Internal Auditing and Financial Management in Selected Private Electricity Supply Companies in Puntland, Somalia

ABSTRACT 

The study was carried out to investigate the Relationship between Internal Auditing and Financial Management of three private electricity supply companies selected purposively and 122 employees in those companies selected by systematic method of sampling. This study was based on four objectives that were; 1) To determine the profile of the respondents in terms of gender, age, marital status, educational level, position in the company, number of years in the company and employment status. 2) To determine the level of internal auditing. 3) To determine the level of financial management. 4) To establish if internal auditing is significantly correlated with financial management. Key findings from the study were: (1) The profile of the respondents revealed that male employees (61.5%) dominated female (38.5%); Age, age bracket between 20-25 years old (45.1%), 26-35 years old (27.9%), 36-45 years old (18.0), 46-55 years old (5.7%) and above 55 years old (3.3%); Marital status, single workers (31.1%), married workers (53.3%), divorce workers (4.9%) and widow workers (10.7%); Education level, secondary level (9.8%), diploma (21.3%), degree holders (29.5%), masters (24.6%) and PhD (14.8%); Position level, member of board of directors (41.0%), senior management (9.0%), internal auditor (8.2%), accountant (8.2%), Treasury (8.2%), and cashier (25.4%); number of years working, below one year (13.1%), 1 to 2 years (13.1%), 3 to 4 years (17.2%), 5 to 6 years (25.4%) and over 6 years (31.2%) ; employment status, full time working employees (68.0%), and part time working employees (32.0%). (2) The overall level of internal auditing was found good (mean=2.86). (3) The overall level of financial management was also found good (mean =2.86). (4) The study also found that there was a significant positive correlation between internal auditing and financial management. It was concluded that there is a significant relationship between the level of internal auditing and financial management in the selected private electricity supply companies in Puntland Somalia, and also internal auditing contributes 60% in the variation of the level of financial management. Based on the findings, it was recommended that top management should give input for internal audit department in selected private electricity supply companies in Puntland, Somalia and Internal audit function in selected private electricity supply companies should be independent in order to have effective financial management.

TABLE OF CONTENTS

Chapter Page

DECLARATION A

DECLARATION B ii

DEDICATION iii

ACKNOWLEDGMENT iv

ABSTRACT v

TABLE OF CONTENTS vi

LIST OF TABLES ix

ABBREVATIONS x

One The Probilem and its Scope 1

Background of the Study 1

Statement of the Problem 4

Purpose of the Study 4

Research Objectives 5

Research Questions 6

Null Hypotheses 6

Scope 7

Geographical scope 7

Theoretical scope 7

Content scope 7

Time scope 7

Significance of the Study 8

Operational Definitions of Key Terms 9

Two Review Of Related Literature 11

Concepts, Opinions, Ideas from Authors/Experts 11

Theoretical perspectives 24

Related studies 25

Three Methodology 28

Research Design 28

Research Population 28

Sample Size 28

Sampling Procedures 29

Research Instrument 30

Validity and Reliability of the Instrument 30

Data Gathering Procedures 31

Data Analysis 32

Ethical Considerations 33

Limitations of the Study 34

Four Presentation, Analysis and Interpretation of Data35

Profile of the Respondents 35

Five Findings 57

Profile of the Respondents 57

Level of Internal Auditing 58

Level of Finacial Management 58

Relationship between Internal Auditing and Financial Management 58

Effect of Internal Auditing on Financial Management 59

CONCLUSION 59

RECOMMENDATION 60

REFERENCES 61

Appendix I-Transmittal letter 68

Appendix Il-Clearance from ethics committee 71

Appendix III- Calculation of content of validity index 72

Appendix IV Informed consent for the respondents 73

Appendix V- Demographic Profile of the Respondents 74

Appendix VI - Questionnaire on Level of Internal Auditing 76

Appendix VII - Questionnaire on Level of Financial Management 79

Researcher’s Curriculum Vitae 81