The Role of Financial Knowledge in Achieving the Quality of Internal Control: An Analytical Study at Babylon Bank – Iraq

This study analyzes how having sufficient Financial Knowledge increases internal control over the Quality of Internal Controls for Babylon Bank in Iraq. QC of internal control involves safeguarding assets, providing assurance to stakeholders regarding financial results and protecting customers. By having employees obtain financial knowledge, they can understand financial control measures better and apply them more proficiently, therefore meeting QC requirements for protecting against potential risks as well as complying with regulations. According to this research study lack of Fin. Literacy is the largest obstacle to robust Internal Control and is responsible for decreasing the effectiveness of Risk Assessment & Compliance. Therefore, in developing economies such as Iraq, where financial and structural barriers are considerable it is especially necessary to support Financial Knowledge through educational programs. The research is built upon the COSO Framework in which Internal Control is built upon the five Interrelated elements: Control Environment / Risk Assessment / Control Activities / Information & Communication / monitoring. The study  demonstrates that employees with greater knowledge of Finance and practical application experience will increase overall QC by implementing the controls at a much higher level. Additionally, ongoing education in Financial Knowledge is vital for further developing employee competence and effectiveness of the internal control system. The study shows furthermore that integrating Financial Literacy into internal control mechanisms reduces the potential for financial crime, and therefore creating a solid foundation for good governance and encouraging continued growth of the institution/economy through developing further Capital Resources for economic & institutional growth. Babylon Bank showed strong positive correlations between the various aspects of Financial Knowledge and QC for Internal Control, emphasising that a dedicated investment in Financial Knowledge is Critical.