Internal Audit Governance Factors and their effect on the Risk-Based Auditing Adoption of Commercial Banks in Jordan

Authors

  • Anber Abraheem Shlash Mohammad Digital Marketing Department, Faculty of Administrative and Financial Sciences, Petra University, Jordan Author https://orcid.org/0000-0003-3513-3965
  • Suleiman Ibrahim Shelash Electronic Marketing and Social Media, Economic and Administrative Sciences Zarqa University, Jordan Author https://orcid.org/0000-0001-6156-9063
  • Ibtihaj Taher Saber Accounting Department, Collage of Business Administration, Albayan University, Baghdad, Iraq Author
  • Asokan Vasudevan Faculty of Business and Communications, INTI International University, 71800 Negeri Sembilan, Malaysia Author https://orcid.org/0000-0002-9866-4045
  • Riyad Neman Darwazeh Accounting department, Hourani Center for Applied Scientific Research, Al-Ahliyya Amman University, Amman, Jordan Author https://orcid.org/0000-0002-0130-6429
  • Rania Almajali The University of Jordan, Amman, Jordan Author
  • Zhou Fei Shinawatra University, 99 Moo 10, Bangtoey, Samkhok, Pathum Thani, Thailand 12160 Author

DOI:

https://doi.org/10.56294/dm2025464

Keywords:

Internal Audit Governance, Risk-Based Auditing, Commercial Banks, Jordan

Abstract

Introduction
This paper aims to explore the impact of internal audit governance factors on the risk-based auditing adoption of commercial banks in Jordan. The population targeted in this paper were managers of the accounting and finance departments in the commercial banks listed on the Amman Stock Exchange.

Methods
Using the purposive sampling method, 339 responses were obtained in the final sample, which constituted a validity rate of 73.7%. Structural equation modeling (SEM) was adopted as a statistical approach for hypotheses assessment.

Results
The findings of this paper confirmed the positive impact of internal audit governance factors, including internal audit attributes, audit committee attributes, risk management system, and internal control system, on risk-based auditing adoption.

Conclusion
A set of recommendations was provided to bank managers, such as enhancing the Board's supervision and monitoring of the internal audit function's actions by encouraging Board members to grasp risk-based auditing thoughts and the value it delivers to the Bank.

References

Saraireh, S., Owais, W., Abbas, N., Matar, G., Aryan, L., ALRahamneh, A., & Al-Hawary, S.: The effect of corporate social responsibility and board diversity on earnings management: Evidence from Jordanian listed firms. Uncertain Supply Chain Management 10(4), 1253-1260 (2022).

Čular, M., Slapničar, S., & Vuko, T.: The effect of internal auditors’ engagement in risk management consulting on external auditors’ reliance decision. European Accounting Review 29(5), 999-1020 (2020).

Gallati, R. R.: Risk management and capital adequacy. McGraw-Hill, New York (2022).

Le, T. T., Nguyen, T. M. A., & Ngo, T. H. C.: Risk-based approach and quality of independent audit using structure equation modeling–Evidence from Vietnam. European Research on Management and Business Economics 28(3), 100196 (2022).

Ferdinand, J., Putro, A., & Latief, Y.: Development of Risk-Based Audit Method Standard for Stadium Project Using Design And Build Contract To Minimize Dispute Based On Inspectorate Perpective. International Journal of Science, Technology & Management 4(1), 131-138 (2023).

Al Matari, E. M., & Mgammal, M. H.: The moderating effect of internal audit on the relationship between corporate governance mechanisms and corporate performance among Saudi Arabia listed companies. Contaduría y administración 64(4), 9 (2019).

Kaawaase, T. K., Nairuba, C., Akankunda, B., & Bananuka, J.: Corporate governance, internal audit quality and financial reporting quality of financial institutions. Asian Journal of Accounting Research 6(3), 348-366 (2021).

Al-Jaifi, H. A., Al-Rassas, A. H., & Al-Qadasi, A.: Institutional investor preferences: do internal auditing function and audit committee effectiveness matter in Malaysia?. Management Research Review 42(5), 641-659 (2019).

Amri, K., Ben Mrad Douagi, F. W., & Guedrib, M.: The impact of internal and external corporate governance mechanisms on tax aggressiveness: evidence from Tunisia. Journal of Accounting in Emerging Economies 13(1), 43-68 (2023).

Almasria, N. A.: Corporate Governance and the Quality of Audit Process: An Exploratory Analysis Considering Internal Audit, Audit Committee and Board of Directors. European Journal of Business and Management Research 7(1), 78-99 (2022).

Mwape, A.: The Impact of Poor Corporate Governance on the Effectiveness of Internal Audit at the Road Development Agency (RDA) in Zambia. Open Journal of Business and Management 10(5), 2325-2365 (2022).

Capraru, S.: The Institute of Internal Auditors Internal Audit Capability Model (IA-CM) For the Public Sector. The Institute of Internal Auditors Research Foundation, Florida (2009).

Zainal Abidin, N. H.: Factors influencing the implementation of risk-based auditing. Asian Review of Accounting 25(3), 361-375 (2017).

Esmail, Z. M., & Haque, S. I.: The Influence of the Business Risk-Based Auditing Application on the Audit Process: An Empirical Investigation in the Yemeni Context. Journal of Business Strategy Finance and Management 4(2), 214 (2022).

Ali, M. M.: Risk-Based Auditing, Quality Assurance and Improvement Program in the Practices of Internal Auditing. Global Mainstream Journal of Business, Economics, Development & Project Management 1(04), 34-38 (2022).

Puad, N. A. M., Shafii, Z., & Abdullah, N. I.: The Practices of Risk-Based Internal Shari’ah Auditing Within Malaysian Takaful Operators: A Multiple Case Study. International Journal of Academic Research in Business and Social Sciences 10(7), 52-71 (2020).

Lois, P., Drogalas, G., Nerantzidis, M., Georgiou, I., & Gkampeta, E.: Risk-based internal audit: factors related to its implementation. Corporate Governance: The International Journal of Business in Society 21(4), 645-662 (2021).

Kalamanova E.N., & Prodanova, N.A.: Conceptual framework for risk-based internal audit. Risk-oriented terminological and visual apparatus. Accounting in Healthcare 12, 6-8 (2021).

Adebawojo, O.: Corporate Governance and Audit Risk (February 25, 2020). Available at SSRN: https://ssrn.com/abstract=3543972 or http://dx.doi.org/10.2139/ssrn.3543972.

Esbensen, K.: Introduction to the Theory and Practice of Sampling. IM Publications Open, United Kingdom (2020).

Sureshchandar, G. S.: Quality 4.0–a measurement model using the confirmatory factor analysis (CFA) approach. International Journal of Quality & Reliability Management 40(1), 280-303(2023).

Khalayleh, M., & Al-Hawary, S.: The impact of digital content of marketing mix on marketing performance: An experimental study at five-star hotels in Jordan. International Journal of Data and Network Science 6(4), 1023-1032 (2022).

AlBrakat, N., Al-Hawary, S., & Muflih, S.: The effect of green supply chain on the export performance of the Jordanian pharmaceutical industry. Uncertain Supply Chain Management 11(2), 613-624 (2023).

Al-Rwaidan, R., Aldossary, N., Eldahamsheh, M., Al-Azzam, M., Al-Quran, A., & Al-Hawary, S.: The impact of cloud-based solutions on digital transformation of HR practices. International Journal of Data and Network Science 7(1), 83-90 (2023).

Al-Abbadi, L., Bader, D., Mohammad, A., Al-Quran, A., Aldaihani, F., Al-Hawary, S., & Alathamneh, F.: The effect of online consumer reviews on purchasing intention through product mental image. International Journal of Data and Network Science 6(4), 1519-1530 (2022).

Al-Hawary, S. I. S., & Al-Fassed, K. J.: The impact of social media marketing on building brand loyalty through customer engagement in Jordan. International Journal of Business Innovation and Research 28(3), 365-387 (2022).

AlTaweel, I. R., & Al-Hawary, S. I.: The Mediating Role of Innovation Capability on the Relationship between Strategic Agility and Organizational Performance. Sustainability 13(14), 7564 (2021).

Marcoulides, K. M., & Raykov, T.: Evaluation of variance inflation factors in regression models using latent variable modeling methods. Educational and psychological measurement 79(5), 874-882 (2019).

Tariqa, E., Alshuridehb, M., Akourc, I., Al-Hawary, S., & Kurdi, B.: The role of digital marketing, CSR policy and green marketing in brand development. International Journal of Data and Network Science 6(2), 1-10 (2022).

Alqahtani, M. M., Almomani, H. M., Al-Hawary, S. I. S., Al-Hawajreh, K. M., Mohammad, A., Alkhawaldeh, M. I. G., ... & Al-Qudah, S. H.: The Influence of Electronic Human Resource Management on Intention to Leave: An Empirical Study of International NGOs in Jordan. IN THE EFFECT OF INFORMATION TECHNOLOGY ON BUSINESS AND MARKETING INTELLIGENCE SYSTEMS (pp. 977-992). Cham: Springer International Publishing (2023).

Nattino, G., Pennell, M. L., & Lemeshow, S.: Assessing the goodness of fit of logistic regression models in large samples: A modification of the Hosmer‐Lemeshow test. Biometrics 76(2), 549-560 (2020).

Downloads

Published

2025-01-01

Issue

Section

Original

How to Cite

1.
Shlash Mohammad AA, Shelash SI, Taher Saber I, Vasudevan A, Neman Darwazeh R, Almajali R, et al. Internal Audit Governance Factors and their effect on the Risk-Based Auditing Adoption of Commercial Banks in Jordan. Data and Metadata [Internet]. 2025 Jan. 1 [cited 2024 Nov. 1];4:464. Available from: https://dm.ageditor.ar/index.php/dm/article/view/464