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Risk-based internal audit methodology at a retail business in Cape Town
Author(s)
Roberts, Michelle
Date Issued
2023
Type
Thesis
Abstract
In today's corporate environment, organisations are exposed to some level of risk, which can
prevent them from achieving their goals and objectives if the risk materialise. Organisations
put risk management processes in place to help them mitigate risks, which consequently
assists in achieving their objectives. Internal audit functions can assist management in this
process by using a risk-based approach, which could also eliminate inefficiencies in the audit
process. However, an audit methodology needs to be followed for the internal audit function to
be effective in this process. As a result, internal audit methodologies were developed to
emphasise a risk-based approach. Risk-based internal auditing is an internal audit
methodology that ensures alignment of the internal audit activities with the organisation’s
strategies, business objectives, associated risks, and risk management framework. Therefore,
the risk-based internal auditing methodology is deemed necessary to ensure the effectiveness
and efficiency of internal audit practice. The study focused on understanding the internal audit
methodology followed at a retail business in Cape Town, as a case study. The study aimed to
explore the role of risk-based internal auditing methodology as a driver of the effectiveness of
the internal audit function. This was accomplished through conducting semi-structured
interviews and online surveys with internal auditors, audit managers, and the CAE. This
research study established the extent that risk-based internal auditing methodology contributes
to the effectiveness of the internal audit function within the selected retail business. In addition,
drivers of internal audit effectiveness were identified with a risk-based internal auditing
approach considered as the most important by respondents, and ‘internal audit function
management support’, as the least important. This research study additionally clarified the
various factors affecting risk-based internal auditing, including its limitations. It is important to
note that although limitations are linked to the RBIA approach, RBIA's impact on internal audit
effectiveness and the benefits of the methodology surpass its limitations.
prevent them from achieving their goals and objectives if the risk materialise. Organisations
put risk management processes in place to help them mitigate risks, which consequently
assists in achieving their objectives. Internal audit functions can assist management in this
process by using a risk-based approach, which could also eliminate inefficiencies in the audit
process. However, an audit methodology needs to be followed for the internal audit function to
be effective in this process. As a result, internal audit methodologies were developed to
emphasise a risk-based approach. Risk-based internal auditing is an internal audit
methodology that ensures alignment of the internal audit activities with the organisation’s
strategies, business objectives, associated risks, and risk management framework. Therefore,
the risk-based internal auditing methodology is deemed necessary to ensure the effectiveness
and efficiency of internal audit practice. The study focused on understanding the internal audit
methodology followed at a retail business in Cape Town, as a case study. The study aimed to
explore the role of risk-based internal auditing methodology as a driver of the effectiveness of
the internal audit function. This was accomplished through conducting semi-structured
interviews and online surveys with internal auditors, audit managers, and the CAE. This
research study established the extent that risk-based internal auditing methodology contributes
to the effectiveness of the internal audit function within the selected retail business. In addition,
drivers of internal audit effectiveness were identified with a risk-based internal auditing
approach considered as the most important by respondents, and ‘internal audit function
management support’, as the least important. This research study additionally clarified the
various factors affecting risk-based internal auditing, including its limitations. It is important to
note that although limitations are linked to the RBIA approach, RBIA's impact on internal audit
effectiveness and the benefits of the methodology surpass its limitations.
Additional information
Thesis (Master of Internal Auditing)--Cape Peninsula University of Technology, 2023
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