INTERNAL AUDIT AND PERFORMANCE

OF DEPOSIT MONEY BANKS

(A CASE STUDY OF GUARANTEE TRUST BANK OFFA)

BY

ADEWUYI BUSAYO TOPE

AC/HND/F21/6762

A PROJECT SUMMITTED TO THE DEPARTMENT OF

ACCOUNTANCY, SCHOOL OF BUSINESS AND MANAGEMENT
STUDIES, FEDERAL POLYTECHNIC OFFA, KWARA STATE IN
PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE
AWARD OF HIGHER NATIONAL DIPLOMA (HND) IN
ACCOUNTANCY

NOVEMBER, 2023
 CERTIFICATION
This project titled INTERNAL AUDIT AND PERFORMANCE OF DEPOSIT MONEY
BANKS prepared and submitted by Adewuyi Busayo Tope in partial fulfillment of the
requirements for the award of HND in Accountancy is hereby accepted.

____________________ ___________________
Dr. Yeosuf A.A Date
Supervisor

_____________________ __________________
Mr. Oyewole M.O. Date
Head of Department

____________________ ___________________
External Examiner Date
 DECLARATION
I, ADEWUYI BUSAYO TOPE with matriculation number AC/HND/F21/6762, declare that
this research work titled “Internal Audit and Performance of Deposit Money Banks” is my
original work and has not been presented elsewhere for award of any degree to the best of my
knowledge. All information obtained from published and unpublished works of others have
been duly referenced and acknowledged.

________________________ ______________________
ADEWUYI BUSAYO TOPE DATE
(AC/HND/F21/6762)
 DEDICATION
This research work is dedicated to God Almighty, the author and finisher of our faith, who
gave me wisdom, knowledge and understanding and for granting me the privilege to end this
project successfully.
 ACKNOWLEDGEMENTS
Nothing can man receive except it is given from above, I thank God for sparing my life till
today and being my help in the times of need, and for giving me the strength and courage to
complete this project. May His name alone be praised forever more.
My heartfelt gratitude goes to my parents Mr. and Mrs. Adewuyi for their encouragement,
moral and financial support. God will bless and keep you.
Special appreciation to my supervisor Dr. Yeosuf A.A for his patience, intellectual
competence, his guidance over every detail from the inception to the completion of this work.
May God bless you and grant all your heart desires.
A big thanks to my Head Of Department Mr. M.O Oyebode for his advice and assistance
through this research work, May God reward you. Special thanks to all my lecturers God
bless you all.
My profound gratitude goes to my siblings Adewuyi Oluwaseyi, Stephen and Lydia for their
support and prayers. God will reward you greatly.
 TABLE OF CONTENTS
Content Page
Title Page i
Certification ii
Declaration iii
Dedication iv
Acknowledgements v
Table of Contents vi
Abstract vii
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 2
1.3 Research Questions 3
1.4 Objectives of the Study 3
1.5 Statement of the Research Hypotheses 3
1.6 Significance of the Study 3
1.7 Scope of the Study 4
1.8 Operational definition of Terms 4
CHAPTER TWO
LITERATURE REVIEW
2.1 Conceptual Review 5
2.2 Theoretical Review 10
2.3 Empirical Review 12
CHAPTER THREE
METHODOLOGY
3.1 Research Design 14
3.2 Population of the Study 14
3.3 Sample and Sampling Technique 14
3.4 Source and Data Collection Technique 15
3.5 Research Instruments 15
3.6 Validity of Research Instruments 16
3.7 Reliability of Research Instruments 16
3.8 Method of Data Analysis 16
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 Data Presentation 17
4.2 Data Analysis 22
4.3 Discussion of Findings based on Objectives of the Study 26
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 27
5.2 Conclusion 27
5.3 Recommendations 27
5.4 Suggested Area for Further Studies 28
5.5 Limitations of the Study 28
 ABSTRACT
This research study examines the internal audit and performance of deposit money Banks. Its
main objective is to examine the impact of internal audit activities on the performance of
banks in Nigeria. For the purpose of this study, the researcher adopted the survey method
Research Design. Data used in this research were gotten from both primary and secondary
sources including questionnaires and textbooks respectively. The sampling was done using
the stratified sampling technique. The population of the study consists of 20 staffs of
Guarantee Trust Bank PLC Offa, Kwara State. Data collected were from primary sources
using questionnaire for the respondents. These data were analyzed and presented in tables.
Two (2) hypotheses were formulated and tested using the Analysis of variance (ANOVA)
method. The findings of this research shows that internal audit has assisted management in
realizing profitability and accountability. It is recommended in this work that fraud
awareness committee should be created and establishment of a compliance unit to monitor
compliance with internal control procedure.
 CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Auditing is a monitoring device that is needed for restoring realness in financial

reports prepared by directors which in most cases are perceived to contain fraud, errors or

other irregularities. Financial statements are prepared to provide useful information in making

business and economic decisions. This information is important for the users, as they use the

statement to assess financial condition and performance of the related organization.

Ziniyel, Otoo and Andzie (2018) documented that internal audit activity is bedrock

for effective public institutions financial management and it is important to ensure effective

and efficient operations and the appropriate application of controls. Internal audit is reflected

as the key element in the application of accounting systems which in return helps in

evaluating the work of the departments. Internal audit makes an enormous contribution to the

accomplishment of company goals and implementation of strategies for their achievement.

Furthermore, internal audit is a significant part of the firm’s performance structure in

an organization and a firm’s performance entails activities taken by the board of directors and

audit committees to make sure that the financial reporting process is credible. Internal audit

determines the reliability, reality and integrity of financial and operational information that

comes from different organizational units on which appropriate business decisions at all

levels of management are based.

The soundness of a country’s economy greatly depends on the strength and health of

the banking sector. Bank profitability is necessary for improved financial performance; its

usefulness goes beyond individual bank profitability to economic stability. This is because it

is the responsibility of the audit committee members to brainstorm and create plans and

procedure for repetitive monitoring of the internal control system of the bank.
 Fanen Anande (2020) states that when an organization has an audit committee with a

large size, it can protect and control the accounting process and finance because of it greater

transparency compared to having a small size audit committee.

The failure to maintain effective internal audit over financial reporting could result a

material misstatement of financial statement or otherwise cause failure to meet financial

reporting obligation. The successful implementation of internal audit tasks means that it must

be independent, i.e., company management should in no way be influenced by its work,

information, conclusions and evaluations. By doing so, the internal audit report becomes a

means of communication between internal audit and management and an important guideline

for the successful management of the company (Ljubisavljevic & Jovanovi, 2011).

In Nigeria, Ejoh and Ejom (2014) conducted a study in Cross River State College of

Education, Akamkpa. The study found that the internal audit department of the College is not

sufficiently staffed, does not perform their duties with greater degree of autonomy and

independence from management. This present study therefore examines the effect of internal

audit function on financial performance in deposit money banks.

1.2 Statement of the problem

The importance of internal audit system in banking sector cannot be over emphasized,

since it has been recognized as a tool for ensuring effective workings of the internal control

system.

However, in Nigeria, audit functions in deposit money banks 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 sector. It is therefore obvious that the distress in the banking sector

reflect the lack of effective control mechanism of the audit function. The experience of failed

commercial banks have called for reinforcement of audit and strengthening on the internal

control system.
 It is against this background that this study seeks to evaluate the role of internal audit

in enhancing efficient financial performance of banking industries in Nigeria considering the

fact that the banking institutions is critical to the survival of any economy.

1.3 Research Questions

1. What is the relationship between internal audit and performance of deposit money banks.

2. What is the importance of internal audit procedures and performance of deposit money

banks?

1.4 Objectives of the Study

The main objective of the study is to examine the relationship between internal audit and

organization performance of deposit money banks in Nigeria. Other specific objectives are:

1. To determine the relationship between internal audit and performance of deposit money

banks.

2. To determine the relationship between internal audit procedures and performance of

deposit money banks.

1.5 Statement of Research hypothesis

The following hypothesis have been formulated and stated in null form to be tested in the

case of study

Ho1- There is no relationship between internal audit and performance of deposit money

banks

Ho2- There is no relationship between internal audit procedures and performance of deposit

money banks

1.6 Significance of the Study

This study will enable the management of Guarantee Trust bank and other similar companies

such as Research Institute, business organizations and the general investigating public that

requires an effective internal audit. be guided adequately in the pursuit of the realization of
their own objectives. It will enable them manage the increasing fraud and wastages, cases of

complicated crimes, irregularities and their implications.

It will also be of great benefit to the practicing accountants in their audit work, there would

be accountants, legal practitioners who need them as a good reference guide for their legal

duties.

1.7 Scope of the Study

The scope of this study focuses on the impact of internal audit on performance of deposit

money banks with particular reference to Guarantee Trust Bank, Offa Kwara State. The

reason is to enable the researcher have enough time to carry out an indept study of the subject

matter with regards to its operations in the institutions.

1.8 Operational Definition of Terms

 An Audit is defined as an examination or inspection of various books of accounts by an

auditor followed by physical checking of inventory to make sure that all departments are

following documented system of recording transactions.

 Internal audit process is the process of issuing an internal audit report, it should include

drafting the report, reviewing the draft with management to ensure the accuracy of

findings, and issuance and distribution of final report.

 Financial institution otherwise known as banking institution are corporation that provides

services as intermediaries of financial markets

 Fraudulent act are the intentional false representation or the concealment of a material. It

is also the deliberate act to deprive another of property or money by guile deception or

other unfair means.

 CHAPTER TWO

LITERATURE REVIEW

Introduction

A review of literature is crucial as it shows a picture of the state of knowledge in the

area of study. This chapter will review various literatures in the fields of internal audit and

impact it has on financial performance of organization more particularly banks. Internal

auditing is developing as a substantial element of management in both the public and the

private sectors. Because of its importance and because of its continuous escalation into the

management process, it is essential this action be taken to ensure that the performance of

internal auditing conforms to high quality standards. It is also important to determine that it is

a productive process that enhances its goals and its objectives. In order to examine the

concept of “internal audit”, the paper is structured in four sections. In the first section, we

analyzed the conceptual framework of internal audit via a grid of definitions. In the second

section, we make reference to the historical background of internal audit. Then, to further

approach of the concept of internal auditing, we make reference to its theoretical framework.

In the fourth section, we discuss on the empirical review.

2.1 Conceptual Review

Internal Audit

The International Audit and Assurance Standard Board (IAASB) a sub committee of

International Federation of Accountants (IFAC) defined Audit as an independent examination

and expression of opinion on the financial statements of a business enterprise by an appointed

auditor in accordance with his terms of appointment and in compliance with relevant

statutory and performance requirements.

Suraj 2017 view internal audit as a significant part of internal control which involves

oversight undertakings by the audit committee and the panel of executives to ensure that
 financial reporting practice is sound and up to the mark. In other words, internal audit is the

product of modern social and economic development. Internal Audit is an objective and

independent appraisal service within an organization on risk management, control and

governance by measuring and evaluating their effectiveness in achieving the organization‘s

agreed objectives

Internal audit is a part of the repetitive monitoring of the internal control systems of the bank

and its procedures for evaluating internal capital.

Internal Auditing

According to the Definition of Internal Auditing in The IIA's International Professional

Practices Framework (IPPF), internal auditing is an independent, objective assurance and

consulting activity designed to add value and improve an organization's operations. It helps

an organization accomplish its objectives by bringing a systematic, disciplined approach to

evaluate and improve the effectiveness of risk management, control, and governance

processes.

Techniques of internal audit and control

How do auditors carry out internal audits and controls?

There are a number of techniques that auditors can employ, Some of these aim to prevent

incorrect illegal actions from taking place are;

i. Auditors may recommend increasing the security of accounting software by setting

passwords that are harder to break or limiting the functions that certain categories of user

can perform.

ii. Auditors may cross-check documents to see whether information has been recorded

properly or make inspections of company warehouses to see whether the actual stock

levels equal the ones recorded.

iii. Auditors may ask to modify a payroll entry if they believe that it is wrong.
 The techniques auditors use have been codified by national or international

professional bodies. One of the main international professional bodies is the Committee of

Sponsoring Organizations of the Tread way Commission (COSO), a US based joint initiative

of accounting and auditing organizations formed in 1985. One of its main developments is a

framework of integrated internal controls that has been widely accepted worldwide.

The framework defines internal control as a “process, effected by an entity’s board of

directors, management, and other personnel, designed to provide reasonable assurance

regarding the achievement of objectives relating to operations, reporting, and compliance”. It

also contains detailed recommendations for setting up a control system, which includes

attention to the role of the control environment, the risk management process, the information

systems, the control activities and the monitoring of the controls.

In the public sector, guidelines for audit and control are issued at the international

level by the International Audi ting and Assurance Standard Board (IAASB).

In its 2014 publication a Framework for Audit Quality, the IAASB describes the five

key components of internal audit and control systems, and suggests that audit quality results

from:

Inputs: auditors should hold appropriate values, ethics and attitudes; and they should possess

the knowledge, skills, experience and time to perform audit work;

Process: auditors should follow a rigorous audit process and quality control procedures that

apply with laws, regulations, and standards;

Output: auditors should produce documents, in the form of reports and information, that are

useful and timely;

Contextual factors: auditors should consider the role of conditions such as business

practices, information systems, corporate governance, cultural factors and the legal and

regulatory environment when carrying out their activities;

Interactions: auditors should deal with different actors, including managers, regulators, users

and those charged with governance, through both formal and informal channels of

communication.

Depending on these factors, auditors may find themselves in a better or worse position to

carry out their tasks and deliver assurance that entities and organizations have made proper

use of financial resource

Measurement of Performance

If you’re a banking institution, how can you really put your finger on performance?

Or be sure you’re compliant with federal regulations? You’ve got to know your numbers.

More specifically, those numbers that are key performance indicators (KPIs) for the banking

industry.

A multitude of KPIs can be implemented to measure every type of transaction and

service in a bank to accurately evaluate performance, profit, customer service, and more. It

can be hard to choose which measures to focus on, so here’s a list of bank KPIs you should

track, these metrics are applicable to banks of all sizes and cover the most important aspects

of operations and management.

i. Revenue: All incoming cash flow. For banks, you might break down your total revenue by

deposit interest, loan interest, service fees, and transaction fees.

ii. Expenses: All costs incurred during bank operations. Expenses are usually tracked

separately in two categories: interest and noninterest.

iii. Operating Profit: Money earned from core business operations, excluding deductions of

interest and taxes, in its simplest form, this figure is obtained by subtracting expenses from

revenue.
*Note: The three bank KPIs listed above are the holy trinity. Stakeholders (such as investors

and board) will focus on these metrics more than any others—if nothing else, bank should

track these critical KPIs.

iv. Operating Expenses as a Percentage of Assets: Total operating expenses divided by the

total dollar amount of owned assets, shown as a percentage.

v. Assets under Management (AUM): The total dollar value of assets being managed by the

bank, this KPI can be tracked by various accounting timeframes, such as quarterly.

vi. Return on Equity: Total income the bank generates divided by the total equity owned by

shareholders, shown as a percentage.

vii. Return On Assets (ROA): The total dollar amount of net income generated by the bank

divided by the total assets, shown as a percentage.

Internal audit and financial performance (Return On Equity)

Egolum, Ugonabo and Okonenwa (2021) opines that a firm that performs well is one

that strategically executes tasks in achieving it goals. Performance refers to the ability to

operate efficiently, profitability, survive growth and react to environmental opportunities and

threats. Thus, performance can be measured by how efficient an organization is in use of

resources in achieving its objectives. It is the measure of attainment achieved by an

individual, team, institution or process. Hence, company’s performance can be measured in

different ways, measurement varies in respect to the company’s aims and objectives. A

company might only want to achieve all its objective at the end of a financial period and the

management would be satisfied that the company has a great performance for that year, while

to another company, it might be only to maximize profit and the management would be

satisfied by it performance.

Return on equity (ROE) is a ratio that provides investors with insight into how

efficiently a company (or more specifically, its management team) is managing the equity
that shareholders have contributed to the company. It is sometimes called “return on net

worth”. The formula for ROE is:

Net Income
Shareholders Equity

The numerator is net income, which is bottom-line profit reported on a firm’s income

statement. Free cash flow (FCF) is another form of profitability and can be used in lieu of net

income.

The denominator shareholders equity measures as asset minus liabilities on a firm’s balance

sheet and is the accounting value that is left for shareholders should a company settles its

liabilities with its reported assets.

Most internal audit professionals argue that for an improved financial performance of banks,

there is always a correlation with an effective internal audit. Therefore, an effective internal

audit service can in particular, help reduce overhead, identify ways to improve efficiency and

maximize exposure to possible losses from inadequately safeguarded company assets all of

which can have a significant effect on the financial performance of an organization.

2.2 Theoretical Review

Agency Theory

Agency relationship could be defined as a contract the organization owner(s) and its

top among management. Managers work with the organization as agents to perform some

service on behalf of owners who delegate some decision making authorities to managers.

These authorities could be misused by managers to meet their own personal interests.

Therefore, the existence of the audit committees, and the external and internal auditors will

help the organization in enhancing their performance, and also will ensure that the

management carries out its plans according to procedures (Adams, 1994). Peursem and

Pumphrey (2005) considered internal auditors as agents and monitors for a variety of the
internal audit users that include the board, audit committee and senior management. Agency

problems could occur when the board or its audit committee is inefficient, and hence, the

senior management is likely to be a powerful influence over the internal audit. This complex

web creates an inherent dilemma for the internal audit: how can it carry out their monitoring

role over management if it is ineffective itself? Internal auditors often are employed by senior

management, but at the same time, they are also agents of the board and audit committee who

trust in the internal auditors’ ability to evaluate senior management’s works. However,

internal auditors may have varying motives to act against the board of directors’ interests and

its audit committee and these motives include financial rewards from managers, personal

relationships with them, and the power of senior management in shaping the future position

of internal auditors and their salaries. In such a work environment, internal auditors as agents

may have an incentive to be bias of information flows, which leads to new concerns of the

board and audit committee about their trust on the internal auditors’ objectivity, and

preventing such threats of objectivity becomes necessary for the board and its audit

committee. Internal auditors as agents must perform audit processes at the professional

level requiring education and professional certifications, experience, and other

competencies needed to perform their responsibilities perfectly. Having internal auditors with

such requirements and the existence of training programs for internal auditors, would

increase the confidence level of the board and audit committee in the internal auditor

competence. At the same time, internal auditors, by proving their duties in accordance with

the professional level, can refute charges of neglecting their duties. The internal audit

department works are achieved under supervision of the chief audit executive who is the main

responsible individual for putting the internal audit plan, reporting internal audit findings and

following-up internal audit recommendations. The organization members are required to

evaluate the internal control system (SOX, Section 404, 2002), and in order to achieve this
requirement they depend on the internal audit department. During this evaluation, internal

auditors should collect sufficient and reliable evidences that will support their assessment of

the internal control system. The existence of such evidences will increase the confidence

level of organization member on the works performed by the internal audit. Hence, internal

audit department performance is a crucial requirement for organization members to consider

internal auditors as agents. Internal auditors, as agents of the organization members, need

their support. The existence of an effective audit committee in the organization enhances

internal audit independence and also, reduces senior management interferences either in

internal audit scope or its performance. For example, the problem related to the ability of

senior management’s influence over the future employment and salaries of internal auditors

will be resolved by having an audit committee as the absolute authority for appointment and

removal of the chief audit executive. Another clear example of organization members’

support occurs when senior management asks all departments to accomplish the internal audit

recommendations. Based on the above discussion, it can be seen clearly that the agency

theory is a useful theory which can explain the relationship between some variables of the

study, and it is relevant to be embedded in the development of this research conceptual.

2.3 Empirical Review

Nancy Moraa Ondieki (2013), researched on the effect of internal audit on financial

performance in commercial banks in Kenya. Internal audit was looked at from the perspective

of internal audit standards, professional competency, internal controls and independence of

internal audit. The study selected one senior manager in the finance department. Quantitative

analysis and regression analysis were used as the data analysis technique. Descriptive

statistics such as mean, standard deviation and frequency distribution were used in the

analysis of data.
 Internal audit and financial performance of micro finance institutions in Nigeria were

investigated by Arzizeh & Oti (2019). Their investigation was conducted after an incident

and data was analyzed using the ordinary least square approach. Their findings revealed that

using the value of fraud as internal audit proxy had a positive impact on the linked variables

Return on Asset, Profit Margin, and Return on Equity. The study also found a strong link

between the value of fraud and the dependent variables of Return on Asset, Profit Margin and

Return on Equity, concluding that for successful fraud prevention and control in micro

finance institutions, bank management should guarantee that internal controls are in place.

Hussaini Umar Muhammed Dikko (2018) researched on the effect of internal control

on the performance of commercial banks in Nigeria: a proposed framework. The objective of

this paper was primarily through relevant literature, review the effect of internal control

systems on the performance of commercial banks in Nigeria. The researcher investigated

numerous literatures on the components of internal control to shed lights on how they may be

operated and coordinated to achieve the goals. This study seeks to address measuring internal

control effectiveness and bank performance, which could be used by banks and other

regulatory bodies. The contribution is mainly beneficial for banks and government by

providing input for policy makers and in making various business decisions.

Borhan Omar Ahmad (2018), conducted a study that examines the effect of internal

auditing on the organizational performance of major Jordanian banks. A sample of 364

employees has been selected the study. Data have been collected through self-administered

questionnaires and analyzed with the help of multiple regression. In this study, Internal audit

is used as the independent variables whereas organizational performance is the dependent

variable. The analysis of data reviewed that there is a significant impact of internal audit on

the organization performance in all banks except Arab bank.

 CHAPTER THREE

RESEARCH METHODOLOGY

Introduction

This chapter sets out various stages and phases that were followed in completing the

study. It involved a blueprint for the collection, measurement and analysis of data.

Specifically the following sub-sections were included; research design, target population,

data collection instruments, data collection procedures and finally data analysis.

3.1 Research Design

The research design adopted in this research work is the descriptive survey research

design which involves the usage of designed questionnaire in the collection of data. Under

the survey research design, primary data of this study will be collected from Guaranty Trust

Bank PLC in order to determine the qualities of internal audit and performance of bank. The

design was chosen because it enables the researcher to collect data without manipulation of

any variables of interest in the study. The design also provides opportunity for equal chance

of participation in the study for respondents.

3.2 Population of the Study

The population of this research study will be the entire staff of Guarantee Trust Bank

Offa, Kwara State Nigeria.

3.3 Sample Size and Sample techniques

The researcher made use of stratified sampling technique because all the members

have the same probability of occurrence. The researcher narrowed down the samples to the

organization’s staff in order to get internal audit qualities and performance of bank on the

entire organization’s staff.

As a result of complexity in the size and the possible high cost of using aggregate information

of the entire population a sample being a representative of the total population becomes
necessary. A convenient sample of 20 employees of Guaranty Trust Bank PLC Offa, Kwara

state has been chosen therefore random sampling technique have been adopted to select the

employees because it is a good representation of the study population from which it is drawn.

3.4 Sources and Data Collection Techniques

Basically, the source of data collection used in this study is primary and secondary.

The primary source involves the use of questionnaire. The researcher adopted questionnaire

in collecting relevant information for the study. The questions asked in the questionnaire

were accompanied by multiple choice answers from which the respondents were asked to

pick one. The main reason for using this method of collecting data is to enable the researcher

believe that this method will provide the necessary information as well as the ease with which

the method will facilitate data collection. This will ensure balance and comprehensive

information reliable enough for conclusion to be drawn.

3.5 Research Instrument

Questionnaires were been used as the basis of research instrument in this work. The

nature of the questionnaire was close ended where options were given to respondents to

choose from. The questionnaire was divided into two parts. It’s also going to be free from

bias so as to get the required information needed to proceed with the analyzing of the data.

The questionnaire designed for the respondents in the selected organization that is Guaranty

Trust Bank PLC consisted of two sections A and B(Section A) focus on demographic

information which embraces the name of organization, age, marital status, working

experience, educational qualification e.t.c. While Section B focused on the other variables to

be tested framed out of research questions properly. With regard to the scoring of responses,

a five point numerically scaled typed questionnaire was constructed for the purpose of this

study. The first section (section A) of the questionnaire needs no scoring since the

information required is bio-data of the respondents. The questions asked in the second section
(section B) of the questionnaire were accompanied by multiple choice answers ranged from

1-5 point scale in the following pattern: Strongly Agree-1; Agree-2, Undecided-3, Disagree-

4, Strongly Disagree-5, from which the respondents were asked to pick one.

3.6 Validity of the research Instrument

Nwogu (1991) contended that after the items in the questionnaire have been written, it is

mandatory to subject the questionnaire to validation process, this way, items can be reviewed

in terms of their clarity, appropriateness of the language and their expression.

The questionnaire was presented to project supervisor for independent review and necessary

adjustments were made on the questionnaire based on the comments and suggestions. The

instrument’s reliability was tested after it was administered to a number of staffs in the bank.

It involved administering the instrument to a group then testing them again after some weeks,

then their score will then be compared.

3.7 Reliability of Research Instrument

The reliability of the instrument would be tested through test-re-test reliability. In this

method, the same measuring instruments is used to take separate measurement on the same

research population or sample at different times. The higher the correlation between the two

measurements, the higher the reliability of the measuring instrument.

3.8 Method of Data Analysis

The data collected were presented in a simple table. Analysis of the data was based on the

answers to the key questions received from the questionnaires administered to staffs of GT

Bank Plc Offa, Kwara state. The key questions in the questionnaire were analyzed by the use

of simple percentage. The analysis of variance (ANOVA) was used in testing the hypothesis

and the interpretation of the outcomes of these data.

 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Data presentation

The data collected were presented in a simple table. Analysis of the data was based on

the answers to the key questions received from the questionnaires administered to GT Banks

PLC, Offa, Kwara State. The key questions in the questionnaire were analyzed by the use of

simple percentage.

Using the test re-test reliability, measurement on the same research population has been done

different times and there is a high correlation between the two measurements, hence, the test

has a good test re-test reliability. The analysis of variance (ANOVA) was used in testing the

hypothesis and the interpretation of the outcome of these data.

4.1.1 Analysis of the response

Age of the respondent

Table 4.1.1 Analysis of age

Age Frequency Percentage

21 – 30 years 10 50%

31 – 40 years 4 20%

41 – 50 years 3 15%

51 and above 3 15%

Total 20 100%

Source Field survey 2023

The table shows majority of the respondent are of 21 – 30 years at 50% while 51 and above

are the minority at 15%.

Table 4.1.2 Marital status

Marital status Frequency Percentage

Single 7 35%

Married 8 40%

Divorce 2 10%

Widow 3 15%

Total 20 100%

Source Field Survey, 2023

The table above shows that 35% are single, 40% are married, being the majority, while 15%

and 10% are widow and divorced respectively.

Table 4.1.3 Working experience

Working experience Frequency Percentage

Below 5 years 6 30%

5-10 years 8 40%

11 – 15 years 4 20%

Above 15 years 2 10%

Total 20 100%

Source: Field survey, 2023

The table show that the 30% of respondent have below 5 years working experience, 40%

have between 5 – 10 years working experience being the majority,20% have between 11 – 15

years working experience while 10% have above 15years working experience being the

minority.
Table 4.1.4 Educational qualification

Qualification Frequency Percentage

Below o’ level 1 5%

SSCE 2 10%

OND/NCE 2 10%

DEGREE/HND 10 50%

OTHERS 5 25%

TOTAL 20 100%

Source: field survey, 2023

This table shows that the percentage of respondent with Degree / HND is 50% being the

majority while below O’ level is 5% being the minority.

Table 4.1.5 Department

Department Frequency Percentage

Customer service 3 15%

Cashier 8 40%

Treasury 6 30%

Risk management 3 15%

Total 20 100%

Source: field survey, 2023

This table shows that 40% of the respondents are cashier being the majority while 15% of the

respondent are customer service and risk management being the minority.

4.1.6 There is no relationship between internal audit and performance of deposit money

banks.
Table 4.1.6

Respondent Frequency Percentage

S.A 8 40%

A 7 35%

D 4 20%

S.D 1 5%

U.D - -

Total 20 100%

Source: field survey, 2023

The table 4.1.6 shows that 40% of the respondent strongly agree, 35% of the respondent

agree, being the majority, 20% disagree, 5% strongly disagree, 0% are undecided.

4.1.7 There is no relationship between internal audit procedures and performance of deposit

money banks.

Table 4.1.7

Respondent Frequency Percentage

S.A 6 30%

A 6 30%

D 1 5%

SD 3 15%

UD 4 20%

Total 20 100%

Source: field survey, 2023

Table 4.1.7 Shows that 30% of the respondents strongly agree, 30% agree, 5% disagree, 15%

strongly disagree while 20% are undecided.

4.1.8 Internal audit improves the performance of banks.

Table 4.1.8

Respondent Frequency Percentage

SA 8 40%

A 4 20%

D 2 10%

SD 5 25%

UD 1 5%

Total 20 100%

Source: field survey, 2023

The table 4.1.8 shows that 40% of the respondents strongly agree, 20% agree, 10% disagree,

25% strongly disagree, while 5% are undecided.

4.1.9 Internal audit detects error and fraud in banks financial report.

Table 4.1.9

Respondent Frequency Percentage

SA 6 30%

A 6 30%

D 2 10%

SD 3 15%

UD 3 15%

Total 20 100%

Source: field survey, 2023

 4.2 Data Analysis

4.2.1 Test of Hypothesis

For the purpose of this study, two hypotheses have been formulated. Therefore, in order

to test the hypotheses, the figures/data derived from the analysis table 4.1.6 and 4.4.7 would

be computed and tested using one way ANOVA (Analysis of variance) model.

Table 4.2

ANOVA Table (extract)

Source of variance SS DF MS F-value

Between treatment TESS (r-1) Tess TMS

DF

Within treatment ESS (N-r) Ess EMS

DF

Total TSS (N-1)

4.2.1 Test of hypothesis one

Ho1- There is no relationship between internal audit and performance of deposit money

banks

To test hypothesis one, it will be based on the responses to question 7

Table 4.2.1(A) Contingency Table (responses and scoring)

Respondent x1 x2 x3 x4 x5 Total

Customer service 1×5=5 -- 1×3=3 -- 1×1=1 9

Cashier 3 ×5=15 2× 4=8 -- 2 ×2=4 1×1=¿1 28

Treasury 2 ×5=10 4× 4 = 16 -- -- −¿ 26

Risk management -- -- -- 1×2 =2 2×1=2 4

∑x 30 24 3 6 4 67
∑ x= ∁ 7.5 6 0.75 1.5 1 16.75
r

∑x2 350 320 9 20 6 705

∑ ¿2 14 20 1 5 6 46
X ÷ r=C ¿

X =67÷ 4=16.75

N= Number of rows x number of columns

N=20

TSS=Total sum of square= ∑X2 -∑X2

N

TSS=705 −( 67 )2=480.55

20

TRSS=Treatment of sum of square

TRSS= r ∑ ¿
¿¿

5[(7.5−16.75¿ ¿ 2+(6−16.75)2+(0.75−16.75)2 +¿ +(1−16.75)2]

5(85.5625+115.5625+256+232.2576+248.0625)

5(937.44516) = 4687.2258

ESS =480.55−¿4687.2258 = −¿4206.6758

Table 4.2.1(B)

Source of SS DF EMS F-value

variance

Between 4687.2258 4 1171.80645 1171.80645

treatment

Within −¿4206.6758 15 −¿277.45 −¿277.45

treatment

Total 480.55 −¿4.223

F=TMS/TRSS(r-1)

EMS(N-r)

F calculate= −¿4.223

F tab= Fα (V1,V2) =F0.05(4,15) =3.06

Decision

Since Fcal<Ftab that is −¿4.223<3.06 the null hypothesis is accepted. It is therefore

concluded that there is no relationship between internal audit and performance of deposit

money banks.

4.2.2 Test of hypothesis two

Ho2- There is no relationship between internal audit procedures and performance of deposit

money banks

To test hypothesis two, it will be based on the response to question eight (8)
 Table 4.2.2 (A) Contingency table (response and scoring)

Respondent x1 x2 x3 x4 x5 Total

Customer service 1×5=5 1× 4=4 -- 1 ×2=2 -- 11

Cashier 3 ×5=15 2× 4=8 2× 4=8 2 ×2=4 -- 28

Treasury 2 ×5=10 1× 4 = 4 -- 2 ×2=4 1 ×1=1 19

Risk management 3 × 5= 15 -- -- -- -- 15

∑x 40 14 6 10 1 71

∑ x= ∁ 10 3.5 1.5 2.5 0.25 17.75

r

∑x2 450 96 36 36 1 619

∑ ¿2 27 6 4 9 1 47
X ÷ r=C ¿

X =71÷ 4=17.75

TSS=Total sum of square= ∑X2 – (∑X)2

N

TSS=619 −( 71 )2=366.95

20

TSS = 619 ― 252.05 =366.95

TRSS =Treatment of sum of squares

TRSS = r [∑ ¿] Where r = 5
¿¿

5(10−17.75)2 (3.5−17.75)2 + (1.5−17.75)2 + (2.5−17.75)2+ (0.25−17.75)2 ]

5(60.0625 + 203.0625 + 264.0625 + 232.5625 + 306.25)

5(1066) = 5330

ESS = 366.35 – 5330 = −¿4963.65

Table 4.2.2(B)

Source of SS DF EMS Total

variance

Between 5330 4 1332.5 1332.5

treatment

Within treatment -4963.65 15 327.51 -327.51

Total 366.35 -4.069

Fcal = TMS/TRSS(r-1)

EMS(N-r) = −¿4.069

Ftab = Fα (V1, V2) = F0.05 (4, 15) = −¿3.06

Since Fcal>Ftab that is −4.069<−3.06 ,it is concluded that null hypothesis is accepted, that

is, there is no relationship between internal audit procedures and performance of Deposit

money Banks.
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary

Internal audit is an integral part of the internal control system of financial institutions

and the heart of banking is the audit function. This is evidenced by the fact that all other

department are linked with internal audit department.

This research work was carried out in order to ascertain the performance of internal

audit in Deposit money banks.

The research design is the descriptive survey which involves the usage of designed

questionnaire in the collection of data and the researcher also made use of a stratified

sampling technique. Data were analyzed using frequencies and tables, the analysis of

variance (ANOVA) was used in testing the hypothesis

In the course of the research conducted, certain point were deducted from the responses, the

null hypothesis was accepted therefore, there is no relationship between internal audit and

performance of deposit money bank.

5.2 Conclusion

This study found that there is no significant relationship between internal audit and

the performance of deposit money banks in Nigeria. This findings suggests that other factors,

such as the economic environment or the quality of management may be more important in

determining bank’s performance.

While internal audit may play a role in bank’s performance, this study does not find a

direct relationship between the two.

5.3 Recommendation

To augment the income and influence the performance of banks, the following actions

are recommended.
 a. Establishment of training exercise or workshop for their employees

b. Creation of fraud awareness committee

c. The use of proper accounting policies, terminologies and principles

d. Establishment of a compliance unit to monitor compliance with internal control

procedure.

5.4 Suggested Areas for Further Studies

The research focused on Guarantee Trust Bank Offa. However, it is suggested that

other researchers could focus on more branches of the bank and other banking institutions in

the local government.

5.5 Limitations of the Study

In the course of this study, the researcher encountered a lot of hindrances among

these, the most salient one include finance which the researcher is faced with. Insufficient

funds required for expenses like transportation, acquisition of research instruments, sourcing

for both primary and secondary data etc.

Time also posed a constraint on this research work such as time to study and time to attend

lecture etc.

Attitude of respondent is also another limiting factor to this research work. Most

respondent are often reluctant to part with information even after being assured

confidentiality they still prefer to be secretive.

 REFERENCES

Adams M. B (1994). Agency theory and internal audit managerial auditing journal, 8-12.
https://doi.org/10.1108/02686909410071133
Arzizeh T.T and Oti I. (2019). Internal audit and financial performance of micro finance banks
in Nigeria. International Journal of Social science and management research, 5(1) 95
– 107 E-ISSN 2545-5303 P-ISSN 2695-2203. www.iiardpub.org
Egolum, P. U., Ugonabo, C. U., & Okenenwa. O. (2021). Corporate determinants of financial
statement fraud likelihood: Evidence from quoted international licensed banks in
Nigeria: International journal of academic management science research (IJAMSR); 5
(4), 62-70; ISSN: 2643-900X
Ejoh, N. O. & Ejom, P.E. (2014). The effect of internal audit function on the financial
performance of tertiary institutions in Nigeria. International journal of economics,
commerce and management II (10), 1 http://ijecm.co.uk/ISSN 2348 0386
Fanen, A. & Alematu. O. (2020). Determinants of bank financial performance: A Study Of
Nigerian Deposit Money Banks. International journal Of academic research in
business and social science March 2014. Vol. 4, No. 3.
Hussaini. U., Muhammed, U. (2018). Effect of internal control on performance of commercial
banks in Nigeria: A proposed framework. Journal of management science (Vol.16, No.
3, 2018), University of Maiduguri.
IAASB, (2011). Audit quality: An IAASB perspective,
https://www.iaasb.org/publications/audit-quqlity-iaasb-perspective
Institute of internal auditors (IIA). (2007).The professional practices framework, Internal audit
in banks and the supervisor’s relationship with auditors: (2002, August) Managerial
Auditing.
Nancy, M. O. (2013). Effect of internal audit on financial performance of commercial banks in
Kenya. University of Nairobi
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48 www.idpublications
 APPENDIX

RESEARCH QUESTIONNAIRE FOR ACADEMIC STUDY

Department of Accounting,

School of Business and

Management Studies,

Federal Polytechnic Offa,

Kwara State.

Dear Respondent,

I am a final year student of department of accounting, School of Business and

Management Studies. I am carrying out a research on the subject “Internal Audit and

performance of deposit money bank. (A case of Guaranty Trust Bank PLC)” in partial

fulfillment of the requirement for the award of Higher National Diploma (HND) in

Accounting. your branch at Offa Kwara State have been chosen as one of the branches to use.

Attached to this Letter is a questionnaire aimed at gathering some vital information to

assist me complete the research work. Kindly respond to the statements/questions as freely as

possible in the space provided. All information given will be treated with utmost

confidentiality and will be used solely for the purpose of the research.

Thanks in anticipation of your co-operation

Yours Faithfully,

……………………..

ADEWUYI BUSAYO
 QUESTIONNAIRE

Please kindly read and respond

Section A (Bio data)

1. Age of the respondent

21-30 years [ ]

31-40 years [ ]

41-50 years [ ]

51 years and above [ ]

2. Marital status

Single [ ]

Married [ ]

Divorce [ ]

Widow [ ]

3. Years of service

Below 5 years [ ]

5-10 years [ ]

11-15 years [ ]

Above 15 years [ ]

4. Educational Qualification of Respondent

Below O’ level [ ]

WASSCE/SSCE [ ]

OND/NCE [ ]

HND/BSC [ ]

Others [ ]
5. Department

Customer service [ ]

Cashier [ ]

Treasury [ ]

Risk management [ ]

Section B

Questions Based on Research Question

6. Internal audit detects error and fraud in deposit money banks?

Strongly agree [ ]

Agree [ ]

Disagree [ ]

Strongly disagree [ ]

Undecided [ ]

7. Internal audit has no relationship with performance of deposit money banks.

Strongly agree [ ]

Agree [ ]

Disagree [ ]

Strongly disagree [ ]

Undecided [ ]

8. Internal audit procedure has no relationship with performance of deposit money banks.

Strongly agree [ ]

Agree [ ]

Disagree [ ]

Strongly disagree [ ]
Undecided [ ]

9. To what extent has fraudulent act been curbed in your bank?

Strongly agree [ ]

Agree [ ]

Disagree [ ]

Strongly disagree [ ]

Undecided [ ]