Abstract :

This study examines the performance of the Internal Control System (ICS) in the management of regional finance in the North Maluku Provincial Government. The research employed a descriptive qualitative methodology, utilizing primary data gathered through direct observation and interviews, alongside secondary data acquired from the BPK Audit Report (LHP). This study determined that the implementation of ICS has not been fully effective, based on the analysis of the five components of ICS as per Government Regulation (PP) No. 60/2008, aligned with the COSO framework. Notwithstanding attempts to enhance the control environment, the disparity between employees’ credentials and their responsibilities, along with deficiencies in risk assessment and control activities, suggests the presence of issues. Critical findings indicated that the assets were inaccurately documented, and the potential for unregulated budget management persisted. Furthermore, there was little communication among authorities within the responsibility transfer system. This study found that inadequate ICS can elevate the probability of misstatements in financial reports and obstruct local government initiatives aimed at attaining transparency and accountability in fund administration. This research aims to assist stakeholders in enhancing the future implementation of ICS.

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Keywords :

COSO Framework, Internal Control System (ICS), Management of regional fund allocation.

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