Reisya Ibtida

Factors influencing audit findings of the Indonesian district governments" financial statements

03 Oktober 2019
The Regional Governments’ Financial Statements in Indonesia that have obtained unqualified opinions had increased in recent years. However, the audit findings on the local government’s financial reports have also increased. Those conditions have motivated us to empirically analyze the factors that influence the increasing number of audit findings in district governments in Indonesia for the 2016 and 2017 fiscal years. The independent variables are the Size of the Regional Government, Local Income, Capital Expenditures, and Follow-Up of Audit Recommendations. We measure their influence on the Non-Compliance with Regulations using the Weaknesses of the Internal Control System as the moderating variable. Our results show that Size has a positive impact on the Internal Control System. Otherwise, the Completion of Audit Recommendation negatively affects both the Internal Control System and the Non-Compliance with Regulatory. The other independent variables of Local Income and Capital Expenditures did not show any influence on the number of audit findings. Simultaneously, Size, Local Income, Capital Expenditures, and Follow-Up of Audit Recommendation have an indirect relationship to Non-Compliance with Regulation findings through Internal Control System Weaknesses. Our research emphasizes the importance of developing a comprehensive internal control system for local governments, along with the improvement of asset governance. Moreover, we also encourage the completion of audit recommendations on local governments to avoid the reoccurrence of similar findings.
2019_ART_PP_COGE01.pdf

Factors influencing audit opinion of the Indonesian municipal governments’ financial statements

03 November 2018
This study aims to obtain empirical evidence whether the criteria of forming an audit opinion have been significantly effecting audit opinion of municipal government financial statements in Indonesia. The considerations for expressing audit opinion are the deficiency in the internal control system (ICS), the non-compliance with regulations and laws, and the non-conformance with the Government Accounting Standards (GAS). The deficiency in internal control is analyzed by the number of findings on three categories, namely the number of weaknesses in the internal control structure, deficiency in the controlling system of revenue and expenditure budget realization, and the weakness in the accounting and reporting controlling system. The non-compliance with legislation is measured by the number of administrative findings and the ratio between the value of findings to the total value of expenditures of either the findings of regional losses, the potential regional losses, and the revenue shortfall. The non-conformances with the government accounting standard is represented by the number of accounts that were not presented in accordance with the GAS. The study is conducted on 182 municipal government financial statements for 2016 and 2015 financial years with the result of both the non-compliance with the regulations that result in regional losses and the non-conformance with the GAS have a negative effect on audit opinion, whereas the other criteria of forming audit opinion show no effect on audit opinions.
2018_ART_PP_COGE01.pdf

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