Abstract

The purpose of this study was to investigate the relationship between internal auditing and operational risk in Somalia since in my best knowledge there is no study examined the relationship between internal auditing and operational risk in Somalia. Five remittance companies were selected as a sample and self-administered questionnaire was distributed 80 employees of these companies, these employees contained internal auditors, operational managers, and financial mangers. Descriptive statistics was used firstly for the data description of the variable using mean and standard deviation, and then correlations of the variables were presented based on Pearson correlations. The findings of this study include that Somali Remittance Company’s risk identification is weak, weak segregation of duties, no identity of previous incurred risks, reporting behind the schedule and impaired internal audit independence, which highlighted broad operational risk in the remittance companies. As a whole the study found that internal audit and operational risk have significant negative relationship (r=-0.0.15 and P=0.893) with Cranach’s alpha of 0.90 or 90%.

Key words: Internal auditing, internal control, Remittance firms, Somalia.