Abstract

We employ institutional theory to examine the types of isomorphism experienced by the internal audit function (IAF) of an SOE in Indonesia and how the SOE responds to gain legitimacy from its stakeholders. We also examine what strategies and tactics the SOE uses in response to the pressures. The study finds coercive isomorphism arises from five government institutions and four professional bodies. Normative isomorphism arises from the stem change from professional and sustainable education, and mimetic isomorphism arises from complex working experience, including how to develop a proper internal control system, as well as how to implement the ICoFR. The study finds that the IAF uses different strategies and tactics across those isomorphisms. The study contributes to the domain of internal auditing by developing an audit charter. It confirms the validity of institutional theory as a lens to identify the source of pressures and how they are responded to. The study also has potential implications in practice for policymakers and professional bodies in IAF.

Keywords: Internal audit, time budget pressure, moral reasoning, integrity, objectivity

How to Cite:

Utami, H., Silaen, P. & DeZoysa, A., (2025) “A Strategy for Developing an Internal Audit Charter: A Case of State-owned Enterprise in Indonesia”, Australasian Accounting, Business and Finance Journal 19(5): 7, 118–147. doi: https://doi.org/10.14453/aabfj.v19i5.09

Rights:

In Copyright