Analysis of the Challenges of Internal Auditing in Strengthening Corporate Governance in Public Sector Organizations in Zambia

Abstract

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations (Kahn, 2005). According to Marxist theory, internal auditing is viewed as an independent assurance activity designed to protect the integrity of and contribute to the expansion of the circuit of industrial capital so that the surplus value in products might be fully realized through their sale and that capital might not go to waste, which helps an organisation accomplish its objectives by bringing a systematic approach to evaluating and improving the effectiveness of its risk management, control, and governance processes (Marx, 1981). This study's aim was to analyze the challenges of internal auditing in strengthening internal controls in public sector organizations in Zambia: A case study of the Ministry of Education. The specific objectives of the study were to examine the role of internal auditors in strengthening internal corporate governance in the public sector in Zambia, to determine factors that pose challenges in corporate governance in the public sector in Zambia, and to assess the independence and competence of internal auditors in strengthening corporate of public sector in Zambia. The researcher adopted a mixed approach and employed qualitative and quantitative research designs. Stratified simple random sampling is suitable for the quantitative phase because the Zambia MoE workforce is heterogeneous, consisting of multiple positions, departments, and stations. Stratification ensures that all key subgroups such as customer care, teaching department, accounts, logistics, and general duties staff are adequately represented in the sample. The research comprised questionnaires and interview schedules. The questionnaires were used because they are the main means of collecting quantitative primary data. The questionnaires enabled quantitative data collected in a standardized manner to ensure the data is consistent and coherent for the analysis. From the findings, the study concludes there are significant concerns regarding the independence of internal auditors from internal pressure within the Ministry of Education. A substantial proportion of respondents, 35.4%, indicated that internal auditors are perceived to experience internal pressure that may influence their audit work, findings, and recommendations. Furthermore, findings indicate that a majority of respondents (63.4%) perceive internal auditors as capable of using control assessment and risk analysis techniques, with 46.2% agreeing and 17.2% strongly agreeing. Furthermore, the mean score of 3.64 and a median/mode of 4 reflect an overall positive perception of the auditors’ competencies. Pearson correlation analysis between internal auditors’ knowledge of modern technologies and their access to records and information showed a very weak positive correlation (r = 0.081, p = 0.112), which was not statistically significant. This indicates that technology knowledge is not significantly associated with cooperation or access to information in this context.” Pearson correlation analysis between internal auditors’ knowledge of modern technologies and the adequacy of the internal audit department’s staffing revealed a very weak positive correlation (r = 0.039, p = 0.447), which was not statistically significant. This suggests that auditors’ technology skills are not associated with the number of employees in the department.” It depicts a very strong, statistically significant positive correlation between the availability of necessary resources for auditing activities and the consideration of internal auditors’ reports in management decision-making and internal controls (r = 0.904, p < 0.01). This indicates that better resourced auditors are more likely to have their reports taken seriously by management.