THE INFLUENCE OF AUDIT FINDINGS, AUDITOR CHANGE, LOCAL
GOVERNMENT SIZE, LEVERAGE AND SPA ON AUDIT OPINIONS OF REGIONAL GOVERNMENT BPK
IN INDONESIA
Dwi Nugroho1, Noer Sasongko2, Andy Dwi Bayu
Bawono3
Universitas Muhammadiyah Surakarta, Jawa Tengah, Indonesia
|
ARTICLE INFO |
ABSTRACT |
|
audit
opinion, audit findings, auditor change, local government size, leverage,
silpa. |
This
study aims to examine and find empirical evidence of the effect of audit
findings, auditor turnover, local government size, leverage and SiLPA (Budget
Overtime) on local government BPK audit opinions in Indonesia. This study
used a sample of 506 from a total of 514 local governments (districts and
cities) throughout Indonesia with the observation year 2017 2020, so the
total sample used was 1,915. The type of data used in this research is
secondary data. The research data source was obtained through the Information
Management and Documentation Officer Electronic service (E-PPID) at
http://e-ppid.bpk.go.id. The sampling method uses purposive sampling, while
the data analysis technique uses multiple linear regression analysis. The
study results show that audit findings, local government size and leverage
affect local government audit opinions. At the same time, auditor turnover
and SiLPA do not affect local government audit opinions in Indonesia.
Furthermore, from the results of this study, the variables that can be examined
in subsequent studies include performance reports, audit quality, years of
service/auditor experience, amount of capital expenditure, Special Allocation
Funds received by local governments and qualifications of local government
financial report preparers. In addition, the distribution of local
governments according to island location will also be an exciting audit
opinion study. |
|
DOI: 10.58860/ijsh.v2i1.20 |
|
Corresponding Author: Dwi Nugroho
E-mail: d76nug@gmail.com
INTRODUCTION
Local government
financial reports are a form of regional financial accountability to realize
transparency and accountability. Regional government financial reports are
prepared to provide relevant information regarding the financial position and
all transactions carried out by local governments during a reporting period.
Regional government financial reports are mainly used to determine the value of
economic resources used to carry out government operational activities, assess
financial conditions, evaluate the effectiveness and efficiency of a local
government, and help determine compliance with laws and regulations (Indonesia,
2010).
As mandated in
Government Regulation Number 58 of 2005, which has been refined by Government
Regulation Number 12 of 2019 concerning Regional Financial Management, in the
context of accountability for the implementation of the Regional Revenue and
Expenditure Budget (APBD), regional governments prepare Regional Government
Financial Reports (LKPD). The preparation of LKPD is carried out by the
Regional Financial Management Officer (PPKD) by combining (consolidating) the
financial reports of the Regional Work Units (SKPD) no later than 3 (three)
months after the end of the fiscal year following statutory provisions (Indonesia,
2019).
Audits conducted
by the BPK are an essential part of the management and accountability of state
finances. The BPK and other state institutions must encourage the achievement
of state objectives as stated in the Preamble to the 1945 Constitution. BPK
does this through a free and independent examination of the management and
responsibility of state finances (BPK, 2017 ).
BPK is a state
institution that has the right to express audit opinions, in this case, it
plays an active role as an agency that oversees government-managed finances and
synergizes to create government performance outputs that can provide the best
service in all sectors for the community, which is the main
focus of the performance results carried out. Government. After the
reformation took place, changes in structure and everything that happened in
the government bureaucracy, but the goal ultimately boils down to performance
that can carry out the goals that have been set and planned previously as well
as possible. As a manifestation of transparency and accountability for the
management of state finances carried out by the Regional Government, the
Regional Government is obliged to prepare Regional Government Financial Reports
(LKPD), which will then be audited by a free and independent auditing
institution in this case (BPK RI). In addition to Financial Reports that
describe financial accountability, in the context of realizing good governance
in Regional Governments, it is necessary to develop and implement an
accountability system that is appropriate, clear, measurable, and legitimate so
that governance and development can take place in an efficient, effective, clean and accountable manner. Free from corruption, collusion,
and nepotism (performance accountability).
Supervising and
examining the management of state finances is the duty of the Supreme Audit
Agency (BPK). BPK audit results can be in the form of an Audit Report (LHP),
which reflects the level of accountability of a Regional Government Financial
Report (LKPD). To assess the fairness of LKPD, BPK RI conducts an audit, the
results of which are outlined in the LHP. The opinion in the report reveals
non-compliance with regulations that have a direct and material effect on the
presentation of the financial statements. The success of local governments in
obtaining WTP opinions will affect the success of local government financial
performance (Suwanda,
2015). The LKPD shows how much
APBD funds are used to carry out the performance that the Regional Government
wants to achieve (Nurdin
et al., 2014).
Therefore, this
research was conducted to determine what factors influence BPK's Audit Opinion.
The research gap in this study is that there are not many studies that have
re-examined the factors influencing local government BPK audit opinions in
Indonesia by focusing on the primary research variables, namely BPK audit opinions
and independent variables, namely the number of audit findings, auditor
turnover, local government size, leverage and SiLPA. The difference between
this study and previous studies is that this study focuses on local government
audit opinions, which still need to be improved compared to studies on audit
opinions in the private sector.
The theory that underlies this
research is agency theory. According to (Gustavson
& Sundstrφm, 2018), supervision in the public
sector is described theoretically following the logic of the agency problem
(agent-principal) as defined by Jensen and Meckling (1976) in (Vitolla
et al., 2020) as the relationship between
agent and principal. The people, as the highest principle, give a mandate to
political representatives to take care of the public interest. Furthermore,
political representatives delegate the implementation of public affairs to
public officials (agents). Therefore, the need for supervision and control over
the performance of public officials increases.
Agency theory argues that information
asymmetry will occur because the government has more information about its
resources in the form of the State/Regional Revenue and Expenditure Budget than
the public. This asymmetry allows misappropriation or acts of corruption by the
government as an agent (Rini
et al., 2017).
Because of agency problems, the government must be monitored to ensure that
regional financial management is fully compliant with various applicable rules
and regulations. One form of supervision is conducting financial and government
performance audits by the BPK and the Government Internal Supervisory
Apparatus, which aim to encourage good governance (BPK,
2017).
The audit conducted by the BPK
encourages state financial management to achieve state objectives, among
others, through increased accountability, transparency, economy, efficiency and
effectiveness in the management and accountability of state finances in the
form of constructive recommendations and effective follow-up; and increasing
public trust in the results of BPK audits and management of state finances (BPK,
2017).
Another theory that underlies this
research is institutional. The institutional theory
argues that
organizations are shaped by the institutional environment that surrounds them.
Organizations are social systems whose forms are influenced by symbolic
systems, culture and the broader social aspects of the organization (Yustina
& Gudono, 2017). Organizational structure is
not only determined by the task environment but also by society's situation in
general. In other words, the form of organization is determined by society's
legitimacy, effectiveness, and rationalization.
Regional government as an
organization or government institution will always be under the control and
supervision of the community. This can be seen from several regulations
requiring each regional government to submit accountability reports on the
administration of governance promptly. Furthermore, to increase public trust in
the accountability report on governance and management of state finances, an
audit must be carried out by the BPK.
Some research on the factors that
influence audit opinions of local government financial statements in Indonesia,
some of which are as follows: (Hamidayanti
& Wardani, 2019), (Budiarto &
Indarti, 2019), (Andani et al., 2019), (Suryaningsih &
Sisdyani, 2016), (Wijayanti &
Suryandari, 2020), (Simarmata, 2019), (Dewata et al., 2018), (Sutopo et al., 2017), (Purnama et al., 2018), (Yaya & Pawestri,
2021), (Revelation, 2019).
Based on the
discussion of the theory used as the basis of the research, the results of previous
studies that are relevant to the topic under study, which is then described in
a conceptual framework, the
hypothesis developed in this study is as follows.
1. Audit Findings
The Supreme
Audit Agency (BPK) is tasked with conducting state financial audits consisting
of financial audits, performance audits, and audits with specific objectives.
The results of the audit conducted by the BPK are in the form of opinions,
findings, and conclusions in the form of recommendations. BPK audit findings
are cases found on government financial reports for violations committed by a
region against internal control provisions and applicable laws and regulations
so that they will affect the auditor's opinion after an audit. This is
supported by the results of research (Widodo & Sudarno, 2017) which state that
findings on SPI and findings on compliance, which are audit findings, affect
BPK's audit opinion.
Suppose the
local government gets a few audit findings. In that case, the regional
government's financial reports have been prepared with good corporate governance, an adequate
control system and a high level of compliance with laws and regulations, so it
is expected to obtain an audit opinion. From BPK, and vice versa, more audit
findings will undoubtedly influence the auditor's opinion. Based on this description,
the hypothesis developed is as follows:
H1: Audit Findings affect BPK's
Audit Opinion
2.
Auditor Change
In the
process of auditing local government financial reports, there may be changes
between BPK auditors. Some reasons for a rational change of auditors include
the fact that the auditor has been auditing a local government for a long time,
so it requires a refresher on the audit assignment, or it is purely mandatory
from the BPK leadership.
Auditing
the financial statements of local governments that have changed BPK auditors
requires a relatively long time to understand the characteristics of local
governments as auditees. Hence, the auditors require a relatively long time to
complete the audit process.
Meanwhile, the process of auditing local government financial reports
that have not experienced a change in BPK auditors requires a relatively
shorter time because the auditor already understands the characteristics of the
local government enough from the audits that have been carried out in the past
period or year so that this auditor change may affect the BPK audit opinion.
H2: Auditor Change affects BPK's Audit Opinion
3.
Local Government Size
Based on the findings (Cohen & Kaimenaki, 2011) states that
the greater the number of assets, the more problems will be faced by local
governments, especially in the management of resources, so a large number of
asset values will have great demands in reporting mandatory disclosures to the
public. This finding is in line with findings (Wicaksono,
2013), namely, the larger the size of a local government, the greater the assets
it has; of course, this will cause difficulties in governance and
accountability. Based on this description, a hypothesis can be developed.
H3: The size of the Regional Government affects the
BPK Audit Opinion
4.
leverage
Research (Sumarjo, 2010) states that
"The greater the leverage ratio, the more it shows an entity is unable to
finance its operations because it requires funds from external parties, whereas
the smaller the leverage ratio, the greater the ability of an entity to finance
operational costs through its internal funds." This opinion implies that
the greater the leverage owned by an entity, the worse the entity's financial
independence level, and the smaller the leverage owned by an entity, the better
the entity's independence or financial independence.
The leverage ratio shows the financial risk of the
local government due to the risk of default or failure to fulfil its debts or
obligations. This is what the BPK auditors then pay attention to in considering
the adequacy and accuracy of the evidence obtained and conducting tests to assess
that regional financial management has been carried out following the
principles of good governance. This condition may affect the BPK audit opinion.
H4: Leverage affects BPK's Audit Opinion
5. SiLPA (Budget Calculation Excess Time)
This SiLPA, according to Government Regulation 58 of
2005, is the excess difference between the realization of budget revenues and
expenditures during one budget period. Permendagri 13 of 2006 article 137
states that the excess budget calculation (SiLPA) for the previous year is the
financing used for: a. Covering the budget deficit if actual revenue is less
than actual spending, b. They are funding the implementation of follow-up
activities at the expense of direct spending, c. Funding other obligations
until the end of the fiscal year have yet to be completed.
The occurrence of SiLPA only sometimes indicates that the
regional government's performance is good in terms of efficiency in managing
regional expenditures. However, it could be due to the realization of spending
or spending that is lower than the stipulated budget, which occurs due to
programs/activities that were not implemented in the relevant fiscal year so
that the budget was not absorbed. Optimally, therefore SiLPA can be considered
by BPK auditors in determining their audit opinion on local governments.
H5: SiLPA influences BPK's Audit
Opinion
METHODS
This study uses
secondary data from the 2017-2020 BPK Audit Results Report (LHP). The research
data source was obtained from BPK's LHP, published through the Information
Management Officer and Documentation Electronic service (E-PPID) via
https://e-ppid.bpk.go.id/. The object of this research is the local government
BPK audit opinion, while the research subjects in this study are local
governments (districts/cities) throughout Indonesia, excluding provincial
governments. The thing to consider is that the characteristics of the
provincial government are different from the district/city governments in terms
of government affairs, area coverage, governance, financial resources,
information technology used and so on. Based on data from the Indonesian
Ministry of Home Affairs, in 2017-2020 there were 416 districts and 98 cities
spread across 34 provinces in Indonesia on 7 islands/archipelago, bringing a total
of 514 districts/cities. Based on predetermined sampling criteria, a sample of
480 districts/cities met the criteria as a research sample.
Table 1.
Results of Research Data Collection
|
Sample
Selection Criteria |
Regency |
City |
Amount |
|
Number of Regencies/Cities
throughout Indonesia |
416 |
98 |
514 |
|
Districts/Cities
that meet the sampling criteria |
398 |
82 |
480 |
|
Data that meets the sampling criteria during the study period (2017-2020) |
|
|
1915 |
RESULTS AND DISCUSSION
A. Descriptive statistics
Descriptive
statistical testing is intended to provide an overview of the distribution and
behaviour of sample data. The descriptive statistical test calculates each
sample data's mean, median, standard deviation, maximum and minimum.
Descriptive statistical test results can be seen in the following table.
Table 2. Descriptive
Statistical Test Results
|
|
OA |
TA |
PA |
SZ |
LV |
SP |
|
Means |
0.808877 |
12.51697 |
0.588512 |
28.52553 |
0.018731 |
24.88885 |
|
Median |
1.000000 |
1200000 |
1.000000 |
28.45584 |
0.008990 |
24.99786 |
|
Maximum |
1.000000 |
29.00000 |
1.000000 |
31.12454 |
0.999345 |
28.33283 |
|
Minimum |
0.000000 |
2,000000 |
0.000000 |
27.09582 |
3.06E-08 |
20.85115 |
|
std. Dev. |
0.393288 |
4.422336 |
0.492232 |
0.514672 |
0.050342 |
1.158366 |
|
Observations |
1915 |
1915 |
1915 |
1915 |
1915 |
1915 |
Source:
processed data (2022)
Based
on the results of the descriptive statistical test on the 1,915 research
samples in table 2 above, it can be explained the minimum (minimum), maximum
(maximum), median (median), average (mean), and standard deviation (std. dev)
values of each research variable as follows:
1)
The Audit Opinion variable (OA) has the lowest value
(minimum) of 0, the highest value (maximum) of 1, the median value (median) of
1, the average value (mean) of 0.808877, meaning that the data from the Audit
Opinion variable (OA) focus or generally located at 0.808877. The standard
deviation (std. dev) is 0.393288, meaning that if there is an average
deviation, the deviation is not more than 0.393288. The standard deviation
value of the Audit Opinion (OA) Variable is smaller when compared to the
average value of Audit Opinion (OA), indicating that this Variable does not
have data that differs from one data to another.
2)
The Audit Findings Variable (TA) has the lowest value
(minimum) of 2 findings, the highest value (maximum) of 29 findings, the median
value (median) of 12 findings, the average value (mean) of 12.51697 findings
means, data from the Audit Findings variable ( TA)
centred or generally located on 12.51697 findings. The standard deviation (std.
dev) is 4.422336 findings, meaning that if there is an average deviation, the
deviation is no more than 4.422336. The standard deviation value of the Audit
Findings (TA) variable is smaller when compared to the average Audit Findings
(TA) value indicating that this Variable does not have data that differs from
one data to another.
3)
The auditor Turnover variable (PA) has the lowest
value (minimum) of 0, the highest value (maximum) of 1, the median value
(median) of 1, the average value (mean) of 0.588512, meaning that the data from
the Auditor Turnover variable (PA) is centred or at generally located at
0.588512. The standard deviation (std. dev) is 0.492232, meaning that if there
is an average deviation, the deviation is not more than 0.488. The standard
deviation value of the Auditor Turnover (PA) Variable is smaller when compared
to the average Auditor Turnover (PA) value indicating that this Variable does
not have data that differs from one data to another.
4)
The Variable Size of Local Government (SZ) has the
lowest (minimum) value of 27.09582 trillion, the highest (maximum) value of
31.12454 trillion; the median (median) value is 28.45584 trillion, the average
value (mean) is 28.52553 trillion meaning, data from the variable Regional
Government Size (SZ) concentrated or generally located at 28.52553 trillion. The
standard deviation (std. dev) is 0.514672 trillion, meaning that if there is an
average deviation, the deviation is no more than 0.514672 trillion. The
standard deviation value of the Local Government Size (SZ) variable is smaller
when compared to the average Regional Government Size (SZ) value indicating
that this Variable does not have data that differs from one data to another.
5)
The leverage variable (LV) has a minimum (minimum)
value of 0, maximum (maximum) value of 0.999345, median value (median) of 0.008990,
and average (mean) value of 0.018731, that is, data from the Leverage variable
(LV) is centred or generally located at 0.018731. The standard deviation (std.
dev) is 0.050342, meaning that if there is an average deviation, the deviation
is no more than 0.050342. The standard deviation value of the Leverage (LV)
variable is more significant when compared to the average Leverage (LV) value
indicating that this Variable has data that differs from one data to another.
6)
The SiLPA variable (SP) has a minimum (minimum) value
of 20.85115 trillion, a maximum (maximum) value of 28.33283 trillion, a median
value of 24.99786 trillion, an average value (mean) of 24.88885 trillion,
meaning that data from the variable Profitability (PF) centred or generally
located at 24.8888 billion. The standard deviation (std. dev) is 1.158366
trillion, meaning that if there is an average deviation, the deviation is no
more than 1.158366 trillion. The standard deviation value of the Profitability
(PF) variable is smaller when compared to the average Profitability (PF) value
indicating that this Variable does not have data that differs from one data to
another.
B. Classical
Assumption Testing
This research
has gone through the testing stages. It is free from classical assumption problems
for multicollinearity, autocorrelation, and normality problems. However, for
the heteroscedasticity test, the data used in this study did not pass because
the data is not random, which is one of the limitations of this study.
C. Hypothesis
test
After passing the classic
assumption test, hypothesis testing can be carried out. Test the hypothesis in
this study using multiple linear regression analysis. To find out the
relationship between the independent (free) variables that affect the dependent
(dependent) Variable is carried out through the OLS (Ordinary Least Square)
approach, which is shown in the following table.
Table 3. Hypothesis
Test Results
|
Variables |
coefficient |
std. Error |
t-Statistics |
Prob. |
|
C |
-1.624916 |
0.486877 |
-3.337424 |
0.0009 |
|
TA |
-0.016545 |
0.001984 |
-8.337041 |
0.0000 |
|
PA |
-0.028438 |
0.017694 |
-1.607203 |
0.1082 |
|
SZ |
0.087137 |
0.019275 |
4.520626 |
0.0000 |
|
LV |
-0.729721 |
0.174041 |
-4.192806 |
0.0000 |
|
SP |
0.007460 |
0.008661 |
0.861370 |
0.3891 |
Source: Processed data (2022)
Based on table 3 above, the regression
equation is:
OA =
α + β 1(TA) + β 2(PA) + β 3(SZ) + β 4(LV) + β 5(SP)
+ e
OA =
-1.624916 0.016545TA 0.028438PA + 0.087137SZ 0.729721LV + 0.007460SP + e
Information:
|
ca |
= Constant |
|
= -1.624916 |
|
TA |
= Audit Findings |
β1 _ |
= -0.016545 |
|
PA |
= Change of Auditor |
β2 _ |
= -0.028438 |
|
SZ |
= Size |
β3 _ |
= 0.087137 |
|
LV |
= leverage |
β4 _ |
= -0.729721 |
|
SP |
= SiLPA |
β5 _ |
= 0.007460 |
The
test results for the coefficient of determination (R2) are presented
in the following table.
Table 4. Test
Results for the Coefficient of Determination (R2)
|
Model |
R-squared |
Adjusted
R-squared |
SE
of regression |
|
1 |
0, 066190 |
0, 063744 |
0.380547 |
Source:
Processed data (2022)
Based on the test results obtained an R-Squared value
of 0.066190 with an Adjusted R-Square of 0.063744; this indicates that the
variation of the dependent variable Audit Opinion (OA), can be explained by the
independent variables, namely Audit Findings (TA), Auditor Turnover (PA), Size
of Local Government (SZ), Leverage (LV), SiLPA of 6.3744%. Meanwhile, other
variables outside the study explain the rest (100% - 6.3744% = 93.6256%).
The
results of the simultaneous significance test (F test) are presented in the
following table
Table
5. Simultaneous
Significance Test Results (F Test)
|
F-statistics |
Prob(F-statistic) |
|
27.06243 |
0.000000 |
Source:
Processed data (2022)
From
the test results, the calculated F value or F-statistic is 27.06243 with a p-value or Prob (F-statistic)
of 0.000000, which is less than 0.05. This means that together all the
independent variables affect the dependent Variable. This also means that the
research model follows the hypothesis.
The results of the partial
significance test (t-test) or t-test are presented in the following table.
Table
6. Partial Significance Test Results (t-test)
|
Variables |
coefficient |
t-Statistics |
Prob. |
Hypothesis
Answer |
|
C |
-1.624916 |
-3.337424 |
0.0009 |
|
|
TA |
-0.016545 |
-8.337041 |
0.0000 |
Accept H 0 |
|
PA |
-0.028438 |
-1.607203 |
0.1082 |
Reject H0 |
|
SZ |
0.087137 |
4.520626 |
0.0000 |
Accept H 0 |
|
LV |
-0.729721 |
-4.192806 |
0.0000 |
Accept H 0 |
|
SP |
0.007460 |
0.861370 |
0.3891 |
Reject H0 |
Source: Processed data (2022)
The
Partial Significance test (t-test) results show that audit findings, local
government size and leverage affect BPK's audit opinion. At the same time,
auditor turnover and SiLPA do not affect BPK's audit opinion.
1)
Audit Findings and Audit
Opinion
Based
on Table 6, Hypothesis 1 (H1) is accepted, so it can be concluded
that audit findings influence the Audit Opinion of local government. For
local governments that get few audit findings, it can be assumed that the local
government finances have been prepared with good corporate governance so that
the auditor obtains adequate confidence with the tests carried out by providing
a good Audit Opinion. On the other hand, if a local government gets many audit
findings, it can be assumed that the local government's financial statements
are prepared with poor corporate governance, so the auditor will need further
testing of the evidence, including testing the possibility of repeated
findings. This condition, of course, can affect the Audit Opinion. In addition,
the Supreme Audit Agency must be careful in determining and considering
findings. Especially findings indicate criminal acts and losses in managing state
finances. The Auditor for the
Audit Board of the Republic of Indonesia must prepare audit documentation to
provide clear and adequate information to support audit findings, conclusions,
and audit recommendations, as well as the reasons behind all the convincing
things needed in disclosing these findings. These conditions may also
affect the Audit Opinion. This study's results align with research (Widodo & Sudarno, 2017), which found empirical evidence
that audit findings affect audit opinion.
2)
Change of Auditor and Audit
Opinion
Based
on Table 6, hypothesis 2 (H2) is rejected so that it can be
concluded that the change of auditors does not affect the audit opinion of the
local government. The audit team of the Audit Board of the Republic of
Indonesia, who audited the financial reports of local governments, has the
experience and professional audit skills that are relatively the same between
one auditor team and another. Even though there is a change in audit assignment
from one auditor team to another auditor team, it will not affect the process
and time of the audit, so the change of auditors does not affect the audit
opinion of the local government. In addition, the Supreme Audit Agency
has State Financial Audit Standards, which must be guided in conducting audits
of state financial management. The BPK also tries to comply with the audit
deadline stipulated in Government Regulation 12 of 2019 concerning Regional
Financial Management by 2 (two) months after receiving
financial reports from the regional government. The auditor team's adherence to
audit standards and deadlines is why auditor changes have no effect on the
audit opinion of the local government. The results of this study are in line
with the results of research (Djunaidi &
Soepriyanto, 2013), which
found empirical evidence that auditor change does not affect audit opinion.
3)
Local Government Size and
Audit Opinion
Based on Table 6, hypothesis 3 (H3)
is accepted, so it can be concluded that local government size influences audit
opinion. Large local governments tend to have good resources, including sound
information technology systems, reasonable and adequate numbers of financial
and accounting human resources, adequate internal control systems and strong
oversight (Tullah et al., 2019). These good resources are the essential capital
for regional governments in managing sound regional finances, which are
reflected in accountable local government financial reports to facilitate audit
work. Meanwhile, small local governments tend to have inadequate resources,
including sober information technology systems, financial and accounting human
resources that need to be improved in quality and quantity,
inadequate/inadequate internal control systems and weak oversight. The results of this study are
in line with the results of the research (Wicaksono,
2013).
4)
Leverage and Audit Opinion
Based on Table 6, hypothesis 4 (H4)
is accepted, so it can be concluded that the leverage owned by the local
government influences audit opinion. The leverage ratio shows the financial
risk of the local government due to the risk of default or failure to fulfil
its debts or obligations. This is what the BPK auditors then pay attention to
in considering the adequacy and accuracy of the evidence obtained and
conducting tests to assess that the principles of good governance have carried
out regional financial management. A high leverage ratio indicates increased
local government financial risk due to the high risk of default or failure to
fulfil obligations. High liabilities (debt) will impact local government
budgeting in the following fiscal year, where expenditure must be allocated to
pay obligations (debt) in the previous fiscal year. This causes the auditor to
increase the adequacy and accuracy of the evidence obtained and to carry out
tests to reduce audit risk that can affect audit opinion.
Meanwhile, a low leverage ratio
indicates a low local government financial risk from the low risk of default or
failure to fulfil obligations. This causes the auditor to reduce the adequacy
and accuracy of the evidence obtained and perform testing so that it can affect
the audit opinion. This study's results align with the research (Sumarjo,
2010).
5)
SiLPA and Audit Opinion
Based on
Table 6, hypothesis 5 (H5) is rejected, so it can be concluded that SiLPA does
not influence audit opinion. The sum of the difference between regional
government budget revenue and expenditure measures the SiLPA of regional
government. The size of the SiLPA does not affect the audit opinion because a
large SiLPA is not necessarily the success of the regional government in
providing significant funds but rather the efficiency of budget execution or
the regional government's failure in implementing its programs and activities.
CONCLUSION
This
study aims to examine and find empirical evidence of the influence of audit
findings, auditor turnover, local government size, leverage and SiLPA on local
government audit opinions in Indonesia. Based on the results of the research,
the results of data analysis and the discussion, the following conclusions can
be drawn: 1) Audit findings have an effect on local government audit opinions,
2) Auditor turnover has no effect on local government audit opinions, 3) Local
government size has an effect on local government audit opinions, 4) Leverage
owned by the local government affects the audit opinion of the local
government, 5) SiLPA (Budget Calculation Overtime) has no effect on the local
government audit opinion.
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