Abstract

<p>The existence of an internal audit unit is an undeniable necessity for strengthening corporate governance, upgrading the internal control system, assisting in strategic risk management and ensuring transparency in internal and external reporting. The purpose of this study is to investigate the effect of the characteristics of the internal audit unit on the probability of fraud in the financial statements. For this purpose, the data of 96 companies listed on the Iraqi Stock Exchange during the years 2014 to 2020 have been used. The number of employees, tenure, experience and degree have been the characteristics of internal audit that have been investigated in this study. Inventories are measured in current assets, equity liabilities, cash in current liabilities and the absolute value of changes in the current ratio. The research hypotheses were analyzed using regression model and Eviews software. The findings indicate that the experience, tenure and education of the audit unit manager have a significant negative effect on the likelihood of fraud in the financial statements of Iraqi stock exchange companies. However, no significant effect was observed on the probability of fraud in the financial statements of the companies under study due to the nature of the number of internal audit staff</p>