The impact of internal control systems on sustainable firm performance: the moderating role of the audit committee in Fiji’s listed companies

The purpose of this research is guided by stakeholder theory to investigate the impact of internal control on sustainable firm performance and how audit committees (AC) play a role in moderating this relationship. Structural Equation Modelling (SEM) and Confirmatory Factor Analysis (CFA) tests were conducted as quantitative methodology to assess the measurement model and the study framework. SEM results indicated that internal control is significantly associated with sustainable performance, with the R2 value increased by 6.4 percentage points after AC moderation from 82.7% to 89.1%. The strongest pathway coefficient is derived from the interaction between internal audit (IA) and audit committee (AC × IA) (β = 0.548, p < 0.001). The second-highest significant relationship is from the audit committee to sustainable performance (β = 0.487, p < 0.001). The findings highlight improvements to the audit committee’s professionalism and scepticism that relate to higher quality internal control activity and positive, sustainable performance outcomes for stakeholders.