Susilawati 1, Sudarno 2

International Journal of Empirical Finance Vol. 3, No. 5, 2014, 243-254 Effect of Government Accounting Standards of Quality of Financial Statements and Implications on Local Government Accountability Performance: A Case Study in the Department Pekanbaru Susilawati 1, Sudarno 2 Abstract This study aims to determine how much influence the implementation of Governmental Accounting Standards for Quality of Local Government Finance Report and Its Implications on the performance Accountability Office Pekanbaru Se-city partially and simultaneously. The method used in this research is descriptive and verification methods. The unit of analysis in this study is the Department of Pekanbaru, amounting to 17 offices. The method used in this research is descriptive and verification methods. Descriptive method in this study is used to describe the formulation of the problem first and second. Verification method used in this study to test the hypothesis by using a statistical test that analyzes Path (Path Analysis).The results show that there is a close relationship between the Government Accounting Standards in improving the quality of financial reporting and its implications in the area of performance accountability. Keywords: Government Accounting Standards, Quality of Local Government Financial Statements, Performance Accountability. 1. Introduction In accordance with the mandate of Law No. 17 of 2003 on State Finance, the government has set the Indonesian Government Regulation No. 24 Year 2005 regarding the Government Accounting Standards. Which then digantingan with the Indonesian Government Regulation No. 71 Year 2010 concerning Governmental Accounting Standards are adhered to in full accrual basis. Government Accounting Standards, hereinafter referred to as SAP, are accounting principles applied in preparing and presenting the financial statements of the government. Government Regulation No. 8 of 2006 requires that financial statements are reviewed by the Government Internal Supervisory Apparatus (APIP) before being handed over to the CPC to be audited. Review for Local Government Finance Report (LKPD) is conducted by the Provincial Inspectorate and the Inspectorate District / City in order to assure the reliability of the information presented in the financial statements. Currently the development of the quality of financial reporting and accountability for performance on LKPD not as expected. This is evident from the above opinion LKPD given by BPK still getting a disclaimer opinion or no opinion. Here's development LKPD opinion in 2007-2011 in Indonesia. 1 Program S1 Accounting College of Economics Pelita Indonesia 2 Program S1 Accounting College of Economics Pelita Indonesia 2014 Research Academy of Social Sciences http://www.rassweb.com 243

Susilawati & Sudarno Table 1 Development of Opinion LKPD Year 2007-201 LKPD OPINI (Tahun) WTP % WDP % TW % TMP % Total 2007 4 1% 283 60% 59 13% 123 26% 469 2008 13 3% 323 67% 31 6% 118 24% 485 2009 15 3% 330 65% 48 10% 111 22% 504 2010 34 7% 341 65% 26 5% 121 23% 522 2011 67 13% 349 67% 8 2% 96 18% 520 Source: IHPS BPK Second Half of 2012 In the first semester of 2013 CPC Representative WDP Riau Province provides over LKPD Pekanbaru City Government FY 2012. This opinion is the same as the opinion given on LKPD BPK 2009, 2010 and 2011. From the results of the LKPD Pekanbaru City in 2012 found several phenomena which explains the reason CPC gives a qualified opinion (WDP), namely: 1. Receivables levy for the year ended December 31, 2012, 2. Non-Permanent Investments for the year ended December 31, 2012, 3. Pekanbaru City Government did not follow up on BPK about the problems fixed assets where there is some value of fixed assets for the year ended December 31, 2012 are presented in LKPD is not supported by adequate source documents. And it has become the exception to the provision of BPK opinion on LKPD Pekanbaru FY 2009, 2010 and 2011. 4. Actual Expenditure Social Assistance in FY 2011 Budget Realization Report presented in LKPD, found that social assistance is not accepted by the party entitled and not supported by the clarity of the recipient's identity. The same study ever conducted by Permana (2011) in the Department of Bandung with the title "The Effect of Government Accounting Standards Implementation on the Quality of Local Government Financial Statements and Its Implication to Accountability (A Case Study Department of Bandung", and followed by Jannaini (2012) in the Department of Kota Bandung with the same title. the difference this study with previous research is the study was conducted in the Department of Pekanbaru City in 2013 without reducing the existing variable for all variables used to obtain better results. 2. Literature Government Accounting Standards According Mardiasmo (2009: 149) accounting standards are needed to ensure consistency in financial reporting. and beneficial to the development of government accounting itself. Governmental Accounting Standards definition contained in the Indonesian Government Regulation No. 71 Year 2010 (2010: 1) is the Government Accounting Standards, hereinafter referred to as SAP, is the accounting principles applied in preparing and presenting the financial statements of government. Quality of Local Government Finance Report According Mahmudi (2011: 143) the financial report is the output of the accounting system useful for providing information to those who will make the financial information as a basis for decision making. Under Law No. 17 of 2003, the government's financial statements consist of Budget Realization Report, Balance Sheet, Cash Flow Statements, Notes to the Financial Statements 244

Performance Accountability International Journal of Empirical Finance In the Government Instruction No. 7 Year 1999 Performance Accountability is the embodiment of the obligation of a government agency to take responsibility for the success / failure of the mission of the organization in achieving its goals and objectives that have been set As set forth in the Decree of the Head LAN No. 239 / IX / 6/8/2003, that Government Performance Accountability (AKIP) can be Realized with a Well, the Following Requirements Must be Met: a. Moving from a system that can ensure proper use of resources consistent with the general principles of state administration. b. The commitment of the leadership and the entire staff of the agency concerned. c. Indicates the level of achievement of goals and objectives that have been set. d. Oriented towards achieving the vision and mission, as well as the results and benefits. e. To be honest, objective, transparent, and accurate. f. Presenting success and failure in achieving the goals and objectives that have been Governmental Accounting Standards on the Quality of Local Government Finance Report And Its Implication On the Performance Accountability Standardized Government Accounting Financial Report on the Quality of Local Government. Kualitas Laporan Keuangan Terhadap Akuntabilitas Kinerja According to Government Regulation No.24 of 2005 on Government Accounting Standards in Annex 1 (a) Introduction to the Governmental Accounting Standards in the fifth paragraph that the Government Accounting Standards is the principle - the accounting principles applied in preparing and presenting the financial statements of government Thus, SAP is a requirement which has the force of law in an effort to improve the quality of financial reporting in the Indonesian government.. Framework Figure 1 Schematic Framework Indonesian Government Regulation No. 71 Year 2010 Government Accounting Standards (SAP) Kualitas Laporan Keuangan Pemerintah Daerah Performance Accountability Effect of Governmental Accounting Standards Implementation on the Quality of Local Government Finance Report and Implications In Performance Accountability Source: Data processed in 2013 245

Susilawati & Sudarno Against the Government Accounting Standards Performance Accountability According to Government Regulation No.24 of 2005 dated June 13, 2005 of the Government Accounting Standards in Annex 1 (a) Introduction to the Governmental Accounting Standards The first paragraph is: One of the measures taken to achieve transparency and accountability of financial management is the delivery of the government's financial accountability reports satisfy the principle of timely and prepared by following the government accounting standards generally accepted. According Permana (2011: 10) Local Government Finance Report generated through the accounting process is a form of transparency and accountability in public financial management. 3. Research Methodology Research Methods The method used in this research is descriptive and verification methods. Descriptive method in this study is used to describe the formulation of the problem first and second. Verification method used in this study to test the hypothesis by using a statistical test that analyzes Path (Path Analysis). Model Research Judging from the problem, this study includes the causal-comparative study that is ex post facto in which data is collected after the events in question took place. This research models the relationship paradigm approach one independent variable, with one dependent variable and an intervening variable. Pernelitian models can be described as follows: Figure 1.2 Structural Relationships between Variables Government Accounting ε Performance Accountabilit ε Quality of Financial Statements (X2) Descriptive Data Analysis Techniques Source: Data processed in 2013 To answer a description of each variable of this study, used a range of assessment criteria as follows: Table 3 Criteria Percentage of Respondents No % Total Score Criteria 1 20.00% - 36.00% not Good 2 36.01% - 52.00% poorly 3 52.01% - 68.00% Good Enough 4 68.01% - 84.00% good 5 84.01% - 100% very Good Source: Narimawati in Permana 2011: 65 246

International Journal of Empirical Finance Source: Narimawati in Permana, 2011: 64 4. Results and Discussion The realization of good governance, cannot be separated from the role of government officials in the course of running a government. Supervision is one way to help the realization of good governance. Inspectorate is a watchdog organization of Local Government, led by Inspector and is directly responsible to the Mayor. In performing its duties Inspectorate has oversight functions as program planning, policy formulation and monitoring facilities as well as inspection, investigation, testing and assessment of supervisory duties. Characteristics of Respondents Respondent data collected by the authors of this study are as many as 33 respondents. For variables X1, X2 and Y questionnaire given to the object that is the Auditor Inspectorate Pekanbaru. Data on the characteristics of the respondents as follows. a. By sex, the majority of respondents in this study were male with a percentage of 63.64%. b. Based on the age, the majority of respondents in this study aged> 51 years with a percentage of 48.5%. c. Based on the latest education the majority of respondents in this study last educated Strata I (S1) with a percentage of 69.7%. d. Based Work Lama majority of respondents in this study with long work between 1 to 5 years with a percentage of 42.4%. Analysis at the Department of Government Accounting Standards Pekanbaru Here is Rekapulasi Score Answer Respondents Regarding preformance Government Accounting Standards Table 5: No Indicator Actual score Ideal score % category 1 Government Accounting Standards Conceptual Framework 265 330 80,30 good 2 Concept Presentation of Financial Statements 265 330 80,30 good 3 The concept of Budget Realization Report 256 330 77,58 good 4 Concept Inventory Accounting 495 660 75 good 5 Fixed Asset Accounting Concepts And Construction In 347 495 70,10 good Work 6 Liability Accounting Concepts 122 165 73,94 good 7 Error Correction Concepts Financial Statements 121 165 73,33 good Total 1871 2475 75,60 good Source: Data Processed in 2014 247

Susilawati & Sudarno Based on the percentage of the total score of respondents it can be concluded that the Government Accounting Standards can be said is Good. Where the constants obtained figures of 75.60%. This can be seen in Table 3.3 Quality Analysis of Financial Statements of Local Government at the Department of Pekanbaru No Indicator Actual Ideal score score % Category 1 Relevant 480 660 72,73 good 2 reliable 488 660 73,94 good 3 can be compared 247 330 74,85 good 4 can be understood 248 330 75,15 good Total 1463 1980 73,89 good Source: Data Processed in 2014 Based on the percentage of the total score of respondents it can be concluded that the quality of financial statements can be said is Good. It is based on the criteria of Table 3 the percentage of respondents, with the score of 73.89% respondents included in both categories. Analysis of the Performance Accountability Office Pekanbaru Here is the answer scores Respondents Regarding Performance Accountability in Table 7:. No Indicator Actual Ideal score score % Category 1 commitment 129 165 78,18 good 2 System that ensures the use of resources-resources 365 495 73,74 good consistently 3 The level of achievement of goals and objectives that have been set 126 165 76,36 good 4 Oriented towards achieving Good the vision and mission as well 110 165 66,67 Enough as the results and benefits 5 To be honest, objective, transparent, and innovative as 121 165 73,33 good a catalyst for change Total 851 1155 73,68 good Source: Data Processed in 2014 Based on the percentage of the total score of respondents it can be concluded that the Performance Accountability Office Pekanbaru City can be said is Good. It is based on table 3.3 percentage criteria of respondents, with the score of 73.68% respondents. Model Adjusted R Std. Error of R R Square Square the Estimate 1.802 a.643.631.34723 a. Predictors: (Constant), X1 Sumber: Data Olahan SPSS 17.0, 2014 248

International Journal of Empirical Finance Effect of Government Accounting Standards for Quality of Local Government Finance Report and Implications on Performance Accountability Partial. Based on the data collected in this study will be tested Effect of Application of Accounting Standards on the Quality of Financial Statements of the Government of Local Government and Its Implications on Performance Accountability. Effect of Government Accounting Standards Against Performance Accountability Path coefficient calculation influence Government Accounting Standards for Performance Accountability Unstandardized Standardized Model B Std. Error Beta t Sig. 1 (Constant) -1.103.583-1.891.068 X1 1.145.153.802 7.464.000 Dependent Variable: Y Sumber : Data Olahan SPSS 17.0, 2014 Regional Acceptance and Rejection Ho on Governmental Accounting Standards Test Effect on Performance Accountability Because the t (7.464) is greater than t table (2.039) then the error rate of 5%, then Ho is rejected and accept the research hypothesis (Ha), so that the 95% confidence level can be concluded that the Government Accounting Standards partially a significant influence on the performance Accountability Office Pekanbaru. This can be seen in the table below: The coefficient of determination of the Government Accounting Standards Performance Accountability Effect of Quality of Financial Statements Against Local Government Performance Accountability Path coefficient Effect of Quality of Local Government Finance Report on Performance Accountability. a Unstandardized Standardized Model B Std. Error Beta t Sig. 1 (Constant) -.193.507 -.380.707 X2.925.136.773 6.795.000 Dependent Variable: Y Sumber : Data Olahan SPSS 17.0, 2014 Rejection and Acceptance area Ho on Quality of Local Government Finance Report on Performance Accountability 249

Susilawati & Sudarno Because the t (6.795) is greater than t table (2.039) then the error rate of 5%, then Ho is rejected and accept the research hypothesis (Ha), so that the 95% confidence level can be concluded that the partial Quality Financial Statements give a significant effect on Accountability at the Department of Pekanbaru. This can be seen in the table below: The coefficient of determination Quality Financial Statements of the Local Government Performance Accountability R Adjusted R Std. Error of Model R Square Square the Estimate 1.773 a.598.585.36808 a. Predictors: (Constant), X2 Sumber: Data Olahan SPSS 17.0 2014 Government StandarAkuntansi influence on the Quality of Local Government Finance Report and Implications on Performance Accountability Simultaneously Path coefficient Influence of Government Accounting Standards for Quality of Local Government Finance Report Model Adjusted R Std. Error of the R R Square Square Estimate 1.731 a.535.520.33100 Predictors: (Constant), X1 Sumber: Data Olahan SPSS 17,0, 2014 The coefficient of determination of the Government Accounting Standards Quality of Local Government Finance Report a Unstandardized Standardized Model B Std. Error Beta t Sig. 1 (Constant).392.556.706.486 X1.874.146.731 5.973.000 Dependent Variable: X2 Sumber: Data Olahan SPSS 17,0, 2014 Based on calculations using SPSS 17.0 was obtained t value of 5.973. The test criteria are, "Reject H0 if t> t table or if t <t table", where from table t with a significance level (0.05) and the degrees of freedom (DK) with the following provisions: DK = n-2, or 33-2 = 31 and obtained a value of 2.039 t table. Because the t (5.973) is greater than t table (2.039) then the error rate of 5%, then Ho is rejected and accept the research hypothesis (Ha), so that the 95% confidence level can be concluded that the Government Accounting Standards significant effect on the quality of the Government Financial Statements area at the Department of Pekanbaru. Diagrams and Path Coefficient First Sub-Structure X 1 P X 2X 1= 0,731 ε 1 X 2 0,291 Source: Data Processing, 2014 250

International Journal of Empirical Finance Regional Acceptance and Rejection Ho In Test Effects of Government Accounting Standards for Quality of Local Government Finance Report Effect of Government Accounting Standards for Quality of Local Government Finance Report and Implications on Performance Accountability Path coefficient Government Accounting Standards and Quality Financial Statements of the Local Government Performance Accountability Model Summary Adjusted Model R R Square R Square Std. Error of the Estimate 1.847 a.718.699.31358 a. Predictors: (Constant), X2, X1 Sumber: Data yang telah diolah SPSS 17.0. 2014 Coefficient of Determination Government Accounting Standards and Quality of Local Government Finance Report on Performance Accountability a Unstandardized Standardized Model B Std. Error Beta t Sig. 1 (Constant) -1.292.531-2.434.021 X1.725.203.507 3.565.001 X2.482.170.403 2.830.008 a. Dependent Variable: Y Sumber: Data Olahan SPSS 17.0, 2014 And Coefficient Diagram Sub-Structure Second Line X 1 P YX 1= 0,507 P X 2X 1= 0,731 Sig.0,000 Y ε 1 P YX 2= X 2 0,403 Sig. 0,008 0,29 1 Source: Data Processed in 2014 0,28 2 ε 2 251

Susilawati & Sudarno Anova Test to Test Effects of Government Accounting Standards and Quality of Local Government Finance Report on Performance Accountability Sum of Mean Model Squares df Square F Sig. 1 Regression 7.505 2 3.753 38.163.000 a Residual 2.950 30.098 Total 10.455 32 a. Predictors: (Constant), X2, X1 b. Dependent Variable: Y Source: Processed Data SPSS 17.0, 2014 Based on the examination table above can be seen calculated F value of 38.163 with a significance value (p-value) of 0.000. While on the table F for the 0.05 significance level and degrees of freedom (DK) with DF1 (variable number - 1) or 3-1 = 2; and DF2 (nk-1) or 33-2 - n 1 = 30, obtained F0,005 (2:30) = 3.316. Because of F (38.163) is greater than the F table (3.316) then the error rate of 5%, then Ho is rejected and received a research hypothesis (Ha), so that the 95% confidence level can be concluded Governmental Accounting Standards and Quality of Local Government Financial Statements together have a significant effect on the performance Accountability Office Pekanbaru. Regional Acceptance and Rejection Ho In Test Simultaneous Effects of Government Accounting Standards and Quality Report to the Local Government Finance Accounting In the picture above can be calculated F falls in the rejection region Ho, so it was concluded that the Government Accounting Standards and Quality of Local Government Financial Statements simultaneously significant effect on the Performance Accountability Office Pekanbaru. 5. Conclusions and Recommendations Conclusion a. In general, the Government Accounting Standards Agency Pekanbaru City Government has been implemented properly. However, if viewed from the overall assessment indicator of the Government Accounting Standards almost meets both criteria, but had the lowest response from the respondents. This is evidenced by the results of BPK RI where on Fixed Assets still be an exception in the above opinion Local Government Finance Report 2012 and the Financial Statements no longer correction, b. Quality of Local Government Financial Statements in Pekanbaru City Government Department can be said is good. When viewed from the overall indicator of respondents regarding the quality of Local Government Finance Report on the Department of Pekanbaru has not fully meet the criteria, and still has the lowest response from the respondents. This is evident from the BPK in which there is some data that does not fit between the financial statements with the facts that occur in the field. c. The Government Accountability Office Pekanbaru almost be said either. When viewed from the indicator system which can guarantee the use of resources-resources consistently, oriented to the achievement of 252

International Journal of Empirical Finance the vision and mission as well as the results and benefits obtained and the concept of honest, objective, transparent, and innovative as a catalyst for change, is not fulfilled both criteria. d. Governmental Accounting Standards significant effect on the quality of Local Government Financial Statements in the Office of Pekanbaru. Governmental Accounting Standards and Quality of Local Government Financial Statements either partially or simultaneously or jointly have a significant effect on the Performance Accountability Office Pekanbaru. Suggestion Based on the conclusions that have been raised, then this gives advice that can be used as fill for the Office of Pekanbaru and for further research as follows: a. For the Office of Pekanbaru Operationally Pekanbaru City Department of Human Resources should meperhatikan competent and able to handle the management and financial reporting and have a broad understanding of the Government Accounting Standards. So it will not happen irregularities committed by persons who are not responsible for the present Government Finance Report. And the Office of Pekanbaru City should immediately repair or correction of the financial statements if found errors in the presentation of financial statements that are inconsistent with the Government Accounting Standards. Because it is very influential on Government Performance Accountability Pekanbaru. b. For Further Research This study only covers about Government Accounting Standards, the quality of the Financial Statements and Performance Accountability. Therefore, it is suggested for further research in order to examine more broadly, for example on Human Resources, Government Accounting Standards understanding, and employee performance. In addition, the number of samples should be reproduced again and be directed to the entire Department and SKPD in Pekanbaru, do not get hung up on one SKPDs alone, so that would be obtained more accurate results in the study. References BPK RI Representative Riau Province, 2013. Accessed at http://pekanbaru.bpk.go.id Presidential Instruction No. 7 of 1999 on Government Performance Accountability Pekanbaru City Government Inspectorate, 2013. Accessed at http://www.pekanbaru.go.id/inspektorat/jannaini, Yuli. Effect of Governmental Accounting Standards Implementation on the Quality of Local Government Finance Report And Its Implication In Performance Accountability. London: UNIKOM, 2012. Mahmudi. Regional Financial Management. Jakarta: Erland 2010 Mahmudi. Public Sector Accounting. Yogyakarta: UII PRESS 2011. Mardiasmo. Public Sector Accounting. Yogyakarta: Andi, 2010. Indonesian Government Regulation No. 24 of 2005 on Government Accounting Standards Indonesian Government Regulation No. 71 Year 2010 regarding the Government Accounting Standards Indonesian Government Regulation No. 8 of 2006 on Financial Reporting and Performance of Government Agencies Permana, Irvan. Effect of Governmental Accounting Standards Implementation on the Quality of Local Government Finance Report And Its Implication On Accountability. London: WELCOME 2011 Sarwono, Jonathan. Analysis jalaur For Business Research with SPSS. Yogyakarta: Andi, 2007 Sugiyono. Statistics for Research. London: Alfabeta 2009 Sugiyono. Statistics for Research. London: Alfabeta 2012 Law No. 1 of 2004 on State Treasury Law No. 15 of 2004 on the Management Audit and State Financial Responsibility. 253

Law No. 17 of 2003 on State Finances Susilawati & Sudarno Widjaja, Haw. Regional Autonomy in Indonesia Socialization in the Context of Law No. 32 Year 2004 on Regional Government. Jakarta: Division of Higher Education Books PT Raja Grafindo Persada, 2005 254