The Roles of Internal Audit in Risk Management at Local Governments in West Java Province
ResumenOne way to create clean, effective, democratic and trustworthy local governance is by raising the accountability of financial management. On the other hand, prob- lems have been found in the internal control of local governance (Audit Board of the Republic of Indonesia, 2016). The limitations of internal control consist of issues in the accounting and reporting control system, in the control system over the implementation of the income and expenditure budget, and in the internal con- trol structure. In local government activities, internal control functions are carried out by Government Internal Auditors. The strategic roles of Government Internal Auditors in the budget planning process by reviewing the budget and supporting documents exemplify quality assurance. The effectiveness of Government Inter- nal Auditors in performing risk management, control, and governance is expected to drive success in quality assurance. This research seeks to identify the roles of Government Internal Auditors at local governments in the province of West Java through a focus group discussion (FGD) and survey approach. The FGD and sur- vey were conducted on five local governments in West Java selected based on high, medium and low maturity levels. Results of the survey show the perception of respondents that Government Internal Auditors have been reasonably effective and so has risk management at the local governments. On the contrary, in-depth interviews revealed several obstacles that may hamper or decrease the effectiveness of Government Internal Auditors in applying risk management at local governments, namely lack of work- force, the competence of Government Internal Auditors, tone of the top, and challenges against independence.
Acharyya, M., & Johnson, J. (2006). Investigating the devel- opment of enterprise risk management in the insurance industry: An empirical study on four major European insurers. Geneva Papers on Risk and Insurance: Issues and Practice, April(Special edition), 55- 80.
Asare, T. (2009). Internal auditing in the public sector: Pro- moting good governance and performance improvement. Interna- tional Journal on Governmental Financial Management, 9(1), 15-28. 3. Asosiasi Auditor Intern Pemerintah Indonesia. (2013). Stan- dar audit intern pemerintah Indonesia. Jakarta: Asosiasi Auditor In- tern Pemerintah Indonesia.
Audit Board of the Republic of Indonesia. (2016). Semester Examination Results I Year 2016. Jakarta: Audit Board of the Repub- lic of Indonesia.
Badan Pengawasan Keuangan dan Pembangunan. (2016a, March 27). APIP, garda terdepan pengawal tata kelola keuangan ne- gara [News release]. Retrieved from http://www.bpkp.go.id/berita/ read/15843/5/APIP-Garda-Terdepan-Pengawal-Tata-Kelola-Keuan- gan-Negara.bpkp
Badan Pengawasan Keuangan dan Pembangunan. (2016b) Rakornas APIP: Peningkatan kapabilitas aparat pengawasan intern pemerintah. Retrieved from http://www.bpkp.go.id/konten/2338/ rakorn
Bura, E., Wiryono, S. K. (2013). Risk management‐based in- ternal audit for auditor to improve the performance of Internal Audit Unit of PT Timah (Persero) Tbk. The Indonesian Journal of Business Administration, 2(16), 1962-1968.
Chandra, A. A. (2016, October 4). Dari 533 laporan keuan- gan pemerintah daerah, hanya 312 raih opini WTP. detikcom. Re- trieved from https://www.detik.com
Committee of Sponsoring Organizations of the Treadway Commission. (2004). Enterprise Risk Management – Integrated Framework. Durham: COSO.
De Zwaan, L., Stewart, J., & Subramaniam, N. (2011). Inter- nal audit involvement in enterprise risk management. Managerial Auditing Journal, 26(7), 586-604.
Ernst & Young. (2005). Enterprise risk management: Busi- ness risk services.
Henning, F., & Columbia, R., (1990). Penyelenggaraan dan penafsiran hasil-hasil diskusi grup fokus. Majalah Kesehatan Mas- yarakat, 4, 35-39.
International Organization for Standardization. (2009). ISO 31000 Risk Management – Principles and Guidelines. Sydney: SA/ SNZ.
Jajeli, R. (2017, January 31). Nilai rata-rata kinerja Pemda se-Indonesia tahun 2016 masih ‘C’. detikcom. Retrieved from https:// www.detik.com
Kasim, M. A., & Mohd Hanafi, S. R. (2012). The Enterprise Risk Management (ERM) and role of internal auditors in the ERM implementation: A review of related literature on measurement in- struments. African Journal of Business Management, 6(36), 9883- 9891.
Killackey, H., (2009). Integrating enterprise risk management with organizational strategy: An ERM program must align with cor- porate strategy to give the organization a complete and comprehen- sive approach to managing risk. The RMA Journal, 91(8), 228.
Kurnia D. (2016). Peningkatan Maturitas SPIP dan Kapa- bilitas APIP [PowerPoint slides]. Retrieved from http://www.bpkp. go.id/public/upload/unit/pusat/files/7-Slide Deputi%20PKD-BP- KP_Rakornas%20APIP%2023-08-2016.ppt
Liu, J. (2012). The enterprise risk management and the risk oriented internal audit. iBusiness, 4(3), 287-292.
Lyons, S. (2015). Enterprise risk management and the five lines of corporate defense. The Journal of Enterprise Risk Manage- ment, 1(1), 56-81.
Ma’ayan, Y., Carmeli, A. (2016). Internal audits as a source of ethical behavior, efficiency, and effectiveness in work units. Journal of Business Ethics, 137(2), 347–363.
MacLeod, A., MacDonald, P. A., Ybarra, B., Sorlie, T., Foster, B., & Stokka, T. (2010). Assessing the adequacy of risk management using ISO 31000 [Practice