Corporate Governance in the Nigerian Financial Sector: The Efficacy of Internal Control and External Audit
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Date
2011
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Global Conference on Business and Finance Proceedings
Abstract
Poor corporate governance has become a common lexicon in the Nigerian financial sector. Arguably, the crisis that rocked the sector between 1994 and 2003 are clear testimonies of bad corporate governance due partly to weak internal controls as exhibited in various financial firms and the unprofessional attitude of some of the external auditors. The main thrust of this paper is to determine the efficacy of sound internal controls as checks and balances on the spurious activities of the board and management of the firms. It is also intended to justify the expected role of the external audit in ensuring good corporate governance. For the purpose of this study, secondary sources were utilized and in analyzing the data collected, descriptive statistics was adopted. The principal results showed that weak internal controls were evident in the sector due to the overbearing influence of the chairman in family-controlled businesses and the existence of rubber stamp board. It was also observed that the external auditors and the inspectors from the regulatory authorities have been compromised. Consequently, the authors of this paper opine that a total overhaul of the internal control system within the sector and a visibly independent external audit will be required to curb the excesses of the board and management and guarantee sustainable governance.
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Citation
Adenugba, A.A. and Babalola, A. (2011). Corporate Governance in the Nigerian Financial Sector: The Efficacy of Internal Control and External Audit. Global Conference on Business and Finance Proceedings. 6(2); 691-698.