Abstract
This research is conducted based on Supreme Audit Agency’s (BPK) opinion on Local Government Financial Statement (LKPD) that is released anually and to observe the effect of BPK’s opinion has on local government financial performance in North Sulawesi Province which consists of 15 municipalities/cities and 1 provincical government. In addition to BPK’s opinion, the author takes some variabels in consideration to analyze factors affecting local government financial performance in order to find out problems faced by local government. The dependent variable used in this research is Efficiency Ratio that reflects the local government financial performance. This research uses Least Square Dummy Variable (LSDV) regression method with selected fixed effect model. It is found that, some variables that significantly affect financial performance of local government are government expenditures, independent financing, BPK’s opinion, tax ratio, and Indonesia Net Budget Financing (SILPA).
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