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Financial management has become a critical problem in Local Government Authorities in Tanzania. This is attributable to weaknesses in internal auditing systems within the councils. This study therefore, set out to examine the efficiency of internal auditing and its contribution to improving financial management in Local Government Authorities (LGAs) in Tanzania. The unit of analysis was the Local Government Authorities in Musoma municipal and Musoma district councils including their External and Internal Auditors, Accountants, Head of Departments and Members of Audit and Finance Committees.
The overall objective of this study was to assess the efficiency of internal audit units in improving financial management in LGAs especially with the amendment of Public Finance Act of 2004 and establishment of Internal Auditor General Division in 2009. Specifically, the study assessed the independency of the Internal Auditors in performing their duties, examined the capacity of internal audit units in terms of human and material resources, and assessed the extent to which the management of municipal councils act upon Internal Auditor’s recommendations. The study also examined Internal Auditors’ compliance with the International Professional Practices Framework (IPPF) standards, and proposed practical solutions to that will empower the Internal Audit Unit in the selected municipal councils.
Data were collected from both primary and secondary sources of information. Mailed questionnaires, interviews schedules, and observation checklists were used as data collection instruments while desk research was used to complement the primary data. Out of the 60 questionnaire, 51 questionnaires were valid for analysis. The findings of the study were analysed through Scientific Product for Social Sciences (SPSS). The study revealed that inadequate support from top management, lack of autonomy among Internal Auditors, insufficient human and financial resources and absence of quality assurance mechanisms to be critical factors affecting the performance of Internal Audit Units in municipals and district councils. The study recommends that management of municipal and district councils strengthen internal audit units in terms of financial and human and implementation of Quality Assurance and Improvement Program (QAIP) to enhance the performance of Audit units. |
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