Optimizing the Role of Internal Audit Through Effective Communication with Risk Management at PT Pegadaian (Persero)

This study examined the optimization of the Internal Audit Function (Satuan Pengawasan Intern, SPI), operating as the third line, through effective communication with the Risk Management Function, operating as the second line, at PT Pegadaian (Persero). The study was grounded in the Three Lines Model developed by The Institute of Internal Auditors (IIA), alongside Financial Services Authority Regulations (Peraturan Otoritas Jasa Keuangan, POJK) No. 42 of 2024 concerning the Implementation of Risk Management for Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Services Institutions, and POJK No. 48 of 2024 concerning Good Governance for these institutions. Using a descriptive qualitative approach with a case study design, the research identified communication gaps that prevented internal audit findings from being systematically integrated with the organizational risk profile maintained by the second line. The findings revealed that coordination and communication between the two functions remained suboptimal. The Risk Management Function had not established a comprehensive risk register to support risk-based internal auditing, while SPI had identified 1,491 chart of accounts (CoA)-related conditions and 72 CoA-related causes that were not systematically consolidated into reports for the Board of Directors and senior management. The identified communication barriers included organizational factors, particularly a silo mentality; structural limitations, including the absence of formal coordination mechanisms; technical deficiencies, particularly an incomplete risk register; and misconceptions regarding internal audit independence, which was incorrectly interpreted as organizational isolation. The study concluded that optimizing the internal audit function required effective communication, structured coordination, and strategic collaboration with risk management while preserving internal audit independence and objectivity. Strengthening these mechanisms could enable SPI to produce risk-informed audit reports that address underlying causes and provide constructive, actionable recommendations to improve organizational governance and risk management effectiveness.