THE ROLE OF INTERNAL AUDIT FUNCTION IN ENHANCING RISK MANAGEMENT

Abstract

This study explored the role of internal audit in enhancing risk management, focusing on banks. It aimed to assess internal audit effectiveness, monitoring processes, and risk management. The research posed questions on the effectiveness of internal audits and monitoring processes, and the extent of risk management's effectiveness using questionnaire as the survey instrument. Three hypotheses were tested using a questionnaire survey method. Findings revealed effective internal audit functions at First Bank at Okpara Avenue, in Enugu, with robust monitoring processes ensuring smooth business transactions. An effective risk management process was also identified, capable of detecting and preventing errors and fraud. The study evaluated the influence of these variables on Nigerian banks, employing the chi-square model. The result showed that the value of calculated X²0.298 is greater than the critical value of X²0.05 at a significant of 0.585. Therefore, we reject the null hypothesis and accept the alternative hypothesis. Thus, we accept that internal audit functions are effective in First Bank and are positive and significant. Results indicated that a well-managed internal audit environment contributes to risk management and fraud prevention, reducing fraud likelihood. Recommendations included ensuring proper management of the internal audit environment, reviewing customer and supplier complaints, and securing accurate financial records.