Internal Audit and Trust of Donors in Developing Countries: The Case of Benin

Abstract

The main objective of this paper is to determine the impact of internal audit on the trust of Donors (Technical and Financial Partners) of Developing Countries, especially those of Benin. It has two specific objectives: to measure the impact of internal audit on the performance of public administrations; and assess the influence of the performance of public administrations on the confidence of Benin’s donors. The central hypothesis is that internal audit improves the confidence of state donors. It is broken down into two secondary hypotheses which are presented as follows: internal audit positively influences the performance of public administrations in Benin; and the performance of public administrations positively influences the confidence of donors. The double difference model is used to estimate the impact of internal audit. The study reveals that internal audit positively influences the performance of public administration in Benin. It also reveals that the performance of public administrations has a positive impact on the trust of Donors (Technical and Financial Partners) in Benin. Our research work proposes within the framework of the implementation of New Public Management prescriptions and public finance reforms, the generalization of the implementation of internal audit in all public administrations of developing countries. The implementation of internal audit would therefore serve to boost the trust of State donors and thus give them assurance as to the proper management of Public Development Aid (PDA) and External Loans.