Thesis Abstract

Abstract
This research study aims to investigate the effect of internal audit on the performance of private firms. Internal audit functions play a crucial role in ensuring the effectiveness of internal controls, risk management, and governance processes within organizations. The study will explore how the presence of a well-established internal audit function influences the overall performance of private firms in terms of financial stability, compliance with regulations, and operational efficiency. A mixed-methods approach will be utilized, combining quantitative analysis of financial data and qualitative assessment through interviews with internal audit professionals and key stakeholders within private firms. The research will focus on identifying the specific internal audit practices and processes that contribute most significantly to improved firm performance. Additionally, the study will examine the relationship between the size of the internal audit function, its level of independence, and the extent of its scope within the organization. The findings of this research are expected to provide valuable insights for private firms looking to enhance their internal audit practices and thereby improve their overall performance. By understanding the impact of internal audit on various aspects of firm performance, organizations can make informed decisions regarding resource allocation, risk management strategies, and governance structures. The research will also contribute to the existing literature on internal audit effectiveness in private firms, filling a gap in the current knowledge base. The implications of this research are significant for both practitioners and academics in the field of internal audit and corporate governance. Private firms can benefit from the findings by implementing best practices in internal audit to drive better performance outcomes. Academics will gain a deeper understanding of the role of internal audit in enhancing firm performance, leading to further research opportunities in this area. In conclusion, this research study will shed light on the critical role that internal audit plays in shaping the performance of private firms. By examining the specific practices and processes that drive internal audit effectiveness, the study will offer practical recommendations for firms seeking to leverage their internal audit function for improved performance outcomes.

Thesis Overview

INTRODUCTION

1.1.     Background of the Study

Internal audit is a management tool used in ensuring transparency in conduct of business. Auditing took the entire stage after the industrial revolution since before this period, transactions increased, precipitated by the development of large corporations, limited liability companies, there became the need for divorce of ownership from control. Hence mangers and shareholders became two different partners. Then it became apparent for mangers to render accounts of their stewardship to those who has pooled their resources together for the business .it is noteworthy that an independent person be appointed to represent the interest of the shareholders in reviewing the report of mangers to ensure accuracy and transparency. This is how auditing started.

We have two types of sectors. Public and Private sectors. Public sector is the governments initiate and control in economic activities with the aim of rendering services at a breakeven point.

The private sector is the private initiative aimed at profit/wealth maximization for the owners Mill champ (1996) defines internal audit as an independent appraisal.