Internal Audit Function Independence and Its Role in Corporate Fraud Detection in Nigerian Quoted Companies

This study investigates the relationship between internal audit function independence and the effectiveness of corporate fraud detection in Nigerian quoted companies. The internal audit function serves as a first-line governance assurance mechanism, and its independence from management influence is theorised to be essential for objective fraud detection and reporting. Despite the Institute of Internal Auditors' practice standards and the Financial Reporting Council of Nigeria's governance code, internal audit independence is frequently compromised by reporting line arrangements, resource constraints, and management influence in many Nigerian quoted firms. Drawing on agency theory and auditing effectiveness literature, this study examines three dimensions of internal audit independence: organisational independence (reporting to audit committee), operational independence (access to all records and personnel), and objectivity (freedom from management interference). These are related to fraud detection effectiveness measured using the number of fraud cases detected internally relative to total reported fraud losses. A survey design is adopted, with questionnaires administered to eighty internal audit chiefs and audit committee chairs across twenty-five quoted firms. Structural equation modelling is applied. The study anticipates that organisational independence is the strongest predictor of fraud detection effectiveness. Findings will contribute to the audit governance literature and assist audit committees and the Securities and Exchange Commission in strengthening internal audit independence requirements. Keywords: internal audit independence, fraud detection, corporate governance, quoted companies, audit committee.