Evaluating the Effectiveness of Internal Audit in Risk Management at Lusaka City Council
Year: 2025
Type: article
Study design: Observational Study
Abstract: In recent years, there have been growing concerns about the adequacy of internal controls within local government institutions in Zambia, including the Lusaka City Council. Instances of financial irregularities, resource misallocation, and operational inefficiencies have highlighted the need for a comprehensive assessment of the internal audit function. Despite Lusaka City Council having a well-established internal audit function, they seem to be irregularities which are still appearing and these are in growing tendency, during the period of five years between 2018 to 2022 Lusaka City Council has failed to collect revenue which the council had budget for amounting K480 million. In this regard, this study evaluated the effectiveness of internal audit in risk management at Lusaka City Council using a self-administered questionnaires by assessing the Audit Committee, Segregation of Duties, Data Security and Information Technology in Internal Audit, and Risk Assessment. Analysis of Variance (ANOVA) was used to create whether there was difference between the independent variables and effectiveness of the internal audit at the Lusaka City Council. Analyzing the effectiveness of the Audit Committee, Reduced Audit Queries, and Enhanced Revenue Collection on internal audit controls at Lusaka City Council. The model showed a significant effect overall, with a p-value of .029 (Sig. = .029). This indicated that, collectively, the predictors significantly contribute to explaining the variance in internal audit controls. The F-value of 3.896 reflects the model’s strength in predicting internal audit controls, while the Regression Sum of Squares (4.163) and Mean Square (2.096) indicate the proportion of variance attributed to the predictors compared to the residual variance (30.677). The regression equation IAC=0.763+0.174 RAQ+0.214 ERCIAC, describes the influence of Reduced Audit Queries (RAQ) and Enhanced Revenue Collection (ERC) on Internal Audit Controls (IAC). Reduced Audit Queries (B = .174, Sig. = .026) has a statistically significant positive effect, meaning that improvements in reducing audit queries are associated with stronger internal audit controls. Enhanced Revenue Collection (B = .214, Sig. = .117) shows a positive but statistically insignificant impact, suggesting it may contribute to internal audit controls but not as strongly or reliably as Reduced Audit Queries. Overall, the results imply that while both predictors positively influence internal audit controls, reducing audit queries is the most significant factor in this model. The regression model IAC=−0.781+0.164 SD+0.293 SJDIAC, describes the effects of Segregation of Duties (SD) and Structure and Job Descriptions (SJD) on Internal Audit Controls (IAC). Segregation of Duties (B = 0.164, Sig. = .037) has a positive and statistically significant impact, suggesting that improving segregation of duties positively influences internal audit controls. Structure and Job Descriptions (B = 0.293, Sig. = .096) also show a positive relationship with internal audit controls, although this effect is not statistically significant at the 0.05 level (Sig. = .096). Overall, the model suggests that enhancing segregation of duties has a meaningful impact on strengthening internal audit controls, while the influence of structured job descriptions is positive but less definitive in this model. The findings indicate the presence of internal control measures, including an audit committee overseeing financial reporting, internal controls, and risk management. However, several weaknesses are identified, such as inadequate internal audit reporting, inadequate revenue database system, poor operation of billing systems and slow operations of online payment systems. These weaknesses can impact financial management and revenue collection. To address these issues, the study recommends specific remedies aligned with best practices identified in the literature. These remedies include partnering with mobile phone service providers to introduce a platform which allows customers to easily access their bills and statements, invest their resources in procuring a bigger database that can store all their revenue from different revenue streams. In addition, the council should also procure Computer Assisted Audit Techniques (CAATs) tools that will broaden the audit scope and perform test that cannot be performed manually by enabling real-time monitoring and detection of irregularities which will increase the quality and reliability of audit results. Auditors should also be trained in information system and forensic audits since payments and revenue at the council are processed using information systems, and due to the nature of the risks at the council the auditors need to have forensic skills in order to detect fraud. The other recommendation is that the council should have a disaster recovery plan in place. The recommendations provided in the study aim to establish a robust internal control system at Lusaka City Council.
Authors: Liwakala Iliamupu, Norman Kachamba
Institution: University of Zambia
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4408730909