Evaluation on Village-Fund Management
A Case Study at the Lembang Sub-districts, West Bandung Regency
Mimin Widaningsih and Aristanti Widyaningsih
Departement of Accounting, Universitas Pendidikan Indonesia, Jl. Dr. Setiabudhi No 229 Bandung 40154, Indonesia
{mimin.widaningsih, aristanti.widyaningsih}@upi.edu
Keywords: Community Empowerment, Management, Planning, Village Fund.
Abstract: One of priorities in village development fund as stated in the Regulation of Ministry of Village No 4 of 2017
is to finance some village development programs and empower the villagers. Regarding this issue, the study
aims to identify and evaluate problems found in village fund management programs. To get an in-depth
analysis, a qualitative method with case study design was conducted in Lembang sub-district, West Bandung
Regency. Three research instruments were collected namely field observation, Focus Group Discussion
(FGD) and interview with village government officers, particularly, for those who involved in managing the
fund. The result of data analysis shows that the village officers seem to have a lack of knowledge and
experience related to village fund development management. This is due to some problems dealing with
inappropriate implementation procedures because the officers do not understand the regulation well. It can be
seen from the officers’ mismanagement to the fund which left mechanism of creating priority. Therefore, to
overcome this problem, it is necessary to optimize the role of fund consultant to guide them in planning and
managing the fund appropriately.
1 INTRODUCTION
Decentralization Era of Regional financial
management is characterized by the implementation
of regulation no 32 of 2004 of Regional Government.
By this law, every Local Government gets an
authority to manage its own wealth. Since the
regulation No. 6 of 2014 has been employed, it is not
only the Local Government who gets it but also a
Village Government as the smallest part.
As an important issue related to this regulation, it
leads to the polemics of “pros” (agree) and “cons”
(disagree) with the regulation. Issues on regional
autonomy, especially in the Village and its
surrounding regulations, are an interesting issue to be
studied further (Utomo and Wahyudi, 2008).
Historically, village is the first form of social
institutions before Indonesia was transformed to be
Republic of Indonesia in a sense of Unitary State of
Indonesia Republic (NKRI) (Act no 6/2014). This
regulation is supported by Chamber as cited in Eko
(2014) who explains that Indonesia is a country
developed based on village development or known as
Tut Wuri Handayani. In Indonesian context, village
exists before a monarchy state which now has been
transformed to be a unitary state. In a unitary state,
various regions are integrated in a nation. Since its
transformation, several regulations have been
formulated to improve a village financial
management. The government has tried to make an
effort in order to upgrade and expand village financial
management which aims at reducing a gap between
rural and urban development.
One of alternatives to reduce an unequal
development between the urban and rural areas, the
government arranges a Village fund allocation (ADD;
Alokasi Dana Daerah) program. It is a financial
support -for about 1billion- allocated by the
government to develop a village. It is such a big
number of money for a village as a small region.
Moreover, the number of fund allocation will be
increasing year to year meaning that a village will
obtain incomes from several sectors including village
basic income, revenue sharing and district
distribution. All of them are part of central and
regional financial balance received by a Regency/city
which is budgeted from National Expenditure Income
Budget (APBN/ Anggaran Pendapatan Belanja
Negara), financial aid from provincial and District
Regional Expenditure Income (APBD: Anggaran
Pendapatan Belanja Daerah) as well as non-binding
542
Widaningsih, M. and Widyaningsih, A.
Evaluation on Village-Fund Management - A Case Study at the Lembang Sub-districts, West Bandung Regency.
In Proceedings of the 1st International Conference on Islamic Economics, Business, and Philanthropy (ICIEBP 2017) - Transforming Islamic Economy and Societies, pages 542-548
ISBN: 978-989-758-315-5
Copyright © 2018 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
grants and donations from the third parties (PP NO 60
of 2014).
Through that current regulation, nowadays, a
village can receive much more fund compared to the
previous village finance allocation of tens or
hundreds millions altogether. Therefore, additional
fund is expected to be able to improve the village
development programs including to support programs
related to rural people empowerment (Faozi, 2015).
On the other side, some people are worried about this
new regulation that potentially misleads village
officers to use the money through inappropriate way
and bring them to deal with such a criminal case
(Wiyanto, 2014).
Rural government officers such as the head of
village and his staff may find it difficult because they
do not have a sufficient competence to manage it well
in accordance with the regulation. The competencies
needed involve managing administration, reporting,
and accountability of the village finances (BPKP,
2015). Therefore, it is quite risky for the officers to
make some mistakes either in administrative and
substantive process that may lead them to a legal case.
On the other side, village government gaining some
additional fund is obliged to manage their finance by
being transparent, accountable and free from misuse
of the fund. To use the fund, the village officers must
do planning, implementing, supervising, and
reporting the fund expenditure at the end of the
program. It should be noticed that the village planning
is designed in accordance with its city planning.
Many parties play a role to the success of this
financial management including a good quality of
human resource. However, it is found that the local
government officers in Indonesia are generally
incompetent to handle all the tasks related to financial
management skill (Sidik, 2002).
In contrast, in the process of financial
accountability in administration management, human
resources competence is considered as the main
problem (Subroto, 2009) since the people capacity in
the village is not propositional (Yuliana, 2013). In
line with this, Ministry of Finance also claims that
rural officers are not ready yet to receive and manage
the village fund budget (Basri, 2014). This is due to
the factual condition that shows the rural officers do
not have adequate capacity and skill to do such
management tasks.
West Bandung District is one of autonomy area in
West Java. According to law of Indonesia Republic
No. 12 of 2007, it reveals that West Bandung district
is a result of expansion program in Bandung city area;
while, Lembang is the sub- district of West Bandung.
Like other villages, all villages in Lembang also
receive Village Finance from central government at
which the number of fund in 2017 is higher than the
previous years. This year, central government
allocates more than one billion for each village to
develop rural areas including for empowerment of
rural communities. Besides, being a good opportunity
for village development, it also challenges all rural
government officer to manage it optimally as
managed in the regulation. By doing so, it may
empower a better quality of human resources in
village area.
Empowering community must be run in line with
allocation of each expenditure items to make people
more productive. In addition, aspect of financial
management is also crucial to avoid mistakes in
process of managing village finance management. It
can be done through evaluating problems occurred in
the management of village fund. Therefore, the
researcher aims to identify and evaluate problems of
village fund management in District Lembang,
Bandung, West Java. This study aims at providing
information and data for the government related to
village readiness in managing additional fund from
the central government. Besides, it is also aimed to
prepare their understanding in accounting system
applied in current village fund management. The
result of this study is expected to be a guidance for
the rural officers to be able to do a good financial
management starting from recording data until
reporting reliably the data, and on time.
2 THEORETICAL
FRAMEWORKS
2.1 Village Finance Management
According to Regulation of the Minister of Home
Affairs Number 113 of 2014, Village is clearly
defined as a legal community unit with a territorial
boundary authorized to regulate and administer
government affairs, the interests of local communities
based on community initiatives, rights of origin, and
/ or traditional rights recognized and respected in the
system of government of the Unitary State of the
Republic of Indonesia. Furthermore, the management
of village finance is the whole activity involving
planning, implementation, administration, reporting,
and accountability of village finances.
The cycle of village finance management covers
several stages namely planning, action,
administration, reporting, and yearly accountability
report in 1 January until 31th of December. The
Evaluation on Village-Fund Management - A Case Study at the Lembang Sub-districts, West Bandung Regency
543
following diagram describes the cycle of village
finance management:
Figure 1: Village financial management cycle.
Source: Village Finance Management Module,
Pusdiklatwas BPKP
2.2 Village Budget
Under the decision of the Minister of Home Affairs
Regulation No. 113 of 2014 defines a village budget
as a budget which is gained from the State Revenues
and Expenditures Budget for the Village. That fund is
given from the Regional Revenue and Expenditure
Budget that aims to finance some government
implementation programs namely: community
development and empowerment of the village
officers. In addition, the village income and
expenditure are currently included in Regional
Income and Expenditure Budget (APBD which is
considered as an annual financial plan of the village
government in which hereinafter become the
Regional Income and Expenditure Budget (APBD).
2.3 Administration
Administration is one of financial village process that
should be conducted by the village officers.
According to a module of village financial
management provided by the Center of Training and
Education Supervision from Financial and
Development Supervision Institution (Pusdiklatwas
BPKP), administration is explained as an
administrative process that notes all economic
activities in the village and it is documented by a
village treasurer using registration
forms/document/book. Moreover, the administration
of village finance involves administration of village
income, village expenditure and finance, financial
administration document, village treasurer’s report,
and activity report.
2.4 Reporting Village Financial
Management
Reporting financial management includes all aspects
dealing with providing and presenting financial
information. It also explains that process of reporting
village finance management is officially regulated in
the Minister of Home Affairs Regulation No. 113 of
2014 of the fourth section of Article 37 that is
described as follow:
The Head of Village should submit a report
about implementation program of the Village
Income and Expenditure Budget (APBDesa) to
the Regent / Mayor in the form of:
a. First semester report; and
b. end year semester report
The first semester report defined in paragraph
(1) point (a) is referred to a report in the
realization of Village Income and Expenditure
Budget (APBDesa).
The report on the realization of the Village
Income and Expenditure Budget (APBDesa)
program defined in paragraph (1) point (a) must
be submitted no more than the end of July in the
current year.
The report of the end year report as referred in
paragraph (1) point (b) must be submitted no
more than the end of January of the following
year.
3 RESEARCH METHODS
This study employed a descriptive qualitative method
as a research design. Data were collected by using
three instruments, namely interview, observation and
documentation. In order to analyze the collected data,
that method proposed by Milles and Huberman in
Sugiono (2009, p.16) covering data reduction,
presentation, and conclusion. Moreover, this study
was conducted in Lembang District, West Bandung
Regency which involved some respondents, namely:
xxx,
Head of Community Empowerment and Rural
Office of West Bandung Regency,
ICIEBP 2017 - 1st International Conference on Islamic Economics, Business and Philanthropy
544
xxx,
Secretary of Village and Community
Empowerment of West Bandung Regency.
4 RESULTS AND DISCUSSION
4.1 Accountability of Rural Fund
Management
There is a change of organizational structure in
District Government of West Bandung. It was
previously under the authority of the Community
Empowerment and Rural Governance, but now it has
changed its status into an official department. It can
be seen from the statement of the Head of Community
Empowerment and Rural Governance who claim that:
Rural government should understand this
situation, especially for certain regulations which
govern administration process.
Generally, the amount of Fund Allocation in the
village is different one from another. It depends on
the number of people, width of area, level of poverty,
and Geographical Difficulties Indexed according to
data taken from the Indonesia Finance Ministry.
Village Fund Allocation (ADD) comes from
balancing fund after reducing special allocation fund
received by the region in accordingly with the local
government policy. Therefore, the village fund can be
allocated to pay fixed income for village officers.
Out of 16 districts, West Bandung Regency
(KBB) has 165 districts. The government allocates
fund for each village in West Bandung Districts in
2017 for about 2 billion. This fund is obtained
through some sources such as village fund allocation
and shares from tax and region retribution.
Disbursement of fund is applied after the
accountability of year 2016 has been submitted to the
Central Government (BAPPED, 2017).
Region government of West Bandung District
attempts to encourage the village officers to complete
their annual report so that the disbursement of fund
can be done early. To help the village officers, the
region government facilitates them by providing
official consultant to give guidance and assistance in
completing the report as stated by one of respondents
below:
All needs should be noted in the Village Income
and Expenditure Budget (APBDes). It is aimed to
deploy all funds given to be appropriately spent.
Ideally, the process of fundraising is not a big
problem for a village since the central government
has a set of policy for village which consists of some
procedures to collect fund. However, the fundraising
process can be only started after all villages have
submitted their annual reports to the local government
as its requirements.
On the other hand, the verification on empirical
data reveals that in West Bandung District there are
only 16 villages out of 30 villages which have
fulfilled the administrative requirements to write the
Village Income and Expenditure Budget Report
(APBDes). The minimum number of villages which
has submitted their report is due to process of
adjustment experienced by the villages since a current
regulation form Ministry of Village no 22 of 2016.
The regulation decides a priority scale for village
fund expenditure in 2017 as explained by one of the
respondents below:
It may be caused by the new regulation from the
Ministry of Village which changes the structure of
village officers and other policies related to
Human resources. It also happened in other
villages.
The requirements for getting village fund cover
several documents namely sub-district heads, copies
of village regulations on the Village Government
Work Plan (RKPDes) and the Village Income and
Expenditure Budget (APBDes), copies of district
decisions, village administration reports, and village
bank accounts.
4.2 Guidance and Supervision
The West Bandung Regency (KBB) local
government has made a number of efforts to
accelerate stipulate village regulations on the Village
Income and Expenditure Budget (APBDes). One of
the efforts is through launching events for
disbursement of village fund activities. The program
is expected to be able to motivate other villages in
completing their reports. It is stated by one of the
respondents below:
It depends on the Head of Village and readiness
of each village. So, we will not wait for all the
villages to be ready. The launching is considered
as a symbolic in order other villages are
motivated.
Besides conducting launching events, the Village
and Community Empowerment (PMD) office also
Evaluation on Village-Fund Management - A Case Study at the Lembang Sub-districts, West Bandung Regency
545
asks the sub-district heads to form an evaluation team
of the Village Income and Expenditure Budget
(APBDes), because the sub- district is authorized by
the Mayor to evaluate the Village Income and
Expenditure Budget (APBDes). Some points need to
be evaluated are priority scales of village fund,
budgeting plan for the physical activity of the village
fund, and fixed income of village heads, village
officers, and treasurer.
The result of Village Income and Expenditure
Budget (APBDes) is written in a daily report which
provides inputs for making decision related to Village
Income and Expenditure Budget (APBDes). If the
head of sub-district does not launch the decree in 20
days after it is submitted, then the village regulation
related to Village Income and Expenditure Budget
(APBDes) can be decided. However, according to the
interviewee, the total number of fund allocated for all
villages in West Bandung Regency is about 152
billion rupiahs, in 2017. In contrast, the village itself
allocates its fund for only about 118 billion rupiahs.
However, most of villages in West Bandung Regency
receive the village fund in the total of 900 million
rupiahs. Once a village has already disbursed the
village income from the transferred fund then the
village budget raises to be about Rp1,5 - 1,9 billion.
By utilizing that amount of money, every village can
use it for benefits of development, both physically
and non-physically. As the respondent stated below:
A village head as the holder of the financial and
asset power of the village should be able to
optimize the fund for the benefit of the community.
Do not get reports of budget lapses or even
corrupted for personal gain. You see, along with
the increase in the budget in the village, the
demand for transparency is also higher.
In village financial management, the role of the
Head of village is very crucial. Being the Head is not
only being a facilitator but also the one who prepares
plan and must be able to accommodate all the
potentials in the village. Decision in financial
management is not an individual decision but a joint
decision of all village elements.
The Village and Community Empowerment
(PMD) Office of West Bandung Regency has
tightened the use of village fund. This is done to
prevent errors in reporting the financial management
at the end of the year. In accordance with the
regulation of the Village Minister, village fund can
merely be used for development and empowerment
activities. Meanwhile, community and government
programs can spend fund from other sources of
village incomes. In fact, distribution of village fund
from the central government has not touched a single
village in West Bandung Regency until June. Some
findings indicate that there is still discrepancy in
expensing the village fund, as revealed by the
following respondent bellow:
However, from the village submission report it is
found that some villages did not follow the
minister regulation because they build a mosque.
It should be verified by a team from the sub-
district. You see, I've made a letter twice to the
sub-district heads regarding the disbursement of
the village fund.
Other efforts undertaken by the Office of The
Village and Community Empowerment (PMD) to
follow the regulation is through caring out technical
meetings, mentoring, technical guidance related to
the administrative affairs of village fund. However,
the errors are still found in the report written by the
village government. It leads to the disbursement of
village fund being somewhat stagnant. Such efforts
are not intended to delay the disbursement of village
fund. However, the emphasis is placed on village
government that is expected to be more organized in
preparing village funding reports. It is stated by the
respondent (3) as follow:
In 2016, in the budget realization report, there are
some mistakes found in the end year report. Well,
we want to prevent that, let the fund of this village
is used appropriately, although, the mistakes are
sometimes only two or three related to spending
the fund. Therefore, we are now more careful
when making disbursement process.
Four areas of village government affairs are often
suspected to have errors of perception, namely
government, development, empowerment, and
community. For example, building a mosque is
included in community program, but many villages
put it as a development program as stated by the
following respondent (3):
Or for direct benefits, it's not empowerment, but
society. Or for capacity building, it's the entry in
government.
4.3 Village Finance System
The government makes some efforts to optimize the
financial management in the village, the Office of
Community Empowerment and Village of West
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546
Bandung Regency plans to apply the online-based
Village Financial System (Siskeudes).
With the electronic application, the use of village
finance, including those from village fund, can be
more controlled as revealed by the following
respondent (2):
For the financial management of this village, I
want to make it online. So, all villages should
access Siskeudes. However, for the facilities and
infrastructure it needs to be coordinated with the
Office of Communications, Informatics, and
Statistics. With the Siskeudes, all activities
dealing with spending village fund will be
controlled. If there are any delays, too.
As long as the Siskeudes have not yet been
implemented, West Bandung Regency
Administration conducts a technical guidance
(Bimtek) to the village officers, especially for the
village treasurer and the village secretary. The
management activities include the planning,
implementation, administration, reporting, and
accountability of village finances. Those activities
aim to make the documents related to village finances
to be better organized as explained by the following
respondent (2):
You see, human resources in the village are still
limited. There are indeed village heads who are
professors, but there are village heads who only
have high school degree as well ... If planning is
not in accordance with the implementation, it can
lead to irregularities. Hence, Bimtek also must be
comprehensive.
In addition, to optimize Siskeudes, The Village
and Community Empowerment (PMD) also assigned
to improve the role of the village fund consultant.
Each village was accompanied by approximately four
consultants. The village consultant is responsible for
monitoring the accountability of village fund.
Guidance and assistance are done from the
disbursement of the first stage Village Income and
Expenditure Budget (APBdes) to the third stage of the
accountability evaluation. However, in this case, the
Village and Community Empowerment (PMD) do
not have the authority to audit the village financial
management as underlined by respondent (2) below:
The one who has the authority to audit the fund
management is the Inspectorate. When the
Inspectorate conducts regular monitoring, there
will be feedback that should be followed up by the
village government…to prevent repeating the
same mistakes.
Siskeudes application also facilitate the district
government, West Bandung in doing financial control
in the village since an assessment of financial
management of Regency government performance is
influenced by a well-managed fund in the village as
stated by respondent (4) below:
When West Bandung Regency want to achieve
unqualified predicate from the Supreme Audit
Board, the financial administration in the village
must also be well organized…. You see, the
Village Budget and Expenditure (APBDes) is an
additional fund obtained from the Regional
Income and Budget Expenditure (APBD). It is
applied through electronic system of village
financial management so that the financial spend
will be more monitored.
Moreover, a village financial management must
also be transparent. Several ways to make it can be
done by displaying the village fund report in a
billboard.
Besides, West Bandung Regency has a plan to
install a digital screen for any information related to
the management of village fund later.
5 CONCLUSIONS
The result of this study shows that most of village
officers still have limited knowledge and experience
related to planning and developing the village fund
management. The management of fund in most
villages so far has not been conducted as stated in the
regulation. In fact, the findings show that there is no
mechanism priority for expenditure decision making
found in the village development plan. The results
also recommend that it is important to improve the
role of financial consultants who can help the village
to manage the fund more orderly. Therefore, they
understand how to manage the fund optimally started
from planning to accountability process of village
fund allocation management.
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