JEFMS Journal

ABSTRACT:

This study investigated the relationship between internal control process and organizational financial and non-financial performance of selected deposit money banks in Nigeria. with specific objectives of determining the effect of risk assessment and monitoring activities the performance of DMBs in Nigeria. Primary data was collected using questionnaires administered to top level employees and other employees of 11 banks using a purposive random sample of 150 respondents out of which 97 responses were collected. The data were analyzed using descriptive statistics, correlation analysis, exploratory factor analysis and regression with aid of Statistical Package for Social Sciences (SPSS) version 26. The result of the analysis shows that risk assessment risk assessment practice has a positive impact on the performance of deposit money banks in Nigeria (B= 0.390, t= 4.019, p < 0.01) and that monitoring activities have a positive impact on the performance of deposit money banks in Nigeria (B= 0.415, t= 4.019, p < 0.01) Each has a positive and significant impact on financial, non financial and overall organizational performance DMBs in Nigeria. Based on the findings, it is concluded that internal control mechanism is a significant predictor of organization financial and non-financial performance and that effective internal control systems must incorporate the effects of risk assessment and control activities to enhance organizational performance of DMBs. The study therefore recommended that internal control systems especially risk assessment and monitoring activities are significant areas and management of DMBs in Nigeria should give great attention to them in order to improve organizational performance.

KEYWORDS:

Risk assessment, Monitoring Activities, Control Activities, Financial performance, Non financial performance.

REFERENCES:

1) Adejuwon, O. and Adejuwon, J. A. (2020), “Internal Control System and Financial Performance of Selected Money Deposit Banks in Nigeria.” West African Journal of Business and Management Sciences, Vol.9(4) pp1-13

2) Adejuwon, J. A., and Adejuwon, O. (2022), “Internal Control System and Performance of Selected Money Deposit Banks in Nigeria: Non-financial KPIs’ Approach.” International Journal of Innovative Finance and Economics Research vol. 10(2) pp108-118 ISSN: 2360-896X. www.seahipaj.org.

3) Andrew G. (2018)"Internal Control Systems and Financial Performance of Public Institutions of Higher Learning in Vihiga County, Kenya."Journal of Business and Management (IOSRJBM) 20, (4), 31-41

4) Arzizeh Tiesieh and Oti Ibiam (2019). “Internal Audit and Financial Performance of Micro Finance Banks in Nigeria.” International Journal of Social Sciences and Management Research 5,(4), 95-107. l.www.iiardpub.org

5) Avagre P. (2014)."The Effectiveness of Intemal Control Systems of Banks: The Case of GhanaianBanks.” International Journal of Accounting and Financial Reporting 4, (2), 377-389.

6) Byaruhanga B. (2014)."The impact of internal control and risk management on banks in Palestine. International Journal of Economics, Finance and Management Science, 3(3), 156- 161.

7) Eke G. (2018) "Internal Control and Financial Performance of Hospitality Organizations in Rivers State. European Journal of Accounting, Auditing, and Finance Research 6, (3), 32-52.

8) Eleazer Fianko Ofei et al.,. “Effect of Internal Control Environment on Financial Performance of Banks In Ghana.” International Journal of Accounting and Financial Management Research 10, (2) 2020, 1–12.

9) Emmanuel N. and Olang A. (2017)."Internal Control System and Financial Performance in FinancialInstitutions in Rwanda: A Case of I & M Bank Ltd Rwanda." African Journal of Business andIndustry 2, (3), 46-58.

10) Eniola O. and O. Akinselure (2016)."Effect of Internal Control on Financial Performance of Firms inNigeria." IOSR Journal ofBusiness and Management (IOSR-JBM) 1 (10), 80-85

11) Etengu R. andM. Amony(2016). “'Internal Control System and Financial Performance in Non-governmental in Uganda: A Case Study of International Union for Conservation of Nature. International Journal of Contemporary Applied Sciences 3, (2), 328 -341

12) Fulbright N. R. (2016). “Internal control and corporate performance. International Journal of Humanities and Social Sciences 1, (1), 23-29

13) Funso Kolapo and Temitayo Olaniyan (2018). "The Impact of Fraud on the Performance of DepositMoney Banks in Nigeria." International Journal of Innovative Finance and Economics Research6, (1), 40-49. "www.seahipaj.org

14) Gamage T. and Fernando J. (2014)"A Proposed Research Framework: Effectiveness of Internal Control System in State Commercial Banks in Sri Lanka."International Journal of Scientific Research and Innovative Technology1 (5), 25-44

15) Gberevbie, D. E. (2011). Leadership The Financial Sector and Development in Nigeria. Inkanyiso Journal Humaniora & Social Science, 3(2), 148–157.

16) Gideon Tayo and Adebola Daniel (2020). "Internal Controls and Performance of Selected Tertiary Institutions in Ekiti State: A Committee of Sponsoring Organizations (COSO) Framework Approach." International Journal of Financial Research 11. (1), 1-12http: /ijfrsciedupress.com

17) Hanoon, Raad Naser, Azam Abdelhakeem Khalid, N O R Hanani, Ahamad Rapani, Talal Mohammed Aljajawy, and Abbas Jumaah Al-(2021). “The Impact of Internal Control Components on the Financial Performance, in the Iraqi Banking Sector.” Journal of Contemporary Issues in Business and Government 27, (3).

18) Hayes R. S. and R.Baker (2014)."A Participant Observation Study of the Resolution of Audit Engagement Challenges in Government Tax Compliance Audits." Qualitative Research in Accounting & Management 11, 416-439.

19) Hussaini, Umar, and Muhammed Umar Dikko. (2018).“The Effect of Internal Control on Performance of Commercial.” International Journal of Management Research & Review 8, (6), 13–32.

20) Jensen M.C. and Meckling W.H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, (3), 305-360.

21) Kinyua J,. Gakure R., Gekara R., and George Orwa (2015) "Effect of Internal ControlThe environment on the Financial Perfomlance of Companies Quoted in the Nairobi SecuritiesExchange."International Journal of Innovative Finance and Economics Research 3, (4), 29-48.

22) Kiprop, Lagat Fredrick.(2017) “Effect of Risk Evaluation on Performance of Financial Institutions.” Cari journals 2, (3), 54–68.

23) Lily, Chepkirui (2017). “Internal Control Systems and Financial Performance of Commercial Banks Listed At Nairobi Securities Exchange, Kenya By Chepkirui Lily D53/Ol/27207/2013 a Research Project Submitted in Partial Fulfillment of the Requirement for the Award of the Degree of Masters.

24) Livingstone K and Isaac T.(2017)"Accounting Internal Control Systems and Firm Performance:Evidence from Commercial Banks in Kericho County: Kenya"International Journal ofEconomics, Commerce and Management 4, (11), 697-712.

25) Muganda Abdillahi (2015) “Corporate Governance Mechanism and Financial Performance of Commercial Banks in Kenya. Journal of Business and Management (IOSR-JBM) 17, (3), 25-40

26) Muhunyo Benson and A. Jagongo (2018)."Effect of Internal Control Systems on Financial Performance of Public Institutions of Higher Learning in Nairobi City County Kenya." International Academic Journal ofHuman Resource and Business Administration 3,(2), 273-287.

27) Ndifon Ejoh and Patrick Ejom (2014).“The Impact of Internal Control Activities on FinancialPerformance of Tertiary Institutions in Nigeria."Journal of Economics and Sustainable Development 5, (16), 133-143

28) Nwude, E Chuke, and Chinedu Okeke.(2018) “Impact of Credit Risk Management on the Performance of Selected Nigerian Banks.” International Journal of Economics and Financial Issues 8, (2), 287–297.

29) Oluwafemi, Adeusi, Stephen.(2013) “Risk Management and Financial Performance Of Banks In Nigeria.” IOSR Journal of Business and Management 14, (6), 52–56.

30) Omoregie, A.ENosa, and Usifo, John Eromosele (2020). "FACTORS AFFECTING FINANCIAL REPORTING QUALITY IN NIGERIA PUBLIC SECTOR." Int. j. of Social Science and Economic Research, vol. 5,(5), 1172-1185, ijsser.org/more2020.php?id=82. Accessed May 2020

31) Oyoo O. (2014). “Effect of Internal Control on Financial Performance of Micro-Finance Institutions in Kisumu Central Constituency: Kenya. Scholarly Journal ofScientific Research and Essay 3 (10), 139-155.

32) Sahabi Ibrahim, Gordon Diibuzie and Mohammed Abubakari (2017). “The Impact of Internal Control Systems on Financial Performance: The Case of Health Institutions in Upper West Region of Ghana." International Journal of Academic Research in Business and Social Sciences 7, (4), 684-696.

33) Siyanbola Trimisiu (2013). "Effective Intemal Controls System as Antidote for Distress in the Banking Industry in Nigeria." Journal of Economics and International Business Research (JEIBR) (1), 106-121

34) Sleimi, Mohammad Tahseen (2020). “Effects of Risk Management Practices on Banks’ Performance: An Empirical Study of the Jordanian Banks.” Management Science Letters 10, (2), 489–496.

35) Tekalign Negash (2019) "Assessing the Effectiveness of the Internal Control System in the Commercial Banks of Ethiopia: A Case of Hawassa City. International Journal of Science and Research (IJSR)8 (12), 414-418.

36) Toufaili, Bilal.(2021) “The Impact of Risk Management on Financial Performance.” The EUrASEANs: journal on global socio-economic dynamics, no. 3 (28), 7–23.