he Perceived Role of Artificial Intelligence Technology in Enhancing Internal Audit Quality in the Iraqi Banking Sector: An Empirical Study

Abstract

 Background: Artificial Intelligence Technology (AIT) is increasingly transforming internal auditing through automated data analysis, continuous monitoring, anomaly detection, and enhanced professional decision-making. In the Iraqi banking sector, growing financial complexity, cybersecurity risks, and regulatory requirements highlight the importance of examining how AI-related organizational capabilities are associated with internal audit quality.

Objectives: This study investigates banking professionals' perceptions of the relationship between AIT and internal audit quality in Iraqi banks. Specifically, it examines three dimensions of AIT: technological infrastructure availability, cognitive and digital skills, and digital governance and ethical controls.

Methods: A quantitative, cross-sectional, descriptive-analytical research design was employed. Data were collected through a structured questionnaire administered to 257 banking professionals involved in auditing, accounting, compliance, and related financial control activities. The questionnaire comprised 30 items measuring AIT and internal audit quality. Data were analyzed using SPSS, incorporating descriptive statistics, reliability assessment, and multiple regression analysis.

Results: The findings revealed significant positive associations between all three AIT dimensions and perceived internal audit quality. The regression model explained 70.7% of the variance in perceived internal audit quality (R² = 0.707). Technological infrastructure availability demonstrated the strongest positive regression coefficient (B = 0.342), followed by digital governance and ethical controls (B = 0.315) and cognitive and digital skills (B = 0.184). All three predictors were statistically significant (p < 0.001).

Conclusion: The findings suggest that effective AI-supported internal auditing requires an integrated approach combining technological infrastructure, professional digital competencies, and appropriate governance mechanisms. Iraqi banks should strengthen their technological readiness, invest in continuous professional training, and implement robust ethical and cybersecurity controls. Since the findings are based on cross-sectional perceptions, they indicate statistical associations rather than causal improvements in actual audit performance.