Study Highlights Challenges in Village Budget Transparency Despite Stronger Internal Audit Oversight in Medan
MEDAN, Indonesia — Village budget management in Medan City has made significant progress in accountability and transparency, yet the quality of financial reporting remains uneven due to differences in administrative capacity, limited internal audit resources, and inconsistent use of digital systems. These findings come from a 2026 study by Nelva Ananda, Pradita Tasyarani Ginting, and Galih Supraja of Universitas Pembangunan Panca Budi (UNPAB), Medan, published in the International Journal of Contemporary Sciences (IJCS). The research highlights the evolving role of the Medan City Inspectorate as an internal auditor that not only ensures compliance but also supports better governance through advisory and mentoring functions.
As local governments receive greater authority to manage public funds, transparency and accountability have become central to maintaining public trust. In Indonesia, village and sub-district administrations are responsible for managing public budgets intended to improve infrastructure, community services, and local development. While regulations governing budget management have become more comprehensive, effective implementation continues to depend on administrative capability, financial oversight, and institutional cooperation.
The study explains that Medan City's village budget system operates within a strong regulatory framework established by local government policies. However, the researchers found that practical implementation still faces several obstacles, including limited accounting skills among village officials, administrative complexity, and technological adaptation challenges. These factors can delay financial reporting and reduce the overall effectiveness of public financial management.
According to the authors, village governments function as agents entrusted with managing public funds on behalf of both the Medan City Government and local communities. This relationship can create information asymmetry when village officials possess more operational information than the public while lacking sufficient technical expertise to prepare accurate financial reports. In this context, the Medan City Inspectorate plays a critical role in reducing governance risks by supervising financial management and helping local administrators improve reporting quality.
The research was conducted using a descriptive qualitative approach. Instead of relying on statistical testing, the researchers analyzed government regulations, official documents, previous scientific publications, and literature on public sector accounting and internal auditing. They applied content analysis and the Miles and Huberman qualitative analysis model to examine how accountability and transparency are implemented in village budget management and how internal audit supervision contributes to good public governance.
The findings indicate that accountability mechanisms have generally been implemented throughout Medan City's village administrations. Most villages prepare accountability reports and Statements of Accountability (SPJ) before receiving subsequent budget allocations. Nevertheless, reporting quality differs considerably depending on the competence of local administrative staff and their ability to operate integrated digital financial information systems.
Key Findings
- Most village administrations comply with mandatory financial reporting requirements before additional budget disbursements are approved.
- Reporting timeliness varies significantly because accounting competencies differ across village administrations.
- Administrative errors are still found in the preparation of accountability reports (SPJ).
- Budget transparency is promoted through public information boards installed at village offices, but digital publication of detailed financial information remains inconsistent.
- Limited numbers of internal auditors require the Medan City Inspectorate to conduct sample-based audits rather than comprehensive reviews of every village during each audit cycle.
One of the study's most important findings concerns the transformation of the Medan City Inspectorate's role. Rather than acting solely as a watchdog that identifies violations after financial activities have been completed, the Inspectorate increasingly serves as a consulting partner. In addition to conducting compliance audits, internal auditors provide technical guidance, assist village officials in preparing financial reports, and deliver regulatory training designed to prevent administrative errors before they occur.
Nelva Ananda, Pradita Tasyarani Ginting, and Galih Supraja of Universitas Pembangunan Panca Budi conclude that combining quality assurance with advisory services creates a more effective supervision model for village budget management. Their analysis suggests that internal auditors contribute not only by ensuring legal compliance but also by strengthening institutional capacity and reducing the risk of financial irregularities through continuous mentoring and assistance.
The researchers also identify three major obstacles limiting the effectiveness of village budget governance. First, accounting competencies vary considerably among village personnel. Second, the number of auditors within the Medan City Inspectorate remains insufficient compared with the number of villages requiring supervision. Third, digital financial reporting systems are not yet fully optimized across all local government units, creating inconsistencies in reporting quality and information accessibility.
These findings have important implications for public policy and local government administration. The authors recommend that the Medan City Inspectorate develop an integrated e-audit and continuous auditing system to enable remote and ongoing supervision of village financial management. Such a digital oversight system would help address staffing limitations while improving the efficiency and consistency of monitoring activities.
The study also recommends continuous technical training for village treasurers and administrative staff in public sector accounting and local financial management. Strengthening human resource capacity, the researchers argue, is essential for reducing reporting errors, improving accountability, and expanding public access to transparent financial information.
Overall, the research demonstrates that effective public financial governance depends on more than well-designed regulations. Sustainable accountability requires capable public officials, adaptive internal audit institutions, reliable digital systems, and transparent communication with citizens. As village governments continue to manage increasing public resources, strengthening these interconnected elements will be critical for maintaining public trust and achieving good governance.
Author Profiles
- Nelva Ananda is a researcher at Universitas Pembangunan Panca Budi (UNPAB), Medan, specializing in public governance, accountability, and regional financial management.
- Pradita Tasyarani Ginting is an academic at Universitas Pembangunan Panca Budi, with research interests in public administration, government transparency, and public sector accounting.
- Galih Supraja is a lecturer at Universitas Pembangunan Panca Budi (UNPAB), Medan, and the corresponding author of the study. His expertise includes public sector accounting, internal government auditing, financial governance, and public management.
Source
- Ananda, Nelva., Ginting, Pradita Tasyarani., & Supraja, Galih. (2026).
- Accountability and Transparency of Village Budget Management in Medan City: An Internal Auditor's Supervision Perspective.
- International Journal of Contemporary Sciences (IJCS)
- Vol. 4, No. 6, 2026, pp. 1665–1674.
- DOI: https://doi.org/10.55927/v17zph31.
- URL Jurnal: https://journalijcs.my.id/index.php/ijcs
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