Determinant factors on the disclosure level of local government’s financial statements in Indonesia

Author:

Aswar Khoirul1ORCID,Yoga Fanany Alvin2,Sumardjo Mahendro3ORCID,Wiguna Meilda4ORCID,Hariyani Eka5ORCID

Affiliation:

1. Ph.D., Lecturer, Faculty of Economics and Business, Department of Accountancy, Universitas Pembangunan Nasional Veteran Jakarta

2. Graduated Student, Economics and Business Faculty, Accountancy Department, Universitas Pembangunan Nasional Veteran Jakarta

3. Dr., Lecturer, Faculty of Economics and Business, Department of Accountancy, Universitas Pembangunan Nasional Veteran Jakarta

4. M.Sc., Lecturer, Faculty of Economics and Business, Department of Accountancy, Universitas Riau

5. M.Sc., Lecturer, Department of Accountancy, Faculty of Economics and Business, Universitas Riau

Abstract

Financial reports are required from both the federal and municipal governments to demonstrate and improve governance and raise openness and accountability of government financial management. This study aims to determine how much mandatory disclosure in local government financial reports can be increased by adding variables such as the number of members in the legislative body, debt, and population, as well as a control variable – the age of the municipal authorities. The population of this study comprised all Local Government Financial Statements (LGFS) in Indonesia and the Supreme Audit Agency’s financial statement auditing requirements as of 2018. The paper adopted a purposive sample technique; 248 local governments in Indonesia were sampled. This study tested hypotheses using multiple regression analysis with the SPSS Version 25 application. The findings show that the number of members in the legislative body, debt, and total population do not affect the level of LGFS disclosure; however, the level of welfare does. This study should provide information that can help increase LGFS disclosure in a way that is valuable for local governments. Utilization of information technology in meeting social demands more efficiently and effectively is one of the strategies for local governments in carrying out financial statement disclosures.

Publisher

LLC CPC Business Perspectives

Subject

Public Administration,Economics and Econometrics,Finance,Business, Management and Accounting (miscellaneous)

Reference37 articles.

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2. Aljifri, K., Alzarouni, A., Ng, C., & Tahir, M. I. (2014). The association between firm characteristics and corporate financial disclosures: evidence from UAE companies. The International Journal of Business and Finance Research, 8(2), 101-124. - http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v8n2-2014/IJBFR-V8N2-2014-8.pdf

3. Arifin, J. (2014). Isomorphic Pressures Influencing the Level of Mandatory Disclosure within Financial Statements of Indonesian Local Governments. Curtin University. - https://espace.curtin.edu.au/bitstream/handle/20.500.11937/2046/213629_Arifin%202014.pdf

4. Potential Factors to Enhance the Level of Disclosure within Financial Statements of Indonesian Provincial Governments

5. Financial reporting compliance in Indonesian local governments: Mimetic pressure dominates

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