Determinants of Internal Audit Function Effectiveness of DSE Listed Companies in Tanzania: Moderation Effect of Audit Committee

The study aimed at examining determinants of internal audit function effectiveness of DSE listed companies in Tanzania and moderation effect of audit committee. The study applied a cross-sectional survey design, positivist paradigm and deductive approach. The study collected quantitative data through questionnaire from DSE listed companies in Tanzania. The hypothesized model of the study examined whether organizational independence, top management support, professional proficiency, communication skills and audit committee determine internal audit function effectiveness. The study also examined whether the moderator moderates the relationship between independent variables and dependent variable. Data analysis was done through PLS-SEM path modelling. The study findings were that professional proficiency (p=0.045), communication skills (p=0.003) and audit committee (p=0.000) had statistically significant positive impact on internal audit function effectiveness of listed companies in Tanzania. Organizational independence (p=0.914) and top management support (p=0.523) were statistically insignificant; however their indicator measurements were found to be significant determinant of IAF effectiveness. Another notable finding was that audit committee had statistically significant positive partial moderating effect on communication skills (p=0.036). Moderation effect of audit committee on the relationship between communication skills and IAF effectiveness found to be a theoretical contribution of this study to resolve the agency problem of information asymmetry. The determinants are considered to be key inputs for strengthening IAF of listed companies in Tanzania. Lastly, practitioners and academia can use the results of this study for future references