Comparative Study of Regional Financial Performance in Underdeveloped and Developing Regions in East Nusa Tenggara Province

DOI

10.2991/978-2-494069-83-1_12How to use a DOI?

Keywords

Comparison; Regional Financial Performance

Abstract

Measuring financial performance is crucial in order to assess the accountability of regional governments in managing regional finances. Accountability is not just the ability to demonstrate how public money is spent but also covers the ability to show that public money has been spent efficiently, effectively and economically. According to Mardiasmo (2004: 182), efficient means that the use of public funds produces maximum output, while effective means that the use of the budget must achieve the goals that serve public interest, moreover, economically is related to the selection and use of resources under a certain quantity and quality at the lowest price level.

Based on the opinion of the Audit Board of the Republic of Indonesia, poor financial performance that occurs in underdeveloped districts in East Nusa Tenggara Province includes: mismanagement and misadministration of asset; mismanagement of School Operational Assistance (SOA) funds as well as the miscalculation of cash and balance by including the accumulative values of school buildings depreciation; the existence of permanent investment and fixed assets in the Regional Government Financial Report (RGFR); incomplete and unaccountable financial reports; inconformity with the Government Accounting Standards (GAS), inadequacy of disclosure, incompliance with laws and regulations, and ineffective internal control system; accumulative depreciation of fixed assets, such as irrigation, roads and networks, has not been regarded as part of the development process and not been capitalized into the main fixed assets; weak internal control of the fixed asset management.

Therefore, improving the financial capacity is the key factor to achieving the optimal financial performance and, ultimately, being lifted from the underdeveloped region category. Thus, the regional governments must manage the Regional Income (RI) in order to finance the regions’ expenditures. Mardiasmo (2009: 64) states that by providing a greater freedom for regional governments to manage their budgets, then it is necessary to increase the role of the Regional Representative Councils (RRC) to supervise the administration of governments.

Based on the background described above, the purpose of this study is to compare the regional financial capabilities between underdeveloped and developing regions in East Nusa Tenggara Province. Thus, the descriptive method used in this study will produce an accurate verbal and numerical comparisons on the financial performance of underdeveloped and developing regions in the province of East Nusa Tenggara.

Copyright

© 2022 The Author(s)

Open Access

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TY  - CONF
AU  - Eugenia H. P. Tanan
AU  - Agnes K. B. Mudamakin
PY  - 2022
DA  - 2022/12/30
TI  - Comparative Study of Regional Financial Performance in Underdeveloped and Developing Regions in East Nusa Tenggara Province
BT  - Proceedings of the International Conference on Applied Science and Technology on Social Science 2022 (iCAST-SS 2022)
PB  - Atlantis Press
SP  - 63
EP  - 70
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-494069-83-1_12
DO  - 10.2991/978-2-494069-83-1_12
ID  - Tanan2022
ER  -