Factors Influencing the Financial Disclosure of Local Governments in Indonesia

Supriadi Laupe, Fadli Moh. Sal

Abstract

This study aims to examine the influence of political competition, legislature size, audit findings, and education level on the financial statements disclosure of local governments. This study used 190 local governments in Indonesia as the samples. The results of this study shows that the higher the level of political competition, legislature size, and education level of community, the higher the disclosure level of financial statement of local governments. Conversely, audit findings measured by the amount of the monetary value audited by the audit board are proven to have no influence on the disclosure level of local financial statement. However, the sensitivity analysis shows a different result. By changing the audit findings proxy with the amount of items findings in the audit findings from the audit board, the analysis proves that the new proxy has a positive influence on the disclosure level of local financial statements. This study has only investigated the disclosure level of local financial statements with the basis of government accounting standards following the government regulation No. 24 of 2005 implementing cash basis toward accrual. Therefore, future studies should aim at that with the basis of government regulation No. 71 of 2010 implementing full accrual basis.