Dissertation (MA Business Administration)The study was about an assessment of factors that determine the effectiveness of the internal audit in managing public funds. Internal auditing is important in any organization since it helps to understand and to be aware of how the organization resources were utilized effectively. The study was carried out at Dodoma Municipal Council (DMC), through which both primary and secondary data were used. Respondents were selected from the management of DMC, internal audit department and finance department; then quantitative and qualitative methods were employed for the study. Findings of the study have revealed that, factors that hindered the effectiveness of audit included employees' experience and skills, lack of independence to auditors, lack of advanced technological equipment’s like computers and improper record keeping. The study also entailed factors which could be used to ensure the effectiveness of internal audit as the employment of skilled personnel and training to internal auditors. Internal auditors must be independent and the management should work on the recommendations provided in the auditor’s reports. The study concluded that the effectiveness of the internal audit is very important to ensure the required performance for any organization. In addition, the effectiveness of the internal audit is necessary for a strong internal control system. The study recommended that audit activities must be conducted frequently and follow the rules and regulations issued by NBAA.