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    Determinants and effects of the internal audit function in microfinance institutions : a global perspective : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Accountancy at Massey University, Manawatu Campus, New Zealand
    (Massey University, 2022) Omidiji, Abiodun
    This research investigates the determinants and effects of the internal audit (IA) function in microfinance institutions (MFIs) using data from the World Bank’s Microfinance Information Exchange database. The sample is comprised of 1,025 MFIs during the period 2010–2018. MFIs are specialised financial institutions established to provide vital financial services to the poor, and it is of particular interest to identify and understand the determinants of their IA function. Moreover, IA has wider implications for the microfinance industry which is reported to lack effective governance and control mechanisms. This thesis therefore consists of two distinct studies: (i) the study of the determinants of IA function in MFIs; (ii) the study of the association between IA function, loan losses, and financial performance in MFIs. In the first study, I find that as MFIs increase outreach, proportion of female board directors, and level of financial performance, the existence of the IA function in MFIs is advanced. I also find that sensitivity to operational costs can deter MFIs from investing in the IA function. In the second study, I find that the IA function reduces the rate of loan loss occurrence in MFIs. I also find that the IA function improves the financial performance of MFIs through its significant positive effect on institutional operational self-sufficiency. Furthermore, I find that the negative association between loan losses and financial performance is not significantly higher in MFIs without IA, than in those with IA. The IA function therefore both reduces the risk of writing off bad loans and improves profitability, but it cannot solitarily eliminate the adverse impact of loan losses on MFI financial performance. This thesis extends the corporate governance and IA literature by identifying the factors that determine IA existence from the MFI perspective. It also provides evidence of the effect of the IA function on MFI loan losses and financial performance. This thesis reveals the potentiality of the IA function for improving governance and risk management in MFIs and its findings provide policy and practice implications for the microfinance industry, development agencies and governments to consider.
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    Internal audit of foreign exchange operations : a research report presented in partial fulfilment of the requirements for the degree of Masters of Business Studies at Massey University
    (Massey University, 1989) Mathews, Clive M. H
    Foreign exchange operations involve complex economic. political, technical and financial factors. Due to these complexities and the rapid deregulation of the New Zealand financial markets in recent years, there is a real danger that foreign exchange operations maybe mismanaged leading to major losses. A recent New Zealand survey by Deloitte Haskins and Sells on treasury operations, which include foreign exchange activities, as reported by the National Business Review stated: ... many organisations which had moved to manage financial risks by establishing treasury functions had done so without fully understanding the implications of mismanaging that function. This had led to spectacular and well publicised losses such as the 483 million marks Volkswagon lost through unauthorised dealing. (MacLennan, 1989, p.14) This illustrates the magnitude of financial loss that can occur through mismanagement of treasury and, similarly, foreign exchange operations. A specific dollar amount for the total value of foreign exchange operations in New Zealand is not available1, 1. (Discussions with the Department of Statistics, Massey University's Economics Department and Mr B.H. Doyle from the Rural Bank determined that no actual figure was available due to the difficulties in establishing a basis for measurement.) but it runs into many billions of dollars. The research described in this paper addressed issues relating to the internal auditing of Foreign Exchange (FX) operations. As indicated above, foreign exchange operations carry high risk of loss due to the complexity of the factors involved. The primary objective of this research was to identify the seriousness of risks and appropriate management controls to deal with those risks. To achieve this two subobjectives were formulated. Firstly, all possible risks had to be identified, both from a normative and practical perspective. Secondly, the identification of all types of management controls theoretically appropriate and/or actually used to eliminate or reduce risk. This research is likely to be particularly relevant in an Australasian context because of the high dependency of local economies on the export and import of goods and services invoking millions of dollars of foreign exchange being handled each working day. Within New Zealand the deregulation of the financial markets, since 1984, has led to greater exposure to currency fluctuations, with the management controls to eliminate or reduce risk consequently becoming of greater importance.