Evaluation of Internal Audit and Control System as a Prerequisite for Qualitative External Audit Report

The quality of the audit report in corporate organization around the world and Nigeria has been of great concern considering the contribution of internal auditors as the overseer of daily accounting entries in an organization. Considering this issue, the study focused on evaluation of internal audit and control system as a prerequisite for the qualitative external audit report. Survey research design was adopted in the conduct of the study. The population of the study includes 93 internal and external auditors randomly selected amongst organizations in Nigeria. Three research questions and three hypotheses, all stated in its null form guided the study. Questionnaire instrument was adopted in the conduct of the study, which was rated on a five point scale with an acceptable rating of 3. Hypotheses that guided the study was tested using one sample test statistics at .05 level of significance. Findings from the study shows that, internal auditors in corporate organizations are not significantly independent in the discharge of their duties. It was also discovered that internal audit and control system of corporate organizations in Nigeria are significantly relied on as audit evidence/basis for financial report. Final findings showed that, internal audit and control systems do not significantly aid qualitative external audit report of corporate organizations in Nigeria. The findings imply that the quality of the external audit report is determined by the quality of its internal audit and control team. Based on this, the researcher recommends amongst others that, regulation and training should be provided to enhancing independence of internal auditors and that external auditors should endeavor to carryout more comprehensive sampling during audit exercise.