Relationship Between Internal Control, Internal Audit, and Organization Commitment With Good Governance: Indonesian Case

Abstract

The aims of this research are to examine the relationship between internal control, internal audit, and organization commitment with the good governance. Internal control consists of the organization planning that includes all methods used to safeguard the company assets, to insure the reliability of information, to support the efficiency and effectiveness of operations, and to insure the compliance with rules and regulations. Internal audit is an organization which functions with the duties to assess and evaluate all activities within the organization. Organization commitment is defined as the individual relative power to identify his/her self into the organization. Governance has been variously defined as the exercise of authority or control to manage a country’s affairs and resources. The type of data in this research is primary data that could be collected by questionnaires which were distributed to the respondents. The populations of this research are local government of Central Java province, Indonesia which consists of 35 regions. The respondents include head of local government inspectorate, head of monitoring division in local government inspectorate, head of internal audit team, and head of region. Therefore, 35 sets of questionnaires were distributed to respondents from February to July in 2011. Exogenous variables are the internal control, audit internal, and organization commitment. Meanwhile, endogenous variables are good governance. With multiple linier regression analysis, the finding showed that internal control, internal audit, and organization commitment have positive significant relationship with the good governance. It means that when local government of Central Java province implements the internal control effectively, audit internal and high organization commitment, therefore makes the good governance practices increase.

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