System Analysis in Developing an Effective Government Internal Audit System

Units of Government Internal Audit (GIA) play a significant role in developing a system of good governance. They contribute to the improvement of public services delivery and the welfare of society. But some current governance issues in Indonesia, such as corruption, accountability and performance problems, raise questions concerning the effectiveness of Indonesia’s GIA units. The complexity of these issues requires cybernetic study to find holistic and effective solutions. The objective of this study is to examine the effectiveness of government internal audit systems in order to enhance the professionalism of government internal auditors and the maturity of the management processes that they audit.  This research was based on qualitative approaches with systems methodology. The instruments used during the research were regulatory analysis, survey, and in-depth interviews. The survey involved 205 Chief Audit Executives (CAE) of Government Internal Supervisory Apparatus (GISA) in national government and regional governments, and was conducted on-line or on paper. The survey was complemented by in-depth interview with 24 (twenty four) senior stakeholders representing practitioners (the CAE of GISA units), internal users (governors, mayors, heads of regional planning agencies), external users (Indonesia’s Supreme Audit Board, SAB), regulators, and associations of professional internal auditors, both private sector (IIA) and public sector (AAIPI). The research found that the effort of enhancing the role of the GIA units should be seen holistically. The improvement of the role of GIA units related to the stakeholders, including management line of the organization, the SAB, professional associations, regulators, and law enforcement officials as well as other factors. The arrangement of the internal audit system could allow the government auditors to improve their professionalism and help line management to mature their management processes. The emerging strategic issues needed to build an effective internal audit system are the improvement of independence and objectivity of the auditors, a relationship with relevant stakeholders regulation and harmonization of regulation for the internal audit system.