Festus Mithi WanjohiKithome, Maurice Kivoto2024-02-022024-02-022023-11https://ir-library.ku.ac.ke/handle/123456789/27420A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirement for the Award of Degree of Master of Business Administration (Accounting Option) of Kenyatta University, November, 2023Quality, according to internal auditors, is crucial to every organization's success. The top management is advised by a good audit report on the best way to proceed to be done in the audited area. The organization's risk matrix and how it was implemented in accordance with risk-based internal auditing are what define the quality of the auditors' report. The quality of their audited accounts has been an issue for the water, sanitation, and irrigation sector. This is due to a shortage of experienced internal auditors, a lack of training on new auditing issues, and a lack of knowledge in risk assessment, particularly in the technical and human resources departments. Although corporate entities use RBIA as an internal control system instrument that impacts organizations, the evidence available indicates that there are still issues with RBIA and the calibre of audit reports. In this research, the Kenyan ministry of water, sanitation, and irrigation investigates the connection between RBIA and the calibre of audit reports in-state businesses. The study sought to examine the impact of auditor independence on the calibre of the auditor's report, the impact of auditor capacity on the calibre of the audit report, and the impact of risk assessment on the calibre of the audit report in state corporations in the ministry of water, sanitation, and irrigation in Kenya. The study was based on three theories: fraud theory, risk-based internal audit theory, and audit quality theory. The study used a description-based causal research approach. The 48 internal auditors made up the study's target population. 43 respondents were used for the research objective after a pilot study with 5 respondents at a scale of 0.7 was completed. In the study, descriptive and inferential statistics were both used. All respondents were given questionnaires to complete. Regression analysis and Cronbach's alpha statistic were used to test the hypothesis. The study found that risk-based internal audits affected the quality of internal audit reports. The study also found that internal auditors’ independence, skills and competence and risk assessment quality of audit reports were positively and significantly correlated. The study concluded that internal auditors’ independence, skills and competence and risk assessment all had a very favourable impact on the quality of the audit report in state corporations in the ministry of water, sanitation, and irrigation. The study recommends that internal auditors should have independence since it allows them to make the objective decisions necessary for the appropriate conduct of engagements, internal auditors should have the necessary skills and be competent due to the fact that they assist the business's financial, operational, compliance, control, and governance activities, state corporations should carry out risk assessment since it is essential to audit planning and analyze the risks of significant misstatement at the financial statement and related assertion levels, whether due to mistake or fraud. The study is important for auditors and academics interested in general knowledge since it could serve as a foundation for future research. The study suggests that additional research is required to determine the other factors that affect the quality of audit reports.enRisk-Based Internal AuditQualityAudit ReportState CorporationsMinistry of WaterSanitationIrrigationKenyaThesis