The Moderating Role of Top Management Support in the Relationship Between Internal Audit Practices and Financial Performance: An Applied Study in Iraqi Public Higher Education Institutions

Abstract

Internal auditing is a widely recognized key governance mechanism for enhancing accountability and improving financial performance in public sector institutions. However, empirical evidence regarding its effectiveness remains inconclusive, particularly in public higher education institutions in developing countries. Drawing on agency theory and contingency theory, this study examines the effect of internal audit practices on financial performance and investigates the moderating role of top management support.

Data were collected using a self-administered questionnaire distributed to potential participants working in auditing and financial activities. A total of 175 questionnaires were distributed, of which 137 were retrieved. After verifying their completeness and consistency, 129 valid responses were found suitable for data analysis. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM).

The results indicated that internal audit practices have a positive effect on financial performance, although the magnitude of this effect is relatively modest. More importantly, top management support significantly strengthens the relationship between internal audit practices and financial performance, suggesting that the effectiveness of internal auditing depends on management commitment. This study contributes to the literature by integrating internal audit practices and top management support within a unified framework and provides practical insights for public higher education institutions seeking to improve financial performance through effective governance mechanisms.