Saleh F. A. Khatib

This study seeks to verify the contribution of internal audit (IA), especially its role in improving financial performance in Yemeni commercial banks, with a specific focus on three factors, namely: the independence and objectives of IA, the quality of IA and the size of IA. This study reviews some existing literature on the contribution and role of IA in improving financial performance. It relies on available data from questionnaires. 90 questionnaires were distributed to nine commercial banks in Yemen (23 branches) working under the supervision of the Central Bank of Yemen; 81 questionnaires (90%) were regained and used in the process of analysis. To analyze the data, three analysis approaches were used, including description, correlation, and regression. The results showed that the IA has a significant impact on the overall performance of Yemeni commercial banks. Furthermore, the results showed that the auditors’ efficiencies, as well as their financial and accounting experiences, have a significant and positive impact on financial performance. It was revealed that the independence and objectivity of internal auditors are highly insignificant for financial performance. However, the size of IA and the frequency of the auditors’ meetings have a negative and significant effect on financial performance. This study provides some recommendations for improving the effectiveness of IA, which in turn will contribute to improving financial performance.