Purpose: This study examines the impact of the 2017 Institute of Internal Auditors (IIA) Standards on risk management within Palestinian banks, a sector operating amidst persistent economic instability and conflict since 2020. Focusing on the "Attributes" and "Performance" standards, the research investigates their influence on risk management practices in this challenging environment to understand their effectiveness in mitigating and managing risks.

Design/Methodology/Approach: Utilizing an explanatory sequential mixed-methods design, this research investigates the influence of IIA Standards on risk management in Palestinian banks. A purposive sample of 160 professionals from internal audit, risk management, and related committees participated in the study. Quantitative data were collected through a questionnaire, followed by semi-structured interviews with selected participants to provide deeper insights and interpret the quantitative findings. Multiple linear regression analysis was employed to test the study's hypotheses, specifically examining the relationship between the implementation of IIA "Attributes" and "Performance" standards and risk management effectiveness.

Findings: This study reveals a significant positive correlation between adherence to IIA Standards and enhanced risk management effectiveness in Palestinian banks during periods of crisis. Adherence to the "Attributes" and "Performance" standards strengthens the internal audit function's ability to proactively manage risk. Notably, the findings highlight the crucial role of "Performance" standards in enabling risk-based auditing, facilitating proactive risk identification and mitigation, and thereby mitigating the negative impacts of crises on financial stability and organizational performance.

Originality/Value: This research makes a novel contribution to the existing literature by examining the impact of implementing IIA Standards on risk management within Palestinian banks, a context often overlooked in prior studies. The study's findings, derived from an analysis of the challenges within Palestine's volatile political and economic landscape, provide valuable insights into the effectiveness of these standards in mitigating risks within other similar crisis-prone environments.

Practical Contributions: This study underscores the vital role of adherence to internal auditing standards in promoting the long-term sustainability of banking operations, particularly during times of crisis. Compliance is not simply a matter of regulatory adherence but a strategic investment in robust risk management capabilities. By facilitating improved risk identification, measurement, monitoring, and mitigation, adherence strengthens banks' ability to maintain financial stability, foster transparency and accountability, and achieve operational efficiency, ultimately benefiting stakeholders across the board.

Keywords:   Internal audit standards, attribute standards, performance standards, risk management, strategy papers, financial inclusion, banking sector, crisis periods, and the Palestinian context.

Title

Journal of Financial Reporting and Accounting

Publisher

Emerald group

Publisher Country

United Kingdom

Indexing

Scopus

Impact Factor

None

Publication Type

Both (Printed and Online)

Volume

--

Year

2025

Pages

--