“Role of quality determinants of the internal audit function in corporate governance effectiveness. Senior management support as moderator: Evidence from Yemeni commercial banks”

The purpose of this study was to determine if senior management support (SMSI) in Yemeni commercial banks mediates the association between internal audit function (IAF) quality characteristics and improved corporate governance effectiveness (CGE). Internal auditors, heads of internal audit, chairmen and participants in audit commit-tees, CEOs, and financial management of Yemeni commercial banks were given a list of questions to answer. 158 full lists were obtained to evaluate after distributing the survey. For data analysis and hypothesis testing in this work, Smart PLS 3 was used. The study findings demonstrate a substantial relationship between CGE and IAF competence and due professional care (CPCI), IAF independence and objectivity (INOI), and IAF professional ethics (PEI). The outcomes of the study also demonstrate that there is no relationship between CGE and chief audit executive (CAE) Leadership Style (CLS). In terms of the moderate variable’s influence, the findings revealed that SMSI positively changes the link between CLS, CPCI, and corporate governance effectiveness. SMSI, on the other hand, has no influence on the link between INOI, PEI, and the efficacy of corporate governance. The findings add to the knowledge on IAF factors affecting the efficacy of CG and the role of SMSI in changing this relationship in developing countries such as Yemen.


INTRODUCTION
Due to the expansion of global trade, the size of commercial projects, and the emergence of multinational corporations, the separation of ownership and management has become crucial because many investors lack the time or expertise to manage the facility and ensure a return on their investment.Owners and investors are no longer able to manage their businesses independently.Because they are entrusting management of the facility to experts to ensure that the facility's goals are achieved effectively and efficiently, the facility's owners and investors choose employees with administrative expertise to handle the administration and day-to-day operations (CIPE, 2003).Corporate governance (CG) was developed to maintain a balance between a wide range of actors and the use of instruments for managing financial wealth, whether for shareholders or other parties with an interest in the facility's capital (Tabara & Ungureanu, 2012).This is because there are individuals managing businesses and others who are responsible for assuming their risks.
CG requires the support of various accounting activities despite its importance.So, according to Gramling et al. (2004), IAF is one of the fundamental foundations of CG.Internal audit has traditionally had a substantial influence on CG at many organizations since the early 1940s (Moeller, 2004), and this function's nature has changed through time (Lin et al., 2011).It also currently has a distinct position in terms of enhancing the effectiveness of CG (Carcello et al., 2005a;Gramling et al., 2004;Karagiorgos et al., 2010).Additionally, it now has more relevance than ever before.Due to the close connection between the IAF and CG, each organization must have a strong IAF in order to be successful (Carcello et al., 2005b;Hazaea et al., 2021).Based on the influence relationship between the IAF and CG, several scholars have claimed that the IAF is best suited to assist and succeed CG and Control Processes (Kontogeorgis, 2018).IA quality is accountable for preventing fraud and profit manipulation, but it also helps CG by fostering confidence in the proper management of business risks and the efficiency of internal financial reporting controls (Al Matari & Mgammal, 2019; Arena & Azzone, 2009; Arum, 2015; Lin et al., 2011).
IAF must possess a few characteristics that boost its effectiveness in order to carry out its vital function in CG advancement.Proficiency and appropriate professional care are the most important elements affecting the effectiveness of the IAF (Drogalas et  Yemen is an intriguing case study that emphasizes the need of assessing the role of IAF quality components in boosting CG, especially in the banking business, which is more concerned with CG than other commercial sectors.Yemen is a developing country.The main goals of this study are to assess the impacts of CAE leadership style, IAF independence and objectivity, IAF competence and appropriate professional care, IAF independence and objectivity, IAF professional ethics, and SMSI on CGE as well as to identify whether or not SMSI will have a stronger impact.This research used a technique based on agency theory.The CG's IAF is a vital control mechanism to address issues about information asymmetry and challenges with conflicts of interest between managers and agents, according to agency theory (Al-Matari et al., 2021; Goodwin-Stewart & Kent, 2006; Sarens & Abdolmohammadi, 2011).According to agency theory, internal audit reflects the interests of shareholders as well as a wide spectrum of IA users, such as the BOD, the AC, and organizations (Peursem & Pumphrey, 2005).Supporters of the agency hypothesis contend that top management funds the IAF to ensure the board that the internal control procedure and risk management strategy are effective.According to considerations from agency theory, the IAF's ability to maintain and assess an efficient internal control system may be enhanced by specific traits of internal audit staff (Oussii & Boulila Taktak, 2018).Because of this, internal auditors must carry out their responsibilities professionally in order to successfully contribute to lowering agency issues and safeguarding shareholder interests (Al-Matari et al., 2014; Endaya & Hanefah, 2013).As well as other knowledge and skills, this calls for the holding of the required academic and professional credentials.The relationship between CGE and IAF quality standards is thus positive.

LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT
IA personnel proficiency is vital in improving the IAF's quality."Internal auditors must possess the knowledge, skills, and other competencies needed to perform their responsibilities.).Independence is defined as "freedom from conditions and circumstances that threaten the ability of the internal audit activity or chief audit executive to carry out internal audit responsibilities in an impartial manner", objectivity is "an unbiased mental pattern that authorizes internal auditors to perform internal audit tasks in such a way that they believe in the integrity and quality of their work without reproach" (Moeller, 2015).The internal audit executive needs unrestricted and direct access to the board of directors and senior management to achieve the degree of independence required for the efficient completion of the internal audit activity's tasks.To be objective, internal auditors must also make independent decisions about audit matters without deferring to the views of others (Moeller, 2015).
The success of the IAF depends on its capacity for objectivity and independence ( The role of the chief audit executive (CAE) is crucial in attracting and cultivating talent, improving internal audit effectiveness, and delivering value to the organization (Hoos et al., 2015).A vital characteristic of the CAE is the leadership style (Burnaby et al., 2007).To define a leader's style, terms like "transformational," "transactional," and "laissez-faire" are widely employed (Bass, 1999).Moreover, it creates clear objectives and targets, and outlines the monetary and non-monetary rewards for achieving them (Hargis et al., 2011;Jing & Avery, 2008).
The results of an empirical study by Dal Mas and Barac (2018) show that the CAE leadership style has a big impact on how successful the IAF is.Lenz (2013) asserts that the effectiveness of IA procedures is significantly impacted by the chief audit officer's leadership style.Furthermore, charismatic leadership provokes emotional reactions, inspires vision, and motivates followers to achieve shared objectives via collective action, according to Erasmus and Coetzee (2018).
The support of high management is necessary for the IAF to function efficiently (Ahmad et al., 2009).SMSI is essential and crucial for creating and activating the IAF and making it possible for the internal auditors to do their duties ( Barac, 2018).Four more characteristics were discovered to have been used as stand-ins for corporate governance effectiveness.On a Likert scale of 1 to 5, where 1 denotes a strong disagreement and 5 denotes a strong agreement, all research aspects were scored.This scale was chosen because, according to Dawes (2008) and Krosnick and Fabrigar (1997), it is the best at generating higher mean scores, maintaining the validity of the measuring procedure, and being the most pertinent.

RESULTS
The hypotheses and variables were checked and evaluated using PLS-SEM 3.

Structural model
The structural model examines the study hypotheses and determines the link between the research variables using the PLS technique.The path coefficients indicate the strength and direction of the correlations, while the t-statistics and standard errors show the amount of the effect, when t-statistics, path coefficients, and R2, Q2 values are formed.The R2 value showed how the independent variables contributed to the variation in the dependent variable.Variables connected to the dependent variables must be different in order for the suggested model to adequately explain the data.Q2 may be used to assess a model's predictive ability by seeing if it can accurately anticipate data that wasn't utilized to create its parameters.The proposed framework explains around 714 percent of the variation in the CGE, according to the R2 values determined from the study's conclusions.In other words, independent variables can explain about 71% of the variance in CGE, proving that the proposed framework offers a sufficient level of justification (Chin, 1998b).Figure 1 displays the R2 value.The Q2 values obtained from blindfolded results with an omission distance of 7 were also much higher than the zero and positive values suggested by Chin (1998b).As a result, the suggested model's explanatory power and predictive utility are both appropriate in this context.Table 3 lists the outcomes.The study tested the importance of route coefficients using 2,000 bootstrapping procedures.The study applied the bootstrapping approach to empirically evaluate the expected connections for the path topology.The t-values and path coefficients for each association are displayed in The association between IAF professional ethics and CGE is shown to be positive and statistically significant in the table (B = 0.113; t = 1.648; p0.05), suggesting that if IAF professional ethics improve, CGE will follow suit.Therefore, H3 is approved.The connection between CAE Leadership Style and CGE was negative and showed no improvement if CAE Leadership Style improved (B = 0.097; t = 1.108; p 0.134), although not being statistically significant.H4 was therefore ignored.The conclusions reached after testing the hypotheses are shown in Table 4.
An interaction effect between SMSI and the independent factors with regard to the dependent variable was discovered as part of the investigation into how SMSI acts as a moderator.To analyze the model, 2,000 bootstrapping procedures were employed.P-values and a significance threshold of 5% were used to determine the significance of the hypotheses (One-tail).It is anticipated that an increase in SMSI will lead to a better CGE for the IAF quality determinants, as shown in H5a-H5d.The null hypothesis H5a is accepted since the P-values for the interaction between CAE Leadership Style and SMSI are significant (B = -0.154,t-values = 1.969, p 0.025).Additionally, the p-values of the interaction between SMSI and the IAF's professional skill and competence are favorable and statistically significant (B = 0.153, t-values = 2.228, p 0.013; Table 2).This enhances SMSI's moderating role, which aims to strengthen the link between CGE competence and care and IAF competency and appropriate professional care.According to this study, a greater SMSI strengthens the link between professional care and IAF and CGE competency.
The p-value for the interaction effect of SMSI and IAF independence and objectivity on CGE (b = 0.041, t-values = 0.567, p0.285) is neither positive nor significant.In other words, the SMSI has no bearing on how the IAF and CGE operate in terms of their independence and impartiality.Additionally, the results of evaluating the moderating influence of SMS on the relationship between the professional ethics of the IAF and CGE do not demonstrate a statistically significant positive connection with p-values of (b = 0.042, t-values = 1.254, p 0.105).In other words, IAF professional ethics have less of an impact on CGE when  (Cohen, 1988).The interaction f2 is important in the current inquiry.Table 5 presents a complete summary of the study's findings.

DISCUSSION
IAF professionalism and expertise have a significant and positive impact on CGE.The first research examined the effects of IAF professionalism and competence, objectivity and independence, professional ethics, CAE leadership style, and CGE.Yemeni commercial banks.According to research, the first factor -IAF competency and proper professional care -has a positive and significant impact on CGE.The results are consistent with the idea that enhanced CGE results from greater professionalism and competence.This discovery thus validates H1.This result supports the agency theory's presumption that IAF professionalism and competence within an organization may increase CG.The results of this study are in line with past studies linking CGE, professional skill, and care.Vadasi et al. (2020), for instance, claim that there is a positive correlation between the CG and internal auditing ability.The IAF aids in enhancing the CG in firms when internal auditors hold professional certifications and the IAF adheres to internal audit standards.In a similar vein, Oussii and Boulila Taktak (2018) found that internal control quality and IAF competency had a sizable positive association.This conclusion, however, conflicts with that of Madawaki et al.
(2022) investigation, which discovered a discrepancy between the effectiveness of internal auditing and the caliber of financial reports.Similar to this, Abbott et al. ( 2016) noted that the existence of both competency and independence can improve financial reporting monitoring, as opposed to only an IAF's competency.The results of this study thus support the idea that professionalism and competence will undoubtedly enhance CGE in the context of Yemeni commercial banks.
Because it shows that the second element, namely the independence and impartiality of IAF, has a positive and significant influence on CGE, the data is in favor of hypothesis H2.This finding corroborates the agency theory's assertion that the impartiality and independence of IAF inside an organization might raise the value of CG.In a previous study, conducted by Fadzil et al. (2005), it was demonstrated that there was a strong and positive correlation between the effectiveness of the internal control system and the objectivity of the internal auditor.These results confirm that conclusion.The findings of the study are in line with those of the Hazami-Ammar (2019) study, which highlighted the importance of the IAF's independence and objectivity and found a positive correlation between those qualities and the decision to start a self-investigation into fraud and violations.Additionally, D'Onza et al. ( 2015) discovered a strong and positive association between the IAF's objectivity, independence, and capacity to create value.In accordance with further studies, the impartiality and independence of the IAF are essential to the CG process because they improve internal auditors' capacity to alert the AC to issues and enable the CG to carry out its tasks more effectively (Scarbrough et al., 1998;Chambers & Odar, 2015).The results of this study do not agree with those of Oussii & Boulila Taktak (2018), who found no connection between the independence of the IAF and the number of serious internal

CONCLUSION
This study's major goal is to look at how IAF quality and CGE in emerging economies are related to one another.Using data from Yemen, it was determined how the CGE related to four IAF traits (competence and appropriate professional care, independence and objectivity, professional ethics, and CAE leadership style).Investigated was SMSI's effect on the moderating relationship.The elements affecting a bank's IAF quality are thought to have an effect on the CGE.The empirical findings demonstrate a substantial and positive relationship between CGE in Yemeni commercial banks and the elements influencing IAF quality.The findings indicate a statistically significant positive relationship between CGE and IAF professionalism, independence, and objectivity.The recent study has shown how important IAF's impartiality, neutrality, and professionalism are to advancing CGE.
The findings of this study provide a number of important contributions.This study contributes to the body of research supporting the relationship between effective corporate governance and high-quality IAF.It highlights the significance of IAF traits and how they may improve corporate governance.This study demonstrates that CGE is likely to improve with professional internal auditors who are familiar with on-premises transaction systems, have a lot of professional experience, and receive regular training, especially when it comes to the proficiency and proper professional care of IAF.According to the study's findings, internal auditors are better able to improve CGE if they have freedom in reporting, access to all departments, enough independence to carry out their duties and responsibilities, and channels of communication with the audit committee or the board of directors.This is related to the independence and objectivity of IAF.Additionally, it was shown that CGE is more likely to improve when internal auditors are real, authentic, and transparent, respect the privacy of the information they get, avoid engaging in conflicts of interest, and have the capacity to spot unethical activity when it occurs.According to the study's findings, SMSI will also boost the IAF's professionalism and competency as well as the CAE leadership style's contribution to CGE.
The findings of this study are critical for policymakers like the Central Bank of Yemen because they highlight how important it is for internal auditors to possess the required professional credentials and certifications, as well as how important it is to continuously train them and give them the necessary training in bank transaction systems.The internal auditors must furthermore have access to all bank divisions and staff, be given enough independence and reporting flexibility, and be required to regularly meet with the bank's audit committee.Additionally, it is crucial to encourage and support internal auditors in their attempts to conduct business ethically, protect the privacy of customer information, and disclose any potentially unethical activity within the bank.The corporate governance framework is strengthened as a result.This study has significant limitations that should be taken into account when interpreting the findings.First off, the fact that this study ignored Yemen's other economic sectors in favor of focusing just on the banking industry forces the remaining academics to examine other sectors in their subsequent studies.Second, information for this investigation was gathered via a questionnaire.Because respondents could get bored or be unwilling to finish a survey if they think it will take too long, this technique may have problems, such as low response rates and the possibility of bias.Some respondents may provide incorrect information in an effort to emphasize the IAF's success in their organizations.As a result, it would be highly advantageous to use a different data collection technique in future investigations.Finally, IAF may incorporate other elements that are not part of the model but that might assist businesses increase their effectiveness and efficiency in corporate governance.Future research may thus take into account additional IAF traits that might enhance CGE.

Figure 1 .
Figure 1.Structural model with path coefficient (R 2 ) Endaya and Hanefah (2016)Dellai & Omri, 2016).A successful IA requires SMSI to recruit, train, and retain knowledgeable and experienced staff members as well as establish relationships with outside auditors(Alzeban & Gwilliam, 2014).According to Cohen and Sayag (2010), all three elements of an effective IAF have a strong relationship with senior management support.Internal audit relies greatly on its ability to communicate with higher management about its resources and reporting routes.According to the sources mentioned by Soh and Martinov-Bennie (2011).According toEndaya and Hanefah (2016), the support of top management for the IAF moderates the association between the internal auditor's expertise and the quality of the au- dit, making it essential for the success of internal audits.Ahmad et al. discovered that the execution of recommendations from internal audits was significantly impacted by the availability of adequate administrative support for the IAF, including appropriate personnel and financial resources (2009).When there is little administrative support, auditing is seen as an inconsequential aspect of senior management's agenda, and this creates a negative vey had more than one year of experience, while the majority (57) had more than 15 years.Also used to evaluate the variables and test the research hypotheses was Smart PLS-SEM 3.3.3.

Table 1 .
Fornell and Larcker (1981)ume 18, Issue 2, 2023According to Joseph F.Hair et al. (2014), bigger outer loading factors suggest greater dependability.As demonstrated in Table1, sex-related items out of a total of 53 were eliminated from the current study because to low outer loading.Furthermore, Cronbach's alpha and composite dependability are two further metrics of data consistency that enable more precise estimates of data consistency.The amount to which each item on a certain (sub)scale measures the same variable is referred to as internal consistency reliability(Sun et al., 2007).The findings of this analysis show that the parts exhibit a high level of internal consistency (Ringle et al., 2017).Chin (1998a)suggested that each latent structure's AVE should be more than 0.50 to achieve satisfactory convergent validity.Table1also shows that the IAF's professional ethics AVE test scores were 0.481, which is below the necessary threshold (0.5).The AVE value should be more than 0.5, although 0.4 will do, according toChin (1998b)andFornell and Larcker (1981).Because the convergence validity of the notion is still valid if the AVE is less than 0.5 and the composite reliability (CR) is more than 0.6, according toFornell and Larcker (1981).An overview of the measuring model can be found in Table1.Test of convergent validity, reliability, and loadings Cronbach's Alpha http://dx.doi.org/10.21511/bbs.18(2).2023.053.1.Model for measurement http://dx.doi.org/10.21511/bbs.18(2).2023.05

Table 2 .
The AVE square root

Table 4 .
Hypothesis testing using path coefficient

5 .
Results of the moderator interaction model's hypothesis testing