THE IMPACT OF INTERNAL AUDIT ACTIVITIES ON THE PERFORMANCE OF BANKS IN NIGERIA.

TABLE OF CONTENTS Title Page.I Certification..II Dedication.III Acknowledgements...IV Table of ContentsVI Abstract. IX CHAPTER ONE: INTRODUCTION

1.1 1.2 1.3 1.4 1.5 1.6 1.7

Background to the Study Statement of the Problem Objectives of the Study Research Questions Research Hypothesis Significance of the Study The Scope and limitation of the Study
REVIEW OF RELATED LITERATURE

CHAPTER TWO:

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8

Introduction The Concept of Internal Auditing Historical Development of Internal Auditing The Practice and Techniques of Internal Auditing Internal Auditing Reports Uses of Internal Audit Report The Responsibility and Accountability of the Internal Auditors The Role of Internal Audit Department

CHAPTER THREE: RESEARCHER METHODOLOGY 3.1 Introduction 3.2 Research Design

3.3 Population of the Study 3.4 Sampling technique and sample size 3.5 Sources of Data 3.6 Method of Data Collection 3.7 Method of Data Analysis 3.8 Limitation for the Methodology 3.9 Model Specification CHAPTER FOUR: FINDINGS 4.1 4.2 4.3 4.4 Introduction Data Presentation and Analysis Test of research hypothesis Discussion of Findings SUMMARY, CONCUSION AND RECOMMENDATION DATA PRESENTATION, ANALYSIS AND DISCUSSION OF

CHAPTER FIVE: 5.1 Introduction

5.2 Summary of findings 5.3 Conclusion 5.3 Recommendations BIBLIOGRAPHY Appendices

CHAPTER ONE INTRODUCTION 1.1 Background to the Study In view of the recent global recession of 2009-10, when investments made by banks and financial institutions proved unsafe and almost triggered a financial meltdown that required strong input and investment by most democratic governments, the need for

internationally regulated and well-audited financial institutions are greater than ever. Therefore financial institutions have started to concentrate on rigorous internal audit processes undertaken by an internal audit team that conducts regular control self assessments. According to Obazee, (2009), internal audit can be define as an independent activity objectively, confirmatory, and consultant

determined to add value and improve the organizations operations and by helping them to achieve their objectives through a systematic and disciplined method to evaluate and improve the effectiveness of risk management and control processes and governance.

The financial institutions accountant has the responsibility of developing systematic arrangements to assist management in the performance of the services of the institution while the financial institution auditor has among other duties the complementally role to examine whether management actually performs that efficiently. The financial institutions auditor has to satisfy himself that the presented have been prepared in accordance with statutory and constitutional requirements and regulation and that proper accounting practice have been observed in their Compilation. With the growing size and complexity of financial institutions in the recent years, the importance of the internal audit has correspondingly increased so that it is today a major factor in establishing the quality of the financial institutions internal control and its development has made considerable contribution to the improvement of the financial institutions management (Klein, 2002). The internal audit is one of the important means for management to confirm and verify the compliance of administrative units in the financial and administrative policies, legislations, financial and

administrative systems and the adopted public policies. The internal audit has been developed and increased the attention to it and standards, guidelines and moral constitutions had been issued and became one of the important units in most banks in the world. Banks forms the chief corner-stone of any financial system, and indeed of the economy of a nation (James, 2003). At the heart of banking, is the audit function, this is evident by the fact that all other departments are linked with the internal audit department. Organizations have recognized internal audit as a tool for ensuring effective working of the internal control system. Efficient performance entails achieving goals with minimum waste of resources that is making the best use of resources that is making the best use of money, time materials and people (Lewin and Johnson 2000).

1.2

Statement of the Problem Internal audit is an integral part of the internal control system of

financial institutions, at the heart of banking is the audit function: This is evidenced by the fact that all other departments are linked with internal

audit department. The importance of internal audit system cannot be overemphasized, since organizations have recognized internal audit function as a tool for ensuring effective workings of the internal control system. Okolo, (2001) describes internal audit functions as an aspect of control mechanism, within a business, manned by specially assigned staff. However, in Nigeria, the audit function in the banking sub-sector has not been fully taped. This could be seen in the numerous cases of errors, intent to defraud and other fraudulent acts that exist in the banking industry. It is therefore, no wonder that the distress in the banking sub-sector in the nineties reflected lack of effective control mechanism of the audit function in the banking industry. The experience of failed banks in Nigeria and other nations have called for reinforcement of audit and the strengthening of the control system in the Nigerian banks. It is against this background that, this study seeks to evaluate the role of internal auditing in enhancing efficient performance of financial institutions in Nigeria considering the fact that, the banking institutions is critical to the survival of any economy.

1.3 Objectives of the Study The objective of the study is to examine the impact of internal audit activities on the performance of banks in Nigeria. The specific objectives are stated below: i. To investigate the impact of internal audit meetings on Return

on assets of banks. ii. To investigate the impact of financial expert on return on assets of

banks. 1.4 Research Questions i. Does internal audit committee meeting significantly

influence ii.

the returns assets of banks?

Does financial expert significantly influence the return on assets of

bank? 1.5 Research Hypotheses The following hypotheses have been formulated and stated in null form to be tested in the course of this study.

Ho1: Audit committee meeting does not significantly influence the returns on assets of banks? Ho2: financial expert does not significantly influence the return on assets. 1.6 Significance of the Study This study will be of immense importance in the sense that it will assist management to realize the companys set performance goals; this will be achieved through projecting to the public the impact of internal audit on performance of firms. This work will also broaden not only the researchers knowledge but also the general public on how the internal audit committee can assist management in realizing profitability and accountability. More so, this work shall be found useful to those who may want to carry out further on this topic. 1.7 The Scope and Limitation of the Study The scope of this study covers Nigerian banking sector. First Bank, Access bank and Eco-bank Plc have been selected as a study reference.

The study shall cover a period between 2007-2011. The financial statement of the aforementioned banks in these periods shall be examined and values of internal audit and performance proxies will extracted for investigation.

REFERENCES Holt & Dezoort (2006). The internal Audit and its role in corporate Governance. William Heinemann publisher. Lewin J. E & Johnston W.J. (2000). The impact of ownsizing and restructuring review. Okafor & Ibadin (2009). The imperative of Internal Audit in Nigerian Bank. Issue and prospects. Orsaah S. (2009). Introduction to behavioural research; Aboki. Publishers. Unegbu & kida (2011). Effectiveness of internal audit as instrument of improving public sector management. on organizational competiveness. Competitive

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