Abstract
This study aimed to demonstrate the importance of internal auditing standards issued by the American Institute of Internal Auditors (IIA) in the financial performance of commercial banks in Iraq. Moreover, the researchers sought to determine the impact of internal audit on financial performance under the standards of the Institute of Internal Auditors (IIA) in the surveyed banks. Furthermore, the study selected managers and auditors in the selected banks. The researchers designed a survey questionnaire and handed over to the target professionals for the data collection as it is the suitable tool and solution to collect data. While for the data analysis, Descriptive analysis and inferential statistical methods were used. The study fetched the conclusion that the financial performance of commercial banks has a positive affiliation with internal auditing standards. The respondents indicate that Iraqi commercial banks are still not highly subject to international standards for internal auditing and that all members of the research sample did not agree highly on the statements related to the application of internal auditing standards in their activities. The result of the regression model found that an increase in one unit in internal auditing standards could provide a growth in financial performance. Hence, this study suggests that the Iraqi commercial banks must implement an effective internal audit processes like internal auditing standards in order to improve the financial performances of the banks.
Highlights
Background of studyThe financial humiliations and claims of financial fraud that have occurred recently have emphasized the cons of internal control and internal audit systems in several firms, which led us to pay attention to internal control and internal audit systems and the role of those in the contemporary business firms
2- Internal audit and financial performance The definitions dealing with internal auditing varied and developed according to the development of this job, most notably what was issued by The Institute of Internal Auditors in which it stated that it is an autonomous assessment activity that exists to verify and watch closely the operations of accounting and finance in a business company to afford the precautionary and curative aids to the managements with in organizing “to fulfill the responsibilities assigned to it with a high degree of efficiency, by providing analysis, evaluation, recommendations, advice and information related to the activities which have audited” (IIA, 2017)
The accuracy of the results was tested in terms of quality agreed by the survey. 3- Research Hypotheses Based on the literature review presented formerly, the researchers consider the following hypotheses, for achieving the objectives of the research: H1: There is no significant relationship between the application of internal auditing standards and financial performance H2: The internal auditing standards has no effects on the financial performance
Summary
The financial humiliations and claims of financial fraud that have occurred recently have emphasized the cons of internal control and internal audit systems in several firms, which led us to pay attention to internal control and internal audit systems and the role of those in the contemporary business firms. 2- Internal audit and financial performance The definitions dealing with internal auditing varied and developed according to the development of this job, most notably what was issued by The Institute of Internal Auditors in which it stated that it is an autonomous assessment activity that exists to verify and watch closely the operations of accounting and finance in a business company to afford the precautionary and curative aids to the managements with in organizing “to fulfill the responsibilities assigned to it with a high degree of efficiency, by providing analysis, evaluation, recommendations, advice and information related to the activities which have audited” (IIA, 2017). According to the Institute of Internal Auditors, there are seven Performance Standards those define the activities of the internal audit and customize the qualitative measurements in order to assess the performance which includes: Communicating the Acceptance of Risks, Communicating Results, Engagement Planning, Managing the Internal Audit Activity, Monitoring Progress, Performing the Engagement, and The nature of the work.
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