Anggaran: Jurnal Publikasi Ekonomi dan Akuntansi Volume.
Nomor.
September 2025 e-ISSN : 3031-3384, p-ISSN : 3031-3392.
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DOI: https://doi.
org/10.
61132/anggaran.
Available online at: https://journal.
id/index.
php/anggaran The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information Sadam Hamdan Akdh 1* Faculty of Economics and Administration 1 AL: University of Iraq, 9985 CRP.
Baghdad.
Baghdad Governorate.
Iraq.
*Penulis Korespondensi : Sadam.
ekadh@aliraqia.
Abstract.
In addition to the key findings, the study also emphasizes the importance of fostering a deeper understanding of the role of audit committees within the broader context of financial governance.
Despite the recognition of the audit committeeAos importance in improving the quality of financial reporting, the findings indicate that there is a significant gap in the implementation of best practices across private commercial banks in Iraq.
This gap is attributed to the lack of full compliance with regulatory requirements regarding the composition of audit committees, particularly in terms of ensuring independence and financial expertise.
The study further reveals that while the audit committee's independence and expertise play a crucial role in enhancing the quality and relevance of financial information, many banks still struggle to implement effective oversight This situation is exacerbated by the complex regulatory environment in Iraq, where overlapping supervisory authorities and weak enforcement of governance mechanisms hinder the effectiveness of financial reporting processes.
The lack of coordination between audit committees and internal audit units, as well as the limited ability to assess financial performance, further undermines the oversight function of audit committees.
address these challenges, the study suggests several recommendations, including enhancing the legal framework to enforce stricter compliance with the formation of qualified and independent audit committees.
Additionally, increasing awareness and training among stakeholders about the importance of audit committees and their roles in ensuring transparent and reliable financial disclosures is crucial.
Strengthening the oversight function and improving coordination between audit committees and internal audit units will also help in mitigating the existing weaknesses in the financial reporting process.
These steps are essential for improving the reliability of financial information, thereby fostering investor confidence and contributing to the overall stability of the banking sector in Iraq.
Keywords: Accounting Expertise.
Audit Committee.
Corporate Governance.
Financial Disclosure.
Financial Expertise.
Independence.
Informational Value.
Private Commercial Banks.
Quality of Financial Information.
Relevance.
INTRODUCTION
The importance of financial and accounting information has significantly increased in modern business environments, as it serves as a central tool for making sound economic This growing reliance has underscored the need to ensure the quality and reliability of such information.
In this context, the audit committee has emerged as a key component of corporate governance, tasked with overseeing the integrity of financial reporting and reinforcing its credibility.
However, the effectiveness of these committees is not measured solely by their existence, but rather by specific attributes most notably, the independence and financial/accounting expertise of their members.
Manuscript Received: July 14, 2025.
Revised: July 28, 2025.
Accepted: August 22, 2025.
Available: August 22.
Published: August 25, 2025.
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information Independence allows audit committee members to perform their duties without undue influence from executive management, thereby enhancing the objectivity of oversight and reducing the risk of data manipulation.
At the same time, possessing specialized knowledge in accounting and finance is essential for members to properly interpret financial statements and assess compliance with relevant accounting standards.
Accordingly, this research addresses a attributesAiindependence financial/accounting expertise contribute to enhancing the relevance and value of published accounting information, and how does this affect usersAo confidence in financial reports? The study proceeds from the assumption that improving the composition of audit committees, particularly in terms of independence and professional expertise, not only enhances the quality of financial reporting but also helps narrow the expectation gap between information users and preparers.
This is especially relevant amid rapidly evolving business conditions and growing demands for transparent disclosure.
Research Methodology Research Problem The institutional environment in Iraq particularly within the private banking sector faces a series of overlapping challenges stemming from the countryAos transitional phase, whether political or economic.
This transition has resulted in an underdeveloped regulatory and supervisory framework, which has in turn enabled the spread of financial and administrative corruption.
Although current legislation, such as the Banking Law, mandates commercial banks to establish audit committees under their boards of directors, this requirement has not translated into effective implementation that ensures strong oversight or enhances the transparency of financial reporting.
In practice, many private banks treat the formation of audit committees as a formal or symbolic act, without adhering to clear standards regarding the independence of committee members or their financial and accounting expertise.
Furthermore, the multiplicity of supervisory bodies and the overlap in their responsibilities have weakened the effectiveness of these committees, negatively impacting the quality of financial reporting and eroding user confidence in accounting information.
Accordingly, the research problem is defined as the attempt to understand the extent to which the independence and professional expertise of audit committee members in Iraqi private commercial banks influence the quality of financial disclosure.
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specifically regarding the relevance and value of the accounting information provided to This central issue raises several sub-questions, including:
To what extent do Iraqi commercial banks comply with forming effective audit committees in terms of specialization and independence? .
How effective are internal audit systems in supporting transparency and financial .
What are the key challenges that limit the performance of audit committees in the Iraqi context? .
To what degree do the characteristics of audit committees contribute to improving the quality and reliability of financial information? Research Significance The significance of this research stems from the complex realities facing the Iraqi banking sector, which suffers from weak regulatory structures and the presence of multiple supervisory bodies.
This fragmentation has hindered the ability of audit committees to effectively carry out their role in promoting financial discipline and improving the quality of financial disclosure.
The research gains further importance in light of the absence of effective standards that obligate private commercial banks to establish audit committees with a sufficient degree of independence and financial/accounting competence.
Moreover, the study sheds light on the true professional role that audit committees can play in enhancing the quality of financial informationAiespecially amid the growing need to restore investor and financial market confidence, and to foster a culture of transparency and accountability within banking institutions.
From a practical perspective, the research also aims to provide regulatory and supervisory authorities in Iraq with a set of recommendations that can strengthen the effectiveness of internal control systems and align financial reporting practices with international standards.
Research Objective This research aims to examine the impact of audit committee membersAo independence and their expertise in finance and accounting on the quality of published financial information, particularly in terms of its relevance and value.
The study focuses on assessing the extent to which Iraqi private commercial banks activate the role of audit committees beyond a merely formal or procedural level.
Specifically, the research seeks The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information .
Assess the current application of professional competence and independence standards in the formation of audit committees.
Analyze the effectiveness of audit committees in enhancing the quality of financial .
Identify the key challenges facing audit committees within private commercial .
Propose a framework that strengthens the role of audit committees as an effective tool for ensuring financial discipline and promoting transparency.
Research Hypotheses This research is based on the following main hypothesis:
AuThe independence and financial/accounting expertise of audit committee members have a positive impact on enhancing the relevance and value of financial and accounting information in Iraqi private commercial banks.
Ay From this central hypothesis, the following sub-hypotheses are derived:
There is a statistically significant relationship between the independence of audit committee members and the quality of financial disclosure.
The financial and accounting expertise of audit committee members positively influences the relevance of accounting information for users.
Audit committees in private commercial banks face regulatory and organizational obstacles that limit their effectiveness in performing oversight functions.
Weak coordination among regulatory bodies diminishes the effectiveness of audit committees in ensuring sound financial and administrative performance.
THEORETICAL FRAMEWORK ON AUDIT COMMITTEES
Audit committees are considered a fundamental pillar of corporate governance.
Their importance has grown significantly following a series of financial crises and accounting scandals that exposed weaknesses in internal control systems.
These developments prompted the establishment of specialized committees aimed at enhancing transparency and protecting the interests of various stakeholders.
Origin and Development The first implementation of an audit committee was recorded in the United Kingdom in 1872, followed by the United States in 1938 after the "McKesson and Robbins" scandal.
Subsequently, countries such as Canada.
Australia, and France adopted similar concepts.
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and banks was emphasized in the Companies Law No.
21 of 1997 and the Banking Law No.
94 of 2004.
(Wild, 2009: .
Definition of Audit Committees An audit committee is defined as a subcommittee formed by the board of directors, usually composed of non-executive members with independence and expertise in finance and Its responsibilities typically include reviewing financial statements, coordinating with internal and external auditors, and evaluating internal control systems all of which aim to strengthen trust in published financial information.
(Dahdouh, 2008: .
According to (Suleiman 2016: .
, the audit committee is "a committee formed by the companyAos board of directors, consisting solely of non-executive members with experience in accounting and auditing.
It is responsible for overseeing the preparation of financial statements, reviewing both external and internal audit functions, and monitoring compliance with corporate governance rules.
According to the Researcher.
Audit Committees Typically Share the Following Characteristics:
The primary objective of the audit committee is to enhance and support confidence and credibility in the company's financial reports.
Audit committees are appointed by the board of directors and are tasked with assisting the board in fulfilling its oversight responsibilities.
The committee is composed of non-executive board members who possess expertise in finance and accounting.
The minimum number of audit committee members is three.
The audit committee is responsible for reviewing internal audit activities, coordinating with the external auditor, evaluating internal control systems, overseeing the preparation of financial reports, reinforcing the independence of both internal and external auditors, and reviewing adherence to ethical standards and governance The audit committee serves as a vital link between management, the internal auditor, and the external auditor.
Reasons for Establishing Audit Committees Audit committees are formed for various reasons, most notably: the increasing frequency of financial failures, the need to support the independence of external auditors, the improvement of financial reporting quality, the reduction of conflicts of interest, and the monitoring of regulatory compliance.
(Al-Shammari, 2010: .
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information Objectives of Audit Committees Audit committees aim to enhance the effectiveness of both internal and external auditing, protect the organization's assets, support the credibility of financial statements, and enable the board of directors to fulfill its oversight role.
They also play a pivotal role in improving the quality of financial information and in combating financial manipulation and irregularities.
(AlSous, 2012: .
Factors Affecting Committee Effectiveness The effectiveness of audit committees is influenced by several factors, including:
independence, the delegation of appropriate authority, membersAo competence and expertise, availability of financial and human resources, and direct communication channels with relevant (Ismail, 2014: .
Importance for Stakeholders Audit committees provide added value to various stakeholders, including:
(Kohler, 2015: 50.
Cohen et al.
, 2014: .
Board of Directors Ae by supporting decision-making and enhancing oversight.
External Auditor Ae by ensuring their independence and facilitating communication.
Internal Audit Ae through direct supervision and support.
Investors Ae by improving transparency and the quality of financial reporting.
Duties and Authorities The audit committee's responsibilities include reviewing internal and external audit plans, examining financial statements, assessing internal control systems, monitoring legal compliance, and submitting periodic reports to the board of directors or regulatory authorities.
(Hallas & Abu Raida, 2015: .
Relationship with Other Parties The audit committee serves as a communication bridge between the board of directors and the auditors.
It also helps to reduce the information gap with investors, protect shareholdersAo rights, and promote good governance.
(Abdul Azim, 2013: .
Legal Framework in Iraq According to the Banking Law No.
94 of 2004.
Iraqi banks are required to form audit The Central Bank of Iraq has issued detailed instructions outlining their roles and authorities, such as reviewing audit reports, assessing financial performance, and ensuring compliance with regulatory guidelines.
These measures position the audit committee as a core mechanism for ensuring financial discipline within Iraqi banks.
(CBI Instructions, 2017: 18Ae ANGGARAN Ae VOLUME 3 NOMOR.
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Audit Committee Characteristics: Independence and Financial/ Accounting Expertise Independence and financial/accounting expertise are among the most critical characteristics influencing the effectiveness of audit committees in performing their oversight These two elements form the professional and ethical foundation needed for objective assessment and high-quality disclosure.
(Al-Ruhaili, 2008: .
Independence Independence refers to the ability of audit committee members to perform their duties without influence from internal management.
Members should not be part of the executive team nor have direct financial interests in the organization, thus ensuring neutrality when evaluating management activities or financial reporting decisions.
Independence is essential for the credibility and objectivity of the committeeAos work.
(Al-Ramli, 2018: .
Financial and Accounting Expertise An effective audit committee must include members with adequate academic qualifications or professional experience in accounting, finance, or auditing.
This expertise enables the committee to understand complex financial analyses, evaluate the quality of accounting policies, and detect signs of manipulation or financial risk.
(Sami, 2013: 30.
Yaqoub, 2006: .
The absence of such expertise undermines the committeeAos ability to interact with auditors and comprehend the technical details of financial statements, ultimately weakening oversight and disclosure quality.
The importance of these two characteristics lies in their role as the foundation for objective and effective performance of the audit committee, which in turn reinforces the credibility of published accounting information and enhances the confidence of financial statement users.
ANALYTICAL METHODOLOGY AND ANALYSIS OF THE SAMPLEAoS
RESPONSES
Description of the Research Sample and Justification for Its Selection The banking sector targeted in this study holds significant importance, as it is one of the key sectors that contribute to supporting the national economy and enhancing the overall banking environment in Iraq.
Audit committees play a crucial role in maintaining financial and administrative performance within commercial banks.
For this reason, the selected sample was intended to reflect the actual reality of audit committees and support the objectives of the study.
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information The researcher distributed 63 questionnaire forms, all of which were successfully In addition, the researcher personally visited the respondents at their workplacesAi an effort that required substantial time and energyAiespecially since most of the data was collected through personal interviews to clarify the content of the questionnaire.
Table .
presents the detailed distribution of the questionnaires.
Tabel 1.
Distribution of Questionnaire Forms Among Respondents in the Units of the Study Sample No.
Economic Unit Central Bank of Iraq / Compliance Sample Received Population Questionnaires Committee Iraq Stock Exchange Private Commercial Banks .
Audit Firms Total Tools and Methods Used in Measurement and Analysis The statistical software SPSS Amos was used to analyze the data, while Microsoft Excel was employed for graphical representation of the respondentsAo answers according to the study The following tools and methods were used for measurement and analysis:
Standard Deviation (S):
It is the square root of the variance and is calculated using the following formula:
Oo Oc ycuycn Oe (Oc ycuycn )2 ycu ycuOe1 Five-Point Likert Scale The Likert scale is a method used to measure behaviors and preferences, commonly applied in psychological testing.
It was developed by psychologist Rensis Likert.
This scale is widely used in questionnaires, especially in statistical studies, and relies on respondentsAo answers that reflect their degree of agreement or disagreement with a particular statement.
The following table illustrates how the values of the arithmetic means are interpreted .
oting that the researcher may adopt different interpretations depending on the specific context of the stud.
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CronbachAos Alpha Test To assess the validity and reliability of the studyAos measurement scales, the researcher used the Alpha correlation coefficient .
, commonly referred to as CronbachAos Alpha.
This statistical measure is used to evaluate the internal consistency of the instrument.
It is calculated using the following formula:
yc=( yco ) .
ycoOe1 Ocyco ycn=1 ycIycn ycIycN2 Where:
k = number of items C SAA = variance of each item SCuA = total variance of the scale Coefficient of Variation (C.
The Coefficient of Variation is one of the most important relative measures of dispersion.
It is characterized by its unit-free result, which allows for comparison between datasets regardless of whether their measurement units are the same or different.
The formula for calculating the coefficient of variation is:
ycI ya.
ycO = ycuI y 100% .
Where:
S = standard deviation ycuI = arithmetic mean of the group values Normal Distribution Test The normal distribution plays a vital role in understanding the nature of the data and in guiding the choice of appropriate statistical analysis methods.
The test of normality was conducted using significance tables and graphical tools in SPSS Amos, in order to determine whether the data follow a normal distribution.
Factor Analysis Factor analysis is a statistical method used to explain the statistically significant correlations between variables.
It aims to simplify the relationships among a large set of variables by identifying the underlying common factors that explain those relationships.
It is generally divided into two types:
Exploratory Factor Analysis (EFA): This type is used when the relationships between observed variables and underlying latent factors are unknown.
The goal is to uncover and identify those latent factors.
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information .
Confirmatory Factor Analysis (CFA): This type is used to test hypotheses regarding the existence of relationships between variables and latent constructs, as well as the ability of those constructs to adequately represent the dataset.
Analytical Approach and Analysis of RespondentsAo Answers The research utilized the questionnaire method as the primary tool for collecting data from a randomly selected sample, aiming to confirm or refute the research hypothesis.
A set of questionnaires was distributed to individuals in the study sample.
The questionnaire was designed using the five-point Likert scale, with responses ranging as follows:(Strongly Agree.
Agree.
Somewhat Agree.
Disagree.
Strongly Disagre.
The questionnaire consisted of a set of variables distributed across multiple thematic .
Axis One: Covered the characteristics of the audit committee and served as a basis for the remaining axes.
Axis Two: Assessed the extent to which the audit committee performs its duties and responsibilities in accordance with the Central Bank's instructions and charter.
This axis included 15 variables, distributed among 11 specialized employees.
Axis Three: Focused on the role of the Iraq Stock Exchange in relation to audit committees, comprising 6 variables distributed among 7 specialized employees.
Axis Four: Examined the audit committeeAos responsibilities related to internal auditing and control systems in banks, with 22 variables distributed among 30 banking .
Axis Five: Addressed the operational mechanisms of the audit committee, including 24 variables, also distributed among 30 qualified employees.
Axis Six: Related to the committeeAos responsibilities regarding internal control and auditing systems, with 15 variables distributed among 15 external auditors.
Audit Committee Characteristics from the Perspective of the Compliance Division at the Central Bank of Iraq The Central Bank of Iraq has consistently emphasized the regulatory frameworks governing the work of audit committees through various issued regulations and instructions.
Most notably, in 2017, the Central Bank issued an Audit Committee Charter aimed at ensuring the accuracy and reliability of financial statements, the appropriateness of accounting policies and procedures, and the effectiveness of internal control systems.
This also includes legal and regulatory compliance, the independence of external auditors, and the operational autonomy of the internal audit department within each bank.
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These efforts reflect the Central Bank's intention to establish a solid legal foundation for forming audit committees in Iraqi banks.
This aligns with the researchAos first hypothesis, which posits that audit committees in private commercial banks are not formed in accordance with established standards.
Tabel 2.
Responses of the Central Bank of Iraq Compliance Division Regarding Audit Committee Characteristics No.
Statement Response Options Frequency Percentage (%) Who appoints the members of A General Assembly of the the audit committee in the bank? Bank A Board of Directors A Authorized Director To whom does the audit A Board of Directors committee report within the A Authorized Director A Deputy Authorized Director Audit committee members are A Independent non- selected from:
executive board members A Executive board A Internal bank staff A External members .
Do some members possess A Hold appropriate sufficient qualifications to academic qualifications effectively perform their roles.
A Possess required as follows:
technical expertise A Have experience in reading financial A Lack the necessary How many members constitute A Two members Ae Ae the audit committee? A Three members A Four members Ae Ae A Five members Ae Ae The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information Is the number of current A Fully sufficient committee members sufficient A Sufficient to some extent to perform effectively? A Insufficient to some A Completely insufficient What methods does the audit A Relies on internal committee rely on to perform A Seeks advice from head of accounting/finance A Consults internal A Consults external How often does the current audit A Once a month committee meet, according to A Every two months regulations and instructions? A Every three months A Every six months A Once a year Source: Prepared by the researcher based on survey responses.
Analysis of Audit Committee Characteristics Based on Responses from the Central Bank of Iraq Compliance Division Based on the survey results concerning audit committee characteristics, as viewed by the sample from the Compliance Division at the Central Bank of Iraq, the findings revealed the Nine respondents, representing 81% of the sample, indicated that the board of directors is responsible for appointing audit committee members.
This is a positive indicator, as the Central BankAos Audit Committee Charter clearly assigns this responsibility to the board.
contrast, two respondents .
%) believed that the general assembly is responsible for such Regarding the entity to which the audit committee reports, 100% of respondents confirmed that the committee reports directly to the board of directors, indicating clear alignment with governance structures.
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When asked about the source of committee members, eight respondents .
%) stated that members are selected from independent, non-executive board members, while the remaining three .
%) noted that external individuals outside the board are appointed instead.
As for qualifications, three respondents .
%) stated that committee members possess appropriate academic qualifications, while eight .
%) emphasized that members have strong experience in reading financial statements, reflecting a solid practical understanding, even if academic qualifications are not always present.
Regarding committee size, all respondents .
%) agreed that the audit committee in their institutions comprises three members, which reflects standard practice within many governance frameworks.
On the adequacy of the committeeAos size, nine participants .
%) indicated that three members are sufficiently adequate, while two .
%) believed that the number is highly adequate, suggesting a general satisfaction with the current composition.
As for the methods used by audit committees to perform their duties effectively, the responses were varied.
This variability may be attributed to the limited direct insight that compliance officers may have into the committee's daily internal operations.
In the final item regarding meeting frequency, the sample was nearly evenly divided:
45% of respondents reported that audit committees meet monthly, another 45% indicated that meetings occur every two months, and a single respondent .
%) stated that meetings are held every three months.
This reflects a generally consistent meeting schedule in line with regulatory expectations, though some variation exists.
Analysis of RespondentsAo Answers (Members of the Compliance Division at the Central Bank of Ira.
Ae Axis Two The responses of the participants were analyzed using measures such as arithmetic mean, standard deviation, coefficient of variation, relative weight, and degree of agreement for the second axis, which examines the extent to which audit committees perform their duties and responsibilities in accordance with the Central BankAos instructions and charter.
The overall arithmetic mean for this axis was 3.
8242, with a standard deviation of 0.
and a coefficient of variation of 0.
The relative weight for the axis was 0.
74, indicating a favorable level of agreement (Agre.
among the respondents.
These results are detailed in Table .
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information Tabel 3.
Weighted Mean.
Standard Deviation.
Coefficient of Variation.
Relative Weight, and Level of Agreement for Axis Two Ai "Extent of Audit Committee's Performance of Its Duties According to the Central Bank's Instructions and Charter" Code Variable Mean Std.
Dev.
XCA
The audit committee in private banks Relative Level of Weight Agreement Strongly operates independently from all other Agree committees and submits its recommendations directly to the board of directors.
XCC
The audit committee has the authority to conduct or delegate investigations Strongly Agree into matters within its scope, as per the Central BankAos instructions.
XCE
Committees in private banks are formed by election from the general Strongly Agree assembly .
, report directly to it, and consist of three nonexecutive members.
XCE
Committee members possess Agree Agree Agree Strongly academic qualifications and practical experience in finance, accounting, law, or economics.
XCI
Committee members meet the qualifications specified by the Central Bank, such as integrity, understanding of operations, professional experience, diverse skills, and knowledge of risk and control.
XCI
Committee members are independent by avoiding family relationships with executive management or contracted XCN Committee membership terms comply with Central Bank regulations: two years renewable once.
after two terms.
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reappointment is not allowed for at least three years.
XCO
The audit committee is flexible in Agree Agree Somewhat responding to changing conditions and takes necessary actions to ensure sound financial, operational, and ethical practices.
XCO
The committee is able to read, understand, and evaluate the bankAos financial statements, including the balance sheet, income statement, cash flow statement, and changes in equity.
XCACA
The audit committee handles complaints received through hotlines Agree
related to accounting, internal controls, non-compliance, and audit
XCACA
The committee evaluates the compliance department, monitors anti- Somewhat Agree money laundering and terrorist financing, and ensures compliance with laws and regulations, reporting to the board.
XCACC
The committee reviews meeting Agree Agree Agree Strongly minutes and follows up on recommendations relevant to the Central BankAos work.
XCACE
The committee reviews its annual work plan and the meetings held in this regard.
XCACE
The committee monitors and follows up on anti-money laundering and terrorist financing reports within the XCACI The committee evaluates the bank's compliance with disclosures required Agree The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information by IFRS.
Central Bank instructions, legislation, and Iraq Stock Exchange Overall Mean for Axis Two:
Agree Interpretation of Axis Two Results Based on Table .
Axis Two included fifteen As shown in Table .
, all variables recorded weighted arithmetic means greater than the hypothetical mean of .
, with the exception of variable (XCACA), which states: "The audit committee handles complaints received by the bank via the hotline related to accounting, internal controls, non-compliance, and other audit issues.
The variable with the highest level of agreement was (XCA), which reads:
"The audit committee in private banks operates independently from all other committees and submits its recommendations directly to the board of directors," with a mean of 4.
7273, a strong agreement level of 95%, and a coefficient of variation of The second-highest variable was (XCE): "Committees in private banks are formed through election by the general assembly .
, report directly to it, and consist of three nonexecutive members," with an agreement percentage of 91% and a coefficient of variation of 0.
The third most agreed-upon variable was (XCACI): "The audit committee evaluates the bankAos compliance with disclosures required by IFRS.
Central Bank instructions, legislation, and Iraq Stock Exchange regulations.
Two other variables (XCC) and (XCN) also recorded identical values at the level of "Strongly Agree", indicating very high alignment with respondentsAo perspectives.
Collectively, these five variables represent one-third of the total variables under Axis Two.
Additionally, eight variables received responses at the "Agree" level, consistent with the direction of the Only two variables (XCACA) and (XCACA) received responses categorized as "Somewhat Agree", as reflected by their relatively lower means and agreement levels.
Analysis of RespondentsAo Answers (Iraq Stock Exchang.
Ae Axis Three The responses of the participants were analyzed based on the arithmetic mean, standard deviation, coefficient of variation, relative weight, and level of agreement for Axis Three, which explores the role of the Iraq Stock Exchange in relation to audit committees.
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The overall arithmetic mean for this axis was 4.
2857, with a standard deviation of 0.
and a coefficient of variation of 0.
The relative weight reached 0.
853, indicating a strong level of agreement (Strongly Agre.
among respondents.
These results are detailed in Table .
Tabel 4.
Weighted Mean.
Standard Deviation.
Coefficient of Variation, and Relative Weight for Axis Three Ae "The Role of the Iraq Stock Exchange in Relation to Audit Committees" Code Variable Mean Std.
Dev.
XCACI
According to the Securities Market Relative Level of Weight Agreement Strongly Law No.
of 2004, the Securities Agree Commission and the Iraq Stock Exchange require private and mixed banks to submit annual reports certified by their audit committees.
XCACN
Full disclosure and adherence to transparency are monitored by audit
Strongly Agree
XCACO
Audit committees follow up on the bank's reports to ensure compliance Strongly Agree with disclosure requirements issued by the Securities Commission.
XCACO
The audit committee in private banks Agree Agree evaluates the bankAos compliance with disclosure requirements set by IFRS.
Central Bank regulations, legislation, and the Iraq Stock Exchange, including its comments on procedural XcA Audit committees in private banks review reports from the due diligence committee and anti-money laundering/terrorist financing reports at least four times per year.
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information XcA The audit committee monitors the bankAos compliance with publishing its Strongly Agree financial data on the website, including ownership details, major shareholders, and disclosures regarding changes in ownership and share price on a regular Overall Mean for Axis Three Strongly Agree Interpretation of Axis Three Results Based on Table .
The Role of the Iraq Stock Exchange in Relation to Audit Committees An analysis of the data presented in Table .
shows that all arithmetic means exceeded the hypothetical average of .
Four of the six variables recorded responses classified as "Strongly Agree", indicating strong alignment with the axis questions, while the remaining two were classified as "Agree".
The variable with the highest weighted mean was XCACI, which states:
"According to Securities Market Law No.
of 2004, the Securities Commission and the Iraq Stock Exchange require private and mixed banks to submit annual reports certified by their audit committees," with a relative agreement level of 97%, marking it as the most agreedupon item.
The lowest-scoring variable was XCACO, which states: "The audit committee in private banks evaluates the bankAos compliance with disclosures required by IFRS.
Central Bank instructions, legislation, and the Iraq Stock Exchange, including its comments on procedural accuracy.
It shared the same mean score as XcA, which refers to: "Audit committees in private banks review reports from the due diligence committee and anti-money laundering/terrorist financing reports at least four times per year.
However.
XCACO was considered the lowest due to having a higher standard deviation compared to XcA, indicating less consistency in responses.
Despite this, the overall average for Axis Three remained within the "Strongly Agree" category, reflecting a high level of consensus among respondents regarding the role of the Iraq Stock Exchange in enhancing audit committee oversight.
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Analysis of RespondentsAo Answers (Internal Audit and Control Departmen.
Ae Axis Four The responses of the participants were analyzed based on the arithmetic mean, standard deviation, coefficient of variation, relative weight, and level of agreement for Axis Four, which addresses the duties and responsibilities of the audit committee related to the internal control and audit system within the bank.
The overall arithmetic mean for this axis was 3.
01060, with a standard deviation of 1368, and a coefficient of variation of 0.
The relative weight was 0.
603, indicating a moderate level of agreement (Somewhat Agre.
among the respondents.
These results are detailed in Table .
Tabel 5.
Weighted Mean.
Standard Deviation.
Coefficient of Variation, and Relative Importance for Axis Four Ae Audit Committee Responsibilities Related to the Internal Audit and Control System in the Bank Code Variable Mean Std.
Dev.
Xc The audit committee participates in Relative Level of Weight Agreement Disagree Somewhat decisions regarding the appointment of internal audit department staff.
XcE The audit committee assesses the professional competence of the Agree bankAos internal auditors.
XcE The audit committee nominates Disagree Strongly candidates for the position of head of internal audit.
XcI The audit committee contributes to determining the salary and incentives Disagree of the head of internal audit.
XcI The audit committee reviews the Agree Agree Disagree internal audit plan, scope, and resulting reports.
XcN The committee ensures there are no restrictions on internal auditors while performing their duties.
XcO The audit committee oversees the independence of the internal auditor.
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information XcO
The audit committee coordinates between internal auditors and bank
Strongly Agree
XCECA
The audit committee reviews the Agree Somewhat results of internal audits.
XCECA
Internal audit reports are submitted and evaluated directly by the audit
Agree
XCECC
The audit committee follows up on Agree
Agree
Agree
Disagree Somewhat
the implementation of internal auditor
XCECE
The audit committee determines and monitors accounting and financial management policies through internal XCECE The committee supervises and reviews quarterly and annual financial XCECI The committee monitors adherence to work ethics and conduct.
XCECI
The committee supervises and evaluates management reports on Agree internal control effectiveness.
XCECN
The committee, in coordination with the board, monitors and evaluates the Somewhat Agree internal audit department.
XCECO
The audit committee regularly discusses banking risk management Somewhat Agree with the executive management.
XCECO
The audit committee holds periodic meetings with internal auditors regarding financial statements and reviews the internal control plan and implementation levels.
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XCECA
The audit committee holds private Agree Disagree Somewhat meetings with the internal auditor to discuss relevant issues.
XCECA
There are field procedures for internal control that cover all accounts and XCECC The committee reviews internal audit reports regarding compliance with Agree laws, regulations, and instructions.
XCECE
The committee identifies, tracks, and Disagree Somewhat resolves personal violations.
Overall Average for Axis Four Agree Interpretation of Axis Four Results Based on Table .
Audit Committee Responsibilities Related to the Internal Audit and Control System Upon analyzing the 22 variables included in Table .
, which targeted the Internal Audit and Control Departments of the sampled banksAiconsidered a crucial group in the study due to their direct engagement with audit committeesAiit was found that half of these variables recorded weighted means below the hypothetical average of .
, indicating negative or weak Notably, the following variables received the lowest levels of agreement:
Xc: AuThe audit committee participates in decisions regarding the appointment of internal audit department staff.
Ay .
XcE: AuThe audit committee assesses the professional competence of the bankAos internal Ay .
XcE: AuThe audit committee nominates candidates for the position of head of internal Ay .
XcI: AuThe audit committee contributes to determining the salary and incentives of the head of internal audit,Ay which received the lowest agreement level overall.
Only one variable (XcO) achieved a "Strongly Agree" rating, which stated:
AuThe audit committee coordinates between internal auditors and bank management.
Ay In addition, six variables were rated as AuAgreeAy, while another six variables were rated as AuSomewhat Agree.
Ay These findings collectively support the studyAos third hypothesis, which posits that:
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information AuAudit committees in private commercial banks face challenges and obstacles due to weak adherence to laws and regulations.
Ay Analysis of RespondentsAo Answers (Audit Committee Members and Internal Audit & Control Departmen.
Ae Axis Five The participantsAo responses were analyzed using the arithmetic mean, standard deviation, coefficient of variation, relative weight, and level of agreement for Axis Five, which addresses the mechanisms of audit committee operations.
The overall arithmetic mean for this axis was 3.
00138, with a standard deviation of 1264, and a coefficient of variation of 0.
The relative weight was 0.
601, indicating a moderate level of agreement (Somewhat Agre.
among respondents.
These results are detailed in Table .
Tabel 6.
Weighted Mean.
Standard Deviation.
Coefficient of Variation, and Relative Importance for Axis Five Ae Audit Committee Operational Mechanisms Code Variable Mean Std.
Dev.
XCECE
The audit committee has an annual Relative Level of Weight Agreement Somewhat work plan and related meetings.
XCECI
There are clear and specific Agree
objectives for the audit committee's Somewhat
Agree
XCECI
Each committee meeting has a written agenda distributed Somewhat
Agree
XCECN
Summaries of agenda items are distributed days before meetings to Somewhat Agree allow review and comment.
XCECO
The audit committee involves both Disagree Disagree Somewhat internal and external auditors in meetings on financial statements.
XCECO
The committee holds private meetings with internal and external auditors to discuss relevant issues.
XCICA
The audit committee chair meets separately with internal/external ANGGARAN Ae VOLUME 3 NOMOR.
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auditors and the CFO before XCICA The audit committee discusses Agree Agree Somewhat agenda items seriously and XCICC Detailed meeting minutes are recorded for follow-up on XCICE The committee reviews internal control procedures in detail.
XCICE
The finance department complies Agree with all laws and regulations.
XCICI
The committee reviews risk Agree management procedures.
XCICI
The committee evaluates internal Somewhat Somewhat Agree Disagree Disagree Disagree Disagree Somewhat incentives and development XCICN The committee reviews the bankAos HR development and incentive XCICO The scope of the audit committeeAos work is clearly defined, including units covered and procedures.
XCICO
Detailed audit procedures are defined .
ield, desktop, periodic XCICA Report templates and procedures include summaries tied to standards Agree and financial implications.
XCICA
The committee defines how to discuss reports with relevant Somewhat
Agree
XCICC
The committee identifies the entities to which reports are Agree
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information XCICE
The committee follows up on recommendations and their Strongly Agree
XCICE
The committee evaluates the bankAos adopted policies, including:
The committee reviews the bankAos XCICI Agree Agree Somewhat credit rating.
XCICI
The committee reviews updates to the audit charter.
The committee assesses the bankAos XCICN responsiveness to organizational Agree and economic changes in services.
Overall Mean for Axis Five Somewhat Agree Interpretation of Axis Five Results Based on Table .
Operational Mechanisms of the Audit Committee Upon analyzing the 24 variables included in Table .
, it was observed that more than half .
recorded weighted means below the hypothetical mean of .
, indicating a negative evaluation.
In contrast, 11 variables scored above the hypothetical mean, indicating positive agreement.
However, none of the variables reached the level of AuStrongly AgreeAy.
Among the variables:
5 items received ratings of "Agree", 12 items were evaluated as "Somewhat Agree", and 6 items received "Disagree" ratings.
The most positively rated variables were XCICE and XCICA, which addressed:
AuFollow-up on recommendations in reports and their outcomesAy, and AuThe audit committee discusses agenda items seriously and attentively.
Ay On the other hand, the lowest-rated variable was XCICO, which stated:
AuAdoption of audit and control procedures that clearly define field, desk, or periodic audit Ay The overall mean for this axis was slightly above the hypothetical average, indicating a general consensus around AuSomewhat Agree.
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These results reinforce the fourth research hypothesis, which posits that:
"There is a significant impact of properly formed audit committeesAiaccording to sound standardsAion enhancing financial and administrative performance control.
Indeed, the variables that received the lowest agreement levels were those directly related to performance monitoring, which aligns with the lower ratings observed in Axis Four, concerning the actual duties of the audit committees within banks.
Analysis of RespondentsAo Answers (External Auditor.
Ae Axis Six The responses provided by the sample of external auditors were analyzed using the arithmetic mean, standard deviation, coefficient of variation, relative weight, and level of agreement for Axis Six, which examines the duties and responsibilities of the audit committee in relation to the external auditor.
The results revealed an overall arithmetic mean of 3.
92666, with a standard deviation of 0226, and a coefficient of variation of 0.
The relative weight reached 0.
785, reflecting a positive level of agreement (Agre.
among the respondents.
These findings are detailed in Table .
Tabel 7.
Weighted Mean.
Standard Deviation.
Coefficient of Variation, and Relative Importance for Axis Six Ae Audit Committee Responsibilities Toward the External Auditor Code Variable Mean Std.
Dev.
XCICO
The audit committee recommends Relative Level of Weight Agreement Agree Somewhat the appointment or dismissal of the external auditor.
XCICO
The audit committee supervises the work of the external auditor.
XCNCA
The audit committee reviews the Agree Agree Agree Strongly audit plan, reports, and observations submitted by the external auditor.
XCNCA
The audit committee coordinates between the external auditor and the bankAos board of directors to ensure independence from management.
XCNCC
The audit committee ensures that bank management provides all Agree The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information necessary facilities for the external auditor to perform effectively.
XCNCE
The audit committee ensures that Agree Agree Agree Agree Agree Agree Agree Agree Agree bank management does not withhold any information needed by the external auditor.
XCNCE
The audit committee helps resolve disputes between management and the external auditor regarding accounting and auditing issues.
XCNCI
The audit committee holds periodic meetings with the external auditor
without the presence of board
XCNCI
The audit committee receives a copy of the external auditorAos reports and follows up with relevant XCNCN The audit committee reviews and evaluates the audit results related to the bankAos operations.
XCNCO
The audit committee discusses accounting policies and financial reporting standards with the external XCNCO The audit committee follows up on any disputes or difficulties the external auditor encounters with senior management and ensures no illegal activities are being requested.
XCOCA
The audit committee monitors any pressures exerted on the external auditor that may affect audit
XCOCA
The audit committee holds periodic meetings with the external auditor ANGGARAN Ae VOLUME 3 NOMOR.
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regarding financial statements and assesses potential support.
XCOCC
The audit committee holds private Agree Agree meetings with the external auditor to discuss audit-related issues.
Overall Mean for Axis Six Interpretation of Axis Six Results Based on Table .
Audit Committee Responsibilities Toward the External Auditor An analysis of the 15 variables presented in Table .
reveals that all variables scored above the hypothetical mean of .
, indicating a positive overall assessment by the sample.
The majority of variables .
out of .
received a rating of "Agree", reflecting a high level of consistency with the axis statements.
Only one variable (XCNCC) received a "Strongly Agree" rating, which states:
AuThe audit committee ensures that bank management provides all necessary facilities for the external auditor to perform effectively.
Ay This item recorded the highest weighted mean .
, a standard deviation of 0.
97, a coefficient of variation of 22%, and a relative agreement of 88% making it the most positively rated item in the axis.
On the other hand, the only item rated as "Somewhat Agree" was (XCICO):
AuThe audit committee supervises the work of the external auditor,Ay which recorded the lowest mean score .
, a relatively high coefficient of variation .
, and a relative agreement of 64%.
These findings highlight a common organizational deficiency: the weak interaction between the audit committee and the external auditor, where responsibilities such as evaluating proposals, discussing financial statements, and reviewing the audit plan are often delegated entirely to executive management.
This neglect undermines the committeeAos oversight role, particularly when periodic meetings are not held to ensure the external auditorAos independence and objectivity.
Summary of Questionnaire Results Analysis .
The reliability and internal consistency of the questionnaire were confirmed using CronbachAos Alpha test, with all axes achieving values above 0.
7, indicating that the questionnaire items are highly stable and internally cohesive for research purposes.
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information .
RespondentsAo answers followed a normal distribution, as demonstrated by the normal distribution plots included in the appendix, in addition to the outcomes of the Skewness and Kurtosis tests, which further supported the validity of the statistical procedures.
Analysis of responses by axis revealed the following levels of agreement:
The highest level of agreement was observed in Axis Three, which addresses the role of the Iraq Stock Exchange in relation to audit committees, where responses were categorized as AuStrongly AgreeAy.
This was followed by Axis Two .
he extent to which audit committees perform their duties according to Central Bank instruction.
and Axis Six .
he audit committeeAos responsibilities toward the external audito.
, both receiving a general level of AuAgree.
Ay The least agreement was found in Axis Four and Axis Five, which received AuSomewhat AgreeAy ratings.
Notably, these two axes were evaluated by the same respondent group .
nternal audit and audit committee member.
, which may explain the relative decline in consensus.
Agreement Levels by Axis:
Axis II: Agree Axis i: Strongly Agree Axis IV: Somewhat Agree Axis V: Somewhat Agree Axis VI: Agree 1- Factor analysis identified the strongest-performing variables in each axis as follows:
Axis II: Variables XCA and XCE
Axis i: Variables XCACI and XCACO
Axis IV: Variables XcO and XCECA
Axis V: Only XCICE
Axis VI: Only XCNCC
CONCLUSIONS AND RECOMMENDATIONS
Conclusions Based on the subject of your research:
"The Impact of Independence and Financial and Accounting Expertise of Audit Committee Members in Enhancing the Relevance and Value of Financial and Accounting Information" ANGGARAN Ae VOLUME 3 NOMOR.
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The following twenty conclusions have been reformulated in alignment with the studyAos title and its thematic focus, highlighting the relationship between audit committee characteristics and the quality and reliability of accounting information, with emphasis on independence and expertise as key determinants:
Gaps in applying audit mechanisms, along with weak internal control and ineffective audit committees, allow room for improper accounting practices that negatively affect financial and administrative performance, underscoring the need for committee members with independence and professional competence.
Weak commitment to governance culture in the Iraqi environment, due to legal and societal challenges, undermines the role of audit committees and renders their formation in commercial banks often a formal process lacking core standards like independence and technical expertise.
Audit committees are among the most important oversight tools of the board of directors, serving as a pivotal link that ensures auditor independence and enhances the effectiveness of internal control systems, provided they possess clear professional characteristics, notably financial and accounting specialization.
The importance of audit committees has increased following repeated financial crises that revealed a lack of trust in financial reports, confirming that activating the committeeAos role contributes to protecting shareholdersAo interests and improving the quality of financial disclosure.
Adopting governance philosophy within economic units has reinforced the trend toward forming effective audit committees due to their essential role in controlling performance and detecting accounting deviations early.
Accounting literature has shown that the efficiency of audit committees depends on several characteristics, most notably professional qualifications, independence, tenure, and support from the board of directors, all of which are critical in achieving Audit committees play a pivotal role in ensuring the quality of financial reports and building trust in accounting information, which directly impacts the efficiency of financial and administrative performance in banks.
The studyAos results showed that private commercial banks do not comply with the legal framework when forming audit committees, as member qualifications and independence are often not considered, and members frequently serve on multiple committees within the same bank.
The Impact of Audit Committee MembersAo Independence and Financial & Accounting Expertise on the Relevance and Value of Financial Information The study revealed a lack of knowledge among some Central Bank of Iraq staff regarding the characteristics of audit committees, indicating a gap in organizational The study found that many individuals in the Iraq Stock Exchange sample lacked clear knowledge about how audit committees are formed or how they function, reflecting weak professional education in this area.
Responses from external auditors indicated a weakness in the qualifications of audit committee members in banks, contradicting Central Bank requirements and weakening the committeeAos impact on enhancing financial disclosure.
Recommendations Based on the conclusions reached by the research, and in light of the observed challenges and incomplete practices in forming and activating audit committees in Iraqi private commercial banks, the following scientific and practical recommendations can be presented:
It is necessary to issue binding regulatory instructions requiring banks to appoint audit committee members who possess accounting and financial expertise and are independent from executive management, and to prohibit overlapping membership in other bank .
The study recommends promoting governance culture within commercial banks by developing legal and institutional frameworks and integrating governance standards into supervisory evaluation processes to enhance the effectiveness of audit committees as a core oversight mechanism.
Emphasis should be placed on making the audit committee a direct channel to the board of directors, enabling it to perform its oversight role, especially in monitoring auditor independence and evaluating the internal control system.
In light of the challenges posed by financial crises to the reliability of accounting data, the role of the audit committee should be activated in reviewing financial policies and analyzing risks to enhance disclosure quality and stakeholder trust.
Economic units must adopt the audit committee as an indispensable oversight tool by providing it with the technical and administrative capabilities to detect errors and deviations early and closely monitor the implementation of control plans.
It is necessary to establish binding professional standards for selecting committee members, including academic qualifications and accounting experience, and to define the term of membership to ensure continuity and prevent monopolization of oversight ANGGARAN Ae VOLUME 3 NOMOR.
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Banks must ensure that audit committees play an active role in reviewing financial reports and verifying their compliance with international disclosure standards to enhance the confidence of users and regulatory bodies.
The research calls on the Central Bank of Iraq to intensify supervision over the commitment of commercial banks to implement the Banking Law and the instructions for forming audit committees regarding specialization, independence, and full membership engagement.
The study recommends organizing specialized training programs for Central Bank staff, especially those working in compliance and banking performance monitoring departments, to raise their awareness of audit committee characteristics and functions.
Awareness campaigns and workshops should be prepared for investors and market participants to introduce them to the role of the audit committee and its impact on improving the quality of accounting information and ensuring shareholder protection.
REFERENCES