Open Journal of Business and Management, 2021, 9, 1064-1088 https://www.scirp.org/journal/ojbm ISSN Online: 2329-3292 ISSN Print: 2329-3284 DOI: 10.4236/ojbm.2021.93057 May 13, 2021 1064 Open Journal of Business and Management Internal Audit Practices and Financial Management Reforms: The Case of Payroll Accounting System in the Tanzania Public Sector Nuru Kalufya, Riziki M. Nyello Institute of Social Work, Dar es Salaam, Tanzania Abstract Several initiatives as part of the public sector financial management reforms to improve the payroll system in Tanzania were introduced. Despite such in- itiatives, different cases of fraudulent were reported which raised the need for examining the influence of internal audit practices on the payroll accounting performance. The article involved 240 respondents from 321 public institu- tions. Stratified sampling technique and questionnaires were used as sam- pling technique and data collection instrument respectively while structural equation model (SEM) and Mean were used in data analysis. Focusing on the institutional theory and contingency theory, the results revealed that control environment had significantly positive influence on payroll record processing while risk-based internal audit had significantly positive influence on payroll reconciliation. Internal auditors’ professional competence had significantly positive influence on payroll reconciliation, payroll record processing and payroll accounting system coverage. Furthermore, internal audit work per- formance had significantly positive influence on payroll reconciliation and payroll accounting system coverage. Among others, the article recommends that managers should consider internal audit function as a strategic function and not operational to strengthen the payroll accounting system. Keywords Internal Audit Practices, Payroll Accounting System and Public Sector 1. Introduction Public service has been always the top option available to African governments How to cite this paper: Kalufya, N., & Nyello, R. M. (2021). Internal Audit Prac- tices and Financial Management Reforms: The Case of Payroll Accounting System in the Tanzania Public Sector. Open Journal of Business and Management, 9, 1064-1088. https://doi.org/10.4236/ojbm.2021.93057 Received: February 8, 2021 Accepted: May 10, 2021 Published: May 13, 2021 Copyright © 2021 by author(s) and Scientific Research Publishing Inc. This work is licensed under the Creative Commons Attribution International License (CC BY 4.0). http://creativecommons.org/licenses/by/4.0/ Open Access