BOARD OF DIRECTORS CHARACTERISTICS AND INTERNAL CONTROL WEAKNESS OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract
This study examines the effects of board characteristics on internal control weakness of listed deposit money banks in Nigeria for the period of 10 years (2010 – 2019) with a view to establishing whether selected board characteristics hav effects on internal control weakness of the banks under observation. The study adopted a census approach by selecting the entire 12 listed deposit money banks that form the population of the study within the period under review. Data were sourced from the annual reports and accounts of the banks under observation. The study analyzed the data collected with the aid of multiple regression technique. The result of the study suggests that there are cumulative significant effects of board characteristics on internal control weakness within the period under consideration. Also, the individual variables show that board size has a negative correlation to internal control weakness of listed deposit money banks in Nigeria while, board tenure and board gender shows significant positive effects on the internal control weakness of deposit money banks in Nigeria. Therefore, the study recommends that there is a need for the banks under study to continue to maintain an ideal board structure used in this study in order to mitigate against the incidence of internal control weakness that may impair the performance of the banks. This means that, board size, board tenure and board gender should be sustained as these variables proved to be an effective check on internal control weakness of listed deposit money banks in Nigeria.
Key words: Board of director, Internal control weakness, Board size, Board gender, Board tenure.
Introduction
Deposit money banks play a significant role in an economy as they are the channel through which surplus funds are passed to the deficit unit and as such it is susceptible to all forms of sharp practices if the internal control is not tightened. Therefore, Internal controls over financial reporting are the firm’s policies and procedures designed to ensure that the firm is producing reliable financial statements. The Sarbanes Oxley Act of 2002 in section 404 requires that the client’s auditor issue an opinion on the effectiveness of the client’s internal controls over financial reporting (ICFR). Public Company Accounting Oversight Board (PCAOB) (2007) noted that the purpose of the ICFR report was to alert financial statement users to the possibility that the firm’s reporting system is providing inaccurate financial statements.