|dc.description.abstract||The main purpose of this study was to investigate the internal audit reporting relationships
in the selected public enterprises, to see the influence of the internal audit reporting
relationship. Internal audit is facing many challenges, some of the challenges identified by
the Ministry of Finance and Development, in Internal Audit Manual are: lack of expertise
leading to trivial auditing findings, lack of opportunity for professional development &
repetitive audit routines which staffed members can predict. To obtain the required
information open-and close-ended questionnaires were used as data gathering tools in
three (3) public enterprises in East Arsi from where 36 employees were given
questionnaires thirty three (33) of them have been properly filled and returned. A sample
of 36 respondents was selected purposively. Data was analyzed using statistical package
for Social Scientists (SPSS) Version 16.0 Windows Software.
The findings of the study showed that the involvement of IAF in managerial matters is
very much limited, the scope of internal audit in all of the surveyed enterprises were very
much narrow and not yet set free from the traditional thoughts of what an IAF should be.
The study, therefore, recommended that, the public enterprises should revise their
reporting lines and separate the functional reporting from the administrative reporting.
Key Words: Internal Auditing, Independence, Reporting Relationship||en