MUHAMMAD, Rabi’u Ya’u
Department of Accounting
Al-Qalam University Katsina
rabiuyau@auk.edu.ng
MADAWAKI, Abdulkadir
Department of Accounting
Al-Qalam University Katsina
abdulkadirmadawaki@yahoo.com
JIBRIL, Jamilu
Department of Accounting
Al-Qalam University Katsina
jamiljibril943@gmail.com
ABSTRACT
This study examined effects of internal control systems on financial reporting quality of Deposit Money
Banks in Nigeria. The study specifically examined impact of control environment (CE), risk assessment
(RS), control activities (CA), information communication (IC), and monitoring (MON) on financial
reporting quality (FRQ). The population of the study consists listed deposit money banks in Nigeria. A
sample size of 384 was drawn from the population using Cochran formula. Survey method was used to
obtain data from respondents using structured questionnaire. The study employed second-generation
statistical analysis tools of Smart Partial Least Square (Smart PLS) and SPSS. Five hypotheses were
formulated and tested. The study found that risk assessment, information communication, monitoring
have positive significant effect on financial reporting quality while control activities have negative
significant effect on financial reporting quality. However, control environment was found to have positive
but insignificant effect on financial reporting quality. The results of this study offer valuable insight to
deposit money banks, regulators, and researchers to further understand effect of internal controls on
financial reporting quality. Thus, the study recommends that regulators should encourage all banks to
maintain and improve on the implementation of internal controls COSO framework in order to ensure
effectiveness and efficiency of operation, reliability of financial reporting and compliance with rules and
regulations. It is also recommended that banks should establish a robust information management system
for comprehensive risk analysis and reporting.
Keyword: Control activities, control environment, financial reporting quality, information
communication, monitoring, risk assessment