Effectiveness of Internal Audit Functions in Preventing Financial Mismanagement in Enugu State Ministries

Financial mismanagement continues to erode the integrity of public institutions in Enugu State, with repeated findings by the State Auditor-General pointing to systemic weaknesses in the internal audit function as a contributing factor. This study assessed the effectiveness of internal audit functions in preventing financial mismanagement across selected ministries in Enugu State. The study was grounded in the agency theory, which frames internal auditing as a monitoring mechanism that reduces the divergence between the interests of principals (citizens and government) and agents (public servants). A survey research design was employed, with a population of 296 internal auditors, accountants, and ministry directors drawn from five selected ministries. A sample of 170 respondents was selected via stratified random sampling. Structured questionnaires were administered and validated, and data were analyzed using multiple regression. Findings revealed that internal audit independence, staffing adequacy, and management responsiveness to audit recommendations were the strongest predictors of reduced financial mismanagement. Audit frequency was found to have a significant but moderate effect. The study concluded that the effectiveness of internal audit is conditioned not just by technical competence but by organizational support and follow-through on audit recommendations. It was recommended that the Enugu State Government should amend the State Audit Law to guarantee internal audit independence and establish a dedicated audit implementation monitoring committee.

Keywords: Internal audit, financial mismanagement, public sector, agency theory, Enugu State