INTERNAL AUDIT FUNCTIONS AND FINANCIAL PERFORMANCE:A STUDY OF SELECTED LOCAL GOVERNMENT IN BENUE STATE

Abstract

This study examines internal audit functions and financial performance of selected local governments in Benue State, Nigeria. The specific objectives include investigating the effect of internal audit, monitoring and control activities and audit risk management on financial performance in the local government system.  The study used a descriptive research design and considered 142 staff of finance departments and Audit units as well as the Personnel departments. However, only a sample of 126 staff responded which represented 88.73% of the population. Primary data was collected with the help of a five-point Likert scale structured questionnaires distributed across the seven (7) Local Government Areas (LGAs). Data were analyzed using SPSS version 16.0, with reliability confirmed via Yamane’s and Pearson’s correlation coefficient. The analysis includes frequency distribution of demographic profile data, mean statistics, correlation analysis, and regression analysis to examine the relationship between internal audit, monitoring and control activities, audit risk management on financial performance. The study reveals that, Pearson’s correlation coefficient of financial performance and internal audit was at (r= 0.811**, p-value = 0.000), financial performance and monitoring and control activities at (r=0.908**, p-value = 0.000), while financial performance and audit risk management at (0.952**, p-value=0.000), these results shows that internal audit, monitoring and control activities and audit risk management significantly influence financial performance positively. Implying that the Null Hypothesis was rejected and the alternative Hypothesis was accepted since p<0.05. The study recommended independent of internal auditor, a robust monitoring and control activities should be implemented to optimize resource allocation and program execution. Regular evaluations of these processes can help identify gaps and weaknesses, enable continuous improvement