Investigating Internal Control Factors on Clean Audit Outcomes : A Case of Selected Departments in the Mpumalanga Province in South Africa

Abstract

Among the academic, there is a general agreement that the system of internal monitoring plays an important role in managing business either private or government as far as the audit outcomes are concerned. The article examines the internal control factors that affect the achievement of a clean audit outcomes. Primary data was collected from self-administered questionnaires from 269 research participants who were permanent employed by the three Mpumalanga provincial departments namely Department of Health, Department of Education and Department of Community Safety and Liaison. Research results showed that internal control system factors such as leadership visibility and accountability, corporate governance and financial performance and management were positively related to the audit outcomes with a R square coefficient of .981. Additionally, all three factors were significant with a P-value of .000 less than .01. An effective leadership visibility and accountability should include appropriate management, verification process, performance agreement, early audits plan together with the transgression measures and the compliance to the legislation. The corporate governance dimension should involve management responsibility, risk management strategies, portfolio of evidence, solid internal control system, compliance monitoring as well as the update based on the Auditor General. The financial performance and management dimension should focus on the management controls, review of contracts, certified financial statements, expenditure monitoring while following the Public Finance Management Act. As part of the recommendations, policymakers should ensure execution of the laws and regulations in relation to a clean audit outcome. They should equally organise training sessions to advise companies, organisations and institutions about compliance to the legislation as well as the applicable transgression measures. The execution the audit action plans are to be implemented early during the financial year and review of contracts should be done periodically