The Effect of BPK Audit Findings on Local Government Financial Performance: An Empirical Study of Regencies/Cities in Bali Province

Astrid Fazria; Fatin Delima Br Depari; Novita Aulia Putri; Ratu Nazwa Harahap; An Suci Azzahra

doi:10.55227/ijerfa.v4i2.441

Authors

Astrid Fazria Accounting Study Program, Faculty of Social and Science, University of Pembangunan Panca Budi
Fatin Delima Br Depari Accounting, Social Science, Pembangunan Panca Budi University, Indonesia
Novita Aulia Putri Accounting, Social Science, Pembangunan Panca Budi University, Indonesia
Ratu Nazwa Harahap Accounting, Social Science, Pembangunan Panca Budi University, Indonesia
An Suci Azzahra Accounting, Social Science, Pembangunan Panca Budi University, Indonesia

DOI:

https://doi.org/10.55227/ijerfa.v4i2.441

Keywords:

Audit findings, financial performance, local government, BPK audit.

Abstract

This study aims to empirically examine the impact of audit findings issued by the Supreme Audit Agency of Indonesia (BPK) on the financial performance of district and city governments in Bali Province. The research adopts a quantitative approach using a causal-associative method to analyze the relationship between audit findings and financial performance. The study utilizes secondary data obtained from BPK Audit Reports (LHP) and Local Government Financial Statements (LKPD) published by the Directorate General of Fiscal Balance (DJPK) of the Ministry of Finance. The research objects consist of nine regencies and cities in Bali Province observed over a four-year period from 2018 to 2021, resulting in a total of 36 observations selected through purposive sampling. Data analysis was conducted using multiple linear regression with IBM SPSS software, preceded by descriptive statistical analysis and classical assumption tests to ensure data reliability and validity. The findings indicate that BPK audit findings do not have a statistically significant effect on local government financial performance. This suggests that the presence of audit findings alone is insufficient to directly improve financial performance. Instead, audit effectiveness largely depends on the quality of follow-up actions on audit recommendations and the overall capacity of local government financial management. This study is expected to contribute empirical evidence to the public sector accounting literature, particularly regarding the role of external audits in improving local government financial performance.

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