Problem Ststement

Explanation of the research topic
Research topic: enhancing non-financial risk management and compliance through the transition to
computerized audit and internal control.
What is non- financial risk?

Threats to an organization that could negatively impact its success, but don't directly involve finances.
Examples:
• Operational risks: potential threats to an organization that arise from everyday business
activities such as - human error(Mistakes or intentional manipulation of financial data during
record-keeping leading to inaccurate financial statements.).
• Reputational risks: damage to public image, like a product safety scandal.
• Strategic risks: making poor choices about the organization's direction (Strategic risk refers to
the possibility that an organization's decisions or plans won't achieve its goals due to internal
weaknesses or unforeseen external changes) -weak internal controls.
When we say compliance, what is it that needs to be complied with
• Code of conducts
• Company’s policies
• External regulators (this involves the industry regulations and the government regulations)
But in this research, we will be focusing more on the compliance of internal control framework
standard.
The internal control framework standard outline best practices for designing, implementing, and
maintaining effective internal controls. Compliance would involve adhering to these framework
principles, such as:
• Control Environment: this includes managements attitude towards ethical values and
integrity. A positive attitude from management encourages employees to adhere to policies
and procedures, act with integrity, and perform their duties responsibly.
• Risk Assessment: Identifying and assessing the organization's key risks, including non-
financial risks.
• Control Activities: these are policies, procedures, and practices established by management
to ensure that directives are carried out effectively and efficiently. Control activities can
include segregation of duties, authorization and approval processes, physical controls, IT
controls, and performance reviews.
• Information and Communication: enable the organization to capture and exchange relevant
information in a timely manner.
• Monitoring: ongoing assessment of the internal control system to ensure that it is operating
effectively.
Compliance risks: failing to meet regulations, like violating data privacy laws.
Problem statement
Many organizations struggle to effectively manage non-financial risks and ensure compliance
with regulations due to limitations of traditional, manual audit and internal control methods.
These limitations can include:
• Inefficiency: Manual processes are time-consuming and labour-intensive, meaning they

require effort to execute limiting the scope and frequency of risk assessments and control
activities; meaning that organizations are not thoroughly examining all areas of their operations
for potential risks, nor are they conducting these assessments and activities frequently enough
to keep pace with evolving threats.
• Inaccuracy: Manual data collection and analysis are prone to human error, potentially leading
to errors and omissions in risk assessment, control activities, and compliance reporting.
• Lack of real-time insights: Traditional methods often rely on historical data, hindering
proactive risk identification and mitigation strategies. Without access to real-time data and
analytics, organizations may struggle to identify and respond to emerging risks promptly.
• Limited scalability: refers to the difficulty organizations face in expanding or adapting these
processes to accommodate growth or changes in their risk landscape. However, manual
processes may struggle to keep pace with this growth, requiring significant resources and
becoming increasingly cumbersome to manage.
Research relevance
1. Growing Complexity of Non-Financial Risks: In today's business landscape, non-financial
risks such as cybersecurity threats, data privacy concerns, environmental sustainability
issues, and supply chain disruptions are becoming increasingly complex and impactful.
Traditional manual audit and control methods often struggle to adequately address these
multifaceted risks.
2. Regulatory Scrutiny and Compliance Burden: Organizations operate within a regulatory
environment that mandates adherence to various standards and regulations pertaining to non-
financial risk management. Failure to comply can result in legal penalties, reputational
damage, and loss of stakeholder trust. Thus, the need for effective compliance measures is
crucial for organizational sustainability.
3. Advancements in Technology: With rapid advancements in technology, including artificial
intelligence, machine learning, and data analytics, there is a compelling opportunity to
leverage computerized audit and internal control tools to enhance risk management practices.
These tools offer capabilities such as real-time monitoring, predictive analytics, and
automation, which can improve the efficiency and effectiveness of risk management
processes.
Research objective.
1. To evaluate the effectiveness of transitioning to computerized audit and internal control
tools: This involves assessing whether these tools can actually improve:
o Non-financial risk management: Can they help organizations identify, assess, and
mitigate non-financial risks more effectively?
o Compliance: Can they streamline processes and ensure better adherence to
regulations?
2. To identify the challenges and opportunities associated with this shift: This involves
exploring both the potential downsides and upsides of adopting these new tools.
o Challenges: What are the potential difficulties organizations might face when
transitioning to computerized methods? (e.g., cost, implementation complexity, user
resistance)
o Opportunities: What are the potential benefits beyond the core objectives (e.g.,
increased efficiency, improved data analysis capabilities)?
The transition to computerized audit and internal controls offers a potential solution to these
limitations. However, research is needed to explore how this transition can be most effectively
implemented to:
• Enhance the identification, assessment, and mitigation of non-financial risks.

• Improve compliance with regulations and internal policies.
• Increase the efficiency and effectiveness of internal control frameworks.
This research will investigate the potential of computerized audit and internal controls to address the
challenges faced by organizations in managing non-financial risks and achieving compliance.
This research aims to investigate the effectiveness of transitioning to computerized audit and
internal control tools in enhancing non-financial risk management and compliance, while
identifying potential challenges and opportunities associated with this shift.
Sine we have so many scandals in entities which some were lead to by weak internal controls we
need to assess whether the transition from a manual audit to a computerised audit effectively
enhance non-financial risk management and compliance
Vocabulary
Traditional
➢ Methods that rely on manual processes and human intervention for conducting audits and
implementing internal controls

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Explanation of the research topic

What is non- financial risk?

When we say compliance, what is it that needs to be complied with

• Inefficiency: Manual processes are time-consuming and labour-intensive, meaning they

• Enhance the identification, assessment, and mitigation of non-financial risks.

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