Can the Risk Management Implementation Intensify the Internal Auditor Expertise Finding Risk in Local Government?

Abstract

Many cases of fraud in the form of corruption and bribery are findings of external examinations. It shows internal supervision is not sufficient. The internal supervision of companies and local governments have not been able to detect fraud. In this study, we suspect the internal auditors' workload, which makes their ability to detect fraud poor. If the company or local government has implemented risk management, the workload will not be as heavy as if it has not implemented risk management. The company and local government can apply a Risk-based internal audit if they have implemented risk management. Based on this explanation, conclude that finding auditor expertise of the fraud is influenced by workload, the implementation of risk management, and risk-based internal controls. The population of this research is the internal auditors of the provincial government of North Sumatra. This study uses primary data obtained from distributing questionnaires to the research sample. Data were analyzed using multiple regression analysis with the help of PLS applications. The findings showed that risk management application and risk-based supervision audit has a significant effect on detecting fraud and the workload is not affect to the ability to detect of fraud finding. The interviews with several informants concluded that if they have implemented risk management and risk-based internal audits, the internal auditors will not have a high workload. Because since the beginning, it has been identified which activities have an increased risk.