The Effect of Local Government Fiscal Decentralization on Financial Reporting Accountability with Financial Performance as a Moderating Variable (Study of Regency and City Local Governments in North Sumatra in 2016-2020)
Tiya Mardiyati Dalimunthe (a*), Arfan Ikhsan (b), Andri Zainal (b)

a) Postgraduate Program-Accounting Major, State University of Medan
Jalan Williem Iskandar Pasar V, Medan 20221, North Sumatera, Indonesia
aytitiya[at]gmail.com
b) Postgraduate Program-Accounting Major, State University of Medan
Jalan Williem Iskandar Pasar V, Medan 20221, North Sumatera, Indonesia

Abstract

The implementation of fiscal decentralization in Indonesia has come a long way over the past two decades. Decentralization is one of the strategies to improve public sector efficiency, good governance, and increase government accountability.
This study aims to obtain empirical evidence about the effect of the implementation of fiscal decentralization on the accountability of local government financial reporting with financial performance as a moderating variable. Tests were carried out on 33 district and city regional governments in North Sumatra. This study uses the documentation method using secondary data obtained from the LHP (Inspection Report) of the Supreme Audit Agency of the Republic of Indonesia (BPK RI) on LKPD (Local Government Financial Statements). The analytical test tools used in this research are logistic regression and Moderate Regression Analysis (MRA). Fiscal independence has a significant negative effect on financial reporting accountability. Dependence on the central government has no significant effect on the accountability of financial reporting accountability. Performance finance can affect fiscal independence on financial reporting accountability but cannot moderate the effect of local government dependence on central government on financial reporting accountability.

Keywords: Fiscal Decentralization, Fiscal Independence, Dependence on Central Government, Financial Reporting Accountability, Financial Performance

Topic: Economics, Business and Management Education