The definition of the internal rate of return is the interest rate that causes the net present value to equal zero. However, interest rates can be given in two forms: nominal and effective. So, is the internal rate of return a nominal or effective interest rate? Or both?
It's a bit of a moot question, to be honest.
If your saving account pays you 5% annual, with monthly compounding, then the effective interest rate is = (1 + 0.05/12)^12 -1 = 5.116%
In other words, if you have an investment which compounds every month or quarter, and you want to know the effective rate over another period (typically over a year), you use the calculation above. This is because there is a difference between the frequency of the compounding (in the example, monthly) and the frequency of the effective rate you want to calculate (typically annually).
When you are calculating an IRR, all of these become moot points. There is no more any distinction between the frequency of the compounding and that of the effective rate you are after; in fact, you can calculate IRRs for sets of cashflows which pay at irregular intervals.