THE RELATIONSHIP BETWEEN AUDIT COMMITTEE AND FINANCIAL PERFORMANCE: EVIDENCE FROM IRAQ

The study investigates the relationship of internal control components on the financial performance of the Iraqi banking sector by focusing on the moderating relation of the audit committee. The research theoretical foundation was built based on the agency theories. A quantitative approach using Structural Equation Modelling (SEM) was utilized as the main research design. The data was analysed to determine the relation using SPSS 25 and SmartPLS3 the data was collected from a group of respondents comprising CEO, CFO, accountants, and auditors who were selected through a simple random sampling technique. Exploratory factorial analysis was conducted on 100 respondents in several banks to verify that the research variables that could be used in the actual study. The actual survey questionnaire was distributed to 386 respondents and the data were analysed using a measurement model, the results showed that the audit committee supports the relationship of the control environment, risk assessment, and control activities. While it does not support the relationship of information & communication and monitoring, In conclusion, Audit Committee serves as an influential moderator between internal control components and financial performance. In implication, Banks should focus on Audit Committee to enhance the Components of IC and FP and to Decrease Risks and cases of fraud and theft, which leads to an increase in attracting investors, and consequently, the bank's financial performance improves.