The Effectiveness of Internal Control Systems in Libyan Commercial Banks Operating in the Eastern Region of Libya

Abstract

This study aims to assess the effectiveness of internal control systems in Libyan commercial banks operating in the eastern region of Libya. The study adopted a descriptive-analytical approach, and data were collected through a questionnaire specifically designed for this purpose and administered to Libyan commercial banks whose headquarters are located in the eastern region of Libya, namely: Wahda Bank, National Commercial Bank, Mediterranean Bank, Commerce and Development Bank, and National Union Bank. The study population consisted of 124 individuals, including managers, deputy managers, department heads, and employees working in the Internal Audit, Risk Management, Compliance, and Accounting departments.

The study examined several dimensions of internal control systems, namely the control environment, risk assessment, control activities, and information and communication systems. The findings revealed that the overall level of effectiveness of internal control systems was high. The results also indicated that there were no statistically significant differences in the effectiveness of these systems attributable to the department to which the respondents belonged. The study proposed several recommendations, most notably enhancing the effectiveness and independence of Internal Audit, Risk Management, and Compliance departments within banks; developing the technological infrastructure supporting internal control systems; strengthening employee training programs; and adopting international best practices in internal control. These measures would contribute to improving financial performance, achieving sustainability, and enhancing the competitive advantage of Libyan commercial banks.