SAMPLE RESEARCH PROPOSAL PROMOTING GOOD GOVERNANCE IN PUBLICINSTITUTIONS OF GHANA: THE ROLE OF THEINTERNAL AUDITOR

5/5/2009SCHOOL OF BUSINESS, UNIVERSITY OF CAPE COAST, GHANA ISHMEAL OFORI AMPONSAH (STUDENT)

Table of Contents Introduction ................................................................................................................3 Background of the Study ........................................................................................3 Problem Statement ..................................................................................................4 Research Questions: ...........................................................................................4 Hypothesis: ..........................................................................................................4 Objectives ................................................................................................................5 Significance of Study ...............................................................................................5 Literature Review ........................................................................................................6 Definition of Internal Audit ...................................................................................6 Role of the Internal Auditor in governance ..........................................................7 Methodology ...............................................................................................................8 Research Design ...................................................................................................8 Population ............................................................................................................8 Sampling and Sampling Technique .......................................................................8 Data Collection ....................................................................................................9 Data collection instrument ...................................................................................9 Data Analysis .....................................................................................................12 Timescale ...........................................................................................................12 Limitations ................................................................................................................12 References ................................................................................................................13

Research proposal SB/MAC/08/0005 Page 2

Promoting Good Governance in Public Institutions of Ghana: The Role of the Internal Auditor Introduction A l l o v e r t h e wo r l d t h e r e i s a r e a l i z a t i o n t h a t t h e I n t e r n a l Au d i t activity has the potential to provide hitherto unparalleled s e r v i c e s t o ma n a g e me n t i n t h e c o n d u c t o f t h e i r d u t i e s . T h i s p o t e n t i a l h a s b e e n t u r n e d i n t o a c h a l l e n g e a n d e mb o d i e d i n t h e n e w d e f i n i t i o n o f I n t e r n a l Auditing from the Institute of Internal Auditors (the IIA).

Background of the Study The Government of the Republic of Ghana by the Internal Audit Agency A ct, 2003 (Act 658)established the Internal Audit Agency as an ap ex oversight body to co-ordinate, facilitate and provide quality assurance for Internal Audit activities within the public sector (Section 16 of Act6 5 8 ) . Th e I n t e r n a l Au d i t o r s v a l u e l i e s i n h o w w e l l h e ha s b e e n a b l e t o c o n t r i b u t e t o t h e achievement of the overall organizational objective. The Internal Auditor should constantly seek t o m a k e h i m s e l f r e l e v a n t t o h i s organisation by providing information that will make management take decisions that impact positively on their ability to achieve the organizational goals.

H o w e v e r , a c c o r d i n g t o r e s e a r c h a n d s u r v e ys c o n d u c t e d b y D e l o i t t e & To u c h e ( 2 0 0 4 ) a n d t h e Internal Audit Agency of Ghana (2006), much of the work of Internal Audit has been veryr e s t r i c t i v e i n t e r ms o f s c o p e . Th i s n e e d s t o b e a d d r e ss e d i f t h e r e q u i r e d r e t u r n o n i n v e s t me n t i n t h e I n t e r n a l Au d i t a c t i v i t y i s t o b e a t t a i n e d .

Problem Statement P u b l i c s e c t o r ma n a g e r s d o n o t s u p p o r t I n t e r n a l Au d i t . Th e I n t e r n a l Au d i t f u n c t i o n i n t h e Ghanaian public sector faces a perception and, to some extent, a credibility problem as a value-adding unit of the organisation. The Internal Audit Agency (2006) believes that the importance of

Internal Audit is "shrouded in obscurity. This unfortunate background continues to play d o wn t h e i mp o r t a n c e o f I n t e r n a l A u d i t a s a k e y f u n c t i o n t h a t c a n s t r e n g t h e n t h e o v e r s i g h t responsibility of the governing body. This reflects in the management attitude towards the Internal Auditor. Most often than not the budget of the Internal Audit Unit, if any exist at all, is woefully inadequate to enable them meet the resource requirements of their annual audit plans. Internal Auditors are seen more as fault finders rather than solution providers and partners in the Governments strive for organisational excellence. Management Question: Why do public sector managers fail to support the Internal Audit function and what can be done to curb it? Research Questions: 1. What account for the low support for Internal Audit by public sector managers? 2 . Wh a t a c t i o n s a r e n e c e s s a r y t o g e t t h e s u p p o r t o f ma n a g e me n t o f i n t e r n a l a u d i t i n g i n t h e public sector? 3. I s t h e r e a l i n k b e t we e n t h e q u a l i t y o f s e r v i c e t h e I n t e r n a l A u d i t o r p r o v i d e s f o r h i s organization and the attitude of managers towards the Internal Audit function? Hypothesis: There is no relationship between the quality service Internal Auditors provide for their organisations and the attitude of managers towards the Internal Audit function. Objectives The objectives of the research project are to: 1.Examine the factors responsible for the low support for the Internal Audit Activity by managers of public institutions. 2.Identify specific actions required to secure support of managers for the Internal Audit Activity.

3.Establish the relationship between quality of service and support of managers for Internal Audit.

Significance of Study The significance of the study will be to: 1 .I mp r o v e p u b l i c u n d e r s t a n d i n g o f t h e r o l e o f t h e I n t e r n a l A u d i t o r i n t h e a c h i e v e me n t o f organisational objectives. 2.Improve literature on public sector Internal Auditing in Ghana. 3 .F u l f i l l t h e M B A r e q u i r e me n t .

Literature Review The Government of Ghana has taken a proactive step in e s t a b l i s h i n g t h e I n t e r n a l A u d i t Agency(The Agency) by an Act of Parliament in 2003. The IAA is mandated to co-ordinate, f a c i l i t a t e a n d p r o v i d e q u a l i t y a s s u r a n c e f o r i n t e r n a l a u d i t a c t i v i t i e s wi t h i n t h e p u b l i c s e c t o r institutions (the IAA Act 2003, Act 658).The Agency has formulated three strategies which it is currently pursuing to improve the image of the Internal Audit function in the public sector. These are as follows:

1.Professional Practice Framework which aims at developing key documents and templates for use by the Internal Audit function such the Internal Audit Regulations, Internal Auditing Standards, Audit Programmes Internal Audit Charter and Annual Audit Planning templates. 2.Human Resource Development which seeks to facilitate the recruitment, training and development o f i n t e r n a l a u d i t o r s t o b e p r o f i c i e n t i n a p p l yi n g i n t e r n a l a u d i t st a n d a r d s , p r o c e d u r e s a n d techniques in performing engagements.3.Quality Assurance and Improvement which addresses the issue of continues improvement in the performance of the internal audit activity.

Definition of Internal Audit According to the Institute of Internal Auditors, internal auditing is an independent, objective assurance and consulting activity designed to add value and improve anorganizations operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes (March 2007). This definition actually seeks to demonstrate the depth and breadth of the internal audit activity within an institution as against the previous orientation of reviewing payment transactions over the years. Modern internal audit covers (or should cover) all activities of the organisation. Therefore the scope of internal audit is no longer restricted to the processes and systems in the accounts and finance function. Role of the Internal Auditor in governance The value of the modern day internal auditor lies in his ability to help management to achieve its objectives. According to a research jointly conducted by Deloitte & Touche and the Institute of Internal Auditors, U.K., (2004) improved attitudes toward internal audit are built on a belief that internal audit functions are creating greater value for their organisations. Governance refers to all the strategic plans of the organisation to demonstrate its commitment t o q u a l i t y a n d e x c e l l e n c e . Th e y r e f l e c t t h e s t r a t e g i c thinking and orientation of the Boarda n d M a n a g e m e n t t o achieve the objectives of the organisation. However, every d e c i s i o n a n d p r o g r a m me c a r r i e s w i t h i t a n e l e me n t o f r i s k o f n o n - a c h i e v e me n t , d u e t o u n c e r t a i n t i e s associated with the implementation of programs. Some of the risks are reputational, financial, operational, and information technology related. It would therefore be appropriate to have a structured way of identifying events that would impact negatively on the ability of management to achieve their objectives and also to take advantage of opportunities and other events that could be leveraged to achieve those same objectives.i.e. an integrated risk management framework that is embedded in the planning process of the organisations. Internal Auditors are experts in creating and promoting a risk management culture that is necessary to the effective implementation of the risk management framework. They can also assist in monitoring the framework.

Methodology This section presents an overview of the methods to used in the study. Areas covered include the research design, population, sample and sampling techniques, data collection and analysis. Research Design The study will involve the evaluating the role of Internal Auditors in the good governance of the organisations in the public sector. Consequently, the research will be designed to achieve the objectives set out by the researcher. Population The public sector of Ghana is the biggest employer of I n t e r n a l A u d i t o r s a n d i n v o l v e s several organisations including Ministries, Departments and Agencies (MDAs).The public sector a l s o includes Metropolitan, Municipal and District Assemblies M M D A s ) . T h e t a r g e t e d population for the study thus includes the following: 1.Chief Directors and Directors of all MDAs. 2.Coordinating Directors, Finance Officers and other staff of MMDAs. 3.Heads and staff of internal Audit Departments (IADs) of MDAs and MMDAs. Sampling and Sampling Technique It obvious from the definition of the population above that a census is not feasible in this study. Accordingly, the researcher will adopt the survey type of research in which a sample from the target population will be used for the study. In total, a sample of 185 elements will be selected from a targeted population of 300. Details of the sample are as follows: 15 Chief Directors and 30 Directors of MDAs. 20 Coordinating Directors, 20 Finance Officers and 20 other staff of MMDAs. 40 Heads of IDAs and 40 Internal Auditors of MDAs and MMDs. The study will adopt a multistage stratified sampling method to select elements. First, the population will be divided into MDAs and MMDAs. Next, the MDAs will be grouped into M i n i s t r i e s , De p a r t me n t s a n d Ag e n c i e s a n d t h e M M D As i n t o M e t r o p o l i t a n , M u n i c i p a l a n d D i s t r i c t s . Th i s

will ensure a fair representation of each group of institutions s i n c e t h e i r operations are significantly different. Data Collection The focus of study is on attitudes and perception and the importance of primary data cannot be o v e r - e mp h a s i s e d . Ho w e v e r , s e c o n d a r y d a t a w i l l a l s o b e c o l le c t e d t o a u g me n t t h e s t u d i e s . Before the actual data collect the researcher will collect introductory letter from the School of Business of the University of Cape Coast to the sampled institutions. The initial visit to the s e l e c t e d i n s t i t u t i o n s wi l l t h e r e f o r e b e t o i n t r o d u c e h i ms e l f , f a mi l i a r i z e h i ms e l f wi t h t h o s e institutions as well as seek their consent for the study. Data collection instrument The researcher will collect data by administering a questionnaire. The questionnaire will use structured questions, consisting of approximately 20 questions divided into three sections A,B, and C. Section A will consist of seven questions seeking to answer the first research question. Section B will consist of six questions covering the second research question whereas Section C will consist of questions to test the hypothesis and also answer the third research question. Sample investigative questions: T a b l e 1 b e l o w p r o v i d e s s a m p l e s o f t h e i n v e s t i g a t i v e questions.

Most of the structured questions will be the close-ended type and respondents willbe asked to mark the appropriate box matching the correct answer. Otherquestions, however, will require respondents to give opinions.

Data Analysis T h e r e s p o n s e s t o t h e s t r u c t u r e d c l o s e - e n d e d q u e s t i o n s wi l l b e r a t e d i n p e r c e n t a g e s . Th e percentage of respondents for each alternative will be given and analysed. The data collected will be analyzed using the computer software known as Statistical Package for Service Solution(SPSS).

Timescale June July 2009: review of literature August 2009: draft literature review September 2009: agree research strategy with supervisor October 2009: agree formal access to organisations for collection of primary data November 2009: compile, pilot and review questionnaire December 2009 - January 2010: administer questionnaire February 2010: final collection of questionnaire March 2010: data analysis April May 2010: final writing of project report. Limitations The researcher cannot cover all the ten regions of Ghana. The research will therefore be restricted to five out of the ten regions. References The Institute of Internal Auditors (the IIA). (2007), The Professional Practices Framework. Florida, U.S.: The IIA Research Foundation. Spencer, P. K. H. (2003),The Internal Auditing Handbook. U.K. City University Press. Deloitte & Touche Enterprise Risk Services & Institute of Internal Auditors UK and Ireland(2004), The Value Agenda. Available atwww.iia.org.uk , (Accessed on 14 April 2009). Internal Audit Agency, Republic of Ghana. (2007), Annual Report to the Office of the President .Accra: the IAA

Internal Audit Agency, Republic of Ghana. (2006), Championing Excellence in Universities of Ghana: The Role of the Internal Auditor. A paper presented to the Association of the Internal Auditors of the Universities of Ghana at their annual congress in 2006. Accra: Ransford Agyei, Deputy DirectorGeneral. Saunders, M., Lewis, P., & Thornhill, A. (2007), Research Methods for Business Students (4thed.) Harlow, England: FT Prentice Hall Blumberg, B., Cooper, D.R., and Schindler, P.S. (2005) B u s i n e s s R e s e a r c h M e t h o d , Maidenhead, McGraw-Hill

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