Indonesia has introduced radical decentralisation measures, transferring many functions and much finance to democratically elected sub-national governments. However, human resource management (HRM) has largely been overlooked. Using data obtained from central personnel agencies and nine sub-national governments, this article examines the major elements of HRM at sub-national level: recruitment and selection; promotion and advancement; training and development; remuneration; and performance management. The structure and operation of these elements are compared with those advocated in Strategic HRM, the dominant paradigm of contemporary HRM. The findings are that a centralised, bureaucratised system of HRM remains in place in Indonesia, with many practices retained from the pre-decentralisation period. The HRM system is only minimally linked to strategic concerns and organisational goal achievement. Reforms are essential, but an incremental approach is recommended, keeping the basic framework centralised but creating incentives for reform by making local governments more accountable for personnel costs and performance.

Indonesia has taken initiatives to reform its public sector financial management. One of the reform agendas was to introduce 'cash to accrual' accounting for improved financial reporting. It is expected that improved financial reporting will enhance financial accountabilities of the governmental agencies and will assist both internal and external decision makers whose decisions will be based on the financial reports. However, it has been observed that there is a significant increase in the number of qualified audit reports when these financial reports were audited. This also means that these financial reports are lacking in providing true and fair views on the financial activities of the governmental agencies, thereby not assisting in discharging their accountabilities. This study seeks to answer the question as to why the numbers of qualified audit reports have increased despite the existence of various governmental accounting reform agendas. Based on the in-depth case studies of three Indonesian local governments, it is found that the demand, the supply and the quality assurance of the accounting information outputs in these local governments are not in parity, and this lacking in parties actually has impacted in producing unqualified and usable accounting reports.

This paper compares the management of human resources (HRM) in two large, modern sector business organisations, one state-owned and the other privately owned, in the context of the rapidly deregulated Indonesian economy of the mid-1990s. The two organisations differed greatly in the extent to which HRM was able to underpin the efficient management of the organisation. Owing to fundamentally different approaches to recruitment, training and development, employee performance management and remuneration, the state-owned enterprise had far less effective HRM than its private sector counterpart, and could learn a great deal from how the privately owned organisation responded to the challenges presented by deregulation. The findings suggest that firm effectiveness depends significantly on the HRM function, and that the performance of state-owned enterprises tends to suffer as a result of interference in HRM processes by their government owners.

Informative and transparent financial information in the public sector is crucial for improving public sector management and eradicating corruption. Given this, Indonesia has reformed its public sector accounting, reporting and accountability systems by implementing a dual reporting system known as ‘cash towards accrual’, following similar reforms in developed countries. Drawing on the experience of five local governments (districts) in Indonesia, this study finds that the implementation of the dual reporting system has helped local governments to produce transparent and informative reports. However, the accrual‐based contents of the dual reports produced by the new reporting system are underused for decision making. In addition, there has been a significant increase in costs associated with the implementation of the new accounting regime in the jurisdictions studied. The study also finds that the ability of the users to use information generated by the new accounting system is more important than just a legal and mandatory requirement to use the new system.

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