Internal Control Information and Communication Effect on Operational Risk of Quoted Banks in Nigeria 1. Introduction An internal control system is designed as being the whole system of controls financial and otherwise established by the management in order to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of the records (COSO, 1992). Corporate organisations are obligated to disclose fully issues that concerns their operations in order to help investors make investment decisions as well as inform the judgment of financial statement users (Hossian, 2008). Operational risk disclosure is expected to close the gap in communication between banking management and its stakeholders especially lenders and investors (Verrechia 1999; Archambault & Archambault, 2003). Wallace, 1988, Adeyemi, 2006 and Ofoegbu & Okoye, 2006 have investigated the extent of disclosure of Nigerian firms in the banking sector, they all found the same result of weak corporate reporting practices. The internal control system of an organization is shouldered with the responsibility of improving effectiveness and efficiency of activities. They ensure that laid down rules, laws, policies and guidelines are adhered. Financial reporting quality and reliability of the internal control system of an organization is important if organizational goals must be achieved. Internal control system assists banks in the prevention and detection of fraud and errors as well as the causes of such financial losses that may arise. One of the main reasons for banking failures which results in major financial loss and even bankruptcy is high risks taken by bank management on an excessive scale and inability of controlling them. The lack of an internal control system whose duty is to keep the risks or major breakdowns within an existing internal control system under control poses a threat against the success of the banking sector. These operational risk has risen drastically in recent times. Corporate governance in many banks failed because their boards ignored best practices for various reasons, ranging from being misled by executive management and participating in obtaining unsecured loans at the expense of depositors, to lack of capacity to enforce good governance on bank management. Uneven flow of information in the system. There were also the problems of the overbearing influence on the boards by the Chairmen/CEOs, lack of independence of some boards, unclear lines of authority to failure to make meaningful contributions to safeguard the growth and development of the banks, weak ethical standards, failure to adhere to well established policies and procedures, poor communication among employees, and ineffective board committees information flow. These Internal control weaknesses are revealed in operational losses in

Abstract-The

Abstract-

The study aimed at finding the relationship between audit quality, abnormal audit fee and auditor attributes. The study employed ordinary least square regression technique to analyze the relationship between the dependent and independent variable. Samples of fourteen banks were selected using judgmental sampling technique. The results reveal the existence of positive relationship between abnormal audit fee and audit quality at 5%. Second, the influence of auditor independence on quality appears to also be positive and significant at 5%. Third, the effect of Auditor tenure on audit quality appears to be positive and insignificant at 5%. The study recommended that apex bank should ensure that all factors that hamper auditor independence should be removed unduly long auditor tenure should be discouraged to avoid over familiarity of auditor with the client.

Banks are more likely to fail from operational risk than from credit risk, and internal control at banks create operational risk losses. The objective of this study is to investigate internal control risk assessment and operational risk of quoted banks in Nigeria. 16 selected quoted banks in the Nigerian stock exchange from 2013-2017 were studied based on the 2012 banking reform on corporate governance by the then CBN governor Sanusi Lamido Sanusi’s “Project Alpha Initiative” (PAI). Data were collected from banks published annual reports, CBN statistical bulletin, NDIC report, CBN fact book, company website and banks’ Pillar III disclosure report for the relevant years sampled for analysis. The analysis carried out included pooled OLS regression, fixed and random effect and Hausman tests to determine the most suitable model for result interpretation. This was conducted with the aid of E-View 7 software. The findings shows that internal control risk assessment (ET and PQ) has positive significant effect on Operational risk (OPR). It was recommended that banks should ensure that internal control unit personnel are qualified and adequately trained to carry out banking activities as this will go a long way in reducing the risks from operations.