The Impact of the Characteristics of the Board of Directors and the Audit Committee on the Quality of Internal Audit "Analytical Study on Companies Listed on the Palestine Exchange"

Abstract

The study aimed to analyze the impact of board of directors and audit committee characteristics on the quality of internal auditing in companies listed on the Palestine Stock Exchange. Board characteristics were studied, including the number of members, female representation, number of meetings, and independence. Audit committee characteristics included committee size, number of annual meetings, members' accounting and financial qualifications, and professional certifications. The study followed a descriptive analytical approach and adopted a comprehensive survey approach. The study population included 48 companies listed on the Palestine Stock Exchange during the period from 2019 to 2023. Data were collected from these companies' annual reports. After excluding five companies due to lack of required financial data, the study population was reduced to 43 companies. The study used panel data models using STATA, followed by a fixed-effects regression model using Driscoll-Kraay standard errors. The results showed statistically significant effects for several variables, with board size, independence, and female representation positively associated with internal audit quality. The results also showed that the number of audit committee members and the frequency of its annual meetings contribute to improving the quality of internal auditing. In contrast, the number of board meetings, the accounting and financial qualifications of audit committee members, and the size of the company did not show a significant impact on the quality of internal auditing. The study recommended increasing the number of board and audit committee members and enhancing women's representation on boards of directors, in addition to improving the effectiveness of meetings and focusing on the practical experience of committee members.