Evaluating the Implementation of a Mandatory Dual Reporting System: The Case of Indonesian Local Government

Abstract

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.

Disclosure of Non-Current Tangible Assets Information in Local Government Financial Statements: The Case of Lithuania

“…In analysing the compliance with mandatory disclosure, Mir et al (2019) have used legitimacy theory that explained that "organisation will continue work to ensure that the organisation operates within the frame and norms that exist in community or environment in which the organisation was and continues to ensure that activities of the organisation accepted by stakeholders as legitimate". Following this theory, Gabrini (2013) states that failures in the governance of a certain institution may cause stakeholders to question the transparency of government activities.…”

“…(1) The size of municipality is measured by municipality assets. For instance, Laswad et al (2005) have used total assets, Gordon et al (2002) have used a natural log of gross assets adjusted for interfund receivables/payables and Mir et al (2019) have used a logarithm of total year-end assets. In this research, the size of municipality measured by natural logarithm of total assets for a municipality (lnTA) is used as a control variable (see Table 1).…”

“…Increasing assets will make the voters concerned about the performance of local government. According to Mir et al (2019), assets of local government influence the compliance with mandatory disclosure. Garcia and Garcia-Garcia (2010) have determined that when local governments invest heavily, they are also more concerned with the reporting of financial information.…”

“…Analysing the size of the municipality as an independent variable, we have shown that in the works of some researchers (Gordon et al 2002;Laswad et al 2005;Mir et al 2019), the size of municipality is measured by municipality assets. As the object of this research is municipality tangible assets, this type of asset is selected as an independent variable.…”

“…ix) Municipality wealth (municipality own revenue (difference between total revenue and government funding revenue) per capita (TR-GFRperCap). This variable is analysed byLaswad et al (2005);Martani and Lestiani (2012);Moreno-Enguix et al (2019);Mir et al (2019).…”