The imperatives of internal audit in Nigerian banks: issues and prospects

C Okafor,P Ibadin

doi:10.4314/gjss.v8i2.51576

Abstract

Many have argued that internal audit plays a pivotal role in enhancing corporate performance in organizations (Oseni, 1994 and Lav, 2004).This is the focus of this paper, using Nigerian recapitalized banks as a reference point. This paper empirically evaluates the relationship between internal audit and corporate performance. In pursuance of this, a survey sampling of the banks was conducted. The dependent variable was corporate performance that was measured by return on total assets (ROTA).The independent variables were the motivation of internal audit staff and the efficiency of internal controls. The data collected for the variables were subjected to the ordinary least square (OLS) regression analysis. The results indicated that motivation of audit staff positively affect bank’s corporate performance; and the efficiency of the internal control was also positively related to corporate performance. It is therefore recommended that Nigerian banks should professionalize the audit departments to optimize the objectives for which they are established.KEYWORDS: Internal Audit, Corporate Performance, Motivation, Internal Control Efficiency, Internal Audit Staff

Highlights

Betty (1975) describes auditing as a branch of accounting concerned with the efficient use of resources to achieve a previously determined objective or set of objectives contained in a plan. Obazee (1997) describes internal auditing as the whole system of auditing, financial and otherwise, intended to secure management information and reliability of accounting records.Given the introductory definition, banks form the chief cornerstone of any financial system, and of the economy of a nation
The data presented and analyzed reveal that motivationally trained staffs have a positive relationship with the bank’s performance.This finding is consistent with the position of Okolo(2001)
The internal audit department functions, under the policy established by the banks, as a watchdog

Summary

Introduction

Betty (1975) describes auditing as a branch of accounting concerned with the efficient use of resources to achieve a previously determined objective or set of objectives contained in a plan. Obazee (1997) describes internal auditing as the whole system of auditing, financial and otherwise, intended to secure management information and reliability of accounting records.Given the introductory definition, banks form the chief cornerstone of any financial system, and of the economy of a nation. Okolo (2001) describes the internal audit function as an aspect of control mechanism, within a business, manned by specially assigned staff. According to Lav (2004), the internal audit provides an independent and objective appraisal of activity for management.

Results

Conclusion