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Factors influencing audit opinion of the Indonesian municipal governments’ financial statements

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  • Bambang Pamungkas
  • Reisya Ibtida
  • Cendy Avrian

Abstract

This study aims to obtain empirical evidence whether the criteria of forming an audit opinion have been significantly effecting audit opinion of municipal government financial statements in Indonesia. The considerations for expressing audit opinion are the deficiency in the internal control system (ICS), the non-compliance with regulations and laws, and the non-conformance with the Government Accounting Standards (GAS). The deficiency in internal control is analyzed by the number of findings on three categories, namely the number of weaknesses in the internal control structure, deficiency in the controlling system of revenue and expenditure budget realization, and the weakness in the accounting and reporting controlling system. The non-compliance with legislation is measured by the number of administrative findings and the ratio between the value of findings to the total value of expenditures of either the findings of regional losses, the potential regional losses, and the revenue shortfall. The non-conformances with the government accounting standard is represented by the number of accounts that were not presented in accordance with the GAS. The study is conducted on 182 municipal government financial statements for 2016 and 2015 financial years with the result of both the non-compliance with the regulations that result in regional losses and the non-conformance with the GAS have a negative effect on audit opinion, whereas the other criteria of forming audit opinion show no effect on audit opinions.

Suggested Citation

  • Bambang Pamungkas & Reisya Ibtida & Cendy Avrian, 2018. "Factors influencing audit opinion of the Indonesian municipal governments’ financial statements," Cogent Business & Management, Taylor & Francis Journals, vol. 5(1), pages 1540256-154, January.
  • Handle: RePEc:taf:oabmxx:v:5:y:2018:i:1:p:1540256
    DOI: 10.1080/23311975.2018.1540256
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    Cited by:

    1. Asaad Mohammed Ali Wahhab & Emad Hamza Abd. Alajeli & Baneen Hassoun Jawad, 2022. "The Role of Internal Audit in Analyzing and Auditing Big Data and its Impact on the Quality Financial Reports," Technium Social Sciences Journal, Technium Science, vol. 32(1), pages 669-679, June.
    2. Margaretha S. N. Mait & Marthinus Mandagi & Abdul Rahman Dilapanga, 2021. "Role of Government Authorities in The Supervision of Internal Fraud Prevention Fund Management in Village," Technium Social Sciences Journal, Technium Science, vol. 21(1), pages 73-84, July.

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