Internal Audit Practices and Quality of Financial Reports of Listed Consumer Goods Manufacturing Firms in Nigeria

Abstract

The quality of financial reporting has remained an issue of significant concern among professional accountants, regulators, and other users of financial information. This is because financial reporting has been a principal means of communicating result of financial transactions and events which transpired within the organization. To that end, this study investigated the relationship between internal audit practices and financial reporting quality of consumer goods manufacturing in Nigeria. The research design used in this study was descriptive survey. The targeted population of this study consists of all the twenty-one (21) listed consumer goods manufacturing firms in the Nigerian Exchange Group (NGX) with a respondent total of two hundred and ninety (290). The sample size of the study consists of ten (10) consumer goods manufacturing firms that have branches in South-South, Nigeria using purposive sampling technique. The study employed primary data sourced from questionnaires administered to the respondents and two hundred and fifty-one (251) representing a response rate of 86.6% was used as sample size for the study. The study used content validity and Cronbach alpha reliability test was used to determine the statistical reliability of the instrument. Descriptive statistics such as frequencies, percentages, means, and standard deviations and spearman rank correlation were used in data analysis. Findings indicated that a positive and significant relationship between internal audit control mechanisms and timeliness of financial reports, a positive and significant relationship between internal audit risk management and timeliness of financial reports, and a positive and significant relationship between management support and timeliness of financial reports of consumer goods manufacturing firms in Nigeria. Based on the findings, this study concluded that, internal audit practices positively and significantly influence financial reporting quality of consumer goods manufacturing firms in Nigeria. The study recommended amongst others that consumer goods manufacturing firms in Nigeria should adopt the effective use of internal audit activities since it has positive and significant influence towards an improvement in financial reporting quality.