This st udy attempted at examining the practice of internal quality assessment and itsrnchallenges and prospects in Ethiopian HErs wi th pal1icular reference to Arba Minch University.rnTo thi s end, 'Mixed Research Design' was employed to grasp the general picture of the situation.rnQualitative data were obtained via ten (10) interviews with the management of the University andrnHERQA and two (2) FGDs with instructors and students representatives. Questionnaires werernused to gather data fi'om 238 participants. These pal1icipants were composed of 128 prospectiverngraduates, 76 instructors, and 34 university management. Qualitative descriptions were pursuedrnto analyze data from in-depth interviews and FGDs. Descriptive and inferential statistics were runrnto analyze quantitative data obtained from questionnaires. The result of the study revealed thatrnimportant preconditions to effective internal quality assessment were either missing or notrnproperly functioning. Limited aspects ofIQA strategies were practiced by the University. Examrnreview practice, internship programs, and instructors ' performance evaluations were commonrntraditions. Program review and external examiner system were occasionally used to make surernthat programs are up-to-the standard. No formal survey of graduate employment and employersrnand students sati sfaction has ever been undertaken. Educational research practice, teachingrnobservat ion s, peer reviews of programs and assessment of resource adequacy were quite scanty.rnNeglecting external constituencies, involvements in institutional quality assessments were limitedrnto internal stakeholders. The use of quality assessment results to improve academic quality fa llsrnshort of the desired level. HERQA has contributed a lot towards the development of institutionalrnculture of quality and quality assessment. Notwithstanding this fact, a good number of challengesrnwere encountered during the quality audit process. The University was not well-prepared to thernaudit in terms of human, material and financial resources. There was insufficient understandingrnof the audit procedures due to lack of experiences and inadequacy of the training offered torninternal quality auditors. HERQA's quality audit did not consider the prevailing condition of thernuniversity when it used the quality audit procedure of developed countries. Lack of qualified andrncompetent staff due to unbridled staff turn-over was intensified by involvement of MOE in staffrnrecruitm ent and appointment policy of the University. This study recommends the diversi ficationrnof quality assessment strategies by the University and provisions of adequate support by HERQArnand MOE to the quality assurance efforts of the University. Moreover, the University has torndesign strategies to recruit and retain qualified and competent staffby arranging incentivernmechanisms. Finally, HERQA has to revisit the audit methodology by gathering feedback fromrnHEls and drawing lesson from the first audit trial