The effect of internal auditor independence on effectiveness of government internal audit: group cohesiveness as an intervening variable (case study at the regional inspectorates at java island)

Ari Kuncara Widagdo

doi:10.24912/ja.v22i1.328

Abstract

The objective of this study is to examine the effect of auditor independence, group cohesiveness, and individual factors on internal audit effectiveness of regional inspectorates. In addition, this study also intends to examine whether group cohesiveness mediates relationship between auditor independence and internal audit effectiveness. Population of this study is regional inspectorates located in some regencies/municipalities in Central Java Province and East Java Province, Indonesia. Method of analysis of this study is structural equation modeling by using Smart PLS. The results indicate that, as predicted, auditor independence has a positive and significant relationship with internal audit effectiveness. Interestingly, this study proves that group cohesiveness partially mediates relationship between auditor independence and internal audit effectiveness. Unfortunately, individual factors (i.e. level of education and work experience) do not have significant relation with audit effectiveness.

Highlights

Local government internal auditor, which is known as regional inspectorate, is a unit conducting local government oversight
Regional inspectorate has the task of conducting the general supervision of the local government and other duties assigned by the head of the region (Falah, 2005)
In reality, the roles of the regional inspectorate are being questioned as hundreds of officers in Indonesia caught in corruption

Summary

Introduction

Local government internal auditor, which is known as regional inspectorate, is a unit conducting local government oversight. Regional inspectorate has the task of conducting the general supervision of the local government and other duties assigned by the head of the region (Falah, 2005). The role and functions of the inspectorate of provinces, districts/cities, in general, governed by Article 4 of Regulation of the Minister of Interior No 64 of 2007. It is stated that, in carrying out supervisory duties of government affairs, inspectorates provincial or inspectorates district/city have a function as follows: first, planning surveillance program; second, policy formulation and monitoring facilities; and third, examination, investigation, testing, and assessment of supervisory duties. The data of the Ministry of Internal Affair shows, since decentralization in 2014, as many as 318 heads/deputy heads of the region have involved in corruption. The regional inspectorate should be a means of early detection. (Anggoro, 2015)

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Conclusion