which were given to different staff in an organization in order to collect data.

3.7.2 Secondary data collection

Sounders defined secondary data as the data covered in library research for relevant literature from all possible source and formats, it including journals, articles, books, thesis, internet and expert contact, (Sounders, 2007) Also, secondary data are the data obtained from literature sources or data collected by other people for some other purposes, (Adam & kamuzora, 2008)

3.7.2.1 Documentary Review

These are recorded materials which can be used to collect data. Documents can be virtually anything written or printed materials such as letters, newspaper articles, policy documents, diaries and books According to Miles the documentary review is a process of reading various extracts found in offices containing issues related to what the researcher is investigating, (Miles & Huberman,1996)  In this study, the documentary analysis was used to acquire secondary data by distilling information.

3.8.1 Data Analysis Method

Adam and Kamuzora explain data analysis as the procedure which intends to determine whether the observations and information, either supports or do not support, the hypotheses the researcher had formulated before going into the field to collect data, (Adam & Kamuzora, 2008)  

The researcher used two types of data analysis method which is quantitative data analysis and qualitative data analysis, so as to come up with the sound analytical clarity for the purpose of this research.

3.8.1.1 Quantitative Data Analysis

Adam and Kamuzora defined quantitative data analysis as the technique used for numerical nature purposely for statistical test, (Adam & Kamuzora, 2008)   Under this method the researcher used Excel computer software for preparation and presentation of various numerical data into chart in order to create sensible information

3.8.1.2 Qualitative Data Analysis

The concerned with subject assessment of attitude, opinion, and behavior to analyses the data gather.

3.9 Ethical Consideration

During the collection of data for this study, the researcher ensured privacy and confidentiality of the response from the respondents by not disclosing their names in this work. During data collection, the researcher avoided using the language that would harm the respondent and he carefully used simple and well understood languages. The researcher ensured that data collected during this study was the same data that is presented in this study. In this research work, the researcher presented data collected from RAS Office staffs through questionnaires distributed, interviews made and observation made under the study. The researcher adhered to the rules and regulations of RAS office and MU-MCC guidelines for writing a research.

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

   4.1 Introduction

This chapter represents and discusses the results of the study as per the researcher objectives mentioned in chapter one. The rest of this chapter is organized as follows; demographic characteristics of respondents, finding per objectives and discussion of the findings. The key of the research objective was the role of internal auditing on promoting good corporate governance in an organization. And the research questions were 

4.2 Demographic Characteristics of Respondents

For this study, the researcher got the information from different demographic characteristics of the respondents that are information based on age, gender, education and qualification.

4.2.1 Gender of the respondents.

Gender of the respondents was classified into two classes namely male and female as explained below; where questionnaire distributed was 24questionnaires to all respondents both male and female. The results were illustrated below from the table 4.1 or figure 4.1 followed with interpretation after results revealed from the table and figure below hence used to drew the logical statement about the results from the gender distribution of the respondents;

Table 4.1 Gender of the respondents

Gender Frequency Percentage (%)

Male 16 66.7

Female 8 33.33

Total 24 100

Source: data collected from field (2021)

4.2.2: Age of the Respondents.

This study intended to determine respective age of the respondents of the research questionnaires, and the total thereafter. It was found as provided in the table 4.2, that 21% of the respondents that included both male and female ranged from 20-29 years, 33% ranged from 30-39 years and 46% ranged from 40 years and above. Therefore, there was a gender balance data collection from the respondents of the study.

Table 4.2 Ages of Respondents

Age of Respondent Frequency Percentage

20-29 5 21

30-39 8 33

40 and above 11 46

Total 24 100

Source:  data collected from field, (2021)

4.2.3 Education level of the respondents.

The study was able to determine the level of education of employees working in the organization as seen in table 4.3, It was found that 8% of the respondents were graduates of diploma level, 42%-degree level and 50%masters level. From the research it shows that the organization is operated mostly by educated personnel.

Table 4.3 Level of Education.

Education Frequency Percentage

Certificate 0 0

Diploma 2 8

Degree 11 42

Masters 11 50

Total 24 100

Source: Data collected from field,(2020

4.2.4 Working Experience of the Respondents

The researcher requested the respondents to state their work experience in terms of years worked since their first appointment. The table above shows that, 4% of the respondents had experience of 1-3 years while 33% had the experience of 3-5 years and the remaining 63% have the experience of more than five years. This implies a good mixture of experiences among employees.

Also, a questionnaire was administered to some of the senior members of different departments with the help of the interview guideline. The analysis indicated that some of the employees working at RAS Office Mbeya were transferred from and to different government departments so, the experience of each employee varies depending on when he/she was admitted to that specific department. The researcher overcame this gap by performing indirect interview to the population and this helped him in selecting the good sample for distributing the questionnaires.

Table 4.4 Level of Experience

Work experience Frequency Percentage

1-3 years 1 4

3-5 years 8 33

Above than 5 years 15 63

Total 24 100

Source: Data collected from field,(2021)

4.3 Findings for specific Objectives.

The study was focused on specific objectives namely; What are the Internal Audit roles on promoting and monitoring good corporate governance?, To identify strategies for enhancing the effectiveness of internal audit function towards corporate governance and to examine the challenges faced by internal audit in promoting good corporate governance.

4.4 What are the Internal Audit Roles on Promoting and Monitoring Good Corporate Governance?

The aim of this specific objective was to determine the effectiveness of internal control audit on promoting good corporate governance based on documentary review, keeping records and efficient co-sourcing system. The respondents were asked to rate various circumstance as found to be the role of internal audit on promoting and monitoring good corporate governance.

Table 4.5  Internal audit roles on Promoting and Monitoring Good Corporate Governance

Review of published financial information

Rate of Acceptance Frequency Percentage

Agree 18 75

Neutral 4 17

Disagree 2 8

Total 24 100

Systems And Controls

Rate of Acceptance Frequency Percentage

Agree 14 58

Neutral 6 25

Disagree 4 17

Total 24 100

Fraud prevention and Detection.

Rate of Acceptance Frequency Percentage

Agree 20 83

Neutral 4 17

Disagree 0 0

Total 24 100

Ensure adequate disclosure.

Rate of acceptance Frequency Percentage

 Agree 21 87.5

Neutral 3 12.5

Disagree 0 0

Total 24 100

Source: Data collected from field (2021)

4.4.1 Analysis and discussion on findings on the internal audit role in promoting corporate governance.

On the role the internal audit that promoting good corporate governance was to review of published financial information, as presented in Table 4.5; 18 respondents represented by 75% of the respondents agree to this,17% of the respondents were neutral on this bu also 8% of the respondents were disagree on this. Portrays on the respondents response toward the fact that the internal audit role is system and controls, 14 respondents represented by 58% agreed whereas 6 respondents represented by 25% were neutral to it as well as 4 respondents represented by 17% were disagreed to it. On the state that the internal audit role is to detect and prevent the fraud, Table 4.5 shows that 20 of the respondents represented by 83% were agreed on it and 4 respondents represented by 17% were neutral to it. As illustrates the respondents towards the role of internal audit that insure adequate disclosure ,21 respondents presented by 87.5 were agreed to it and 3 respondents presented by 12.5% were neutral to it but also there were no respondents who disagreed to it. 

4.5 Identification of strategies for enhancing the effectiveness of internal audit function on corporate governance.

Strategies for Enhancing the Effectiveness of Internal Audit Functions Strategies which were identified to enhance the effectiveness of internal audit functions on promoting good corporate governance include; cyber security assessments, effective use of co-sourcing, optimize the value of enterprise risk management (ERM) and third party compliance reviews. The results were shown in the table 4.6 

 Table 4.6 Internal Audit Strategies for enhancing the effectiveness of internal audit function towards corporate governance.

Internal audit strategies Frequency Percentage

Cyber security assessment 10 41.7

Efficient Co-sourcing system 6 25

Enterprises Risk management 5 20.8

Third party compliance review 3 12.5

     Total 24 100

 Source: Data collected from field (2021).

4.5.1 Cyber security Assessments 

With all the organizations, security is a contentious issue, with emerging threats appearing at every turn. Modern preventive controls are designed to avoid emerging 

Threats and, therefore, effective detective and corrective measures must be introduced.  Based on Table 4.6; 41.7% of the respondents suggested assessments of cyber security enhances effectiveness of internal auditing functions.

 4.5.2 Efficient Co-Sourcing System 

Co-sourcing ensures the internal audit is performed in collaboration with a service Provider for the company's division. Organizations recourse to co-sourcing of internal audits as a means to monitor costs and reduce employee turnover. As indicated on Table 4.6; 25% of the respondents suggest the use of co-sourcing system enhance the effectiveness of internal audit functions.  

4.5.3 Enterprise Risk Management (ERM) Quality Optimization 

Enterprise risk management describes how global events, environmental catastrophes, changes in the regulatory system and failures in goods, processes and services can lead numerous companies to consider a broader risk strategy. Table 4.6 demonstrate that, 20.8% of the respondents suggest optimization of ERM quality enhance internal audit function effectiveness. 

4.5.4 Third-party Compliance Reviews 

The management of third parties is a system, not a one-time operation. Organization, in order to identify gaps in current processes, must develop a program focused on people, processes and technology. Through third-party compliance, internal audits create a detailed plan, timeline and budget, and expand their vision to integrate concurrently addressable operational, regulatory and non-stop risk standards. Table 4.6 address that, 12.5% of the respondents regard the review of third-party compliance improve internal audit functions.

 4.6 The examination of Challenges Faced by Internal Audit In Promoting Good Corporate Governance.

The study sought to examine the challenges facing internal audit in promoting good corporate governance. The identified challenges include; inadequate management support, unreliable monitoring processes for auditing, lack of independence, time limit, and understaffing. 

Table 4.7  Challenges faced by Internal Audit in Promoting Good Corporate           Governance

Challenges Frequency Percentage

Lack of independence 8 33.3

Inadequate management support 6 25

Time limit 3 12.5

Unreliable monitoring process for auditing 5 28.8

Understaffing 2 8.3

Total 24 100

    Source; Data collected from field (2021).

4.6.1 Lack of Independence 

The internally auditor's independence reflects independence from entities whose interests may be influenced by audit performance,( Mbelwa,L,  2019). Inadequate risk management, inadequate internal control and poor governance are particular internal management issues. Based on Table 4.7, 33.33% of the respondents claim that, lack of independence has negative influence on internal audit in promoting corporate governance at RAS Mbeya.

4.6.2 Inadequate Management Support 

The analysis of management support on an organization's progress helps to recognize the areas/ activities of management support and their metrics of quality assessment. These measures must be quantified after evaluation and the results checked for success with the corporate goals. Based on Table 4.7, 25% of the respondents suggested that, inadequate management support affect promotion of internal audit on corporate governance. 

4.6.3 Time Limit

The researcher found out that internal audit is constrained with time limit due to many reasons some of them being the administrative activities that they have to participate. Example; During SABASABA Trade fair, Nanenane Exhibition the internal audit staff also participate, this consume their time which would otherwise be used in other internal audit activities. Based on Table 4.7 ;12.5% of the respondents argue that, time limit it act as obstacles to achieve promotion of good corporate governance by internal audit. 

4.6.4 Unreliable Monitoring Processes for Auditing 

Monitoring is a continuous management system that typically ensures that processed performs as expected. As indicated on Table 4.7; 28.8% of the respondents regard unreliable monitoring processes for auditing affect negatively internal audit to promote the corporate governance at RAS  Mbeya.

4.6.5 Under Staffing

Audit departments are historically understaffed and the problem becomes increasing worse in today’s economic environment. Staff are being downsized and faced to operate at base-bones levels. Appropriate staffing of an internal audit department and good management of that staff are the keys to effective operation of internal audit roles. Based on Table 4.7; 8.3% of the respondents argue that the understaffing of the internal audit it affect the internal audit on promotion of good corporate governance   

   

CHAPTER FIVE.

DISCUSSION, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This chapter provides conclusion of the study. It specifically presents summary of the findings, discussion of the findings and its implications, conclusion of the study, and ends with recommendations of the study. 

5.2 Summary of the Study

The study was on the role of internal audit in promoting good corporate governance in an organization, a case of RAS Office Mbeya. The study as focusing on the role of internal audit, strategies for enhancing the effectives of internal audit functions and challenges faced internal audit in promoting good corporate governance.

The first chapter covered the introduction, the back ground of the study, statement of the problem and the objectives of the study. The it followed by literature review as contained in the second chapter presents an overview of the concept of internal audit and the corporate governance, the advantages of Internal audit and Corporate governance in an organization. The context of corporate governance in Tanzania as well the corporate governance theories was also reviewed but also the empirical literature review reviewed.

The third chapter consists the research methodology adopted by the researcher in the study which involved the use if the research designs, the questionnaire were distributed to twenty-four respondents and data collected through primary data methods and secondary data methods. The fourth chapter dealt with data presentation, data analysis and discuss of the findings. The chapter was divided into three main parts of the objectives of the study namely as, to know the audit role on promoting corporate governance, strategies enhancing the effectiveness of audit function towards the corporate governance and the last was to examine the challenges faced by internal audit on promoting good corporate governance.

Lastly, the chapter five include summary of the study, summary of findings, conclusion, recommendation and suggestions on areas for further studies.

5.3 Summary of the Findings

To attain the objectives of the study, research questionnaire were posed in order to guide the study. It consists of three objectives; What are the Internal Audit roles on promoting and monitoring good corporate governance?, to identify strategies for enhancing the effectiveness of internal audit function on corporate governance and to examine the challenges faced by internal audit in promoting good corporate governance

5.3.1 Roles of Internal Audit on promoting good Corporate Governance 

Findings of the study revealed that, internal audit roles have significant relationship with corporate governance. The role such as review of published financial information, detection and prevention of fraud, ensuring of adequate disclosure were found strongly attributed to the corporate governance. This implies that, internal audit role has positive effect on promotion of corporate governance. The study also reveals that; increase of adequate disclosure explains increase of corporate governance. This gives a conception that, adequate disclosure has the most significant contribution on promoting corporate governance. 

 These findings align with (Zou, 2019) who also found significant relationship between internal audit role and corporate governance in public sector. (Tumwebaze et al, 2018) found that, internal audit explains 32% of the corporate governance and accountability in statutory institutions. Also, (Pertsinidou, 2018) suggest that, internal audit roles and corporate governance interaction influences all sorts of economic activities. There has already been a significant public interest in the need of internal auditing and corporate governance. 

5.3.2 Strategies for Enhancing the Effectiveness of Internal Audit Functions towards good corporate governance 

Findings of the study revealed that, the most effective strategies that enhance internal audit functions include, cyber security assessments, effective use of co-sourcing, optimize the value of enterprise risk management (ERM), and third-party compliance reviews. This implies that, internal audit functions tend to provide significant outcomes when cyber security is effectively evaluated. In addition, effectiveness of internal audit is also influenced by co-sourcing, ERM as a control cost, prevent employee turnover, solve uncertainties, and facilitate technological changes. 

These findings in line with (Kirima, 2016) who also found that, performance of internal audit functions was mostly influenced by effective security systems, compliance review and co-sourcing, (Danescu et al, 2015) concur with findings on the fact that, an impartial and unbiased internal audit offers sound guarantees through the judgments and recommendations it has provided to the management, which gives the audit a vital role.( Riyadh, 2017) also suggest that, ERM plays crucial role on enhancing effectiveness of internal audit functions in public sector. 

5.3.3 Challenges Facing Internal Audit Function in promoting good corporate governance

Based on the findings, the study revealed five challenges which are mostly affecting the implementation of internal audit function. These include time limit, inadequate management support, understaffing, and lack of independence. Identified challenges give several implications on the implementation of internal audit in RAS Office. 

First, time limit among internal auditors affects the extent at which they accord with ethics code and international standards. Second, inadequate management support affect implementation of internal audit as the unit cannot sustain to accommodate basic requirements of internal auditing in the regional council. Third, challenges understaffing  lead to delay of internal audit function because in RAS office there are only two internal auditors which when one of them get emergency means some audit function will delayed, lack of independence were deemed to be influenced by weak human resource policies for instance recruitment, retention, and training and development policies. 

 Current findings were consistent with several literally works. For instance, Elnafabi asserts that, the challenges of staffing in the internal audit department are now well known: not enough qualified applicants with the unique skills needed to succeed in the modern internal audit department, (Elnafabi, 2019) Wages are also important, making hiring the right workers more difficult. Bilal in the same vein suggest that, risks such as internal auditing, compliance with legislation; third parties, cyber-security; and IT governance must be better equipped to provide assurance in internal audit, (Bilal et al, 2018) The need to understand the market, develop strong connections with other department and lead change is necessary to address the challenge of providing more insight into such risks.

 In addition, Kontogeorgis found that, public sector internal auditing unit are likely to be insufficient workforce strategy, and lack of independence, (Kontogeorgis, 2018)   

5.4 Conclusion of the Study 

Corporate governance appeared to be satisfactory and helpful for the government to meet its objectives since good corporate governance is among of the key factor for the organization performance and organization structural reform. Corporate governance provides government internal auditors with a set of tools of consolidate and access reliable and timely financial information and decision making process. Also identifies unique operation to process government financial transaction efficiently, apply control and simultaneously gather timely and accurate financial information. The good corporate governance facilitates easy of many controls and procedures since as transaction is prepared, processed the internal auditor can apply the necessary controls for stance ensuring that a proper budget allocation exists prior to making a commitment or approving a payment. Through the good corporate governance made helpful in daily government organizations activities. 

With regards to the findings, present study affirms that, internal audit function has significant effect on promotion of corporate governance. Internal audit roles such as compliance evaluation, risk assessment, and efficient co-sourcing system were found to be significant predictors of corporate governance. In other words, these factors were significant drivers which effectively influence performance of corporate governance. The study also identified effective strategies which enhance performance of internal audit in RAS Office. Most of the strategies focused on security, risk management, compliance reviews, and effective use of co-sourcing. This evince that, global events, environmental catastrophes, changes in the regulatory system and failures in goods, processes and services can lead the regional administrative secretary (RAS) office to consider a broader risk strategy. On the other hand, the performance of internal audit was found to be constrained by several obstacles. These challenges hindered the RAS management, employee training and development policies, as well as technological aspects. Besides, internal auditors were deemed to lack effective training as they possessed insufficient business knowledge and basic information technology (IT) skills. 

 To sum up, the role of internal audit has significant impact on performance of corporate governance in RAS Office. However, there are indices of challenges which affect the effective implementation and enhancement of internal audit strategies.

5.6 Recommendations of the Study 

Since the internal audit and corporate governance acts as backbone of Government and organization in financial management. The following are some suggestions from this study results; 

(i) The study advises that every person involved in the internal audit process be trained to understand the importance of an internal audit as regards enhancing the organizations efficiency and to therefore build an understanding that will improve the business and its stakeholders. In order to ensure that the process does not serve as an obstacle to the audit feature always bearing in mind the role that internal audit plays in corporate governance. 

(ii) The company should have its own internal audit charter that clearly articulates the operational and organizational reporting lines as well as its core functions. 

(iii) Adequate correspondence and data flows should be allowed by the reporting line so that internal audits provide accurate and timely information on their operations, strategies and business initiatives. 

(iv) While carrying out its brief, internal audit should not be affected by the financial constraints placed on an administrative reporting row

5.7 Suggestions on Areas for Further Studies.

The importance of this research can be viewed from its contribution to fill an important gap in literature. However, the following are the areas for further studies by future researchers in the field:  The impact of good corporate governance on performance of an organization. Also more research studies should be carried out to find out on more other factors that could hinder internal audit to promote good corporate governance. While the focus of this study was RAS Office in Mbeya future research studies should consider similar studies in other public institutions so as to give wider representation of views of corporate governance.

                                                    

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