Abstract: This study assessed the effect of internal audit on the financial performance of local NGOs in Rwanda, using the Gasore Serge Foundation as a case study. The study examined how audit quality, audit firm independence, and compliance audits influence financial performance indicators, including revenue generation, expenditure control, fundraising, program efficiency, and beneficiary satisfaction. A mixed-method approach was adopted, combining descriptive and correlational research designs. A sample of 109 respondents was selected from a target population of 150. The findings revealed that audit quality positively influenced financial reporting accuracy and decision-making, with a mean of 3.69 and a regression coefficient of 0.601. Audit firm independence showed a strong influence, with a mean of 3.76 and a regression coefficient of 0.602, while compliance audits recorded the highest mean of 3.80 and a regression coefficient of 0.361. Correlation analysis showed strong positive relationships between the independent variables and financial performance, with Pearson coefficients above 0.96. The regression model demonstrated high explanatory power (R² = 0.973), with all variables statistically significant (p < 0.001). The study concludes that effective internal audit systems enhance accountability, transparency, resource management, and organizational sustainability. It recommends strengthening audit capacity, implementing audit recommendations, and allocating adequate resources to audit functions.