Internal audit quality role in raising the level of corporate governance: a case of Jordanian Banks

Abstract

The purpose of this paper is to review the internal audit quality role in raising the level of corporate governance in Jordanian Banks. This paper also assesses the relationships between internal audit quality factors and link with corporate governance, and how quality internal audit affects corporate governance of an institution towards achieving its objectives. The paper sites the case of Jordanian banks and shows how the country has observed corporate governance principles in its financial sector. This has led to an increase in the Gross domestic Product of the country. Subsequently, the paper highlights some key problems which hinder the growth and development of the lucrative financial sector of Jordanian economy. The main problem discussed is the issue of ownership. This paper also discusses some of the improvements in the level of corporate governance in Jordanian banks. The Central Bank of Jordan is viewed as the main contributor to most of these improvements. This paper gives some of the recommendations made by the Central Bank of Jordan. Some financial examples from Jordanian banks are also given. The final part of the paper gives an opinion on the relationship between internal audit quality and corporate governance. The paper concludes that competence of internal auditor, objectivity and performance, qualification of auditor, degree of independence and the performance of the internal audit department highly affect the internal audit quality.