FIRM SIZE, INDUSTRY TYPE AND INTERNAL AUDIT OUTSOURCING IN NIGERIA: EVIDENCE FROM SMEs

Enyinna Okpara
Wellspring University Benin City

Chinedu B. Ezirim
University of Port Harcourt, Port Harcourt

Umaru Mohammed
Nigerian Army Signal Corp Headquarters, Lagos

ABSTRACT

This study investigates the relationships between the industry and firm specific factors on the decision to outsource internal audit functions by small and medium scale enterprises in Nigeria. The study’s design was quasi-experimental, with the questionnaire as the critical research instrument. The results indicate that the type of industry in which the Small, Medium, Enterprises (SMEs) belongs is a major argument in internal audit function (IAF) outsourcing decision. Equally, the size of the SME is also a major factor in IAF outsourcing decision. In other words, these two factors exerted remarkably great influence on their decisions to outsource. The policy implication of these results suggests that the SMEs operating in Nigeria must not fail to give adequate consideration and attention to the nature and type of industry they belong, noting that some industry’s operation favor outsourcing more than others in their decisions to outsource internal audit functions They would also do well to give appropriate attention to their size, noting that it is more efficient for smaller firms to outsource internal audit functions than larger ones in view of cost considerations and resource availability.

Keywords: Terms: Small and medium scale enterprises, outsourcing decisions, internal audit functions,
Firm size and Industry type, Nigeria