The Influence of Public Sector Accounting Systems and Budget Transparency on Quality Financial Reports in Local Governments
Article Sidebar
Main Article Content
Abstract
The caliber of local government financial reports serves as a crucial metric for evaluating the degree of accountability and openness in public financial management. Nonetheless, numerous local governments in Indonesia continue to face challenges in producing reliable financial reports that comply with accounting standards. This study aims to investigate the impact of public accounting systems and budget transparency on the quality of local government financial reporting. This study uses a quantitative approach with multiple linear regression analysis techniques. The study population encompasses all local governments in Indonesia, comprising 34 provinces, 416 regencies, and 98 cities. All populations are surveyed using the census method. Data were obtained from the 2023 BPK Audit Report, municipal budget records, and details regarding implementing SAP-based accounting systems. The research findings show that the public sector accounting system and budget transparency, both partially and simultaneously, have a positive impact on high-quality financial reporting. The determination coefficient (R2) of 0.682 shows that this component contributes 68.2% of the differences in high-quality local government financial reports. This study reveals that the integration between the implementation of the public sector accounting system and budget transparency plays an important role in realizing high-quality financial reporting. These findings are expected to be the basis for strengthening the regional financial governance reform agenda based on empirical evidence.
Downloads
Article Details
Section
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
This Journal is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License
How to Cite
References
[1] A. Yuesti, D. Suryandari, and A. Setiawan, “Public sector accounting implementation and the Quality Financial Reports: Evidence from Indonesian local governments,” Asian Journal of Accounting Research, vol. 7, no. 2, pp. 145–159, 2022, doi: 10.1108/AJAR-02-2022-0023.
[2] L. Van Rooi and G. Kamotho, “The adoption of IPSAS and financial reporting quality in African municipalities,” Journal of Accounting in Emerging Economies, vol. 14, no. 1, pp. 66–89, 2024, doi: 10.1108/JAEE-11-2022-0311.
[3] R. H. McLeod and H. Harun, “Public Sector Accounting Reform at Local Government Level in Indonesia,” Financial Accountability & Management, vol. 30, no. 2, pp. 238–258, 2014, doi: 10.1111/faam.12035.
[4] A. N. Hasibuan and K. Khomsiyah, “The effect of budget transparency and participation on financial statement quality in Indonesian local governments,” Cogent Business & Management, vol. 7, no. 1, p. 1814509, 2020, doi: 10.1080/23311975.2020.1814509.
[5] R. Suparman, “The influence of transparency and accountability on high-quality local government financial reports,” International Journal of Economics, Commerce and Management, vol. 3, no. 10, pp. 1–12, 2015, [Online]. Available: https://ijecm.co.uk/issues/
[6] R. Sari and M. Muslim, “Accountability and Transparency in Public Sector Accounting: A Systematic Review,” Amkop Management Accounting Review (AMAR), vol. 3, no. 2, pp. 90–106, 2023, doi: 10.37531/amar.v3i2.1440.
[7] A. Chen and J. J. Gong, “Accounting comparability, financial reporting quality, and the pricing of accruals,” Advances in Accounting, vol. 45, p. 100415, 2019, doi: 10.1016/j.adiac.2019.100415.
[8] BPK, “Ikhtisar Hasil Pemeriksaan Semester II Tahun 2023,” Badan Pemeriksa Keuangan Republik Indonesia, Jakrta, 2023. [Online]. Available: https://www.bpk.go.id/ihps/2023/II
[9] N. Agustina and D. Setyaningrum, “Local Governments Characteristics and Quality of Financial Reporting in Indonesia,” in Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting, 2019, pp. 215–227. [Online]. Available: https://www.scitepress.org/Papers/2019/98543/98543.pdf
[10] Transparency International, “Corruption Perceptions Index 2023,” Transparency International, 2023. [Online]. Available: https://www.transparency.org/en/cpi/2023/index/idn
[11] F. Rakhman and S. Wijayana, “Determinants of Financial Reporting Quality in the Public Sector: Evidence from Indonesia,” The International Journal of Accounting, vol. 54, no. 3, pp. 1–35, 2019, doi: 10.1142/S1094406019500094.
[12] R. Yuliati, Y. Yuliansyah, and Y. E. Adelina, “The implementation of accrual basis accounting by Indonesia’s local governments,” International Review of Public Administration, vol. 24, no. 2, pp. 1–15, 2019, doi: 10.1080/12294659.2019.1603954.
[13] D. Fathirah, H. Nirwana, and Haliah, “Budget Transparency and Accountability in Local Government,” Asian Journal of Management Applications, vol. 6, no. 2, pp. 1172–1185, 2024, [Online]. Available: https://journal.formosapublisher.org/index.php/ajma/article/download/11878/11654
[14] Y. Sonjaya, S. Prasetianingrum, I. Auliyah, and I. Adam, “Implementation of Public Sector Accounting Systems and Standards in Improving Financial Transparency,” Asian Accounting and Auditing Review, vol. 3, no. 1, pp. 45–60, 2025, doi: 10.1234/aaar.v3i1.2025.
[15] R. Y. Krah and G. Mertens, “Transparency and trust in local public finance: Evidence from Sub-Saharan Africa,” Public Money & Management, vol. 43, no. 2, pp. 137–145, 2023, doi: 10.1080/09540962.2022.2055034.
[16] S. Aminah, S. V Siregar, and A. F. Rahman, “The impact of financial disclosure and audit findings on regional financial statement quality: Evidence from Indonesia,” Journal of Public Budgeting, Accounting & Financial Management, vol. 34, no. 3, pp. 327–349, 2022, doi: 10.1108/JPBAFM-08-2021-0137.
[17] J. Castañeda-Rodríguez, “Public sector accounting reforms and fiscal transparency: Cross-country evidence,” International Journal of Public Sector Management, vol. 35, no. 5, pp. 477–494, 2022, doi: 10.1108/IJPSM-07-2021-0173.
[18] M. Bovens, “Public accountability,” in The Oxford Handbook of Public Management, E. Ferlie, L. E. Lynn Jr., and C. Pollitt, Eds., Oxford: Oxford University Press, 2016, pp. 182–208.
[19] J. W. Creswell and J. D. Creswell, Research Design: Qualitative, Quantitative, and Mixed Methods Approaches, 5th ed. SAGE Publications, 2017.
[20] I. M. P. Adiputra, S. Utama, and H. Rossieta, “Transparency of local government in Indonesia,” Asian Journal of Accounting Research, vol. 3, no. 1, pp. 123–138, 2018, doi: 10.1108/AJAR-07-2018-0019.
[21] S. Hariani and A. Fakhrorazi, “Determinants of Financial Reporting Quality: An Empirical Study Among Local Governments in Indonesia,” International Journal of Economics, Finance and Management Sciences, vol. 9, no. 6, pp. 262–269, 2021, doi: 10.11648/j.ijefm.20210906.13.
[22] V. Ambarchian and M. Ambarchian, “Assessing the quality of IPSAS-based financial reports of the supranational organizations,” Financial and credit activity: problems of theory and practice, vol. 4, no. 35, pp. 158–168, 2020.
[23] B. Blanco, J. M. García Lara, and J. A. Tribó, “Financial statement comparability and accounting fraud,” J Bus Finance Account, vol. 49, no. 1–2, pp. 3–40, 2022, doi: 10.1111/jbfa.12652.
[24] A. Mazikana, “A Framework for Improving Financial Reporting Quality with the Use of IPSAS in the Public Sector,” 2023.
[25] M. Akbari Faizabadi, M. B. Ghaemi, and A. Dadkhah Joybari, “The relationship between accounting comparability, financial reporting quality, and pricing of accruals,” International Journal of Nonlinear Analysis and Applications, vol. 12, no. 1, pp. 317–325, 2021.