THE ROLE OF INTERNAL AUDIT ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN RWANDA CASE STUDY Equity Bank Rwanda/ Head office (2019-2022)

Abstract

This study projected was on the role of internal audit on financial performance of commercial banks in Rwanda case study: equity bank Rwanda PLC (2019-2022). In Rwanda particularly, the audit function in the banking sector has not been fully taped. This coul1.d be seen in the numerous cases of errors, intent to defraud and other fraudulent acts that exist in the banking industry. It is therefore, no wonder that the distress in the banking sub-sector in the nineties reflected lack of effective control mechanism of the audit function in the banking industry. The past decade has seen dramatic losses in the banking industry around the world, firms that had been performing well suddenly announced large losses due to credit exposures that turned sour, interest rate positions taken, or derivative exposures that may or may not have been assumed to hedge balance sheet risk. In response to this, financial institutions have almost universally embarked upon an upgrading of their risk management and control systems. The specific objectives of this study were: To examine the effectiveness of internal audit applied in Equity Bank Rwanda PLC, to assess the contribution of internal audit to the financial performance of Equity Bank Rwanda PLC.The researcher used descriptive research design. Throughout this study primary and secondary data was used by the researchers and data was collected by using questionnaire, interview and documentation technique. In this study, the study found that from In the table 4.22 shows that the Net Profit Margin ratio of Equity bank Rwanda PLC was 35.23%, 36.35%, 36.95%, and 37.40 respectively in 2019, 2020, 2021 and 2022. for 100Rwf of sales a bank got 35.23 Rwf of benefit; in 2019, for 100Rwf of sales a bank got 36.35Rwf of benefit; in 2020, for 100Rwf of sales a bank got 36.95Rwf of benefit and in 2021 and for 100Rwf of sales a bank got 37.40Rwf of benefit; in 2022 . Therefore, these results show that Equity bank Rwanda PLC is profitable.