The Internal Audit Function as a Corporate Governance Mechanism in a Developing Economy: An Empirical Study of the Nigerian Financial Sector




Journal Title

Journal ISSN



Volume Title


De Montfort University


Thesis or dissertation

Peer reviewed


This study investigates the contributory power of the Internal Audit Function (IAF) as one of the four mechanisms of Corporate Governance. The primary aim of the research is to examine the capacity of the IAF to fulfil its contributory role as one of the four cornerstones of CG particularly in the financial sector (FS) of a developing country-Nigeria. Four research questions were put forward. First, what is the level of independence of the IAFs in the Nigerian financial sector (NFS), Second, To what extent are the IAFs in the NFS performing their roles in conformity with the Institute of Internal Auditors (IIA)’s standards?, Third, how objective are the internal auditors in the Nigeria Financial Sector (NFS)?, and finally, to what extent are internal auditors in the NFS competent in fulfilling their expected roles? To provide some answers to the research questions, the study made use of triangulation of both quantitative and qualitative primary data gathered from both questionnaire survey on 88 respondents (internal auditors) from firms in the NFS, through purposive sampling method. Four hypotheses formulated for the study were tested using both binary logistic regression analysis (BLRA) and thematic analysis on the collected data, with the aid of a conflation of 3 theories (Agency, Transaction Cost Economy and Institutional theory-‘’ATI’’). Overall, the study provided strong evidence to indicate that the IAFs of the NFS cannot be said to be totally independent of management. The study also established that the auditing methodology of the IAFs of the NFS is not in tune with the new order of internal audit practice (i.e. IIA’s standards). Likewise, the internal auditors in the NFS were not found to objective and proficient. Areas requiring improvement include the manner of appointment and dismissal of CAEs, irregularity of audit committee meeting attendance by the CAEs, insufficiency of training for the IAs as well as their low membership with the Institute of Internal Auditors (IIA). The originality of the study and its key contribution to the body of knowledge reside in the evolution of the expansive theoretical framework (‘’ATI’’), and the development of four different models applied to investigate the IAF’s contributory power in CG.





Research Institute