Examining the Effectiveness of Audit Functions in Loss Prevention and Regulatory Compliance in Business Firms: Evidence from Selected Firms in Kitwe, Zambia

This study explored the perceived effectiveness of audit functions in selected business firms in Kitwe, Zambia, in the areas of loss prevention, revenue, regulatory compliance, and business growth. A descriptive cross-sectional survey was carried out on 104 respondents who were selected purposively using structured questionnaires. The study used descriptive statistics and two-tailed one-sample t-tests against the neutral midpoint (μ₀ = 3), with Holm adjustment, for data analysis. The mean rating for detection of fraud and financial irregularity was significantly above neutral (M = 4.096, SD = 1.000), t(103) = 11.177, adjusted p < .001. Five loss-prevention indicators were above neutral, whereas perceived reduction of operational losses was below neutral (M = 2.538, SD = 1.358), t(103) = −3.467, adjusted p = .002. Of the 86 respondents providing a definite Yes/No response, 84 indicated that audits reduce exposure to penalties and sanctions (exact two-sided binomial p < .001). Constraints reported included inadequate technology, poor record keeping, and high audit costs. The findings depict perceptions of respondents of the firms sampled. The purposive sample and cross-sectional self-reported data do not establish that audit functions caused revenue growth or other business outcomes. Firms may want to consider bolstering audit technology, record management, staff capacity, management support, and follow-up on audit recommendations.