The reality of the role of corporate governance mechanisms in reducing financial corruption

An exploratory study from the point of view of employees of the General Administration of Financial Supervision of Companies and Banks at the Libyan Audit Bureau

Abstract

This study sought to find out how the most important means of corporate governance, (Audit Committee and the Remuneration Committee), contributed in decreasing the financial corruption in Libyan institutions in one hand, and to indicate the level of the seriousness of financial corruption on institutions that has a negative impact on their sustainability in the other hand. The study adopted the descriptive approach, and that can be done through conducting a survey to highlight opinions of employees of the general administration of financial supervision of companies and banks at the Libyan Court of Audit , as they are the authority concerned with the subject of the study. The number of participants is (30) employees, where the statistical program (SPSS) was used to analyze the data gathered from the questionnaires that were obtained, which reach (29) questionnaires, and they consist of a number of questions related to the extent of the contribution of the (Review Committee and the Remuneration Committee) positively in reducing financial corruption in Libyan institutions, and this study got many results, the most important of which is that the audit committee plays a role in reducing financial corruption in Libyan institutions. This can be achieved by improving the effectiveness and efficiency of the board of directors in carrying out their duties, and financial accountability to shareholders. The audit committee also contributes to examining the internal control systems of institutions, reducing agency costs, and supporting the independence of auditors (internal and external). As for the remuneration committee’s contribution to reducing financial corruption in Libyan institutions, it is its role in evaluating the nature and amount of compensation paid to members of the board management and senior officials, in addition to its activities to avoid clash of interests between managers and shareholders, and to create work motives for workers and confirm the value of retirement for them. The researcher concluded his study by a very crucial recommendation that is all Libyan institutions, whether financial or non-financial, should implement corporate governance and activate their tools, in addition, the responsible authorities in Libyan should combat financial corruption in different ways in order to preserve and sustain institutions, and preserve the current and future resources in the state