Thesis Abstract

Abstract
Internal audit functions play a critical role in assessing and enhancing the performance of private firms. This research aims to investigate the effect of internal audit on the performance of private firms by examining how internal audit activities impact various aspects of firm performance. The study utilizes a quantitative research design, collecting data through surveys and financial reports from a sample of private firms across different industries. The findings suggest a positive relationship between the internal audit function and firm performance indicators such as profitability, operational efficiency, risk management, and compliance. Internal audit activities, including risk assessment, control evaluation, and monitoring, are found to significantly contribute to improving firm performance. The results also highlight the importance of an independent and competent internal audit function in driving better performance outcomes within private firms. Moreover, the study identifies several factors that influence the effectiveness of internal audit in enhancing firm performance, including the level of management support, internal audit resources, and the quality of internal audit processes. Firms that invest in developing a robust internal audit function and fostering a culture of accountability and transparency tend to achieve better performance outcomes compared to those with weaker internal audit practices. The research also underscores the role of internal audit in providing valuable insights to management for strategic decision-making and improving overall business operations. Internal audit functions that are aligned with the strategic objectives of the firm are more likely to contribute meaningfully to enhancing performance and creating long-term value for the organization. In conclusion, the findings of this study support the notion that internal audit has a significant positive impact on the performance of private firms. The research highlights the importance of a well-functioning internal audit department in driving performance improvements, enhancing risk management practices, and ensuring compliance with regulatory requirements. The study recommends that private firms prioritize the development and strengthening of their internal audit functions to realize the full potential of internal audit in achieving sustainable business success.

Thesis Overview

INTRODUCTION1.1. Background of the StudyInternal 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.