Impact of Internal Audit on Corporate Governance in Deposit Money Banks in Nigeria

Abstract

The studies were focused on determining the relationship that exist between internal audit and corporate governance in deposit money banks in Nigeria. Specifically, the study’s objectives were to determine the relationship between internal audit function and the quality of corporate governance, the effect of internal audit reporting and independence on the quality of corporate governance, and the extent of the internal audit’s contribution to transparency and accountability. The survey research methodology was used in collecting data via a structured questionnaire, which was administered to employees in internal audit departments and other related departments such as compliance, risk management and finance in some selected deposit money banks in Nigeria. A total of 250 questionnaires were analysed using descriptive statistics and Pearson Product Moment Correlation and Multiple Regression Analyses. The findings revealed a strong positive and statistically significant relation between internal audit function and the quality of corporate governance (r =0.781, p<0.05). The influence of internal audit reporting and independence on the quality of corporate governance was found to be significant (R =0.677, F = 257.834, p<0.001). Both reporting and independence of internal audit influenced corporate governance quality although reporting played a dominant role as against independence of internal audit (regression coefficient of reporting: =0.491; regression coefficient of independence: =0.451). The ability of internal audit in enhancing transparency and accountability in deposit money banks in Nigeria was established (R = 0.724, F=663.552, p<0.001). The research concluded that, a more effective and independent internal audit in conjunction with thorough reporting greatly facilitates and enhance corporate governance among deposit money banks in Nigeria.