ANALYSIS OF THE ROLE OF INTERNAL AUDIT IN HANDLING NON-PERFORMING FINANCING AT BSI TEMBILAHAN

Abstract

The increase in financing activities in Islamic banking in recent years has been accompanied by a rising potential for non-performing financing (NPF), thereby necessitating the strengthening of an effective supervisory function through internal audit. This study aims to analyze the role of internal audit in handling problematic financing at Bank Syariah Indonesia KCP Tembilahan, focusing on the implementation of internal audit, the mechanisms used in managing problematic financing, and the extent of internal audit’s contribution in reducing NPF risk. This research employs a qualitative approach with a descriptive method, where data collection is conducted through interviews, observations, and documentation, and then analyzed systematically to obtain a comprehensive understanding. The results of the study indicate that internal audit is conducted periodically as part of the internal control system, with a scope that includes evaluating financing processes, examining the completeness of administrative documentation, and assessing compliance with applicable operational standards. In addition, internal audit also plays a role in monitoring ongoing financing activities and identifying potential financing risks at an early stage. In practice, the handling of problematic financing is carried out through various measures such as restructuring, rescheduling of payments, and a persuasive approach to customers, all of which remain under internal audit supervision. Furthermore, internal audit also provides improvement-oriented recommendations to enhance the effectiveness of financing control. However, its implementation still faces constraints such as limited information from customers and human resource limitations, which affect the optimization of the supervisory function. Overall, internal audit has a significant contribution in supporting financing control and minimizing NPF risk.