Dissertation (MA Business Administration)Despite of the existence of internal audit units in public institutions, misappropriation and embezzlement of funds, has been a common practice as reported by CAG from year to year. This study was established to assess the auditing function as a tool for accountability in LGAs. The study intended to accomplish three objectives, namely; to investigate on the adherence of auditing procedures in financial management in LGAs, to analyze the performance of auditing function in Local Government Authorities and to investigate on the challenges facing internal audit units in implementing their duties. The study was conducted by taking Bahi and Chamwino district councils as platforms. It involved employees (auditors) and management cadres in data gathering part from documentary review. Questionnaires and interviews guide were used to collect data from auditors and management personnel respectively. Data were then analysed both qualitatively as well as quantitatively. The findings have revealed that, the procedure used in conducting audit work involved; audit plan preparation, field visit audit, reporting, evaluation and follow ups. In addition to that, respondents reported that, the procedure used in the two district councils was in line with the international standards of auditing. Further, it was found out that, the extent to which auditing function had performed its role in the two LGAs was not satisfactory. Moreover, the study uncovered several challenges which faced internal audit units in LGAs, the most notable being; inadequate reliable transport, shortage of staff members, shortage of resources, political interference and a poor cooperation between the management and internal audit unit. It was recommended that, the government needed to come up with guidelines which will do away with political interference in auditing decisions. It was also advised that, the government provides funding timely and adequately to LGAs to allow them implement their plans including auditing matters. Finally, it was advised that, the management of LGAs provides conducive environment and all the necessary support for internal audit units to operate efficiently and effectively