The Role of Internal Auditing in Improving the Quality of Financial and Sustainability Reports

Abstract

This study aims to examine and analyze the role of internal auditing in enhancing the quality of financial reports and sustainability reports through the application of sustainability standards and the identification of internal auditors’ duties and responsibilities in evaluating these reports. It also assesses the sustainability practices of the economic unit, internal systems, and the efficiency of sustainability initiatives. The study clarifies the concept of financial reporting quality as a recurring issue and discusses its measurement metrics. A descriptive–analytical methodology was adopted, and a questionnaire was used as the primary data collection instrument. A total of 60 questionnaires were distributed to a random sample of employees in Islamic banks in Baghdad Governorate, achieving a 100% response rate. The results revealed several key findings, most notably the existence of a statistically significant correlation between internal auditing and the quality of both financial and sustainability reports. Hypothesis testing further indicated a statistically significant correlation between the role of the internal auditor and the quality of financial reports, as well as a statistically significant correlation between the role of the internal auditor and the quality of sustainability reports.