The Effect Of Local Government Size, Audit Recommendations, And Audit Findings On The Quality Of Financial Reports Of Indonesian Local Governments

Abstract

The auditor's opinion reflects the quality of local government financial reports because BPK's opinion on local government financial reports (LKPD) is a source of information as a guide for decision making by local governments. This study aims to test empirically (1) the effect of local government size on local government financial reports quality in Indonesia, (2) the effect of audit recommendations on local government financial reports quality in Indonesia, (3) the effect of audit findings on the local government financial reports quality in Indonesia. The analytical method used to test the hypothesis in this study is multiple regression. This study uses secondary data, namely the 2018 local government financial reports obtained from the official BPK RI website. The population of this research is the local government in Indonesia. The samples used in this study were 508 local governments selected based on the purposive sampling method. This study indicates that the local government size has negative effects on the quality of financial reports. Audit recommendations have negative effects on the quality of financial reports. Audit findings have negative effects on the quality of financial reports. The implication is that local governments have to continuously improve the performance and quality of financial reports by improving internal control, financial governance, and adequate supervision so that the public still supports the programs held by the government.