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Internal Auditing
British Journal of Arts and Social Sciences ISSN: 2046-9578, Vol.8 No.I (2012) ©BritishJournal Publishing, Inc. 2012 http://www.bjournal.co.uk/BJASS.aspx

Effectiveness of Internal Audit in Tanzanian Commercial Banks

Dr.Jayalakshmy Ramachandran Asst. Professor, Nottingham University Business School, Seminyih, Malaysia, Email: jayalakshmy.rama@nottingham.edu.my 60386248779

Dr.Ramaiyer Subramanian , Lecturer, Faculty of Business and Law, Multimedia University, Malaysia. Email: ramaiyer.subramaniam@mmu.edu.my, 6062310640

Ireneo John Kisoka Research scholar, Nottingham University Business School, Seminyih, Malaysia, Email: rajoo42@gmail.com

Abstract This study aims to examine the effectiveness of internal audit function in Tanzanian commercial banks since this function is now a mandatory requirement as per the Banking and Financial Institutions Act 2006. Results of this study deliberate that, the risks management and corporate governance related activities of internal auditors are incorporated merely as statutory obligations and do not provide additional value to the stakeholders. We assert that that internal auditing in Tanzania commercial banks is still embracing the conservative approach which is primarily concerned with compliance and monitoring rather than adopting value added approach. The inference of the study is more crucial to the agency theory whereby public funds are being spent on activities which do not add value to the stakeholders. This could in turn dilute the principal agent relationship, which is already a tenacious issue due to the corporate collapses witnessed over the last decade. The study comes as a timely contribution to practice since, Tanzanian economy is now at a growth and development stage and the Commercial Banks of Tanzania are the major contributors to the development of Tanzanian economy. We suggest that it is time to change the outlook of internal audit system by Tanzanian Commercial Banks. Key words: Internal, Audit,


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