ABSTRACT

This study examines the role of internal auditing in promoting good governance within organizations, with a focus on NFC Bank Buea, Cameroon. Good governance in organizations is characterized by transparency, accountability, compliance with regulations, and the efficient use of resources to meet organizational goals. Internal auditing plays a critical role in ensuring that these governance principles are upheld by evaluating internal control systems, risk management processes, and organizational policies to ensure that they align with good governance standards.

The primary objective of this research is to assess how internal auditing at NFC Bank Buea contributes to promoting good governance practices. The study seeks to evaluate the effectiveness of the bank’s internal audit functions in enforcing compliance with regulatory frameworks, safeguarding assets, detecting and preventing fraud, and providing recommendations for improving operational efficiency. Additionally, it explores the challenges faced by internal auditors in fulfilling their roles and the potential for strengthening internal audit practices to enhance governance.

To achieve this, the study adopts a mixed-method approach, combining both qualitative and quantitative data collection techniques. Interviews were conducted with internal auditors, compliance officers, and other key personnel at NFC Bank Buea to gain insights into the internal audit processes and governance practices within the bank. Additionally, secondary data such as audit reports, policy manuals, and governance guidelines were reviewed to provide a comprehensive analysis of the internal audit function’s role.

The findings reveal that internal auditing at NFC Bank Buea plays a significant role in promoting good governance. The internal audit department is responsible for assessing the effectiveness of the bank’s internal controls, identifying potential risks, and ensuring compliance with both internal policies and external regulatory requirements. Internal auditors at NFC Bank are also tasked with monitoring financial transactions to detect any irregularities that may indicate fraudulent activities. The study found that regular internal audits provide valuable insights into the bank’s operations, offering recommendations for improving efficiency and reducing risks. These audits help management make informed decisions, thereby strengthening the overall governance structure of the bank.

Despite these positive contributions, the study identifies several challenges faced by the internal audit team at NFC Bank. One key challenge is the lack of adequate resources, such as staffing and technological tools, which limits the scope and effectiveness of audits. The internal audit department is often constrained by time and budget limitations, which prevent comprehensive audits from being conducted across all areas of the bank’s operations. Additionally, there is a lack of continuous training and professional development opportunities for internal auditors, which affects their ability to keep up with evolving best practices in governance and risk management.

Another challenge is the resistance to audit recommendations by some departments within the bank. While internal audits provide crucial recommendations for improving governance and operational efficiency, their implementation is sometimes met with reluctance, particularly if the recommendations require significant changes in existing processes or increased oversight. This resistance can undermine the effectiveness of internal auditing and weaken governance.

The study also highlights the importance of independence for internal auditors. At NFC Bank, the internal audit department reports directly to senior management, which can potentially compromise the objectivity and independence of audit findings. To promote good governance, it is essential for the internal audit function to maintain its independence from management, ensuring that auditors can provide unbiased assessments and recommendations.

Based on these findings, several recommendations are made to enhance the role of internal auditing in promoting good governance at NFC Bank Buea. First, it is recommended that the bank invest in capacity-building initiatives for internal auditors, including ongoing training on governance, risk management, and audit best practices. This would equip the audit team with the skills and knowledge needed to effectively promote good governance. Second, the bank should allocate more resources to the internal audit department to allow for more comprehensive audits and the use of advanced auditing tools.

Additionally, the study recommends that NFC Bank strengthen the independence of the internal audit function by ensuring that auditors report directly to an independent audit committee rather than senior management. This would reduce the risk of conflicts of interest and ensure that audit findings are objective and actionable. Finally, the bank should foster a culture of openness to audit recommendations, encouraging all departments to view internal audits as a tool for improvement rather than a punitive process.

In conclusion, internal auditing plays a vital role in promoting good governance at NFC Bank Buea by ensuring compliance, managing risks, and enhancing operational efficiency. However, to maximize its effectiveness, the internal audit function must overcome challenges related to resource limitations, resistance to change, and independence. By addressing these challenges, NFC Bank can further strengthen its governance practices and ensure sustainable growth and accountability in the future.

Keywords: Internal audit, good governance, NFC Bank, risk management, compliance, accountability, Cameroon.