INTERNAL AUDITOR'S ROLE IN ENHANCING FINANCIAL ACCOUNTABILITY IN INDONESIAN PUBLIC HIGHER EDUCATION

Financial accountability in Indonesian BLU polytechnics — institutions managing State Budget allocations under Public Service Agency status — remains a persistent governance challenge. Recurring financial irregularities, documented by Indonesia's Supreme Audit Board (BPK RI), highlight significant weaknesses in public financial governance. This study explores how internal auditors can improve financial accountability in these institutions, where such irregularities signal major governance issues. Although Government Regulation No. 60 of 2008 (SPIP) mandates Internal Supervisory Units (SPI), there is little empirical data on how internal audit effectiveness influences financial accountability in this setting. Using Agency Theory (Jensen & Meckling, 1976) and Stewardship Theory (Davis et al., 1997), this research assesses whether internal audit effectiveness—measured through monitoring, assurance, and consulting activities aligned with IIA (2024) standards—predicts financial accountability outcomes in Indonesian BLU polytechnics. A quantitative survey was conducted from March to June 2025, involving 30 respondents—leaders and internal auditors—from 12 BLU polytechnics, with responses on a five-point Likert scale. Data analysis included simple linear regression and validation via interviews and document review. Results reveal a strong positive correlation between internal audit effectiveness and financial accountability, underscoring the importance of monitoring, assurance, and consulting in strengthening financial governance. Nonetheless, structural deficiencies remain, with inadequate financial risk assessment and no formal system linking internal audit to risk management frameworks. Indonesian polytechnics urgently need integrated internal audit and risk management systems compliant with SPIP regulations and BLU standards. Priorities include enhancing SPI mandates and improving auditors' financial risk analysis skills to minimize state financial losses. This study provides systematic empirical evidence on the internal audit–financial accountability relationship in Indonesian BLU polytechnics, contributing to knowledge of public-sector auditing and financial governance and informing institutional reforms in developing countries.