This study attempts to establish the extent to which internal audit functions (IAFs) are outsourced by the consolidated conventional banks in Nigeria, now addressed in the country as deposit money banks (DMBs). The extent to which the banks outsource each of the 15 identified functions traditionally attached to the internal audit unit/department is tested, using a structured questionnaire to elicit responses from the top and middle level management staffs of the banks. Bank’ management normally establishes and safeguards internal control system and internal audit system. Accordingly, heads of operations, branch managers, regional/area managers and internal auditors/controllers of all the 22 DMBs existing in Nigeria as at 31st July, 2013 are used as respondents. 25 copies of the questionnaire are administered to the targeted respondents from each of the 22 banks, making a total of 550 copies. Of the copies returned, 435 (79%) are accepted for analysis. As the data are collected on an ordinal scale, non-parametric confirmatory analysis is employed. The study finds that all the 15 identified IAFs are being outsourced by the Nigerian DMBs at varying degree (completely, partially, occasionally or rarely). It is also discovered that 6 IAFs stand out as those that are more outsourced than provided in-house by the Nigerian DMBs (going by the 50% and above scores they attracted from the respondents), and that the other 9 IAFs are more discharged in-house than outsourced to outside experts.
Keywords: Outsourcing; internal audit functions; deposit money banks; Nigerian banking industry; internal control system
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