THE ROLE OF INTERNAL AUDIT FUNCTIONS AND EMPLOYEE ATTITUDES ON FINANCIAL PERFORMANCE OF PUBLIC UNIVERSITIES IN ETHIOPIA EVIDENCE FROM PUBLIC UNIVERSITIES IN AMHARA REGION

Abstract

The widespread characteristics of public sector governance need an effective internal auditing function to meet the demanding responsibilities required by stakeholders. Internal audit can help to improve governance processes by focusing on how values are established to ensure effective and efficient control and management of public sector entities. Thus, the purpose of the study was to establish how internal audit function and employee attitudes affect the financial performance of Public Universities in Ethiopia. The study focused in examining the relationship between the internal audit function and financial performance, the relationship between employee attitude and financial performance in Public Universities. The study adopted the quantitative research methodology employing a cross sectional research design. A population of 200 was selected from some selected departments of Gondar University, Wollo University, Daberatabor University and Debramarkos University using purposive sampling.The findings of the study revealed a significant and positive relationship between internal audit function and financial performance and between employee attitudes and financial performance in public Universities. The findings of the study support several previously conducted studies in that each factor examined had a moderate to high positive correlation with financial performance. In addition, the independent variables together explain about 61 percent change in financial performance of public Universities (R2= .605). The study recommended that Public Universities should adopt strong policy measures on the variables of internal audit function which are risk management and internal controls and also aim at creating a committed work force for better financial performance.