The Role of Government Internal Control System Quality in Moderating the Relationship of Financial Reports Quality and Local Government Performance

Sunardi

doi:10.47191/afmj/v6i6.03

Abstract

Empirical test of the role of the quality of the internal control system in strengthening the relationship between the financial reports quality and the local governments performance in Indonesia used secondary data in the form of the BPK RI audit report and the Appendixs in the 2016 and 2018 of Regional Government Implementation Performance Evaluation Report (EKPPD). The population of 514 regency and city governments in Indonesia. The sampling technique was purposive sampling with a total of 268 regency and city governments using data for 3 years, the total sample was 804. Variable measurement used index, time dimension used panel data. The results showed that the quality of financial reports had a positive and significant effect on the local government performance, then the quality of the government internal control system (SPIP) cannot strengthen the relationship between the quality of financial reports and the performance of local governments. The research results were expected to contribute to the policy that the implementation of the local government internal control system should be the focus of the relevant agencies. The limitation of this research is the large gap score on the key performance indicator in each region EKPPD.

Highlights

The fundamental purpose of New Public Management is to improve public services (Wardhani, Rossieta and Martani, 2017), (D. usanto, Yusuf and Rachmawati, 2014), increase efficiency, responsiveness and increase government accountability and performance (Christensen and Lægreid, 2015). )
The quality of financial reports had a significant effect on non-financial performance (Al-Dmour, Abbod and Al Qadi, 2018), the quality of financial reports affected the quality of public services (Furqan et al, 2020), the implementation of International Public Sector Accounting Standards (IPSAS) can improve accountability and quality of financial reports, (Muraina and Dandago, 2020), local government financial reports did not provide the information needed to evaluate local government performance. (Christine Ryan and Christine, 2000), accrual-based financial reports affect the financial performance of local governments (Perwita Sari et al, 2018), local government financial reports that receive a fair opinion with exceptions cannot be used to measure local government performance (Goenawan, 2010). and Bhakti S
ANALYSIS AND RESULTS Descriptive statistics on the quality of financial reports based on the average of four dimensions, the mean value > standard deviation value (3.06 > 0.72), the quality of data related to the quality of financial statements was good, the trend of changes in the average score of the dimensions the quality of financial reports for two years had increased

Summary

Introduction

The fundamental purpose of New Public Management is to improve public services (Wardhani, Rossieta and Martani, 2017), (D. usanto, Yusuf and Rachmawati, 2014), increase efficiency, responsiveness and increase government accountability and performance (Christensen and Lægreid, 2015). ). The number of noncompliance resulting in losses, the increase of potential losses and administrative irregularities from 2014 to 2018, but the audit opinion of the The Audit Board of Republic of Indonesia (BPKRI) that received an unqualified opinion is increasing, on the other hand, corruption cases involving regional heads and deputy regional head is still high. It indicates that the financial reports quality is not good, and the internal control system has not been implemented optimally so that the contribution to the performance of local governments is still doubt. Sastranegara, 2012), the difference between this study and previous research lies in the development of research instruments using a questionnaire, this study uses an index or content analysis The internal control system had a positive effect on fraud prevention (Soleman, 2013), the quality of internal control

Objectives

Methods

Results

Conclusion