AN EXAMINATION OF INTERNAL AUDITING AS A STRATEGIC INSTRUMENT FOR ATTAINING ORGANIZATIONAL GOALS

CHAPTER ONE INTRODUCTION 1.1 Background of the Study There is no doubt that internal auditors within organisations are tasked with conducting independent assessments and offering assurance on various initiatives designed to enhance organisational performance. These efforts support the attainment of strategic and operational goals by evaluating and improving risk management practices, strengthening control systems, and enhancing governance frameworks. Due to the expansive nature of internal auditing, it is regarded as a critical component in public expenditure management, covering aspects such as internal controls and the communication of information (Li et al., 2018). Internal auditors serve primarily as advisors to public-sector officials, especially in the context of the principal-agent dynamic that characterises public administration (Cai & Jun, 2018). Their role is vital in safeguarding an organisation’s assets, maintaining transparent records of their use, and assessing whether outcomes are in line with societal expectations. Furthermore, internal audit processes help reduce the risks associated with principal-agent relationships (Testa et al., 2018). As the role of internal auditing becomes increasingly significant in broader management and control frameworks, questions have emerged regarding its efficacy in fulfilling these responsibilities (Sunyoto et al., 2018). Although internal audits have at times fallen short—as illustrated by notable cases such as WorldCom—the global financial crisis intensified concerns about the overall effectiveness of internal audits. These concerns encompass both traditional functions like ensuring compliance with control systems and financial accuracy, as well as contemporary responsibilities such as risk management in large financial institutions across both public and private sectors. Internal auditing is now universally acknowledged as an essential tool in effective management practices across financial institutions. Compliance with auditing standards and addressing extensive accountability requirements, particularly regarding the use of public resources, are essential. Therefore, overlooking internal auditing, even in smaller organisations, is unjustifiable. It is a crucial mechanism for supporting financial efficiency, and many executives depend on the insights of internal auditors to enhance performance and achieve institutional goals (D’Onza & Sarens, 2018). Internal public audits, in particular, contribute significantly to the integrity of administrative accountability systems. In contrast to the extensive emphasis placed on external auditing, the effectiveness of internal auditing remains relatively underexplored (Chen et al., 2019). This underscores the need for robust internal control systems capable of detecting, correcting, and managing operations to ensure legal compliance and optimal functionality of financial units. An internal control framework must be in place to oversee compliance and operational integrity. Internal evaluation serves as a management-led process in financial institutions that assesses the effectiveness of internal controls. It determines their adequacy in terms of relevance, efficiency, effectiveness, and optimal resource use through systematic assessments, tests, and evaluations. Ensuring that public resources are utilised efficiently, economically, and in the public interest is vital for sustainable governance. From a legislative perspective, the primary goal of internal auditing in public institutions is to improve management quality through objective assessments of internal control, risk management, and governance. Internal auditing should be comprehensive, evaluating all significant operational domains—including finance, payments, asset management, accounting, and information systems—at least semi-annually, though more frequent evaluations may be required depending on institutional needs (Lenz et al., 2019). In this context, the current study seeks to examine internal auditing as a strategic tool for the achievement of organisational objectives. 1.2 Statement of the Problem Over the years, organisations have increasingly recognised that the sustainability and success of any enterprise hinge significantly on the implementation of effective internal audit systems. These systems are essential in curbing unethical practices such as the deliberate withholding of vital information to facilitate fraudulent actions, particularly within sectors like insurance. The core function of internal auditing is to enhance organisational productivity and efficiency by delivering timely and relevant feedback (Wu et al., 2019). As Mihret and Grant (2019) contend, the outdated perception that internal auditing merely involves the verification of accounting entries undermines its true strategic value. This misconception neglects the forward-looking and proactive role that internal auditing plays in enhancing organisational performance. The emergence of frequent corporate failures and scandals due to unethical behaviour has exposed significant flaws in control mechanisms and accountability structures within organisations. Consequently, the scope of internal auditing has expanded beyond its traditional focus on fraud detection and regulatory compliance to encompass all facets of organisational operations (Grima, 2022). Today, internal auditing is integral to an organisation’s governance framework, providing assurance regarding internal control systems, risk management, and compliance (Soh & Martinov-Bennie, 2021). However, tensions often arise from conflicting personal interests or managerial ethical constraints (Siegel et al., 2019). Internal auditors, because of their close proximity to management, are frequently confronted with ethical dilemmas that challenge their ability to maintain professional integrity. Shamki and Alhajri (2019) argue that internal auditors not only perform routine verification tasks but also function as strategic partners that drive organisational efficiency and improvement. Their role encompasses the enhancement of operational processes, ensuring they are effective and aligned with organisational goals. According to Desmedt (2019), organisations equipped with robust and skilled internal audit functions are better positioned to detect irregularities and maintain public trust in financial reporting and governance. Thus, an effective internal audit capability is a vital asset that contributes to achieving organisational objectives and enhancing credibility. In light of these observations, this study seeks to critically investigate internal auditing as an essential mechanism for achieving organisational goals, focusing on how it enhances governance, accountability, and performance across sectors. 1.3 Objectives of the Study The main purpose of this study is to Examine Internal Auditing as a Strategic Instrument for Attaining Organizational Goals. Specifically, the study will; i.Find out whether internal audit standards have an effect on the performance of insurance companies inCameroon. ii.Assess the impact of internal audit function on the financial performance of insurance companies in Cameroon. iii.Assess the relationship between internal audit practices and the productivity levels of insurance companies in Cameroon. iv.Propose best practices for enhancing the effectiveness of internal audits in promoting productivity in insurance companies. 1.4 Research Questions The following questions have been prepared for the study: i.Do internal audit standards have an effect on the performance of insurance companies in Cameroon? ii.What is the impact of the internal audit function on the financial performance of insurance companies in Cameroon? iii.What is the relationship between internal audit practices and the productivity levels of insurance companies in Cameroon? 1.5Research Hypotheses H0:Internal audit does not have a significant impact on the productivity of insurance companies in Cameroon. Ha: Internal audit have a significant impact on the productivity of insurance companies in Cameroon. 1.6 Significance of the Study Insurance companies' internal auditors and audit committees will benefit from the study, as it will provide them with better knowledge of how their job affects the productivity of the company. Internal auditors will make sure that their audits are in line with the business's strategic goals and operational priorities by using the findings to improve their target areas and methodology. With the knowledge gained from this study, audit committees will be better equipped to assist the internal audit function, foster an environment of responsibility, and make sure that the audit recommendations are carried out in a way that maximizes performance gains.Moreover,subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to internal audit as a tool for achieving organizational objectives. 1.7 Scope of the study The scope of this study is boarded on Internal Auditing as a Strategic Instrument for Attaining Organizational Goals. Empirically, the study will find out whether internal audit standards have an effect on the performance of insurance companies, assess the impact of internal audit function on the financial performance of insurance companies, assess the relationship between internal audit practices and the productivity levels of insurance companies and propose best practices for enhancing the effectiveness of internal audits in promoting productivity in insurance companies. Geographically, the study will be delimited to insurance companies in Cameroon. 1.8 Limitation of the study In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world. 1.9 Definition of Terms Auditing:The systematic examination and evaluation of financial records and transactions of an organization to ensure accuracy, reliability, and compliance with established accounting standards and regulations. Internal Audit: refers to an independent, objective assurance and consulting activity designed to add value and improve an organization's operations.