Enhancing Risk Management through Internal Audit Quality: Insights from South West Nigerian Money Deposit Banks

Abstract

This study investigated the impact of internal audit quality on risk management in Nigerian money deposit banks. In particular, it looks at how the effectiveness of risk management procedures is impacted by three important factors: the internal audit department's budget (IADB), size (IADS), and percentage of certified internal auditors (POCCIA). Both survey and correlation research designs were used in this investigation. The study used structured questionnaires with a five-point Likert scale to collect primary data from accounting professionals working in the banking sector in the South West. A sample size of 108 respondents was chosen through a deliberate sampling technique, with an emphasis on people who had particular traits that were pertinent to the study. According to multiple regression analysis, greater financial investment in internal audit functions and a higher proportion of certified internal auditors significantly enhance risk management effectiveness, whereas the size of the internal audit department does not yield a significant impact. These findings underscore the critical importance of quality over quantity in internal audit resources, highlighting the need for strategic budget allocation and continuous professional development. The study concludes with practical recommendations for enhancing risk management frameworks in the banking sector, offering valuable insights for policymakers and industry practitioners seeking to bolster organizational resilience and financial stability.