Local Government Financial Statements Disclosure: A Reflection on Governmental Performance in Central Java, Indonesia

Abstract

In Indonesia, local government accountability is a reflection of its performance that can be seen from the disclosure of local government financial statements in accordance with Government Regulation (PP) Number 71 of 2010 concerning Government Accounting Standards. Based on the reference and the previous study, the level of adequacy of financial statement disclosure is influenced by several factors: audit findings, legislative size, local government budget expenditure, intergovernmental revenue, and the number of local governments’ agencies. This study analyzes the effect of those factors on the disclosure of local government financial statements in Central Java Provence, Indonesia from 2017 to 2019. This is a quantitative study with secondary data types obtained from Local Government Financial Report Examination Results (LHP LKPD) districts/cities in Central Java Province in 2017 – 2019. The sample consists of 75 local government financial statement disclosure from 34 districts or cities obtained through purposive sampling methods. The analysis method uses multiple linear regression. The result shows audit findings and local government budget expenditure affect the disclosure of local government financial statements. Meanwhile, the legislative size, intergovernmental revenue and number of local governments agencies do not affect the local government financial statements disclosure. This research can be used as an evaluation for local governments in increasing transparency and accountability in their financial management by applicable laws and regulations. This study has limitations that do not describe the overall level of disclosure of local government financial statements, in future research, it is expected to use a longer period and expand the research area.

The Influence of Religiosity, Organizational Culture, Implementation of Internal Controls and Information Asymmetry on Accounting Fraud

“…There is an opportunity for fraud to occur Opportunities are created due to internal control weaknesses, ineffective management controls or abuse of position and authority. For this reason, organizations must build effective internal controls so that every employee cannot commit fraud and the organization provides fraud detection; and (3) Rationalization, namely the existence of attitudes, character, or a set of ethical values that enable certain parties to commit fraud (Sari & Prabowo, 2019).…”

“…Agency theory views local government as an agent and for the community (principal) will act with full awareness of their own interests and view that regional governments cannot be trusted to act in the best way for the community. Agency theory explains that there is a lot of information asymmetry between agents (government) who have direct access to information and principals (public), this information asymmetry allows fraud by agents (government) (Sari & Prabowo, 2019).…”