THE STRATEGIC ROLE OF INTERNAL AUDIT IN THE IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE AT PT. BANK SYARIAH INDONESIA

Abstract

This study is based on the less-than-optimal implementation of Good Corporate Governance (GCG) in the Islamic banking sector, particularly regarding internal audit procedures as strategic partners and supervisory bodies. The main focus of this study is to examine how internal audit contributes to supporting the implementation of GCG and the challenges encountered in the process. The study specifically discusses the implementation of GCG principles, the functions of internal audit, and the challenges arising from the strategies applied. This research employs a descriptive qualitative method using secondary data obtained from annual reports, GCG reports, and relevant literature, which are analyzed through descriptive qualitative techniques. The findings of the study indicate that although the implementation of GCG at Bank Syariah Indonesia has reached the “good” category, it has not yet achieved optimal performance due to challenges related to merger process integration, transparency, and independence. Internal audit functions have not operated as effectively as expected because of digital risks, technological limitations, and operational efficiency issues. Although initiatives such as digital transformation and the development of a sharia-compliant ecosystem have been implemented, there is still a need to strengthen internal audit functions that are more risk-oriented, adaptive, and integrated in order to enhance the effectiveness and sustainability of GCG implementation.