Assessment of the impact of internal audit on Cut hotel profitability

Abstract

The study sought to investigate the impacts of internal audit on profitability of firms in the hospitality industry. Recent corporate scandals at global and local level in th presence of legislature and internal audit departments propelled the need to examine the impact of internal audit departments on profitability. The case study used was Chinhoyi University Hotel. A sample of 21 employees of Chinhoyi University of Technology was drawn from the population and stratified random sampling technique was used. Descriptive research design was used in data collection. Primary data was collected through questionnaires and interviews. The results showed that internal audit is vital tool in enhancing profitability of companies. Findings indicate that weak internal audit adversely affects the operations of CUT Hotel and results in poor internal communication, poor financial performance and high business risk. The study showed that value for money audits, information audits and continuous audits contribute substantially to the enhancement of profitability if implemented to the internal audit function. The study recommended that internal audit departments should focus on risk management to contribute to the profitability of a firm. Internal audit work should be organised and formally incorporated in annual work plans. Organisations should develop internal audit standards from the international standards on auditing and apply these consistently to optimise the effect of internal audit on organisational performance.