Promoting Good Governance through Internal Audit Function (IAF): The Nigerian Experience

Taiwo Olufemi Asaolu,James Unam Monday,Samuel Adebayo Adedokun

doi:10.5539/ibr.v9n5p196

Abstract

<p>The subject of governance has become a pertinent issue for business, government, politics, and the general public. In both the private and the public sectors, there is an increasing demand for good governance in terms of accountability and transparency, and internal audit function within organizations has an important role to play in the achievement of these objectives. This study therefore assessed the effects of internal audit function (IAF) on good governance in the public sector in Nigeria. Primary data was obtained through the administration of structured questionnaire to purposively selected respondents comprising Head of Internal Audit, Director of Finance and Supplies, and Head of Local Government Administration, in 33 public sector organizations in Oyo State, Southwestern Nigeria. A total of 99 respondents participated in the study. IAF was measured by independence of internal audit system, scope of work, professional competence, examination process, and management support, while quality of service, management of public resources measured good governance. Data obtained was analysed using correlation analysis and multiple regression technique. The results showed that the effectiveness of IAF in Nigerian public sector organisations was moderate since internal audit system in the public organisations was not absolutely independent and professional competence was limited due to the challenge of insufficient funds to successfully carry out its duties. Moreover, the study revealed that IAF had significant and positive effect on the quality of service delivery and management of resources in the public organisations. The study concluded that internal Audit function is a veritable tool for promoting good governance in the Nigerian Public Sector. This study therefore recommended that there should be legal mandate in public sector organisations that allows government information to be publicly published and special funds should be made available to internal auditors as it would enhance effectiveness of internal audit function and boost good governance in the organisations.</p>

Highlights

Good governance became a highly topical business issue at the beginning of the 21st century following a series of large corporate scandals and failures
This study revealed how good governance in public organisations can be promoted through internal audit function (IAF)
The evidence from the study showed that the internal audit system in the public organisations was not absolutely independent and professional competence of the internal audit system was limited due to the challenge of insufficient funds to successfully carry out its duties

Summary

Introduction

Good governance became a highly topical business issue at the beginning of the 21st century following a series of large corporate scandals and failures. Good governance refers to government agencies’ conduct in implementing innovative policies and programs to increase the quality of public service with the ultimate aim of increasing economic growth (Grindle, 2004; Hellman et al, 2000). Such innovative policies and programs address governance aspects such as transparency, accountability, participation and professionalism (Liddle and Mujani, 2005). No matter how well designed, will fully prevent greedy, dishonest people from putting their personal interests ahead of the interests of the organizations they manage. IAF comprises independence of internal audit system, scope of work, professional competence, examination process, and management support

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Methods

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Conclusion