Abstract
This study seeks to verify the contribution of internal audit (IA), especially its role in improving financial performance in Yemeni commercial banks, with a specific focus on three factors, namely: the independence and objectives of IA, the quality of IA and the size of IA. This study reviews some existing literature on the contribution and role of IA in improving financial performance. It relies on available data from questionnaires. 90 questionnaires were distributed to nine commercial banks in Yemen (23 branches) working under the supervision of the Central Bank of Yemen; 81 questionnaires (90%) were regained and used in the process of analysis. To analyze the data, three analysis approaches were used, including description, correlation, and regression. The results showed that the IA has a significant impact on the overall performance of Yemeni commercial banks. Furthermore, the results showed that the auditors’ efficiencies, as well as their financial and accounting experiences, have a significant and positive impact on financial performance. It was revealed that the independence and objectivity of internal auditors are highly insignificant for financial performance. However, the size of IA and the frequency of the auditors’ meetings have a negative and significant effect on financial performance. This study provides some recommendations for improving the effectiveness of IA, which in turn will contribute to improving financial performance.
Highlights
Internal audit (IA) is a basic element of internal control
This study aims to evaluate the impact of internal audit (IA) on the financial performance of Yemeni commercial banks
The initial analysis showed that IA has a significant impact on overall performance
Summary
Internal audit (IA) is a basic element of internal control. It is an independent activity carried out by specialists in institutions. IA is a useful tool aimed at supporting administrations in examining regulatory policies to ensure asset protection and the efficiency of data contained in accounting records, which are aimed at increasing higher possible adequacy of productivity. This function is essential for the success of all firms, including banks. IA management is one of the most important departments in banks, where the IA department is the most critical element in evaluating the work of departments in banks It is the backbone of accounting because this department tracks all financial operations in institutions
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