Internal audit performance in tax administration: a case study on federal inland revenue service of Nigeria

This study focuses on internal audit in Nigerian tax administration from both perspectives of efficiency and effectiveness which was not studied by previous researchers. The objectives of this study are: (i) to understand the internal audit inputs required for internal audit performance in Nigerian Federal Inland Revenue Service (FIRS); (ii) to understand the internal audit processes required
for internal audit performance in FIRS; (iii) to understand the internal audit outputs required for internal audit performance in FIRS; (iv) to understand the internal audit outcomes required for internal audit performance in FIRS; and (v) to identify the strategies for mitigating the internal audit inefficiency and ineffectiveness in FIRS. This study employs a case study methodology to collect
data from face-to-face interviews with 18 internal auditors and tax administrators of FIRS. Self-administered questionnaires were also distributed among 342 taxpayers based in FIRS Headquarters in Abuja. The findings show that effective legislature, organizational policy, working condition, human and material resources, knowledge, qualification, skills, and approach are the basic
requirements for internal audit efficiency. The study also reveals that internal auditing processes efficiency need committed, impartial and transparent auditors. Auditors with techniques, skills and effective qualities and good communication and writing skills are important for auditors’ efficiency in FIRS. FIRS should also focus on auditing key priorities and procedure induced auditing processes. The study indicates that internal auditors should provide strategic advice, report, and recommendations to the FIRS management. Furthermore, auditing outputs are impacting on auditing performance. The inefficiency and ineffectiveness of FIRS should be mitigated by providing adequate auditing resources from human and materials perspectives to meet the auditors' requirement. The policy implication of the study is that the FIRS can ensure efficient and effective internal audit performance by adopting the ‘Integrated Internal Audit Model’ to improve tax administration performance.