The Effect of Internal Audit Outsourcing in Improving the Quality of Internal Audit in Financial Institution Operating in Yemen: A Field Study
The study aimed to identify the effect of relying on external sources to provide internal audit services on improving the quality of internal auditing in financial institutions operating in the Republic of Yemen. This was examined by focusing on the impact of the external provider’s independence and specialized technical expertise. The study adopted the descriptive analytical approach and used a questionnaire as a tool for data collection. The questionnaire was distributed to a sample of banks operating in the Republic of Yemen, consisting of (31) banks, including Islamic banks, government and mixed banks, private commercial banks, and microfinance banks, as well as insurance companies operating in Yemen (16) companies. The questionnaire was distributed to 226 respondents working in financial departments, internal audit departments, and audit committee members in those financial institutions, in addition to employees working in audit firms and offices that audit the accounts of banks and insurance companies.
The study concluded that there is a high effect of relying on external sources in improving the quality of internal auditing according to the dimensions of the study. It also found that the dimensions of independence and specialized technical expertise of the external provider significantly contribute to improving the quality of internal auditing. The study recommended encouraging financial institutions to adopt the option of relying on external sources as an organizational and strategic choice that contributes to improving the quality of internal auditing. It also recommended that relevant regulatory and professional bodies, such as the Central Bank of Yemen and professional associations, issue guidelines and instructions that encourage the systematic use of outsourcing for internal audit services.
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