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Advances in Social Sciences Research Journal – Vol. 11, No. 7

Publication Date: July 25, 2024

DOI:10.14738/assrj.117.17271.

Alsagoor, M. H., Daud, Z. B. M., & Osman, M. N. H. B. (2024). Digital Transformation, Emotional Intelligence, and Organizational

Culture Toward Internal Audit Quality: Conceptual Framework. Advances in Social Sciences Research Journal, 11(7). 92-108.

Services for Science and Education – United Kingdom

Digital Transformation, Emotional Intelligence, and

Organizational Culture Toward Internal Audit Quality:

Conceptual Framework

Muidh Hamad Alsagoor

School of Business and Economics, UPM

Zaidi Bin Mat Daud

School of Business and Economics, UPM

Mohammad Noor Hisham Bin Osman

School of Business and Economics, UPM

ABSTRACT

This paper investigates the interplay between digital transformation, emotional

intelligence (EI), and internal auditing quality within Saudi public institutions, with

a focus on the mediating role of EI and the moderating role of organizational

culture. The advent of digital transformation has significantly influenced internal

auditing practices, necessitating an adaptation to new technologies and

methodologies. Emotional intelligence is identified as a crucial factor in enabling

audit teams to effectively manage the challenges and opportunities presented by

digital transformation, enhancing communication, decision-making, and

adaptability. Organizational culture further influences this relationship by

providing a supportive environment that facilitates the adoption of digital

innovations and the development of EI among audit personnel. The findings suggest

that a synergistic approach, incorporating digital transformation initiatives with

the development of EI and fostering a conducive organizational culture, can

significantly enhance the quality and effectiveness of internal auditing in Saudi

public institutions. This study contributes to the understanding of how digital

transformation, EI, and organizational culture interact to improve internal auditing

practices, offering valuable insights for policymakers and practitioners aiming to

optimize internal audit functions in the face of ongoing digital advancements.

Keywords: Digital transformation, use of digital technologies, changes in value creation,

structural changes, financial aspects, emotional intelligence, organizational culture,

internal auditing quality, and Saudi public institution

INTRODUCTION

Internal Audit Quality (IAQ) is defined by the extent to which internal audit functions align with

recognized auditing standards and contribute to organizational goal attainment [1]. IAQ is

distinguished by its independence, objectivity, competence, and methodical procedures.

Auditors conduct thorough evaluations of organizational operations, offering both assurance

and consultative services to enhance risk management, controls, and governance structures [2].

The significance of IAQ is multifaceted. Primarily, it acts as a crucial control mechanism,

safeguarding organizational assets and ensuring the integrity and precision of financial

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Advances in Social Sciences Research Journal (ASSRJ) Vol. 11, Issue 7, July-2024

Services for Science and Education – United Kingdom

Organizational culture in Saudi Arabia significantly impacts job performance and adherence to

standard procedures [1, 8], extending its influence to internal audit practices. Cultures valuing

governance and compliance are likely to underscore the importance of high-quality internal

audits. The cultural environment within Saudi public organizations can either facilitate or

hinder the adoption of innovations, such as digital transformation in internal audits [10, 14].

Hence, a culture conducive to adaptability and continuous learning is essential for successfully

integrating new technologies and approaches into internal auditing. Emotional intelligence,

crucial for navigating emotional complexities and enhancing job performance [15], is proposed

to mediate the relationship between digital transformation and internal audit quality.

Additionally, organizational culture, encompassing the collective values, beliefs, and practices,

might moderate this relationship, influencing employees' responses to digital transformation- induced changes [16]. The swift pace of digital transformation presents both opportunities and

challenges for internal auditing in Saudi public institutions [17]. While digital tools can enhance

audit process efficiency and effectiveness, they also introduce new risks, underscoring the need

for comprehensive training and development [7]. Furthermore, the adoption of these tools may

be impeded by organizational cultures resistant to change and innovation [16, 18].

OVERVIEW OF SAUDI PUBLIC SECTOR INSTITUTIONS

Saudi Arabia's public sector is a vast and complex array of entities, encompassing everything

from government ministries and agencies to public universities and state-operated companies.

The governance model is predominantly centralized, with the Council of Ministers sitting at the

helm, directing various sectors such as Finance, Health, and Education through its ministries.

These entities are further segmented into specific departments and agencies tasked with

oversight in areas like healthcare and fiscal policy [19]. While the central government holds the

majority of governance responsibilities, certain powers are distributed to regional and

municipal levels. Independent bodies, such as the Oversight and Anti-Corruption Authority,

maintain a level of independence to provide oversight and maintain the integrity of the

governmental framework. The architectural framework of Saudi's public sector is elaborate

and tiered, spanning numerous government organizations under the monarchy's oversight.

This traditional setup comprises ministries, boards, agencies, and commissions, each with

distinct mandates to oversee different societal segments. The governance apex is the King, who

exercises comprehensive executive, legislative, and judiciary powers. Supporting the King is the

Council of Ministers, or the Saudi Cabinet, which includes ministers responsible for critical

departments like finance, health, education, and foreign affairs, playing a pivotal role in policy

development and execution [20].

Beneath the Cabinet lie several administrative strata. Ministries typically feature a centralized

architecture, with various departments or directorates beneath them focusing on specific tasks.

Additionally, a host of semi-autonomous and independent agencies exist, such as the Saudi

Arabian Monetary Authority (SAMA) for financial oversight and the General Authority for Civil

Aviation (GACA) for aviation industry regulation. The governance structure also includes

advisory councils and committees that lend expertise in legislative and policy areas, including

the Shura Council, which evaluates laws and regulations, and specialized councils dedicated to

economic and developmental policies. Local governance structures, such as provincial

governors and city councils, play a crucial role in managing local matters. A significant evolution

in this established structure is underway, propelled by Vision 2030 and its associated Vision

Realization Programs (VRPs), aiming to modernize government functions, diversify the