The Influence of Human Resource Competence, Transparency, and Internal Control Systems on The Quality of Local Government Financial Reports at the Manado City Regional Finance and Asset Agency

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FORMOSA NEWS - Manado - Transparency Matters Most in Enhancing the Quality of Local Government Financial Reports. Public access to financial information is the single most critical factor in ensuring the integrity of local government financial reporting. A breakthrough study reveals that transparency outweighs both the individual competence of civil servants and the presence of internal audit systems when it comes to producing accurate municipal financial data. This significant finding comes from a rigorous collaborative study conducted by Eirene Flandrina Gamani, Jenny Morasa, and Wulan D. Kindangen, a team of researchers from Universitas Sam Ratulangi. Published in May 2026, the investigation focuses heavily on the Regional Finance and Asset Agency (BKAD) of Manado City. The assessment provides an urgent response to a 2023 inspection report by the Audit Board of the Republic of Indonesia (BPK RI) that previously flagged vulnerabilities within the city's internal oversight framework.

Shifting Focus to Open Governance
Achieving good governance requires more than just high-level technical skills; it demands an unwavering commitment to public accountability. Government financial reports serve as the primary bridge of trust between local administrations and the communities they serve. While conventional policy often prioritizes heavy investments in staff training or strict administrative oversight, the Universitas Sam Ratulangi research team discovered an interesting counter-narrative within the mechanics of modern bureaucracy. To investigate these dynamics, the researchers utilized a survey-based quantitative methodology. The team collected primary empirical data directly from 60 active public officials across five core operating divisions of BKAD Manado City, including the Accounting, Treasury, Budgeting, Assets, and Secretariat sectors. By deploying multiple linear regression analysis, the researchers were able to isolate the exact impact of human competence, transparency levels, and internal control systems both individually and collectively.

Unexpected Truths Behind the Numbers
The statistical processing yielded surprising data that challenges traditional assumptions regarding public sector management:

• The Absolute Dominance of Transparency: When evaluated independently, transparency emerged as the only variable that exerts a statistically verified, direct positive impact on financial report quality, yielding a significance value below 0.001. Openness forces administrative self-regulation because public visibility naturally minimizes reporting errors.
  
• The Standardized Mitigation of Individual Skill: Staff competence demonstrated a significance value of 0.518, meaning it does not independently impact reporting quality. The institutional environment at BKAD Manado City relies on highly automated financial software and rigid Standard Operating Procedures (SOPs), which effectively neutralize any differences in personal employee capabilities.
• The Routine Trap of Internal Controls: The internal control system scored a significance value of 0.095, failing to show an independent positive effect. In practice, internal oversight at the municipal level often becomes a routine exercise of document authorization rather than a substantive mechanism for financial validation.
• The Power of Combined Systems: Although individual competence and internal audits appear ineffective when viewed in isolation, the study's joint evaluation (F-test) proved that all three elements combined account for 52.3% of the total variation in financial reporting quality.

Institutional Implications for Public Policy
The real-world applications of this Universitas Sam Ratulangi study are profound for regional policymakers and state administrative bodies. Local governments should reconsider spending large portions of their budgets exclusively on formal staff certifications or repetitive internal audit workflows if they continue to keep financial data behind closed doors. In their published paper, Eirene Flandrina Gamani and her co-authors explain that a high level of transparency functions as an active psychological guardrail for public servants. When financial cycles are open to public scrutiny, the structural opportunities for reporting distortions decrease. Therefore, municipal leaders must focus on expanding digital public information channels and ensuring that budgetary publications are easily readable by the public.

Author Profile
Eirene Flandrina Gamani is a lead researcher affiliated with the Faculty of Economics and Business at Universitas Sam Ratulangi, specializing in public sector accounting and regional financial governance.
Jenny Morasa is a senior academic and lecturer at Universitas Sam Ratulangi, recognized for her extensive research contributions to state auditing frameworks and internal public oversight.
Wulan D. Kindangen is an expert researcher at Universitas Sam Ratulangi, focusing on organizational human resource management and public sector accounting applications.

Source
Eirene Flandrina Gamani, Jenny Morasa, Wulan D. Kindangen. The Influence of Human Resource Competence, Transparency, and Internal Control Systems on The Quality of Local Government Financial Reports at the Manado City Regional Finance and Asset Agency. Formosa Journal of Applied Sciences (FJAS). Vol. 5, No. 5 2026, Halaman 1279-1298
DOI: https://doi.org/10.55927/fjas.v5i5.58
URL: https://journalfjas.my.id/index.php/fjas