<![CDATA[Public audit institutions are required to balance rigorous oversight with adaptive innovation, yet empirical evidence on performance measurement systems in these contexts remains limited. This study examines the influence of key performance indicator (KPI) alignment on organizational performance and the mediating role of innovation facilitation within a government audit context. Using a quantitative cross-sectional design, data were collected through a bilingual survey of 68 audit professionals at Indonesia’s Financial and Development Supervisory Agency (BPKP). The data were analyzed using exploratory factor analysis, reliability testing, and regression-based mediation analysis. The results show that KPI alignment is positively associated with performance outcomes. Innovation facilitation also has a significant positive effect on performance outcomes and mediates the relationship between KPI alignment and organizational performance. These results suggest that KPI systems improve performance primarily by enabling innovation-related capabilities within audit institutions. The study extends the application of the Balanced Scorecard and Resource-Based View to the public audit sector by demonstrating the importance of innovation facilitation in translating strategically aligned KPIs into organizational outcomes. In practice, the findings suggest that audit institutions should incorporate innovation-oriented indicators, capability development, and collaborative practices into their performance management systems to strengthen effectiveness and organizational adaptability.]]>
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