Determinant of Indonesia Government Financial Reporting Quality

Abstract

This study aims to examine the factors that determine the quality of financial statements in the central government in Indonesia at Ministries/Agencies, namely audit findings and follow-up of audit recommendations. This study uses quantitative methods with secondary data from 74 of 88 Ministries/Agencies in the Central Government in Indonesia. The sampling method is purposive sampling with financial statements starting from 2015-2019 which are processed using the STATA. This study shows that audit findings and follow-up of audit recommendations affect the quality of financial reporting. The more audit findings can have a negative impact on the quality of financial reports and the more follow-up on audit results recommendations can have a positive impact on the quality of financial reporting. This study only analyzes audit findings and follow-up of audit recommendations without any other variables that can support the quality of financial statements and can lead to accuracy in this study. Research is important for the central government in maximizing efforts to maintain the quality of financial reports in the context of accountability to stakeholders, especially to the community through the House of Representatives. This study provides new insights into the factors that determine the quality of central government financial reports in Indonesia.

Kualitas Laporan Keuangan Di Indonesia: Transparansi Informasi Keuangan Dan Karakateristik Pemerintah Daerah

“…Penelitian tersebut menguji kualitas laporan keuangan kabupaten/kota di Propinsi Papua dan Papua Barat dengan ukuran pemerintah daerah, belanja pemerintah daerah dan tingkat ketergantungan pemerintah daerah. Penelitian lainnya yang menggunakan data sekunder dilakukan oleh (Pertiwi & Wibowo, 2023;Tiurmaida et al, 2021). Namun, penelitian tersebut menguji kualitas laporan keuangan bukan dalam konteks pemerintah daerah, namun dalam konteks kementerian lembaga dengan temuan audit dan tindak lanjut atas rekomendasi audit.…”

Government Reporting and Quality of Public Services: Are They Twins?

“…From the study results, it can be assumed that the audit findings illustrated a weak internal control system and non-compliance with regulations, leading to government losses and acts of The increased quality of financial reports might be followed by improved public service quality. Factors affecting the quality of government financial statements have been extensively discussed in various studies (such as Tiurmaida et al, 2021;Furqan et al, 2020;Fachriyandana & Wibowo, 2020;Ratmono & Sutrisno, 2019;Pamungkas et al, 2018;Rahayu & Fidiana, 2018;Din et al, 2017;Setyowati et al, 2017;Setyaningrum 2017, Sari 2015. Notwithstanding the above references, those results are inconclusive regarding government financial reporting quality determinants.…”

“…The organization's existence is strongly influenced by the support of stakeholders in the organization. Thus, an organization must maintain relationships with its stakeholders by disclosing information to stakeholders and accommodating their needs and desires of stakeholders (Tiurmaida et al, 2021). Hence, stakeholders may rely on audit reporting to evaluate government performance (Pamungkas et al, 2021).…”

“…The central government's financial reporting quality has substantially progressed in recent years (Tiurmaida et al, 2021). The number of ministries and agencies obtaining unqualified opinions has also risen sharply since 2015.…”

Government Audit Quality: Audit Expectation – Performance Gap

“…Indeed, there will always be a gap between society's expectations of auditors and what the real performance of auditor can be achieved [3]. The quality of financial reporting by the central government has significantly improved in recent years [4,5]. Since 2015, a significant increase in ministries and agencies seeking unqualified opinions has also been noted.…”