Internal auditing and financial reporting quality of local governments in Uganda:

Abstract

This study examined the effect of internal auditing on financial reporting quality of PDLG. The study was guided by the following objectives notably, to examine the impact of audit committee on the quality of financial reporting of PDLG, to establish the impact of audit independence on the quality of financial reporting of PDLG and to establish the impact of audit competence on the quality of financial reporting of PDLG. The study used a cross sectional research design, and a quantitative approach. Data was collected from a target population of 45 employees of PDLG with accessible unit of 40 employees of PDLG, using simple random and purposive sampling techniques. Data were collected with the aid of closed ended questionnaire and Statistical Packages for Social Sciences was employed for analyzing data from which frequency tables, descriptive statistics (mean and standard deviation), reliability, validity, correlation, and regression results were obtained. The study findings revealed that there is a positive and a significant effect of audit committee on the quality of financial reporting, audit independence on the quality of financial reporting and audit competence on the quality of financial reporting of PDLG. The study concludes that there is a strong predictive power that the dimensions of internal auditing contribute towards enhancing financial reporting quality of PDLG. Finally, the study recommends that efforts to improve on the financial reporting quality of local governments depends on internal auditing (audit committee, audit independence and audit competence).