Role External Auditing and Corporate Governance Practices in Combating Corruption in The Financial Sector: An Exploratory Study of Islamic Banks in Kurdistan

Bayar Ali Ismael; Azhy Akram Aziz; Bawan Yassin sabir; Raqeeb Abdulla Omar; Karkhi khalid; Barzan Omar Ali; Bayar Gardi

doi:10.25212/lfu.qzj.8.5.53

Authors

Bayar Ali Ismael accounting Dep., College of business and administration, Erbil polytechnic University, Arbil City, Kurdistan Region – Iraq
Azhy Akram Aziz media Dep., College of business and administration, Erbil polytechnic University, Arbil City, Kurdistan Region – Iraq
Bawan Yassin sabir department of accounting, Kurdistan technical institute, sulaymaniya ,KRG,Iraq
Raqeeb Abdulla Omar business management Dep., College of Administration & Economics, Lebanese French university, Erbil, Kurdistan Region – Iraq
Karkhi khalid business management Dep., College of Administration & Economics, Lebanese French university, Erbil, Kurdistan Region – Iraq
Barzan Omar Ali Accounting Dep. Aynda Institute, Erbil, KRG, Iraq
Bayar Gardi Department of Accounting, College of Administration and Financial Sciences, Knowledge University, Kirkuk Road, 44001 Erbil, Kurdistan Region, Iraq

DOI:

https://doi.org/10.25212/lfu.qzj.8.5.53

Keywords:

Corporate governance practices, corrupt practices, external auditing, moderating effects

Abstract

The main objective of the study is to the role of external auditing initiatives and corporate governance practices in dealing with incidences of corruption observed in the financial sector. A structural equation model was estimated using data collected from 200 Islamic bank managers, auditors, accountants and other employees in Erbil, Kurdistan using Smart PLS. The findings revealed that auditing financial statements acts as a disciplining device for curbing bribery in environments that encourage corruption. It was concluded that external auditing fosters acceptable ethical conduct essential for fostering good corporate governance practices in financial institutions. The study interestingly concludes that the effectiveness of corporate governance practices to warrant a reduction in corrupt practices is conceivable in an environment with solid external auditing initiatives as evidenced by the moderating analysis results.

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