Internal audit and financial performance of selected manufacturing industries in the consumer-goods sector listed on the Nigerian stock exchange

Abstract

Background: The current instability of the Nation's economy has made the manufacturing sector to often experience shocks and distresses, which could be managed if the internal audit unit of such firms are engaging. This makes it crucial to examine how good internal audit indicators such as independence and professional competency of internal auditors; together with the internal control system influence the financial performance of quoted manufacturing industries in Nigeria. Thus, this study aimed at investigating the effect of internal audit on the financial performance of some manufacturing industries in the consumer-goods sector quoted on the Nigerian Stock Exchange Materials and Methods: The study employed a descriptive research approach. Ten (10) industries in the consumer-goods sector were randomly selected for the study while secondary data was used to gather information from their published financial statements for the period 2008-2017. The researchers adopted a panel data. Descriptive analysis was done using mean, median and standard deviation while inferential analysis was carried out using multiple regression analysis. Results The study found that internal audit had significant influence on the financial performance of quoted manufacturing industries in Nigeria. Professional competency of internal auditors and the internal control system showed positive and significant influence while independence of internal auditor had significant but negative influence on the financial performance of the manufacturing industries. Conclusion: The findings suggest the need for good interrelationship between internal auditors’ independence and financial performance so that firms can immensely benefit from the internal audit. Continuous training, seminars and workshops are recommended for internal auditors in order to improve their professional competence. This study contributes to practice, advocating for an effective internal audit system to be put in place by management of quoted manufacturing industries in order to achieve high financial performance.