ABSTRACT: – The results of this research revealed, the internal audit function and internal auditor competency against detection of fraudulent financial reporting of internal auditor state owned bank in Indonesia. The research population was 489 internal auditor voters. Using the Slovin formula, the number of samples was 220 respondents. The list of questions in this research was structured data information from internal auditors of state-owned banks in Indonesia. The respondents in this research were internal auditors and the audit committee. Result of this research, internal audit function and internal auditor competence has positive impact on financial statement fraud detection, and simultaneously internal audit function variable and internal auditor competence have positive significant effect on fraudulent financial reporting detection. The most dominant variable whose influence is internal auditor competence, this can be seen from the high β value of the other variables. The competencies possessed by state owned bank auditor can help the organization to detect intentional fraud in preparing financial statements that provide biased and misleading information. The competence possessed by internal auditors can be seen from the procedural skills they have, audit experience, education level, so that they have the ability to improve the effectiveness of added value in internal audit, which is governance, risk management, and control processes so that in the end the financial statements that become the entity’s activity reports for the year walk free from material misstatement, trustworthy, and reliable.

KEYWORDS :– internal audit function, internal auditor competence, fraudulent financial reporting detection