Abstract:

The public sector in Zambia is categorized in five main categories namely; the Central Government, Local Government, Parastatals and Statutory organizations. This study focuses on the Parastatals also called State Owned Entities (SOEs). The SOEs have a mandate to promote diversification, industrialization and economic growth, as well as contributing to the sovereign wealth of Zambia. However these SOEs have continued to score poor financial performance as usually reported by Auditor General in the public sector audit reports. If these SOEs continue to record poor performance then the aspect of industrialization, diversification and contribution to economic growth cannot be achieved.  The Office of the Auditor General, plays the role of auditing the SOEs and reports to Parliament using appropriate legislation such as the Public Audit Act. Despite the continuous audits being conducted the SOEs have been poorly performing financially and in accountability, hence this study to evaluate the implications of Public Sector Audit on SOEs’ Financial Performance and Accountability for a period of thirteen years. The research approach is a quantitative one with the aim to establish empirical statistical evidence to current theories that audit can improve organizational performance. This study embarks on establishing conclusive statistical evidence to the concerts and theories like (Shariman et. al, 2017) that audit can reduce inefficiencies and increase business performance. The aim of the study was establish a causal relationship between public sector audit and  internal organizational   inefficiencies  that lead to accountability and  better financial performance using secondary data   on the  matters raised by the Office of the Auditor General  on Parastatals and  the financial statements  issued  by  State Owned entities in Zambia. The secondary data was collected for a period of thirteen (13) years for thirty seven (37) Parastatals in Zambia and analyzed using SPSS package using linear regression analysis. From the analysis performed using linear regression on SPSS package, it was overserved that each time public sector audit was conducted using the combination of the three methods namely financial audit, performance audit & compliance audit the result on internal inefficiency improved by 0.699 time or 69.9%. From the findings it was concluded that public sector audit has implications of the internal organizational efficiency that lead to better accountability and financial performance and Parastatal entities have been recording improvements in accountability and financial performance as result in internal efficiency improvement for thirteen years.