The performance payoff: why audit quality, business processes and internal controls matter

Purpose Financial misreporting and weak corporate governance remain critical challenges, particularly in emerging economies like Pakistan. Audit quality plays a vital role in ensuring financial transparency, yet its effectiveness depends on business process management capabilities and internal control quality. This study, thus, examines how these factors collectively influence corporate performance. Design/methodology/approach This study adopts a deductive approach, gathering data from 414 respondents through questionnaires and applying partial least squares-structural equation modeling to test the hypotheses. Findings The findings reveal that audit committee effectiveness, internal audit quality and internal audit staff competency positively impact business process management capabilities and corporate performance. Business process management capabilities fully mediate the relationships of audit committee financial expertise and audit quality assurance program with corporate performance, while partially mediating audit committee effectiveness, internal audit quality and internal audit staff competency. Internal control quality significantly enhances corporate performance and moderates its relationship with business process management capabilities. Practical implications Policymakers should enforce stricter qualification criteria and continuous training for internal auditors, integrate external audit with internal controls and promote digital governance tools for real-time audit monitoring. Originality/value This study advances the resource-based view by examining three key aspects. It examines the previously unexplored impact of internal audit staff competency, audit committee effectiveness and audit quality assurance programs on corporate performance. It introduces business process management capabilities as a mediator, translating audit quality into performance improvements. Lastly, it assesses the moderating role of internal control quality in strengthening audit quality impact.

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Institutions

Publication Details

Journal
Business Process Management Journal
Published
2025-10-15
DOI
https://doi.org/10.1108/bpmj-06-2025-0905
Primary Topic
Risk Management in Financial Firms
Type
article
Field-Weighted Citation Impact
0.00
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article

The performance payoff: why audit quality, business processes and internal controls matter

Madiha Afzal, Muhammad Rizwan Ullah, WU Qiu-sheng, Muhammad Ahmed et al.
Business Process Management Journal
Risk Management in Financial Firms
article

The performance payoff: why audit quality, business processes and internal controls matter

Madiha Afzal, Muhammad Rizwan Ullah, WU Qiu-sheng, Muhammad Ahmed, Muhammad Jamil Khan
article en

Abstract

Purpose Financial misreporting and weak corporate governance remain critical challenges, particularly in emerging economies like Pakistan. Audit quality plays a vital role in ensuring financial transparency, yet its effectiveness depends on business process management capabilities and internal control quality. This study, thus, examines how these factors collectively influence corporate performance. Design/methodology/approach This study adopts a deductive approach, gathering data from 414 respondents through questionnaires and applying partial least squares-structural equation modeling to test the hypotheses. Findings The findings reveal that audit committee effectiveness, internal audit quality and internal audit staff competency positively impact business process management capabilities and corporate performance. Business process management capabilities fully mediate the relationships of audit committee financial expertise and audit quality assurance program with corporate performance, while partially mediating audit committee effectiveness, internal audit quality and internal audit staff competency. Internal control quality significantly enhances corporate performance and moderates its relationship with business process management capabilities. Practical implications Policymakers should enforce stricter qualification criteria and continuous training for internal auditors, integrate external audit with internal controls and promote digital governance tools for real-time audit monitoring. Originality/value This study advances the resource-based view by examining three key aspects. It examines the previously unexplored impact of internal audit staff competency, audit committee effectiveness and audit quality assurance programs on corporate performance. It introduces business process management capabilities as a mediator, translating audit quality into performance improvements. Lastly, it assesses the moderating role of internal control quality in strengthening audit quality impact.

Business Process Management Journal
Shanxi University of Finance and Economics (CN), Government College University, Faisalabad (PK), University of Faisalabad (PK)
Openalex Percentile: Top 57%
Risk Management in Financial Firms
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