Audit Board Research Articles

The Role of the Federal Internal Audit Board in Enhancing Performance Efficiency to Reduce Financial and Administrative Corruption

This research aims to enhance the efficiency of the performance of internal control and auditing bodies by establishing the Federal Internal Control Council, which would reduce the phenomenon of financial and administrative corruption in government institutions. The descriptive (analytical) approach was relied upon in the applied aspect; as data related to the field study were collected, relying on two types of tools, the first is the questionnaire and the second is the available data on cases of administrative corruption discovered in government institutions, where indicators of descriptive statistics and inferential statistics were used; To analyze the results of the study and with the help of the statistical program (SPSS) as well as using the program (SmartPLS) to show the compatibility between the proposed study structures, it was concluded that the role played by internal audit in any service or profit-making facility constitutes an important axis in the work of that facility because it is considered the safety valve and the controller of the extent of the commitment of that economic unit to the instructions in force in its operational work and the extent of its commitment to accounting systems and financial reports, which will be reflected in the efficiency and effectiveness of that economic unit in standing against attempts to exploit its work in administrative and financial corruption operations, which is considered one of the dangerous factors that destroy the work of that facility internally and externally. The study recommends encouraging the provision of appropriate and fair wages that take into account the level of economic growth (the rush of salaries is a pretext for bribery, embezzlement and other economic crimes), and training must be sufficient to raise awareness of the risks of corruption associated with job performance, and training programs may refer to codes or behavioral standards in specific areas.

THE REFUND OF STATE FINANCIAL LOSSES DUE TO CRIMINAL ACTS OF CORRUPTION THROUGH AUDIT AGENCY AUDIT INVESTIGATION

The aim of this research is to analyze the concept of returning state financial losses resulting from criminal acts of corruption based on Audit Board of the Republic of Indonesia audits and to analyze the form of follow-up to recommendations from Financial Audit Agency audit results regarding elements of state losses resulting from criminal acts of corruption. This research is normative research. The approach method used in this research is a statutory approach. The results of this research are the role of the Financial Audit Agency terms of returning state financial losses, the Audit Board of the Republic of Indonesia has the authority to make demands for compensation from parties proven to have committed unlawful acts which resulted in state financial losses through criminal law instruments, through civil law instruments or through administrative legal instruments. The Financial Audit Agency as the holder of audit power has the right to supervise the management of state finances and provide recommendations on audit results to the House of Representatives, Regional Representative Council and Regional People's Representative Assembly for political follow-up as a supervisory function and provide recommendations to law enforcers in the event of indications of criminal acts

The Influence of APIP Capabilities in Optimizing Financial Audit Efficiency: Optimal Accountability

Abstract This study aims to analyze the influence of the capabilities of the Government Internal Supervisory Apparatus (APIP) in optimizing the efficiency of financial audits and reducing audit findings to achieve optimal accountability. The study was conducted by collecting annual report documents from the Financial and Development Supervisory Agency (BPKP), the Audit Board of the Republic of Indonesia (BPK), and the Ministry of Home Affairs (Kemendagri). A quantitative approach was used in this study, with data analysis involving 3,252 observations from various government agencies in Indonesia. The data collected included APIP capabilities, financial audit efficiency, and the number of audit findings. The mediating variable used in this study is the follow-up on audit recommendations. The results show that APIP capabilities have a significant impact on the efficiency of financial audits. Increasing APIP capabilities has been proven to significantly enhance audit follow-ups and reduce the number of audit findings. Additionally, the variables of organizational age and geographic factors also significantly affect audit efficiency and the number of audit findings, indicating that these factors are important in achieving better financial accountability. Conversely, the size of the agency negatively affects audit follow-ups and positively affects the number of audit findings. These findings underscore the importance of enhancing APIP competencies and capabilities as a primary strategy in improving the efficiency and accountability of financial audits in the public sector. This study provides significant contributions to the development of internal supervisory policies and the improvement of financial audit quality in Indonesia, as well as encouraging efforts to enhance public sector accountability. Keyword: apip capabilities; financial audit efficiency; audit findings; accountability

The Impact of (IFRS 9) Adoption on Financial Performance: The Modifying Role of the Internal Audit Board

The Impact of (IFRS 9) Adoption on Financial Performance: The Modifying Role of the Internal Audit Board

The nexus between board audit committee attributes and financial performance of firms in Africa

This research aims to study the connection between the features of board audit committee of a firm and its financial performance in Africa, by looking at the board audit committees’ characteristics of publicly traded companies in the four (4) biggest African financial markets. This research conducted an empirical analysis of the committee features in the years following the global financial crisis and before the COVID-19 pandemic outbreak. The data covered the period between 2013 and 2019. We analyzed the data using correlation analysis, GLS (Fixed and Random Effect Models), and GMM. We used features of the committee as explanatory variables. These include an independent outside director as the chairperson of the committee, whether the committee guards the integrity of the financial reporting of a firm, whether the committee regularly meets and hears the recommendations and complaints of the firm’s external auditor, and whether the committee effectively monitors the management of the firm. Furthermore, for the dependent variable; ROE and ROA were utilized as the metrics of the financial performance of a firm. The results exhibit positive and significant relations between the board audit committee features such as; effective monitoring of management, guarding the integrity of financial reporting, an independent director as chairperson of the committee, regularly meeting and hearing the recommendations and complaints of the external auditor, and the firm’s financial performance measures. The findings are useful to corporate governance regulators who are seeking to improve corporate governance guidelines and minimize the corporate insolvency of firms in Africa.

Analysis on the role of government internal supervisory apparatus and use of information systems on the achievement of follow-up implementations on audit recommendations by the Audit Board of the Republic of Indonesia on the Government of Manado.

The study aims to analyze the role of the Government Internal Supervisory Apparatus as well as the implications of the use of information systems on the achievements of follow-up implementations on audit recommendations by the Audit Board of the Republic of Indonesia on the Government of Manado. The research employs a qualitative method with a case study approach. Data collection is done through in-depth interviews, observations, and documentation studies. The research findings show that the objectives for follow-up monitoring activities have been clearly defined in the Strategic Plan of the Inspectorate of Manado. The Government of Manado is also committed to following up on BPK RI's recommendations. However, there are several obstacles hindering the achievement of the follow-up implementations, including limited human resources and budget constraints at the Inspectorate of Manado, the audited entities lack of understanding of recommendations and requested follow-up documents, and the absence of rewards and punishments for regional entities. The information systems used in the monitoring of follow-up implementations also enhance the effectiveness and efficiency of follow-up monitoring.

ANALISIS INCREASE TAX DAN TAX AMNESTY TERHADAP TAX ASSURANCE DALAM PROBABILITAS PEMERIKSAAN PAJAK

Charge is a required commitment owed by people or substances. In this context, the SAMSAT office participates in public services, contributing to fiscal monitoring and supervision of tax amnesty implementation. It was found that individuals tend to disagree more than agree with tax amnesty, but tax amnesty tends to improve tax compliance. The research method used was qualitative, involving interview sessions at the SAMSAT office. The goal was to gather detailed information about various aspects of public services, with the main objective of providing constructive suggestions to enhance service standards. Interviews were conducted at the Samsat UPT Wilayah I Kota Pontianak, covering the overall profile and structure of the institution, as well as documents related to tax regulations. The research results indicate that increased taxes impact tax assurance, affecting both expenditures and central taxes. Tax rates in daily collections are subject to change, and tax assurance plays a crucial role in handling and overseeing local taxpayers. The government ensures compliance with existing tax regulations, monitored by the Regional Revenue Agency and the State Audit Board, with annual routines to engage the general public in a timely manner.

Planning the audit of financial statements by Federal board of supreme audit of Iraq (FBSA) in the terms of ISA( 300) requirements.

planning an audit of financial statements is an important subject and its importance comes from the fact that it requires some details that make the auditing more successful. The optimal details of planning are contained in ISA (300) requirements so the study mainly aims to ascertain that the auditors of the federal board of supreme audit of Iraq comply with the requirements of ISA (300) when they plan the auditing of financial statements. To achieve the main objective of the study, a sample of (95) the auditors of federal board of supreme audit of Iraq were surveyed through a questionnaire consisting of (42) paragraphs concerned with five sections of requirements. The replies to the questionnaire were collected and processed by using statistical measures for analyzing the data and testing the hypotheses. The study is structured in six axes including an introduction, a conceptual framework of the study, empirical study hypothesis tests, conclusions, and references.

The impact of risk management implementation on the effectiveness of SAI’s internal audit function

Internal audits play an important role in monitoring the achievement of organizational objectives. However, research on the factors influencing the success of internal audits remains limited. This study aims to investigate the effectiveness of BPK’s Itama (The Inspectorate General of the Audit Board of the Republic of Indonesia) functions, hypothesized to be influenced by risk management policy implementation. This study employs quantitative methods; data were collected via surveys and analyzed using structural equation modeling (SEM) to test theory-based hypotheses. Results reveal a significant positive correlation between risk management policy implementation and the effective functioning of Itama. Additionally, the study identifies key factors determining the success of risk management policy implementation: economic, social, and political conditions. Therefore, internal auditors of supreme audit institutions must consider these external factors when implementing risk management policies. This study contributes to understanding internal audit effectiveness by highlighting the impact of external economic, social, and political conditions.

The Role of Public Expenditures on Community Welfare

AbstractThis study aims to determine whether public expenditures in meeting basic human needs affect community welfare. This study uses data on realizing the spending on education, health, and social protection as a proxy for public expenditures and the human development index for community welfare. This study indicates that education and health expenditures have a significant positive effect, while social protection expenditures have a significant negative effect. This study confirms disclosures in the Audit Report of the Audit Board of the Republic of Indonesia. The disclosures in Provincial Government Financial Statements in Indonesia state that the regional government prioritized meeting basic needs, education, health, and social on mandatory spending to improve the quality of community life. This research implies that social protection expenditure is not optimal for developing human capabilities. Keywords:Education Expenditure, Health Expenditure, Social Protection Expenditure, Human Capability, Community Welfare

What are the key drivers of Fraud reporting in Takaful insurance? Evidence from count data models

Purpose This study aims at investigating the effect of corporate governance attributes on the Fraud disclosure of Takaful insurance companies in Saudi Arabia from 2014 to 2022. Design/methodology/approach This study uses a self-constructed disclosure index to quantify the level of fraud information using content analysis. The count regression (Poisson and negative binomial) models in panel data modeling are used to check the interdependence relationship between the Fraud disclosure and the corporate governance structure of 26 Takaful insurers. Findings The findings confirm the negative effect of ownership structure and the board size on the Fraud disclosure. However, the high proportion of independent board members, the audit board committee and the size of the risk board committee positively affect the extent of Fraud disclosure. Finally, this study provide evidence that large size of Shariah board is associated with a lower level of voluntary Fraud disclosure. Research limitations/implications Both economics-based theories and social exchange theory provide a better basis upon which to understand mechanisms by which board of directors in Takaful insurance provides external stakeholders with valuable information about corporate fraud. Practical implications It seems important to equip audit and Shariah board committee with the tools to give them an operational content that focus systematically on the “tone at the top” in investigating fraud, including disclosure and discipline. Originality/value Corporate governance is rapidly changing in Saudi Arabia and it is unclear whether adopting a corporate governance practices in financial institutions is appropriate for Islamic insurance companies.

Indonesian Governors’ Gender, Age, Education Level, Educational Background, Tenure and Their Tendency of Conducting Fraud

This study aims to determine the effect of governor characteristics on the occurrence of fraudulent activities in the Provincial Government in Indonesia. Gender, age, education level, education background and tenure are used as proxies for the demographic characteristics of governors. Data were collected from the Corruption Eradication Commission, the Supreme Audit Board and Indonesian Corruption Watch and analyzed using panel data regression. The results of this study indicate that the governors with accounting background are more likely not to be involved in fraud, while tenure has no effect on fraud. An interesting finding was obtained that education level and age have a negative effect on fraud. Fraud is higher when the governor is younger and has a lower level of education. This has implications for policy makers in Indonesia in preventing fraud by making regulations that take into account the demographic characteristics of candidates for governor in Indonesia. The results also show that the demographic characteristics of the Governor play an important role in preventing fraud.

INFLUENCE OF REGIONAL GOVERNMENT (PEMDA) CHARACTERISTICS ON AUDIT OPINION WITH REGIONAL GOVERNMENT (PEMDA) FINANCIAL PERFORMANCE AS A MEDIATION VARIABLE

Purpose - With local government financial performance serving as a mediating variable, this study intends to investigate the impact of local government characteristics, whose indicators are the degree of reliance and audit results on audit opinions Design/methodology/approach - The Regency/City Government in Banten Province from 2018 to 2021 serves as the study's population. In this investigation, 8 samples were evaluated using the saturation sampling technique. The financial reports of each PEMDA, whose information was collected from the Banten Province Representative Office of the Financial Audit Board (BPK), served as the source of the data for this study. Logistic regression analysis and mediation regression analysis were the analytical techniques employed in this investigation Finding - The outcomes of this study suggest that the amount of reliance and audit findings have a favorable effect on audit opinion, but that this effect is stronger when measured using financial performance as a mediating variable. Originality - Paper Type – Research Paper Keywords: Dependency Level, Audit Findings, Audit Opinion, Local Government Financial Performance

Bank liquidity risk management through stable and volatile markets: The role of the asset-liability committee and lessons learned for the balance sheet governance operating model

This study examines the balance sheet management governance operating model of selected failed banks from 2007, 2008, 2009 and 2023, with emphasis on the corporate governance structure in place and the position of the asset-liability committee (ALCO), and draws conclusions and recommendations for future policy. All failed sample banks exhibited near-identical governance frameworks for management and oversight of balance sheet risk: namely an ALCO that reported to the senior executive management committee, and was at least two levels, if not three levels, below board level. It is inferred that, as the ultimate responsible and accountable forum for ensuring balance sheet viability and continuing going concern of the bank, the board would benefit from being closer to the balance sheet risk management process. This implies changing the governance structure such that the ALCO is closer to the board itself, and able to provide direct comfort to the board that the bank's capital and liquidity risks are being managed appropriately. The following bank governance measures are recommended, to be imposed by regulatory fiat if necessary: •Direct delegated authority of the ALCO to manage the balance sheet, from a long-term robustness and viability perspective, directly on behalf of the board. •The ALCO to report directly to the board, rather than via the executive management committee (or as an alternative approach, changed to become a sub-committee of the board). This recognises that the asset-liability management (ALM) discipline is at least as important as, if not more important than, the ‘audit’ oversight function undertaken by the board audit committee. •Technical expertise at ALCO and board level that is capable of discerning the genuine capital and liquidity risk exposure position of the bank, on a medium-term forward-looking basis, at all times.

Opini Audit, Nilai Aset, Dan Kemandirian Daerah Sebagai Determinan Audit Delay: Studi Empiris Pada Pemerintah Provinsi Di Indonesia 2018-2021

Since 2003, Indonesia has gone through a financial reform. Based on Law No. 13/2004, the Audit Board of Indonesia (BPK) is required to submit the audit report (LHP) including the audit opinion to the Regional People’s Representative Council (DPRD) no later than 2 (two) months after the unaudited financial report is submitted by the local government. This becomes BPK's guideline in completing its audit to avoid delays. During 2017-2021, the audit opinion on local government financial reports (LKPD) has increased. This increase in opinion includes an increase in the unqualified opinion (WTP) to 92.4% of the 2021 financial statements from 76% in 2017. This study aims to answer research gaps related to the effect of audit opinion, local government size through asset value as a proxy, and local autonomy on audit delay. Furthermore, it is important to obtain empirical evidence about the effect of opinion, local government size, and local autonomy on audit delay.

The influence of independence, integrity, professionalism, and objectivity on fraud prevention in auditors with auditor ethics as a moderating variable: Empirical study at the Representative Office of the Supreme Audit Agency in North Sulawesi Province

This study aims to analyse the influence of independence, integrity, professionalism, objectivity, and ethics on fraud prevention among auditors. Additionally, this study also treats the auditor's ethics as a moderating variable. Conducted through survey methodology, the study involved distributing questionnaires to all auditors in the Audit Board of the Republic of Indonesia (or BPK) Regional Office for North Sulawesi Province. The questionnaires were disseminated to 138 respondents and achieving for 100% response rate. Analytical methods employed encompassed multiple moderated regression analysis. The results indicate that independence, integrity, professionalism, objectivity, and ethics positively influence fraud prevention. Moreover, the results also reveal that the auditor's ethics can moderate the influence of independence and professionalism on fraud prevention. The implications of the findings suggest that higher levels of independence, integrity, professionalism, objectivity, and ethics tend to increase effectiveness in fraud prevention within the BPK Regional Office for North Sulawesi Province.

THE Pengaruh Good Corporate Governance Terhadap Nilai Perusahaan Pada Perusahaan Pertambangan Yang Terdaftar Di Bursa Efek Indonesia (BEI) Periode 2019-2022

The aim of this research is to test and analyze the influence of Good Corporate Governance such as the size of the board of commissioners, independent board of commissioners, institutional ownership,managerial ownership and audit commitee on company value. The population used in this research is mining companies listed on the Indonesia Stock Exchange (IDX) from 2019 to 2022. This type of research uses a quantitative approach using secondary data obtained from the company’s annual report. Sample selection was carried out using a purposive sampling method so that 113 samples of mining companies were obtained as research samples based on predetermined criteria. The analytical method used in the documentation method using SPSS 22. The result of the study show that the size of the board of commissioners has a significant positive influence on company value, the independent board of commissioners has no influence on the value of the company, institutional ownership has no influence on the value of the company, managerial ownership has no influence on the value of the company. Influence on company value. Has an influence on company value, and the audit committee has no influence on company value.

Contante Justitie System in Corruption Cases in Indonesia: A Legal Constructivism System Paradigm

The legal consequences of Constitutional Court Decision Number 25/PUU-XIV/2016 stating that Law Number 31 of 199 in conjunction with Law Number 20 of 2001 concerning the Eradication of Corruption Crimes which is contrary to the 1945 Constitution and specifically deletes the phrase "can" in Article 2 paragraph (1) and Article 3 of the Eradication of the Criminal Act of Corruption Law have a legal impact on the characteristics of the offense. This was normative legal research which uses a statutory and conceptual approach. Results showed that the Financial Audit Board's future arrangements can fulfill the principle of Contante Justitie, namely speeding up the investigative examination process. It was applied by delegating authority from the Central BPK to the Regional BPK Representative auditors so that the latter have independent investigative audit authority to speed up the investigative Audit Result Report process in handling corruption to fulfill the legal system constructivism concept.

Determinants of Financial Reporting Quality: Evidence from Local Governments in Sumatera Island

This study aims to investigate determinants of financial reporting quality (FRQ) local government in Sumatera Islands, Indonesia. The FRQ local government is proxied by audit opinion from the Indonesian Supreme Audit Board (ISAB) for each local government sample. The tested independent variables are capital expenditure, characteristics of local governments (size, financial independency, and local government status), and mayor’s characteristics (experience and age). Data were obtained from the summary of semester audit results of ISAB, official website of the ministry of finance and the local governments in Sumatera Island. Total samples are 143 local governments and the period of study is 5 years (2016 – 2020, or 715 observations). Using the multinomial logistic regression, this study found that a lower ratio of capital expenditure, smaller local governments, local government in city areas, and local governments led by older and experienced mayor are associated with higher financial reporting quality. This study also uncovered that mayor education level and mayor graduated from the Institute of Public Administration (or IPDN) have positive influence of financial reporting quality of the local governments.

A Path Analysis of Goodwill Impairment – Does Corporate Governance Matter?

Abstract Objective This paper examines the extent to which different corporate governance mechanisms affect the recognition and measurement of goodwill impairment, considering that these decisions are affected by a complex set of factors such as variables associated with corporate governance, economic/financial variables, and the market. Methodology We used data from 110 companies, both Spanish (75) and Portuguese (35), with listed securities, in the period 2010–2016 (unbalanced panel), and the path analysis method to infer financial and non-financial data relationships. Findings The results support the hypothesis that attributes linked to management and internal and external control mechanisms, as well as economic/financial, market and location variables, are directly and indirectly associated with the recognition of goodwill impairment. Value Added This paper outlines a company behavioral profile where opportunity seems to prevail over timely recognition and measurement of goodwill impairment. Big bath practices appear to be well founded, as well as the alignment of this strategy with market signals. Recommendations To foster the adoption of accounting practices close to the interests of all stakeholders, regulators should be encouraged to incentivize corporate governance models that promote the periodic rotation of the chief executive officer/chairman, the independence of all members of the statutory audit board, and training in economic and financial areas.