INVESTIGATION OF IMPACTS OF INTERNAL AUDIT TOWARDS THE FINANCIAL PERFORMANCE OF WATER AUTHORITIES IN TANZANIA

Abstract

Internal audits are critical for enhancing organizational financial performance, particularly in resource-constrained sectors like water authorities. Despite the growing recognition of internal audit's role, limited research focuses on its effectiveness in Tanzanian water utilities, creating a knowledge gap, particularly regarding internal audit competencies, management support, and independence. This study aimed to investigate the impact of internal audit functions on the financial performance of the Singida Urban Water and Sanitation Authority (SUWASA) in Tanzania. The study targeted a population of 150 employees and board members at SUWASA, with a sample size of 109 respondents selected using a combination of simple random and purposive sampling techniques. Employing a mixed-methods approach, data were collected through questionnaires, interviews, and document reviews and analyzed using descriptive statistics, content analysis, and multiple linear regression. The findings revealed that internal audit competencies, management support, and audit independence significantly influence financial performance, with each factor contributing to enhanced profitability and operational efficiency. The study underscores the need for targeted training programs to improve auditor skills, formalized mechanisms to ensure management support, and policies safeguarding audit independence. These recommendations aim to strengthen internal audit functions, enhance financial governance, and improve service delivery in the Tanzanian water sector and similar contexts.