The Influence of Internal Control Systems, Government Accounting Policies, Human Resource Competence and Regional Financial Management Accountability on the Quality of Financial Reporting

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Aceh— Internal Controls and Accountability Prove Key to Better Financial Reporting in Aceh Government. The research conducted by T Muhammad Deri, Darwanis, and Mulia Saputra from Universitas Syiah Kuala, Aceh, published in January 2026 in the International Journal of Management Analytics (IJMA).

The research conducted by T Muhammad Deri, Darwanis, and Mulia Saputra showed that the quality of the Aceh government’s financial statements is strongly influenced by the internal control system, government accounting policies, and regional financial management accountability.

This study is important because over the past several years Aceh has successfully obtained an Unqualified Opinion (WTP) from the Audit Board of Indonesia (BPK). However, the researchers emphasized that receiving a WTP opinion does not mean that all problems have been resolved. In practice, there are still specific notes indicating weaknesses, such as issues in regional asset management and financial governance that has not yet been fully well-organized.

Unqualified Opinions Do Not Automatically Mean “Perfect” Financial Governance

Aceh recorded six consecutive Unqualified Opinions between 2015 and 2020. Before that, the province still received a Qualified Opinion. While the achievement is positive, Deri and his colleagues highlight that the financial reporting process still contains weaknesses, especially in areas like:

regional asset recording,
the management of public property,
and administrative completeness in reporting.

In other words, a clean audit opinion does not always reflect the full complexity of public financial management.

This is why the authors explored which factors actually shape the quality of Aceh’s financial statements.

Four Key Factors Behind Financial Reporting Quality

The study tested the influence of four major variables:

Internal Control System (SPI)
Government Accounting Policies (KAP)
Human Resource Competence (KSDM)
Regional Financial Management Accountability (APKD)

These factors were selected because they represent the core pillars of public-sector financial reporting: strong procedures, standardized accounting rules, capable personnel, and transparent accountability mechanisms.

Research Method: Survey Across 47 Government Work Units

The researchers used a quantitative causal-associative approach to test how the four variables relate to financial reporting quality.

The study population consisted of 47 Aceh Government Work Units (SKPA). Data were collected using structured questionnaires and analyzed with multiple linear regression using SPSS.

The regression model used in the paper was:

KLK = a + β1SPI + β2KSDM + β3KAP + β4APKD + e

Where KLK refers to financial reporting quality, while SPI, KSDM, KAP, and APKD represent the independent variables.

Main Results: The Four Variables Matter Together

The statistical results show that internal controls, accounting policies, HR competence, and accountability simultaneously influence financial reporting quality in Aceh.

The study reported an R Square value of 0.505, meaning:

Around 50.5% of financial reporting quality can be explained by the four tested variables.

The remaining 49.5% is influenced by other factors not included in the study, such as organizational culture, IT systems, leadership, or political and institutional pressures.

This result reinforces the idea that financial reporting quality is not shaped by a single element, but by multiple interacting systems.

Internal Control System Shows the Strongest Contribution

Among the tested variables, the Internal Control System (SPI) emerged as the most consistent driver of financial reporting quality.

The regression coefficient for SPI was:

SPI = 0.346

The authors explain that internal controls function as the backbone of public financial governance. A strong internal control system ensures:

clear separation of duties,
structured authorization processes,
accurate recording of transactions,
reduced risk of fraud and manipulation,
and compliance with regulations.

In Indonesia, internal controls in government institutions are guided by frameworks such as Government Regulation No. 60 of 2008, which outlines the Government Internal Control System.

Government Accounting Policies Strengthen Reporting Consistency

Government Accounting Policies (KAP) also showed a positive influence, with a coefficient of:

KAP = 0.158

Accounting policies are crucial because they guide how financial transactions are recognized, measured, presented, and disclosed in government financial statements.

These policies are rooted in national regulations such as:

Government Regulation No. 71 of 2010 on Government Accounting Standards (SAP).

The authors note that consistent application of SAP-based accounting policies improves the financial reports’:

relevance,
comparability,
transparency,
and reliability.

Human Resource Competence Matters, but Not as Strongly as Expected

Human Resource Competence (KSDM) produced a coefficient of:

KSDM = 0.259

While HR competence was shown to influence reporting quality, its impact was not as dominant as internal controls.

The authors suggest one reason: financial reporting processes in local government are increasingly supported by standardized government financial systems and software. This reduces the degree to which reporting quality depends solely on individual capability.

However, the researchers still emphasize that without proper competence—especially in accounting standards and reporting procedures—errors can still occur, such as:

incorrect journal entries,
incomplete reporting,
and misclassification of transactions.

Accountability Also Improves Financial Reporting Quality

The fourth variable, Regional Financial Management Accountability (APKD), also contributed positively, with a coefficient of:

APKD = 0.116

Accountability refers to the government’s obligation to manage and report public funds responsibly, transparently, and in line with legal and ethical standards.

The authors argue that stronger accountability leads to better reporting because government units become more disciplined in:

documenting financial activities,
preparing supporting evidence,
ensuring compliance,
and responding to audits.

Accountability also strengthens public trust, since financial reports are one of the main instruments citizens use to evaluate whether public budgets are managed properly.

Practical Implications: Aceh Should Strengthen Systems, Not Just Chase Audit Opinions

The study delivers a clear practical message for local governments:

Achieving WTP should not be the final goal. Strengthening internal systems should be the priority.

The authors emphasize that Aceh—and other regional governments—can improve reporting quality by focusing on:

internal control strengthening,
consistent accounting policy implementation,
continuous HR training,
and building a culture of accountability.

If these four areas improve simultaneously, financial reporting quality will become more sustainable and resilient.

Researchers Recommend Regular Training and Stronger Supervision

In their recommendations, Deri, Darwanis, and Saputra highlight several practical steps, including:

periodic training for financial staff,
routine evaluation of accounting and reporting systems,
stronger SOP enforcement,
more active internal audits,
and deeper SAP-based accounting education for report preparers.

Author Profiles

T Muhammad Deri - Universitas Syiah Kuala
Darwanis - Universitas Syiah Kuala
Mulia Saputra -Universitas Syiah Kuala.

Research Source

Deri, Darwanis, Mulia Saputra “The Influence of Internal Control Systems, Government Accounting Policies, Human Resource Competence and Regional Financial Management Accountability on the Quality of Financial Reporting” International Journal of Management Analytics (IJMA), Vol. 4 No. 1 (Januari 2026), halaman 131–146.
DOI:https://doi.org/10.59890/ijma.v4i1.290

URL: https://dmimultitechpublisher.my.id/index.php/ijma