Local Government Accountability Research Articles

FRAUD DIAMOND THEORY DAN KUALITAS PENGELOLAAN KEUANGAN DENGAN MODERASI SISTEM PENGENDALIAN INTERNAL

Regional financial management is a key element in good governance. The preparation of financial statements based on government accounting standards is a form of quality financial statement management. It can shows the performance of government that always realizes transparency and accountability of local governments. This study aims to examine the effect of fraud diamond theory on the quality of financial management with an internal control system as a moderating variable. This study uses quantitative methods and data samples of 90 employees in the Regional Apparatus Organization (Organisasi Perangkat Daerah – OPD) Malang City, East Java, with a purposive sampling technique based on criteria. Data analysis using Path Analysis techniques. The results showed that pressure, opportunity, rationalization and ability affect the quality of financial management. While the internal control system is not able to strengthen or weaken the influence of pressure, opportunity, rationalization and ability to the quality of financial management.

The diffusion‐adoption of accrual accounting in Sri Lankan local governments

AbstractThe aim of this paper is to evaluate the diffusion‐adoption of accrual accounting among Sri Lankan local governments. The paper draws on the Diffusion of Innovation theory to explain the factors that assist or mitigate the adoption of accrual accounting as a new accounting practice. Finance managers, charged with the responsibility of adopting accrual accounting, were influenced by two major factors: a centralised knowledge‐diffusion process educating these finance managers about its compatibility; and its observability in practice to understand the benefits of adoption. The paper contributes to the understanding of the diffusion of accounting innovation in developing countries and the role of key players such as professional associations within this process.

Analysis of Regional Financial Information Systems As A Media of Regional Financial Management Transparency In Indonesia

This study aims to analyze the transparency of local financial management as an effort to improve and accountability of regional financial information systems in Indonesia. The research method used the qualitative approach. The technique of collecting data using literature study and documentation. As for testing the validity of data using data triangulation. While the data analysis techniques used are the intensive analysis of the data that has been obtained with steps of data collection, data reduction, data classification, data presentation, and conclusion. The results show that the management of local finance in Indonesia has experienced a thorough correction of its management system. In general, local governments have applied transparency and accountability in financial management. However, in terms of accounting recording is still required the existence of coaching and further training, because it is not fully in accordance with the provisions. Regional Financial Information System (RFIS) is an information technology-based system that can provide information to the public regarding the accountability of Local Government in carrying out its duties, especially in the management of local finances. RFIS is one form of government transparency in local financial management.

Earnings management in local governments: the role of political factors

PurposeThe purpose of this paper is to examine earnings management practices in local governments (LGs). The implementation of accrual accounting in LGs opens the way for empirical research on the topic, as reporting high surpluses or high deficits can be negatively interpreted by the central government, monitoring authorities, citizens and political opponents. According to public choice theory, the conflicting interests between politicians, who pursue re-election, and voters, who observe politicians’ actions to assess their alignment with social welfare, create fertile ground for earnings management practices.Design/methodology/approachThe study calculates discretionary accruals, by using the Jones (1991) model, and relates them to several political variables. It employs a large sample of Greek and Italian LGs. The Greek database covers the period from 2002 to 2015 with about 4,300 observations, and the Italian database includes the period from 2008 to 2015 with about 1,130 observations.FindingsThe findings from the analysis give evidence that LGs engage in earnings management. The principal factor is the electoral cycle, as earnings management seems to be greater when the mayor is re-elected than when the mayor is elected for the first time. Furthermore, the period before elections create conditions that cultivate earnings management attitudes.Research limitations/implicationsPrevious studies have principally investigated earnings management in the private sector. Considering that many public-sector entities have implemented accrual accounting systems, this study intends to examine earnings management behaviour at the LG level, providing interesting findings for researchers and policy makers.Practical implicationsA better understanding of the political factors and the financial conditions, which act as obstacles or facilitators, should work hand in hand with the accounting reforms. The usefulness of financial statements for decision making and control presupposes that they are of high quality, an attribute that can be impaired by earnings management.Originality/valueThis study investigates the influence of political factors on earnings management behaviour in public-sector contexts where self-interest and accountability pressures coexist.

Bridging Social and Administrative Accountability in Enhancing Local Good Governance: Evidence From DIY, Indonesia

This study aims to criticize the correlation between administrative accountability and social accountability as well as its impact on the level of prosperity of DIY’s inhabitants. Since 2014 and until 2018, the DIY Provincial Government has obtained the best degree (Grade A) in its government agency performance report (LKJ). The aspects assessed by the Ministry of Administrative and Bureaucratic Reform in the performance of government agency performance accountability systems (SAKIP) include; performance planning, performance measurement, performance reporting, internal evaluation and achievement of organizational goals/performance. However, there is an irony to the predicate. Data for January 2018 show that poverty rates and the levels of economic inequality in DIY are still higher when they are compared to national achievements. Based on the data released by Bureau of National Statistics (BPS), DIY’s Gini ratio figure reached 0.440, while the national figure was 0.391 (BPS, 2018). They have shown a contradiction seeing as accountability for the performance of development is ranked highest, while in reality the poverty rate and the level of economic inequality in Yogyakarta are still quite high. There are unassessed aspects of the phenomenon that occurs in Jogja, namely aspects of social accountability. If the mechanism of social accountability can be captured properly, the contradiction above could then be visibly explained. This study uses qualitative ‘case studies’ research method. This study uses a desk study and interview as its data collection methods. Desk studies are carried out through secondary data tracking. Interviews were conducted with regional apparatus organizations (OPD) which acted as the leading sector in implementation of government accountability system (SAKIP), that is; local planning board (Bappeda), internal supervisory board (Inspektorat), and organizational bureau. From the research conducted, it is known that the mechanism provided by the government in order to oversee the implementation of development is not enough in contributing to social welfare improvement. This is because the mechanism relies heavily on administrative functions. The mechanism prepared by DIY Government does not sufficiently and effectively provide space for citizens’ participation. Space for participation provided is just a formality. Thus, any substantive accountability that provides a way of working administrative accountability and social accountability are yet to be seen.

Making professional decisions account-able

Purpose The purpose of this paper is to analyze how accounts of costs and accounts of needs are shaped, connected and made durable in the day-to-day practices of welfare professionals. Design/methodology/approach Throughout a year, the author traced the work of connecting costs and needs across and beyond the organizational boundaries of the accounting and child protection departments in a Danish local government. Over the course of the study, accountants realized that the budget was overspent and this, accordingly, gave insights into what was done to make accounts more durable. Findings This paper shows that multiple accountabilities are made possible through the ongoing and practical work of shaping, connecting and making accounts durable. This fragile process fails when connections between separate aspects of organizational work are not made visible. Research limitations/implications This paper attempts to convey the potentials of a symmetrical approach for organizational ethnography. In this way, it does not, for instance, address prevailing budget limits or regimes of cost control. Originality/value Insights into how accounts are shaped into meeting multiple and diverging demands for accountability are rare in both the fields of management accounting as a practice and research on social work practice.

PERFORMANCE-BASED BUDGETING AS SURVEILLANCE FOR THE ACCOUNTABILITY OF LOCAL GOVERNMENTS

Performance accountability of local government presents budget allocation and realization to carry out the main tasks in achieving performance indicators. The achievement of these performance indicators can be accounted for and realized through performance-based budgeting (Young, 2003). However, in the implementation of performance-based budgeting required surveillance, control, responsibility, and accountability of the performance of government agencies (SOX 2002, Iman (2005). Internal control system helps to conduct surveillance against the course of governance and financial management are clean and responsible (IIA Standards, 2002). The purpose of this research is to find out whether performance-based Budgets and the Internal Control System effect on performance accountability of local government. The study proposed nine hypothesis and The results showed that the implementation of the budget, the budget reporting, control and monitoring activities (supervision) has an influence on performance accountability of government agencies. Budget planning, performance evaluation, control environment, risk assessment, information and communication has no effect on. performance accountability of local government

Transparency and Accountability in Local Governance: The Nexus Between Democracy and Public Service Delivery in the Philippines

Transparency effectiveness cannot take place without accountability. Democracy as a form of government necessitates popular support which cannot be given by the people unless trust and confidence to a public institution are maintained. The study discusses the concept of transparency and accountability in the context of a democratic system and its role in enhancing people's trust to public institutions. From the perspective of democracy, the direct link between public service delivery and democracy through the intermediacy of transparency and accountability is established. Keywords: Democracy, transparency and accountability, local governance, popular government, public service delivery, the Philippines DOI : 10.7176/PPAR/9-7-04 Publication date :July 31 st 2019

21세기 지방정부 회계관련 법제에 대한 소고

21세기 지방정부 회계관련 법제에 대한 소고

Non‐Governmental Monitoring of Local Governments Increases Compliance with Central Mandates: A National‐Scale Field Experiment in China

AbstractCentral governments face compliance problems when they rely on local governments to implement policy. In authoritarian political systems, these challenges are pronounced because local governments do not face citizens at the polls. In a national‐scale, randomized field experiment in China, we test whether a public, non‐governmental rating of municipal governments' compliance with central mandates to disclose information about the management of pollution increased compliance. We find significant and positive treatment effects on compliance after only one year that persist with reinforcement into a second post‐treatment year. The public rating appears to decrease the costs of monitoring compliance for the central government without increasing public and media attention to pollution, highlighting when this mode of governance is likely to emerge. These results reveal important roles that nonstate actors can play in enhancing the accountability of local governments in authoritarian political systems.

The Prospect of Accountability in Local Governance in Nepal

Government accountability is intrinsic to democracies, as citizens can choose public officials through their popular vote and accordingly exercise some control and oversight over the officials. But elections held in periodic intervals do not allow the scrutiny of the decisions and activities that are conducted on a daily basis. This article examines how to confront this challenge of holding the governments to account, by looking into local governance in Nepal, where citizens have limited knowledge of the government decisions, activities, procedures followed, and their outcomes. This article is developed from the review of policies and laws and semi-structured interviews with elected leaders, civil service personnel, and other stakeholders in select local governments in Nepal. It argues that accountability in local government requires attention not only to laws, but also the practices of civic interaction and the willingness of elected officials and citizens in these engagements. It starts by establishing how the country’s new Constitution of Nepal (2015) espouses a local social contract in view of its division of jurisdictions. It then identifies and analyses the main approaches and tools on government accountability. These encompass broad constitutional provisions to specific legal, institutional and technocratic measures to hold officials to account. It then reveals recent local level experiences around the use of accountability tools and shows that the legacy of widespread collusion and misuse of power continues to be a bottleneck. It concludes that there is a need to foster greater civic demands on accountability and foster measures for deliberation at the municipal level on a more regular basis. Overall, local government accountability should be envisioned as a work-in-progress pursuit and should be coupled with systems of local planning and implementation and vitalization of local democracy.

Fiscal Decentralization and Government Corruption: Evidence from U.S. States

The demand for decentralized government has increased with widespread political devolution, because it is perceived as a more efficient and accountable form of government. However, the limited autonomy in subnational governments is criticized, for fiscal decentralization has the potential to increase corruption and to harm government accountability, because representatives and bureaucrats in local governments may be involved in private corporations and other special interest groups. Moreover, little attention has been paid to U.S. state and local governments. This study considers multiple perspectives in fiscal decentralization in the state governments, and examines the effects of fiscal decentralization on state corruption. The empirical findings contribute to the argument in the extant research that corruption in U.S. state governments increases in a more decentralized structure.

Municipally Owned Enterprises as Danger Zones for Corruption? How Politicians Having Feet in Two Camps May Undermine Conditions for Accountability

The market-inspired reforms of New Public Management have been particularly pronounced in Swedish local government. Notably, municipally owned enterprises (MOEs) have rapidly grown in numbers. Principal-agent theory gives rise to the hypothesis that the massive introduction of MOEs has impacted negatively on the conditions for accountability in Swedish local government. To study this, social network analysis was employed in mapping networks for 223 MOEs in 11 strategically chosen municipalities, covering a total of 732 politicians. The analysis reveals substantial overlaps between principals (representatives of the ultimate stakeholders, citizens) and agents (the boards of the MOEs). Hence, corporatization of public services seems to imply worrisome entanglements between the politicians who are set to steer, govern, and oversee MOEs on the one hand, and the board members of MOEs on the other. The increasing numbers of MOEs may therefore have adverse effects on accountability in important and growing parts of Swedish local government.

The specifics of the corporate model of local self-government and the divergence of modern approaches to self-government at the local level in the Commonwealth countries

The subject of the article is models of local self-government in Commonwealth countries.The purpose of this article is to substantiate or refute the hypothesis post-corporate model of local self-government is evolved.Methods of theoretical analysis are used, as well as legal methods, including the formal legal method and the method of comparative law.The main results and scope of their application. The corporate model of local government can be characterized by the following features: the lack of full constitutional recognition of local government as an independent form of public authority; formal institutional autonomy of municipal units as public (private-public) corporations of a special type that are not included into the system of state power; limited functional autonomy; lack of constitutional recognition of citizens’ or local communities’ right(s) to local self-government; limited accountability of local governments to the population, including the lack of sufficient legislative guarantees for the election of local authorities. These characteristics, grounded also in the historical specificity of local government development in Great Britain and its colonies, as well as in peculiarities of development of municipal units’ status in English law, are determined by the corporate character of municipal government, which does not arise from the power of communities, but is formed by the state "from above". The author also analyzes the differences in approaches to regulation and organization of local government in the Commonwealth countries.Overcoming the historical heritage, laid by the genesis of municipal corporations, in a number of Commonwealth states, indicates the formation of a new, post-corporate model of local government, which can be characterized by some features: the establishment of constitutional autonomy of local government as a special form of public power, its development as a form of democracy with greater control over the forms of self-government and governance at the local level by the population, as well as the establishment of a link between self-government and the local community. The proposed analysis may become a crucial point for future research in the field of post-corporate model of local self-government.Conclusions. Such countries as Australia and Ireland can presently be considered in a state of transition to the post-corporate model of local self-government.

Household self-blame for disasters: responsibilisation and (un)accountability in decentralised participatory risk governance.

The most important theoretical argument concerning decentralised participatory governance is that it can make a government more accountable for the needs of the governed. Key to this process are participatory spaces that act as mechanisms for dialogue between citizens and local government. However, within Cochabamba, a city in the centre of Bolivia, South America, 'at-risk' citizens engage minimally with disaster risk issues in participatory spaces, despite high levels of civic participation. This is because 'at-risk' populations view disasters as a private/household problem that is symptomatic of household error, rather than seeing them as a broader public problem due to wider structural inequalities. Consequently, they redistribute responsibility for disaster risk reduction towards households, which (re)produces the absolution of government authorities as guarantors of disaster risk reduction. This paper challenges the normative assumption that participatory spaces facilitate democratic deliberation of disaster risk reduction and the downward accountability of local government for disaster risk reduction.

The Effect of Internal Auditor Competency on Internal Audit Quality and Its Implication on the Accountability of Local Government

Accountability is one of the fundamental elements of good governance manifestation that currently is strived in Indonesia. Transparency and accountability of regional financial management requires a supervisory agency of local government, an internal Auditor (inspectorate) to improve the accounting quality. The aim of this study is to provide empirical evidence on how the internal auditor’s competency can affect internal audit quality in local government, and how its implication toward accountability of local government will be beneficial. The study is done with the population of all inspectorates in regency/city of Lampung Province, by using path analysis of Partial Least Square (PLS). The result of this study gives empirical evidence that internal auditor (inspectorate) competency positively and significantly affects internal audit quality. Likewise, internal audit quality positively and significantly affects financial accountability of regency/city of Lampung. The higher the internal auditor competency, the better audit quality that is proxied by the number of findings by internal audit. Based on descriptive and verificative approach in all Province/City/Regency Inspectorates in Lampung, it shows that internal auditors (inspectorate) have been adequately competent, but there are some regions that have not been competent (have not had adequate education level and skill). Accountability of local government of regency/city of Lampung is quite accountable, but not all regions of regency/city produce maximal opinion (WTP).

Accrual Basis Landscape: The Absence of Political Will in Preventing Dysfunctional Behaviour in Indonesia

Objective - This research aims to reveal the failure of accrual accounting to create good governance and clean government in local governments in Indonesia. Additionally, the research seeks to examine the increase in accrual based rapid growth in Indonesia and the instance of corruption among government officials. Methodology/Technique - In connection with this objective, the study explains the practical perspective of political intervention during the adoption of accrual accounting and examines the role of the community in the implementation of accrual accounting using a critical phenomenology method. Findings - The findings of this study show that accrual-based accounting encourages deviant behaviour within the public sector and hence, good governance and clean government cannot be achieved. Accrual basis in this regard becomes a means for actors to conceal fraud by exploiting the weaknesses of accrual-based accounting to allow for creative accounting. Novelty - This study uses a qualitative method to describe the implementation of accrual-based accounting in local governments in Indonesia, which is a new approach to this phenomenon. Type of Paper: Empirical Keywords: Accrual; Accounting; Public Sector; Good Governance; Clean Government; Indonesia. JEL Classification: M10, M14, M19

The Recent Reform of Spanish Local Governmental Accounting: A Critical Perspective from Local Governmental Accountants As Internal Users Of Budgeting And Financial Accounting Information.

Local Government Accounting and Financial Reporting in Spain has been recently reformed by the new Accounting Instructions published in 2103 and in force since the 1st of January 2015. Once the financial reports corresponding to 2016 fiscal year have been published, the main purpose of this paper is to empirically evaluate, the perceptions and opinions that local governmental accountants have about the recent reform. Our analysis has found a clear gap between the aims of the reform and the opinion of local governmental accountants, who consider the system too complex and clearly biased towards financial accounting information.

Fiscal Decentralization, Internal Control System, Accountability of Local Government and Audit Opinion

The aim of this research is to examine the influence of fiscal decentralization and internal control system on the accountability of local government financial reporting with audit opinion in the previous year as the moderator variable. The research result shows that fiscal decentralization, which utilize the regional independency level and level of dependency towards the central government as proxy, does not influence the accountability of local government’s financial reporting. Meanwhile, internal control system, which utilizes the weakness of internal control system as proxy, has a negative effect on the accountability of local government financial reporting. The interaction test shows that audit opinion in the previous year is not able to strengthen the influence of the region’s level of independence, is unable to weaken the influence of the region’s level of dependence andis able to weaken the influence of internal control system on the accountability of local government financial reporting.
 Keywords: Fiscal decentralization; internal control system; previous year audit opinion; and accountability of financial reporting

Contracting Out Services in the Nigerian Local Government: Implications for Internal Revenue Generation

The primary reasons for creating the Nigerian local government system was grassroots mobilization and development. The Council has however, consistently failed to provide critical services to the rural poor ostensibly because of poor funding. The work examined the structure, functions and accountability mechanisms of the Council vis-à-vis its revenue generation capacity. The problem identified is that the Council contracts out services and its statutory revenue sources at ridiculous prices to patrons even in the face of fiscal cutback and burgeoning demand from the critical populace. Using the Local Government Discretion and Accountability Diagnostic Framework of Analysis and Financial Agency Theory, the paper found that lack of political, administrative and financial accountability mechanisms provides the leeway for unscrupulous Council officials to grossly enrich themselves and their patrons. The paper recommends that the Public Procurement Act which emphasizes Due Process in tendering should be institutionalized by the local government. The anti-graft agencies should be repositioned to deal with treasury looters while the electoral process should be reformed to make it more transparent and inclusive.