The impact of external audit on the financial management in public organizations : A case study of Rwanda development board.

Abstract

The study is on Impact of External Audit on the Financial Management in Public Organizations, using a case of Rwanda Development Board.The case study method was chosen to provide an in-depth investigation of the RDB’s auditing practices as a fair representative of public organizations in Rwanda. Purposive sampling method was utilized to select sample units as well as stratified random sampling technique and census to select respondents from each sample unit. Research data was collected using observation, review of literatures and interview aided by questionnaire that was pilot tested to ensure reliability and validity of the data. Data collected was, summarized, coded and quantitatively analyzed to compute descriptive statistics and presented in form of tables, frequencies, percentages, graphs and charts. It sought to ascertain the contributions of external audit to efficient financial management in public organizations and determine whether or not external auditors exercise professional ethics and competences while auditing public organizations. Findings revealed that external auditor play a very important role in ensuring that the RDB complies with financial reporting standards and guidelines. It also established that internal auditors do not fully cooperate with external auditors; they delay of financial statement and other requisite support among others. Further analysis confirmed that auditors’ compliance to the professional ethics enhances the reliability of the published financial report. The study findings will benefit government and financial managers with regard to designing policies to streamline the external audit in public organizations. The findings of this study put RDB and other public firms on toes to ensure that proper records are kept. Strict measures should be put in place to check record keeping techniques and procedures in public organizations in Rwanda. The researcher recommends further studies on the causes of conflicts surrounding external auditors and internal auditors in public institutions and impacts of these conflicts on reliability of published financial reports. A further study is recommended to assess the perception of managers on external auditors.