EVALUATION OF THE ROLE OF INTERN AUDITORS IN ASSESSING BANKING BUSINESS RISKS IN SYARIAH BPRs: Case study of BPRS Baktimakmur Indah and BPRS Baktisumekar

Title: EVALUATION OF THE ROLE OF INTERN AUDITORS IN ASSESSING BANKING BUSINESS RISKS IN SYARIAH BPRs: Case study of BPRS Baktimakmur Indah and BPRS Baktisumekar

Author: Habiburrochman

Affiliations: Master of Accounting Study Program, Faculty of Economics and Business, Universitas Airlangga Surabaya

Publisher: Universitas Airlangga

Abstract

The implications of society's desire to carry out sharia transactions have given rise to various types and forms of financial institutions. One of the sharia financial institutions is the People's Credit Bank (BPR). The main concept of a sharia financial institution is that its rules and operations are based on Islamic sharia. As a relatively new financial institution, handling bank risks must be the concern of management and all parties related to the bank. In this case, the role of internal auditors is needed to provide adequate guarantees regarding risks in the implementation of bank operations.

The aim of this research is to get an overview of the role of internal auditors in BPR Syariah. An interesting condition in this case is that there are different positions for internal auditors, namely under the directors and under the commissioners. Apart from that, developments in internal audit are more directed towards preventive audits rather than curative audits through the understanding and application of risk management in audits. From these two conditions, it is interesting to examine further the role of internal auditors in minimizing business risks in the banking world, especially Sharia BPR.

This type of research is explanatory research which explains the phenomena that occur in the company that is the object of research. This research was conducted at two BPRS, namely Baktimakmur Indah Sidoarjo (BMI) and Bakti Sumekar, Sumenep (BS).

Based on the research results, it shows that the role of internal auditors is in accordance with the broad job description that has been determined. Internal auditors at BS focus on operational risks. Internal auditors verify transaction documents including checking correctness, accuracy of calculations, validity, bookkeeping, completeness of signatures and other supporting documents. This pattern often gives rise to the perception that the internal auditor's job is to find people's mistakes. Internal auditors at BMI have a broader job description, covering all functions within the bank. Internal auditors, in carrying out their duties, are required to report regularly the results of their audit findings. Considering that internal auditors are organizationally responsible under the commissioners even though they are under the directors, in providing reports on audit findings they are addressed to both the directors and commissioners. Technical internal auditor reports are immediately followed up by the board of directors, while findings that are strategic in nature usually require the commissioner to ask the board of directors to discuss them. This pattern makes internal auditors a means of guaranteeing and providing input to management and commissioners. The impression that emerges in the end is that the internal auditor looks for or finds an error in order to find the best solution. This condition creates a check and balance condition between directors and commissioners.

This check and balance condition between directors and commissioners is what makes the internal auditor's report more meaningful. The position of internal auditors is only as functional staff, not executors and decision makers of follow-up audit findings. So, if the audit report only goes to the directors, then all reports of findings, warnings and input, all end up with the directors. Meanwhile, in a check and balance condition, the commissioner can ask to what extent the audit findings have been followed up by the board of directors. In this case, the Board of Directors will try to always monitor and follow up on audit findings so that when asked by the commissioners they can provide a detailed and complete picture. So that the aim of minimizing business risks at the bank can be continuously monitored.

Keywords: Sharia BPR, internal auditor role, assurance and consultancy, watch dog, check and balance

Sources: http://repository.unair.ac.id/34643/