The Role of Female Leadership in Enhancing Internal Audit Effectiveness and Promoting Good Governance at eThekwini Municipality, South Africa.

Abstract

This research explores the role of female leadership in enhancing internal audit effectiveness and promoting good governance at eThekwini Municipality, South Africa. The eThekwini Municipality, the third-largest metropolitan area in the country, faces significant challenges related to governance, risk management, and control environments. Despite legislative frameworks like the Municipal Finance Management Act (MFMA) and ongoing national interventions, the municipality has consistently received unqualified audit opinions with material findings over the past five financial indicating persistent governance deficiencies. According to the Auditor-General South Africa (2024), an unqualified audit opinion signifies that the financial statements are free from material misstatements. However, unless a clean audit opinion is issued, there are still significant findings related to non-compliance with legislation, weaknesses in reporting on predetermined objectives, or both. This means that while the financial statements may be fairly presented, governance issues continue to hinder the municipality from achieving a clean audit opinion, highlighting ongoing concerns in accountability, transparency, and compliance. This study aims to assess how female leadership can directly influence the effectiveness of the internal audit function and address these governance issues. The significance of this research lies in its potential to inform policy and improve governance outcomes in eThekwini Municipality. By examining the unique competencies and contributions of female leaders, particularly in the internal audit function, the study specifically aims to (1) evaluate the effectiveness of eThekwini Municipality’s Internal Audit Unit in promoting good governance, (2) examine the leadership competencies of female leaders within the unit, (3) explore the relationship between female leadership and internal audit performance, and (4) provide a framework for policymakers and organizational leaders to promote good governance through gender-inclusive leadership practices. By assessing these dynamics, the study seeks to identify how female leadership can improve audit practices, foster transparency, enhance accountability, and address inefficiencies within the municipality’s governance structures. The study employed a structured analytical framework to assess the relationship between female leadership, internal audit effectiveness, and good governance at eThekwini Municipality. A quantitative research approach was adopted, utilising descriptive statistical techniques such as mean, standard deviation, and frequency analysis to evaluate audit effectiveness and leadership competencies. The study population consisted of 319 municipal employees, from which a purposive sample of 150 employees was selected to provide relevant insights. This sampling method ensured that participants with direct knowledge of internal audit and governance processes were included, enhancing the reliability of the findings. The results of the analysis found that 74% of respondents agreed that the internal audit unit is effective in promoting transparency and accountability, supporting good governance. In addition, 77% confirmed that the unit is proficient in identifying and managing risks, which is essential for proactive governance. Female leaders in the internal audit unit were viewed as highly competent, with 74% of respondents agreeing that female leadership positively impacts decision-making, fostering accountability and strategic planning. Moreover, 70% of respondents believed that female leadership has a constructive effect on internal audit performance, although only 53% identified female leaders as effective motivators for their teams. On the broader impact of gender-inclusive leadership, 86% of respondents agreed that it is essential for promoting good governance, and 85.7% supported prioritising gender diversity in leadership roles to enhance governance outcomes. This study is underpinned by Transformational Leadership Theory, the Corporate Governance Framework (King IV), Internal Audit Effectiveness Models (IPPF), Institutional Theory, Agency Theory, and Gender and Leadership Theory. Transformational Leadership Theory emphasizes the role of visionary and inspirational leadership in driving organizational effectiveness, fostering accountability, and promoting ethical governance. The Corporate Governance Framework (King IV) provides a structured approach to governance, emphasizing principles such as transparency, accountability, and integrity. Internal Audit Effectiveness Models, including the International Professional Practices Framework (IPPF), offer key guidelines for assessing audit performance. Institutional Theory examines how organisational structures and cultural norms influence the adoption of gender-inclusive leadership practices. Agency Theory explores the dynamics between municipal leadership (agents) and stakeholders (principals), highlighting the role of female leaders in strengthening oversight and accountability. Gender and Leadership Theory assesses the impact of gender diversity on leadership effectiveness, illustrating how female leaders bring unique attributes that enhance internal audit functions and governance outcomes. This study acknowledges several potential limitations. The research is focused on eThekwini Municipality, a single public entity in South Africa, meaning the findings may not be transferable to other organisations or businesses operating in different contexts. Secondly, the study employs a quantitative research approach, meaning the findings are limited to this method and cannot be generalized to studies using other research approaches.