Effectiveness of Internal Audit in Private Commercial Banks of Bangladesh

Abstract

This study intends to identify the utilization of internal audit function in Private Commercial Banks of Bangladesh, ever since this function is now an unavoidable requirement as per the Bank Company Act 1991. Outcomes of this study designed that, the corporate governance and risks management related activities of internal auditors are merely incorporated as statutory obligations and do not endow with additional value to the stakeholders. We put emphasis on that internal auditing in Private Commercial Banks of Bangladesh is still taking up the conventional approach which is mostly concerned with compliance and monitoring rather than adopting value added approach. The implication of the study is more decisive to the agency theory whereby public funds are being spent on activities which do not add value to the stakeholders. This could in turn water down the principal agent relationship, which is already a continual issue due to the corporate collapses witnessed over the last decade. The study comes as a timely contribution to practice since, Bangladesh economy is now at a growth and development stage and the Private Commercial Banks of Bangladesh are the major contributors to the development of Bangladesh economy. We put forward that it is time to change the outlook of internal audit system by Private Commercial Banks of Bangladesh