An Analysis of the Importance-Performance Matrix of the Audit Committee, Internal Audit, and Board of Directors' Attributes and Financial Sustainability in the Local Government in Ghana

Abstract

This study aimed to analyse the importance-performance matrix of the audit committee, internal audit, and board of directors' attributes and financial sustainability in the local government in Ghana. The study used census balanced panel data design and survey approach to administer 621 structured questionnaires to the chief audit executives, audit committee and board of directors’ chairpersons in the 207 MMDAs. Data collected were analysed using descriptive statistics and the partial least square-structural equation modelling (PLS-SEM). The findings indicated that all the attributes (board size, board independence, board gender diversity, internal auditor independence, internal audit size, internal auditor competence, audit committee meetings, audit committee independence, and audit committee competence) have a direct significant relationship with financial sustainability. The findings indicated board size as the highest importance to influence financial sustainability of MMDAs. Additionally, among the internal auditors’ attributes, internal audit size (IAS) is considered as the highest importance to influence financial sustainability of MMDAs. With regard to the audit committee attributes, audit committee competence (ACC) is considered as the highest importance of the audit committee attributes to influence financial sustainability of MMDAs. Overall, the findings from the IPMA highlight the need of creating unity among board of directors, internal auditors and audit committees in all the municipalities. This implies when the board of directors, internal auditors and audit committees in MMDAs work together, financial sustainability will improve.