The Auditors Value And Modifying Behavior Accounting Essay

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This case happened in the organization of internal audit Bank Mega, which is called SKAI abbreviation of "Satuan Kerja Audit Intern", the problem growth in this organization before I was appointed by the owner of PARA group to be Chief of Internal Audit (Head of SKAI) as replacement of previous Head of SKAI.

Before I joined in Bank Mega, I was Vice President in PARA group ( Holding Company ) that my main task is to examine, to control and to supervise the subsidiaries company whether their comply or not with all of the direction from Mr. Chairul Tanjung, the owner of PARA group.

The Bank Mega is one of our company that is growing very fantastic, but at the other side so many crisis such as Asia crisis in 1997, Sub Prime Mortgage crisis in 2008 and the latest Europe deficit crisis entered in our global economic, which might be effect in our Group company especially Bank Mega.

As of the Globalization condition and the Regulation of Banking system in our county is very tight by the Central Bank (Bank Indonesia), I had a challenge as replacement of my position from the Holding Company (PARA Group) to be Chief of Internal Audit at Bank Mega, for having advantage of Bank Mega.

The challenge job in Bank Mega is to strengthens the internal control of Bank Mega, that is include to reorganized, to restructure, to motivate and to develop the internal audit system that could have give some recommendations to management in order to prevent the organization face the complicated of banking activities and the uncertainties of our Global economic today.

The Auditors value and modifying behavior

As a function of the Internal Audit, which is auditors have an authority to inspect and to do examination to all activities of the business unit an others as their obligation, and the internal auditor could have a right to use some tools and technique in order their audit accomplished.

Since there have rights in the organization, some of the auditors rule is not reflected their good value and behavior to give advantage recommendation to the company, even though they conduct the audit.

The value of auditor is not as good as management expect, in doing audit in the field whether in the branches or the divisions, the Internal auditors as look like a policeman and their behavior different from one auditor with the others, they don't have standards, in contrast with the management expect with the complicated of banking system activities and uncertainty environment of globalization financial system.

Besides that many of the internal auditors in lower level don't have high motivation to do their job as best as they can, others they look doing their job but factual they are not doing that or just as a common but never give benefit in their best effort to the Bank Mega. Even in the middle Manager such as two of department head which is his name is Trigunadi and Budi Eka, both of them already have been working more than ten years however they hadn't given value added to the company, and even their motivation in below standard as they were in middle management level.

Some of the value and behavior that sighted of internal auditors as reflected below;

A Staff at lower level (an auditors)

An auditors doing their job just as an obligation as an employee that have been paid monthly and never understand why they were performing an audit to business unit or branches, the impact of they don't understand the goal of audit is the result would be not maximize as to be value added for the branches or business unit that they did an audit and that would be inefficient caused of the cost of transportation and accommodation if the branches in the other city.

The auditors in the lower level would be faced of their trust to the company which is in their perception that they are only a second class in the organization, they think as an auditors just an support unit not as an important unit, as an support unit was reflected inherent with their salary and job title, mostly of the internal auditors salary very low and some of them in job title is as a junior clerk.

Another bad perception is growth because some of the auditors came from the business or branches which bad performance, if someone doesn't perform in the business unit or branches, there would be opportunity to change their position in internal audit unit (SKAI).

All of the situations made mostly internal auditors have bad moral and low motivation to achieve what that they should do as internal auditors.

Department head Trigunadi and Budi Eka

Both of the department head had already been working in Bank Mega more than 10 years, when I was at first time arrive to the internal audit (SKAI), both of them look like doesn't welcome to me, they are not really indicate as they don't like new head of internal audit in SKAI however in all meeting with them they never give any suggestion to the organization, even that the always keep silent.

Performance in the workplace, both of them just give neither good nor bad performance, some of their subordinate had talk to me that Trigunadi and Budi Eka never had given them any direction when they were audited at braches or business unit, especially if they faced problem in the audit field such as the data is very slow to have or the people of the branches or business indicate refuse with the audit team that enter to their office, or another technical issue in the process of audit.

At the some point, I already ask both of them of the situation however they still indicate that they are right and never do wrong, even they are quite temperament with request to me to have another change their job to another division.

Some of the branches that have been visited by them in audit process told me about team audit that they lead which is some time indiscipline in the office hour, they usually arrived at the branch office in the morning at 10 am unless the office hour at 08.30 am.

Sometime in the staff meeting, both of them had arrogant attitude when another participant of the meeting told them to do audit in wrong way, and to result in the environment of the meeting in bad atmosphere.

II. Action and Reflection

Since this situation that I faced as a new Chief of Internal Auditor at Bank Mega, I have already analysis the root cause of those situations as follow;

Lack of the value of internal Auditors

As analysis of the value of internal auditor, there is some findings that the internal auditor have less of proud to be as an internal auditors, this situation might be cause of the former head of internal audit (SKAI) have lack of socialize the important point of the internal audit function as an Independent Unit that could give the management value as an advisor in term to prevent the company in doing business comply with the Good Corporate Governance (GCG) that would increase the value added to the company.

Lack of motivation among internal auditors

Since having good motivation among internal auditors, there should be some changing in paradigms of all internal auditors, as mentioned above the role of the former head of internal auditors is a key principle point for having good motivation among internal auditors. Another issue that exist in the organization is last time the performance of the internal auditors not based on the performance of each auditor but based on the connection or how closed one auditor to the head of internal auditor.

Management perception of internal auditor should be changed

The function of internal audit as a independent unit in the company is very important which is we could give the recommendation to the management without conflict of interest, therefore the management should change their perception and more appreciate to the audit reports with the follow up and improvement in the internal control system.

Lack of Leadership

As I mentioned before, one of important key success point in the internal audit organization is the leadership of the head of internal audit, some of the internal auditors have reduction in value and motivation of their function caused of there is not leadership in internal audit organization.

Felling in comfort of the department head

Another trigger that caused some problem that is comfort zone that already exist among the department head, in the case of reluctant of both the two of department head could be solved if they realized that everything is changing and time run very fast. And if they don't want to be changing that would be some sanction to them in term of organization role and policy.

III. Recommendation

As of the analysis as above, I would some action to solve the problem case in our organization as follow;

In conjunction of increase value of the internal auditors, by the Maslow Model Hierarchy of needs theory, an internal auditor need to social needs such as affection and a sense of belongingness, in order to fulfill the social need we have to communicate periodically in the internal meeting to the all internal auditor for knowing and understanding their need, expectation or even problem that they face every day as an internal auditors. The value should be increased and more important as an internal auditors is Integrity and independent, without this value they couldn't give value added to the company, because the product of an auditor is an objective and independent opinion or recommendation.

In order to motivate auditors, as the Maslow Model Hierarchy the auditors need of the physiological needs such as for biological maintenance; food, water, sleeps etc. we should take some policy in correlation of motivation such as an increase of the salary based on the performance and improve the carrier path of an auditors.

As recognitions to the best performance of an internal audit, there will be reward that directly impact to the person such as increase the salary or promotion their position or even training as a soft incentive.

In part of management perception, I should conduct a meeting with the board of directors regularly, for getting same perception about our job and function, so in the future management should know that how important the audit function for having the independent opinions or conclusions about any matter in the company.

For resolve the absence of leader, I will do as a leader that I will give directions, conclusion, and correction to the management, the role of leader should be exist in the organization and the internal auditors would give attention to new leader.

As the another point we should take is to communicate with two of department head that the world are changing, and they should recognize whether like or not that the head of internal audit already change and if they should follow the direction or they would face the sanction.

IV. What I learned or lessons from the cases

The lesson that I have learned from the case of problem that as a human behavior in organization, every internal auditors have different value of each individual, one have value more objective, another one integrity or other maybe more family oriented, however all should be respect about each value.

As an organization of internal auditor, we should create a value that fit our goal so we could give benefit to the company and give the value added, the value should have as an auditor is Integrity, Independent, and Objective.

Besides value, another important is every auditor have a need as Maslow's hierarchy of Need Theory, an auditors need lower-order needs such as Physiological or survival, safety and security, and social need which is would drive their motivation and value to the company, other have a need for security and safety in their life.

Another lesson, in the company there should be strict rule of enforcement and also effective reward based on performance orientation, include the performance appraisal based on the result oriented.

The important thing for having achievement in the organization is there should be a leader that could be give direction, protection, orientation, management conflict and shaping norm to company in order to accomplish the goal, as a leader I should have a detail knowledge of all the members of an internal auditors include what their face a problem for having a good decision.