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The effect of audit findings and audit recommendation follow-up on the financial report and public service quality in Indonesia

The effect of audit findings and audit recommendation follow-up on the financial report and... This study aims to analyze the effect of audit findings and audit recommendations follow-up on the quality of financial reports and the quality of public services in the context of applying accrual accounting systems to local government in Indonesia. This study also examines whether the quality of the financial report affects the quality of public services.Design/methodology/approachThis study employed cross-sectional regression using data from 1,437 observations from 491 districts/cities for 2014–2016. The data illustrates the conditions prior to the adoption of the accrual accounting system (2014), the initial year of application/transition period (2015) and the second year of the expected accrual accounting system (2016).FindingsThe results of the study indicate that, in general, the quality of financial reports affects the quality of public services. Regarding the implementation of audits in the public sector, it is also found that audit findings have a negative impact on the quality of financial report and the quality of public services, while audit recommendations follow-up plays a positive role in improving the quality of financial report and the quality of public services.Research limitations/implicationsThe implication of the results of this study is closely related to the efforts to realize the ultimate goal of the recent government reforms. In order to increase the quality of public services in the era of higher report requirements through an accrual accounting system, the government should focus on the quality of financial reports, audit findings and the audit recommendations follow-up.Originality/valueThis study provides new insight on the link between the public sector auditing and the quality of accounting in accrual implementation context and the quality of public services. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Public Sector Management Emerald Publishing

The effect of audit findings and audit recommendation follow-up on the financial report and public service quality in Indonesia

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0951-3558
DOI
10.1108/ijpsm-06-2019-0173
Publisher site
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Abstract

This study aims to analyze the effect of audit findings and audit recommendations follow-up on the quality of financial reports and the quality of public services in the context of applying accrual accounting systems to local government in Indonesia. This study also examines whether the quality of the financial report affects the quality of public services.Design/methodology/approachThis study employed cross-sectional regression using data from 1,437 observations from 491 districts/cities for 2014–2016. The data illustrates the conditions prior to the adoption of the accrual accounting system (2014), the initial year of application/transition period (2015) and the second year of the expected accrual accounting system (2016).FindingsThe results of the study indicate that, in general, the quality of financial reports affects the quality of public services. Regarding the implementation of audits in the public sector, it is also found that audit findings have a negative impact on the quality of financial report and the quality of public services, while audit recommendations follow-up plays a positive role in improving the quality of financial report and the quality of public services.Research limitations/implicationsThe implication of the results of this study is closely related to the efforts to realize the ultimate goal of the recent government reforms. In order to increase the quality of public services in the era of higher report requirements through an accrual accounting system, the government should focus on the quality of financial reports, audit findings and the audit recommendations follow-up.Originality/valueThis study provides new insight on the link between the public sector auditing and the quality of accounting in accrual implementation context and the quality of public services.

Journal

International Journal of Public Sector Management – Emerald Publishing

Published: Jun 22, 2020

Keywords: Public services quality; Financial report quality; Accrual accounting system; Audit findings; Audit recommendations follow-up

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