Risk Management and Auditor Competence Associated with Risk-Based Internal Audit Effectiveness: Audit Quality as Moderator in an Indonesian SOE
Abstract
This study examines the associations between risk management and auditor competence with risk-based internal audit (RBIA) effectiveness and tests whether audit quality moderates these relationships in an Indonesian state-owned enterprise (SOE) subholding operating in port and maritime services. A sequential explanatory mixed-methods design was used. Quantitative data were collected from 50 internal auditors and risk management personnel and analyzed using multiple linear and moderated regression analyses. In-depth interviews with 12 informants were conducted to explain these statistical results. The findings show that risk management (β = 0.453, p < 0.001) and auditor competence (β = 0.409, p = 0.001) are positively associated with RBIA effectiveness, while audit quality is not significant direct association. However, audit quality significantly strengthens the relationship between risk management and RBIA effectiveness (B = 0.224, p = 0.041) and between auditor competence and RBIA effectiveness (B = 0.193, p = 0.023). The moderation model increased the explained variance from 42.5% to 55.4%. Qualitative evidence indicates that effective risk governance supports audit prioritization, auditor competence remains critical for interpreting business and risk conditions, and audit quality converts these resources into value-adding outcomes through root cause analysis, realistic recommendations, and active follow-up. This study contributes to the literature by positioning audit quality as a moderator rather than an independent determinant of RBIA effectiveness, while highlighting the need to strengthen risk governance, auditor capability, and audit execution quality in SOE environments.