RESEARCH PROPOSAL

TITLE: “Assessing the Effectiveness of Risk-Based Internal

Auditing (RBIA) IN Emerging Countries: the Case of Mauritius.”

Name: Gourdeale Priyashna

Student ID: 1811161
Faculty: Faculty of Law and Management
University Of Mauritius

Submission date: 16.03.2020

 1. Introduction

The perception of organizations to the risk in today's dynamic competitive environment have changed
with globalization and now, taking advantage of the returns of more risky activities has become one of the
priorities of many organizations. However, the global economic crisis required that risks are managed by
the organizations. These developments revealed the auditing of risky activities incurred by organizations,
in other words, the risk-based internal auditing (RBIA) approach. RBIA approach differs from the other
internal audit approaches with its features such as focusing on fields exposed to higher risk rather than the
financial field and creating much value. Risk-based internal auditing selects the high-risk fields
determined by risk assessment as a focal point and provides time and cost saving opportunities in the
audit function. Now, internal auditors do not only supervise the control activities, but also contribute to
the development of the risk management processes by mapping risks and continuously monitoring the
risk status of business. RBIA orientation to the future’s risks is the main difference between this new
model of audit and the traditional one that looks backwards, presenting to the entity’s management only
the past risks. RBIA improves the economic activities providing efficiency that is more meaningful.

As companies grow and evolve in today’s rapidly changing business environment, there is also the
changing stakeholders expectations and a new view of risk management which prompts this important
shift in the role of internal audit (IA) in many organizations around the world (KPMG, 2007).

Internal audit units around the globe are faced with a variety and enormous number of business risks and
related controls that need to be assessed, monitored, and reported. Risks related to the supply chain,
treasury and financial instruments, fraud, systems, privacy, strained economic conditions, corporate
responsibility, regulation, are just some of the new, niche risks which have emerged and can require
highly specialized auditing skills (Nolan, 2008) however, many audit units find themselves exposed,
lacking the skills required to deal with contemporary business risks (Griffiths P. , 1999) (Nolan, 2008).

It is to be noted that this approach concerns all stakeholders in an organization as nowadays, there is an
increasing need for assurance that prevails in the world of finance and investment, especially when it
comes to risk averse investors, and companies highly rely on investment for survival, growth and
development. Hence, risk based internal auditing focuses on risks and the internal controls which should
manage them to acceptable levels.   Thus risk based internal audits should be assessing the effectiveness
of internal controls managing those risks which present the greatest threat to the achievement of the
organization’s objectives.

So, this paper seeks to ascertain whether internal audit units in Mauritius are keeping pace with global IA
developments by investigating the effectiveness of Risk Based Internal Audit in Mauritius, the drivers of
the concept, and the study will rely upon the involvement of internal auditors for further validation.

[Keywords: internal auditing, risk-based auditing, RBIA]

1.1 Research Questions

1) How is RBIA an effective measure for risk management in an organization?
2) What are the drivers of RBIA?
3) What is the perception of Auditors in the implementation and effectiveness of RBIA in
Mauritius?

The main problem having been identified is that of risk management in organizations and its proposed
solution is the implementation of risk-based internal auditing as a way of countering this issue

1.2 Aims and Objectives

 This study aims at assessing the effectiveness of risk-based auditing in Mauritian organizations.
 Identify the drivers of the RBIA approach in Mauritius.
 Analyze the perception of internal auditors’ into evaluating the actual implementation and
effectiveness of RBIA in Mauritius.

1.3 Importance of Research

This research presents a research gap of assessing risk based internal auditing and its effectiveness on
Mauritian organizations and also, analyzing how internal auditors perceive the approach since no prior
research has yet been done in this area, but current research show similar study having been made with
regards to Ghanaian countries.

2. Literature Review
This section has the aim of showing current studies that have been undertake in the field and aims at
identifying the research gap. Following that, there will be an in-depth critical analysis of the gap and
reasons as to why this gap is suitable for research purposes. It also aims at answering the research
questions and analyze them with empirical evidence from previous research and the actual research being
conducted.

Previous studies in this field demonstrate that previous studies conducted have analyzed the adoption and
implementation of RBIA in UK countries as conducted by (Griffiths, M.P., 2012.). this study aimed at
identifying the need for Risk-Based auditing as a whole in UK companies. He also analyzed past
assumptions surrounding the audit function and implemented a critical research on the history of how
auditing has changed since the World War 2. He also presented how risk has become more of a concern
to organizations nowadays and how it has evolved over time and his study showed a positive light on how
Risk-based auditing is actually helping companies.

However, a more relative prior research is one conducted by (Ayagre, P., 2014.) which aimed at studying
the adoption of RBIA in developing countries by specifically taking the case of Ghanaian organizations.
This research has assessed the evolution of internal auditing over time from the traditional method to
more modern ones, where the study highlighted the use of RBIA. It identified the various areas of risks to
which the Ghanaian organizations are exposed. For validation of this study, it used the involvement of
internal audits from the public and private sector to reach conclusive findings about the study. Its study
was focused on the Ghana’s Club 100 group of Companies, specifically in the financial services,
manufacturing and telecoms sectors and findings were that RBIA has helped the organizations focus more
on their priority areas and reasons for those that did not implement this approach were mainly due to lack
of skills set and resource constraints.

Through these relative previous studies, a research gap was identified.

The gap is that no studies have yet been conducted in the Mauritian context and there has been no
evaluation of this concept in the Mauritian environment while taking into consideration the factors
influencing its implementation and effectiveness. Hence, this study has the aim of evaluating the
effectiveness of RBIA in Mauritian organizations.

Moreover, this study will use empirical evidences that will be gathered through a well-established
research methodology that aims at collecting information from a sample population of internal auditors
who will be interviewed in context of the research. And the data collected will be used in order to provide
facts about the research.
This research gap will help bring enlightenment to this study in the context of Mauritius being an
emerging economy and assessing how RBIA actually influences it. Also, considering the perception of
internal auditors as an input to this research.

3. Research Methodology

This section will define the research design that is expected to be used to conduct and validate the study.
It is expected that an inductive research method will be carried out and a quantitative methodology will be
implemented, and that data collection will be sourced from both primary and secondary sources. This
research will be backed by a study which involves internal auditors from both public and private sector
organizations.

To be more precise, in order to reach the target population, non-probability snowball sampling technique
will be used and it is expected that close-ended questionnaires will be used as an approach to with the
internal auditors and the data collected will be compiled using SPSS software tool, which will be accessed
through the Internet. In terms of the practicalities, it is expected that a period of approximately 4 to 6
weeks will be required to collect the targeted data that will be used for analysis and validation of this
study.

4. Limitations

Limitations pertaining this study have been identified as being a study that considers the perception of
only part of the population, being internal auditors. Areas for further studies might be that other

5. Research schedule
 August September 2020 October November
2020 2020 2020

Topic selection

Literature
review

Consult with
supervisor

Data collection

Data analysis

Revert to
supervisor

Findings and
discussion

conclusion

Complete
research

6. Reference
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