The Critical Influence of Internal Audit Effectiveness and Sustainable Innovation on Sustainable Auditing Practices

This study investigates the pivotal roles of internal audit effectiveness (IAE) and sus-tainable innovation (SI) in advancing sustainability auditing (SA) practices within Libya's public sector. The study used a cross-sectional, PLS-SEM and correlational re-search design to analyse 500 valid responses collected from 36 public sector firms, em-ploying hierarchical regression and structural equation modelling for robust data analysis through the Statistical Package for Social Sciences. The findings reveal that IAE and SI significantly enhance SA across various ESG dimensions, emphasising the ne-cessity for robust internal audit frameworks and innovative, sustainability-oriented practices. Conversely, ASPs demonstrated an insignificant negative impact on SA, suggesting a fundamental misalignment between existing audit guidelines and the broader sustainability objectives. These outcomes are consistent with stakeholder and agency theories, which emphasise aligning organisational practices with stakeholder expectations and addressing principal-agent conflicts to achieve sustainability goals. This paper contributes to the limited literature on sustainability auditing within Libya's public sector, expanding theoretical frameworks by illustrating how IAE and SI syner-gistically drive practical ESG integration. The paper highlights practical implications for public sector managers, emphasising the need to enhance SI and IAE to strengthen SA practices. Furthermore, it advocates revising audit standards to ensure their align-ment with evolving sustainability imperatives, thereby fostering a more holistic ap-proach to sustainability auditing in the public sector.