The Relationship Between Institutional Environment, Internal Audit And Performance Of Local Governments In Nigeria

This study aimed at examining the relationship between institutional environment, internal audit and local government performance in Nigeria. The quality of internal audit, effective internal controls, and institutional context factors were specifically examined for the purpose of establishing the nature of relationships existing among the variables. The study adopted the mixed methodology approach. Specifically, the explanatory sequential design was used which entailed an earlier survey followed by semi structured interviews on key participants to provide more insights on the survey results. A total of 301 heads of internal audit in the local government from the six geopolitical zones of the country participated in the survey. Furthermore, interviews were conducted on eight key participants to clarify the results of the survey. The maximum variation sampling technique was used in selecting the participants. Results gave new insights into the challenges of institutional environment and its relationship with local government performance in Nigeria. Particularly, the participants outlined reasons for the negative relationship between internal and external audit collaboration and performance to include external auditor political interest, unethical practices, uncooperative attitude, external auditor preference, and external auditor overriding of internal auditor's queries. Also, the nonsignificant relationship between internal audit relationship with management and performance was a result of poor attitude of management, auditor compromise, funding issues, and reporting relationship. Hence, the outcome of the study demonstrated that the contribution of internal audit quality and internal controls to performance are constantly influenced by the institutional environment and this determines how both would contribute to performance.