Impact of internal auditing practices on the internal control system: pre- & postpandemic comparative study

ABSTRACT

Internal auditing is an impartial practice, which involves providing assurance and consulting services that are aimed at improving a company's business operations. The recent business malfunctions and increased fraudulent and corruption cases in both developed and developing countries have raised questions over the effectiveness of internal auditing practices. The key objective of this study was to assess the effect of internal auditing practices on the internal control system quality pre- and post-COVID-19 pandemic. This study proposes organizational independence, objectivity, audit work performance, scope of work, and professional proficiency as the solution for business operations. The study also advocates that risk assessment and control activities are essential elements of the internal control system to evaluate and enhance the quality of audit work. The data for this study were collected from 89 respondents from 31 Iraqi banks using a survey questionnaire technique. The data were analyzed using SPSS and Smart-PLS. The findings present that the organizational independence impacted the control activities and the scope of work impacted the risk assessment before the pandemic. Objectivity impacted control activities and objectivity, organizational and scope of work impacted risk assessment post COVID pandemic. Moreover, the multigroup technique was used for comparative analysis and the results also showed that only organizational independence showed significant impact on control activities. This study is unique in a way that this is the only study that compares the pre- and post-COVID pandemic impact of internal auditing practices on the internal control system.