Determinant Affecting Audit Opinion of the Local Governments’ Financial Statements in Indonesia

Abstract

This study seeks empirical data as to whether the audit opinion criteria have had a major influence on audit views on local government financial statements in Indonesia. Internal control system (ICS) deficiencies, noncompliance with laws and regulations, compliance with Government Accounting Standards (GAS), and BPK's recommendations are considered when forming an audit opinion. The deficiency in internal control is evaluated according to the number of findings in three categories: the number of weaknesses in the internal control structure, the deficiency in the controlling system of revenue and expenditure budget realisation, and the weakness in the accounting and reporting controlling system. The number of administrative finds and the ratio of administrative finding value to the overall value of expenditures for regional losses, projected regional losses, and revenue shortfall define conformity with Government Accounting Standards (GAS). The examination of the financial accounts of local governments for the 2019-2020 fiscal year.