Improving Corporate Governance

ACKNOWLEDGEMENTS

A number of individuals contributed directly and indirectly to the success of this research. I wish to express my sincere appreciation for their contribution to the formulation and completion of this study.

Exclusive thanks to my Supervisors Mr R N Chigodora and Mr A Chiwetu, who cooperated and encouraged me to carry out this research. I sincerely appreciate their undivided and individual guidance, attention and concern over the study.

Special mention goes to internal auditors, finance managers and accountants who expounded efforts to make this study a success through filling questionnaires and participating in interviews.

DEDICATIONS

I dedicate this piece of work to my late father and mother.

CHAPTER ONE

1.  INTRODUCTION

The need to focus on improving corporate governance has increased in many developed and developing economies during the past few decades, especially in the wake of economic collapse and financial crises (Brown & Caylor, 2006). According to the comprehensive report submitted by the Organization of Economic Cooperation and Development (OECD) in 2004, Corporate

Governance is defined as the supervision and guidance system adopted by the company. It is also a key element in improving economic efficiency and economic growth in addition strengthening investor confidence. Corporate governance includes a set of relationships between management, board of directors, shareholders and other stakeholders. It also provides a structure to determine the means to achieve the company's goals and to monitor the performance within the company. Good corporate governance should provide proper incentives to the Board of Directors and the company's management to seek to achieve the goals that are in the interest of the company and its shareholders and should facilitate effective control (OECD, 2004).

The elements of corporate governance include the audit committee, external auditor, internal audit, and the Board of Directors. In addition, other parties can be included, such as shareholders and professional organizations and other stakeholders (Staciokas & Rupsys, 2005). To secure the operations of governance of a strong company, there must be cooperation between the various components of the system of governance, internal auditors, executive management, financial management, board of directors, shareholders and external auditors (ECIIA, 2005). Several studies indicated that the role of internal audit in governance must take precedence over other internal audit activities, see (Audrey et al., 2004; Cohen et al., 2004; Laker, 2004 ; Prawitt et al.,2009). According to Okafor & Ibadin (Okafor; Ibadin, 2009) that the internal audit exercise a critical role in improving corporate governance in organizations. To achieve the quality of governance, the company must focus on all cornerstones of corporate governance and in particular the internal audit function. It assesses the commitment to the ethics of the organization and its goals, programs and activities. It is also an important source to other cornerstones such as the external audit, the Audit Committee, Board of Directors and senior management. The internal audit function is to control and maintain the quality of corporate governance. This research focuses on the role of the internal audit function in corporate governance in the financial sector of Zimbabwe.