Strengthening public sector resilience through effective internal audits in Indonesian local government

Amid escalating governance complexities and fiscal constraints, enhancing public sector resilience has become a strategic priority for local governments, underscoring the indispensable role of internal audits in promoting accountability, transparency, and sustainable performance. In the context of rapid digital transformation, the integration of information technology (IT) governance within public financial management systems has emerged as a crucial determinant of audit effectiveness. This study investigates the interrelationships among IT governance, financial reporting quality, internal audit effectiveness, and political influence within Indonesian local government organizations. Drawing upon institutional theory, a structural equation modeling (SEM) approach was employed to analyze data collected from public sector entities. The empirical results demonstrate that IT governance exerts a significant positive effect on financial reporting quality, which subsequently enhances internal audit effectiveness. However, IT governance does not directly influence internal audit effectiveness, indicating a full mediation through financial reporting quality. Furthermore, political influence exerts a detrimental impact on both financial reporting quality and internal audit effectiveness, while attenuating the positive linkage between IT governance and financial reporting quality. Conversely, the moderating effect of politics on the relationship between financial reporting quality and audit effectiveness was found to be insignificant. These findings position financial reporting quality as a pivotal mechanism linking digital governance practices with audit performance, while highlighting how political pressures can erode governance integrity. The study contributes to systems theory by conceptualizing internal audit as a core subsystem that sustains organizational resilience. Practically, it offers valuable insights for policymakers to reinforce IT governance, improve audit independence, and mitigate political interference in public sector accountability frameworks.