Mediating Role of Governance on Audit Culture and Audit Quality Evidence from Lebanon

Abstract

This study investigates how audit culture and internal control systems contribute to audit quality, with governance examined as a mediating factor in Lebanese audit firms. The research is grounded in Agency Theory, Stakeholder Theory, and the COSO Internal Control Framework. Using a quantitative cross-sectional design, data were collected from 422 professionals working in auditing, governance, and related financial roles in Lebanon. The proposed relationships were tested through Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that both audit culture and internal control have significant positive effects on governance and audit quality. Governance also positively influences audit quality and partially mediates the relationships between audit culture and audit quality, and between internal control and audit quality. These findings highlight the importance of governance in transforming ethical audit practices and effective control systems into stronger audit outcomes, particularly in institutional contexts where regulatory enforcement remains challenging.