Fighting Corruption by Means of Effective Internal Audit Function: Evidence from the Ghanaian Public Sector

Abstract

Using structural equation modelling (SEM) we analysed the link between corruption and effective internal audit function (EIAF) in Ghana through a survey of directors and managers of selected public sector organizations. A decade after the promulgation of the Internal Audit Agency Act (IAAA), 2003 (Act 658) as an instrument to fight administrative corruption in Ghana, there is little empirical evidence to show its impact on corruption, though anecdotal evidence suggests it has played a critical role in maintaining financial discipline and public sector accountability and transparency. We established that full implementation of Act 658, size of the internal audit department and independence of the audit department significantly affect the effectiveness of the internal audit function which negatively impact on corruption. We conclude that strict adherence to and the implementation of regulations and laws as well as independence of the internal audit function will help fight administrative corruption in Ghana.