ASSESSMENT OF FACTORS THAT INFLUENCE MANAGEMENT RELIANCE ON INTERNAL AUDIT FUNCTION: EVIDENCE FROM OIL AND GAS COMPANIES OPERATING IN TANZANIA

Abstract

The study investigated factors that influence reliance by senior management over internal audit function in the Tanzanian oil and gas companies. The research applied positivism paradigm, and it involved 17 oil and gas companies operating in Tanzania Mainland. Forty-two (42) questionnaires were returned out of fifty one (51) which had been administered to Chief Executive Officers (15), Chief Finance Officers (10) and Members of Audit Committee (17). Data analysis was performed specifically to identify the modelling and relationships of both dependent variable (reliance of internal audit function) and independent variables (communication, independence, objectivity, competence, work performance). The study found that the senior management personnel (CEOs, CFOs and Members of the Audit Committee) were seen to have overall reliance on works of their internal audit functions whereas some differences were revealed between propositions on competence requirements in the oil and gas sector and non-oil sectors. The study further revealed lack of significant independence of internal auditor’s function and interference of senior management in day-to-day operations of the internal audit department. The study generally recommends re-examination of the position of internal audit function in the studied oil and gas companies.