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This research work which is aimed at examining the internal audit as a tool in achieving organizational objective, for the purpose of clarity and academic understanding of above caption, First Bank Nigerian Plc is used as a case study, in which data were collected through the use of personal interview and questionnaires for the research study.

The research tries to first shows that internal auditing is an act of investigating the organization; its records and the financial statement prepared from them and form an opinion on the financial statement by an auditor. The overall objective of the study was to examine the effect of internal audit on the financial performance of organizations while considering First Bank Nigeria Plc. The study was guided by the three objectives; to examine the types of internal controls applied by First Bank Nigeria Plc, to analyze the importance of internal audit function in the accountability and to establish the relationship between internal audit and financial performance of organizations including First Bank Nigeria Plc Data was collected using questionnaire and interview guide, and during data collection purposive sampling method was used. Both qualitative and quantitative methodologies were used to analyze data as a sample size of 52 respondents was used.



1.1             BACKGROUND OF 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 imp rove the organization’s 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 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).


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.      How does internal audit practice help to achieve organizational objectives?

2.      How does internal auditor help to eradicate fraud in banking industry?

3.      Is the internal auditor completely independent of the management in organizations?

4.      Is there any significant relationship between internal audit and organizational objectives?

Does internal audit practice have positive impact on organizational performance?


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


Ho: Internal audit practice does not help to achieve organizational objectives.

Hi: Internal audit practice helps to achieve organizational objectives


Ho: Internal Auditor does not help in eradication of fraudulent activity.

Hi: Internal Auditor helps in eradication of fraudulent activity.


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 examine the impact of internal audit in the achievement of organizational objective.

ii.                 To observe the relationship between internal audit and organizational objectives.

iii.               To investigate the impact of internal audit meetings on return on assets of banks

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


The researcher now discovered that it will be reasonable to encourage Nigeria business promoters (both public and private) to introduce a proper and vital accounting system where fraud and all forms of embezzlements can be checked in all the organizations.


Internal audit is vast and complex subject as it involves internal accounting check and balancing, but the researcher concentrates her study on role of internal auditing in on Nigerian economy with emphasis on First Bank Nigeria Plc, Aduwawa Branch, Benin City.


During the conduct of this research work, some factors posed as constraints to the determined efforts of the research to carryout the research study to such a depth and in such a manner that it ought to have been carried out judging from its relevance to management, such factors include:

a.      Management Restriction: management more often than now allow access to information that are considered very confidential in nature like detail information of organization of the organizational corporate profile. As a result of the restrictions the author was able to work with only the information that he has access to.

b.      Time Constraint: Time is also another factor tat acts as hindrances in carrying out this research study. This is as a result of the fact that other things were still being attended to in the course of carrying out this research work.

c.      Financial Constraint: money also acts as a problem in the conduct of the research work. Traveling expenses were incurred in getting the materials for the research work. Also incurred, were expenses for the typing and distribution, building and a lot of other expenses.


1.      Auditing – an official examination of business and financial records to see that they are true and correct.

2.      Fraud/Embezzlement – illegal methods of collecting/getting money from organization (it is a criminal offence).

3.      Ethnics – rules, principles or order governing a profession.

4.      Leader – person in authority (Head of a country of organization)

5.      Boss – a superior officer having subordinate under him.

6.      Management – the art of running and controlling a business or similar organization. According to Fubara (1986) views management as an activity carried on in an environment that comprise of resources in capital and human, having alternative uses.

7.      Dishonesty – lack of trust and intending to deceive people.

8.      Frustrated – discouraging.

9.      Internal Auditor – professional expert in checking of books of account or records.

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