Advancing the performance of commercial banks in ghana: does quality of internal audit function matter?

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This study examines the nexus between the quality of internal audit (professional competence, audit independence, and audit quality) and the performance of banks in a developing country context, Ghana. The study uses an ordinary least square (OLS) regression model on a primary and secondary dataset of 20 banks over five years (2017 to 2021). The study finds that professional competence has an insignificant positive relationship with financial performance. However, audit independence and quality audit work have a positive and significant relationship with the performance of banks in Ghana. Also, bank size positively affects financial performance. Liquidity records a negative relationship with the bank's performance. Board size, however, records an insignificant positive relationship with the financial performance of banks in Ghana. The study concludes that audit independence, quality of audit work, and bank size increase banks' performance in Ghana. However, professional competencies of internal audit and board size do not predict the financial performance of banks; however, liquidity decreases banks' performance in Ghana. The study recommends there should be adequate professional training for internal audit staff to enhance audit quality which can help improve the effectiveness of internal audit functions. Management of banks should consider training and professional CPDs to enhance the professional competencies of internal auditors or internal audit staff. Finally, management, government agencies, potential investors, and other pertinent stakeholders of financial institutions should use the study's findings and other relevant to assess the bank's performance of banks in developing countries.
A thesis submitted to department of accounting and finance, kwame nkrumah university of science and technology, kumasi in partial fulfillment of the requirement for the degree of master of science (accounting and finance option)