An Analysis of the Role of Internal Audit in Implementing Risk Management - a S tudy of State Corporations in Kenya

Abstract

The study analyzed the role of internal audit in Enterprise Risk Management (ERM) by providing empir ical Evidence on the Kenyan public sector firms. The study examined the impact of Involvement in ERM by auditors and internal auditors’ willingness to report a breakdown in risk procedures and whether a strong rel ationship with the audit committee affects willingness to report. The study also investigated the use of ERM a n d the role of internal audit in ERM. The study was carried out as a cross - sectional survey where the study population was 99 respondents from nine state corporations operating under the State Corporations Act. From the findin gs, the study concluded that ma nagement of State Corporation needs to create an environment that will harness commitment and support to internal audit if it is to effectively perform its responsibility of givin g assurance that organizational risks are managed effectively. This will only be possible if individuals within organizations are aware of the role and importance of internal audit function in implementation of enterprise risk man agement. The study made the following recommendations; the process regarding internal audit and regulat ory compliance certification should be amended to ensure the corporations’ trust in them. This will have the desire d effect of their wide - scale adoption that, in turn, leads to stronger internal controls and standardization of operations. The study suggest ed further research should be carried out to find out how the auditors themselves contribute to the effectiveness of internal audit function, for example factors such as competences, education status and others