The importance of adopting principles of corporate governance for the quality of internal audit

Fedaa Abd Almajid Sabbar,Arshed Makki Rashid,Talib Ghadhban Yaseen Alalawi,Zaid Yaseen Saud Al-Dulaimi

doi:10.2478/picbe-2018-0098

Abstract

Abstract The topic of corporate governance and the quality of internal auditing have increased the importance in the light of fast economic changes. The financial systems of many of the world's largest companies face decreasing trust of the company's stakeholders and beneficiaries in the financial information they present. Iraq is considered one of the emerging countries in which the private sector suffers from the same problems as other international companies. At the same time, the indicators of financial and administrative corruption are increasing in the Iraqi economic and financial environments. The Iraqi environment requires the implementation of the principles of corporate governance, quality control and internal auditing. The aim of current study is to analyze the relationship and effects between the principles of corporate governance and the quality of the function of internal auditing in private companies in Iraq through statistical analysis of the survey data from a sample of internal audit managers and accountants. The recommendations presented aim to improve the quality of internal audit and support corporate governance to ensure the credibility of financial information disclosed in the financial statements by the executive departments in those companies, contributing to the decision-making process. The study reached several conclusions. The most important of these is that the effective and proper implementation of the principles of corporate governance in the private sector companies in Iraq will contribute to the improvement and development of the internal audit function in the company reflected positively on the performance, survival and continuity of corporate activity while safeguarding the interests of those involved.

Highlights

In the last years, the importance of adopting corporate governance has increased due to the economic and financial crisis suffered by the main part of the world
Our current study seeks to provide recommendations that improve the performance of the internal audit function in these companies by focusing on the adoption of the principles of corporate governance and their impact on improving the quality of the performance of the internal control and auditing function, which contributes to ensuring the credibility of the disclosed financial information
The commitment of the Internal Audit Section in the private sector companies in Iraq to work in accordance with the International Standards of Internal Auditing will add good skills in the performance of the internal auditor, which positively reflects on the improvement and development of the quality performance and efficiency in all the activities, especially the advisory services

Summary

Introduction

The importance of adopting corporate governance has increased due to the economic and financial crisis suffered by the main part of the world. These led to the need to focus on the application of the principles of corporate governance and of the functions of control and internal audit in companies through the activation of accountability and oversight of the executive departments. The function of control and internal audit in the companies of the administrative functions should be implemented through the activation of the oversight role, the application of corporate governance and the development and improvement of the quality control and internal audit functions These are important to ensure the quality of financial information and the return of the confidence of the beneficiaries of that information. The fifth section includes the conclusions and recommendations of the study

Objectives

Methods

Results

Conclusion