Effect of Competency, Clarity of Budget Objectives and

Effectiveness of Internal Control on Accountability and

Transparency in Village Revenue and Expenditure

Budget Management in Bengkalis Regency

Suharyono

Politeknik Negeri Bengkalis, Riau, Indonesia

Abstract. The purpose of this study was to determine and analyze the effect of

Competence Influence, Clarity of Budget Goals and Effectiveness of Internal

Control on Accountability and Transparency in Village Budgeting (APBDesa)

Management. The extent of the application of the Competency Factor, Clarity of

Budget Objectives and Internal Control Systems using the Accountability

Framework and to find out the constraints faced by village government officials

in increasing Accountability and Transparency in APBDes Management. This

research uses explanatory research. The research location is Bengkalis Regency

with a population of 136, while the sample is 102 with a random sampling

technique. The analysis technique used is Multiple Linear Regression, hypothesis

testing uses significance level α = 0.05 with the help of SPSS version 22. The

results of hypothesis testing analysis show that the apparatus Competency

variable does not have a significant effect on Accountability and Transparency

in APBDesa Management. For the variable Clarity of the Target Budget has a

positive influence on Accountability and Transparency in the Management of

APBDesa, while the variable Internal Control System has a positive influence on

Accountability and Transparency in APBDesa Management.

Keywords: Competence · Budget Goals · Internal Control · Accountability ·

Transparency

1 Introduction

Based on Law of The Republic of Indonesia Number 6 of 2014, villages are owned by

communities which have territorial boundaries approved and regulated by the

government, community interests based on community initiatives, original rights,

and/or traditional rights of the Unitary State of the Republic of Indonesia [18]. The

village as an autonomous government gets special rights, one of which is related to the

management of the APBDesa. The village revenue and expenditure budget is the

responsibility of the village management holder to provide information on all village

activities and activities to the village community on the management of village funds

and implementation in the form of program plans financed with village money. In the

APBDesa it contains village revenue, expenditure and financing.

The policy on allocating Village Funds is contained in Law No. 6 of 2014. This

means that every year villages throughout Indonesia receive funding from the central

Suharyono, .

Effect of Competency, Clarity of Budget Objectives and Effectiveness of Internal Control on Accountability and Transparency in Village Revenue and Expenditure Budget Management in

Bengkalis Regency.

DOI: 10.5220/0009588400002900

In Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting (MIICEMA 2019), pages 69-78

ISBN: 978-989-758-582-1; ISSN: 2655-9064

government. In practice, the implementation of Law No. 6 which was passed in 2014

still has many problems. Among other things, the amount of the budget stipulated in

the law and the issue of disbursement of funds have not yet been fulfilled. Review of

the Indonesian Parliament's State Financial Accountability Agency (BAKN) on the

results of the examination of the Indonesian Supreme Audit Board (BPK) on the

Development and Supervision of Village Fund Management (DD) activities for the

2015 fiscal year to 2018 in 80 districts, 5 cities and 1,006 districts in 33 provinces

throughout Indonesia found that there were some major problems in managing Village

Funds, both in the guidance and supervision aspects (http://www.dpr.go.id).

Problems in the aspect of fostering the management of Village Funds include the

absence of regulations for the determination of village government accounting

standards and the absence of regulations for the administration and fostering of village

officials that are complete, up-to-date and in accordance with higher regulations. In

addition, Village Fund planning has also not been carried out based on mapping of

village problems and needs. The implementation of the program development activities

have not been fully aligned with the priority scale of the use of the Village Fund.

Problems in the aspects of oversight of Village Fund management include the planning

of supervision by regional governments that have not yet considered risks. This can be

seen from the fact that there are still local governments that do not have plans and

mapping problems in making surveillance activities.

In the case of managing village budget funds, the Village Heads must be more

careful so that no maladministration occurs. But it also did not make the village heads

reluctant to release the budget sourced from the central government. Maladministration

is behavior or actions against the law, exceeding the authority, using the authority for

other purposes than the purpose of the authority, including negligence or neglect of

legal obligations in the administration of public services performed by public services

State Officials and governments that cause material and / or immaterial losses to the

public and / or individuals.

Based on the Ombudsman report, many community reports related to the village,

most of them concerned with the management of village funds. The increase in

community reports related to village funds is caused by, among others, allegations of

non-transparency, mark-up, fiction, projects that are not in accordance with needs, are

not in accordance with the rules in the management of village funds by unscrupulous

village heads. The existence of this problem has the potential to cause a crisis of

confidence in the village head. This was then reported by villagers to the Ombudsman

(https://www.ombudsman.go.id).

Accountability becomes a full apparatus control over everything that has been done

in a government, so that the role of government as an agent becomes an important factor

in accountability of the performance of government to the principal or the people. To

support the success of accountability and transparency in a government, many factors

can influence both aspects.

2 Theoretical Review

According to Halim and Abdullah [4], in the agency relationship, there are two parties

who make agreement or contract, the one who provides authority or power

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

(principal) and the one who receive the authority (agent). Agency relationship in the

government can be showed in the relationship between the people (as the principal)

and the government (as the agent). The relationship is a result of contract between

the people who utilize the government to provide services needed by the people.

Halim and Abdullah [4] mention that in the government, law is the implicit form of

contract among the executive, legislative and public.

According to Anjarwati [2], there is a conﬂict of interest or clash of interest

between principal and agent. The conﬂict often time poses ﬁnancial loss for many

parties, thus, both internal and external mechanism are needed to ﬁx it. The main

problem in the relationship between agent and principal is the existence of information

asymmetry. To solve this problem, a good accountability is needed. According to

Mardiasmo [7], public accountability is the responsibility of agent to provide the

accountability, present report and disclose all activities under their responsibility to

the principal who has a right to ask for the accountability.

2.1 Competencies of the Government Apparatus

Cheng et al. [3] states that the competencies of the government apparatus also influence

the accountability and transparency of the village government. This is supported by

findings presented by the Indonesia Action-Corruption Forum (IACF 2010) which

mentions the potential misuse of Village Funds due to the lack of knowledge possessed

by the village government apparatus and the internal control system.

An equally important factor is the control system in government, because the

existence of a control system can affect the internal decision making of the village

government and can have implications for the accountability and transparency of the

village government. Furthermore, Kalbers and Forgaty [5] add that the existence of

internal control in a government also influences the level of public accountability and

transparency. The leadership in an organization has a form of control so that in the

planning system (village budgeting) the resulting output has a beneficial contribution

to the village community.

On the other hand, based on PP No. 60 of 2014, the village government will be

given funds to be managed to finance the implementation, construction implementation,

community development and community empowerment [12]. When referring to PP No.

60 of 2014 it is quite clear that the allocation of funds given to each village is very

large, which is calculated based on the number of villagers, the number of village areas,

the village poverty rate and the level of geographical difficulties. This fund is large

enough to be used by the village government to improve the welfare of residents in their

respective villages.

2.2 Clarity of Budget Objectives

The budget becomes very important and relevant in village government, because the

budget is related to performance Government that gives commitment to the community.

The budget is a political document or contract between the government and the village

community, for the foreseeable future (Mardiasmo, 2018).

Effect of Competency, Clarity of Budget Objectives and Effectiveness of Internal Control on Accountability and Transparency in Village

Revenue and Expenditure Budget Management in Bengkalis Regency

Kenis (1979) in Putra [14] said that there are several characteristics of the budgeting

system. One of the characteristics of a budget is the clarity of budget targets. In the

context of village government, budget targets are included in the Village Medium Term

Development Plan (RPJMDesa) and the Village Government Work Plan (RKPDesa).

Primayoni [8] in his research on the effect of budget target and the effectiveness of

internal control against the accountability of the performance of the government

institution revealed that both partially and simultaneously the clarity of the budget

target and the effectiveness of internal control have a positive effect on the performance

accountability of the government of Klungklung Regency. With the clarity of specific,

clear budget targets and the effectiveness of good internal controls, the accountability

of performance of government agencies will be even better. An effective local budget

must be a benchmark for achieving the expected performance, so regional budget

planning must be able to clearly describe performance targets. Clarity of budget

objectives reflects the extent to which budget targets are stated specifically, clearly, and

can be understood by those responsible for developing and implementing them.

2.3 Effectiveness of Internal Control

According to Government Regulation number 8 of 2006 concerning financial reporting

and performance of government agencies, the internal control system is a process that

is influenced by management created to provide adequate confidence in achieving

effectiveness, efficiency, adherence to applicable laws and regulations, and the

reliability of the presentation of Government financial statements [11]. Effective

internal control in a government will be able to create a good overall process of

activities, so that it will provide adequate confidence for the creation of the security of

State assets and the reliability of government financial statements, in this case will have

a positive impact on the accountability of the performance of government agencies.

The Purpose of Government Internal Control System According to PP No. 60 of

2008 is to provide adequate confidence regarding; effective and efficient activities,

reliable financial reports, securing state assets and compliance with laws and

regulations [10]. As for the elements of the Government Internal Control System,

namely Environmental Control, Risk Assessment, control activities, information and

communication and Internal Control Monitoring.

2.4 Transparency and Accountability

According to the Presidential Regulation No. 29 of 2014 regarding Government

Agency Performance Accountability System, performance is the output or result of

activities/ programs that have been or will be achieved related to the use of budget with

measurable quantity and quality [13]. Performance accountability is the manifestation

of government agency responsibility for the success or failure in performing the

programs and activities to achieve measurable organizational mission, with the

predetermined targets stated in the periodical performance report.

Transparency means the openness of the government in providing information

related to public resource management activities to those who need information. The

government is obliged to provide financial information and other information that will

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

be used for decision making by interested parties. Transparency, accountability and

fairness are separate attributes. However, the first two terms are not independent,

because the implementation of accountability requires transparency [16]. Meanwhile,

Suharyanto states that the essence of democracy is accountability, while the essence of

accountability is transparency [17].

2.5 Hypothesis

Based on the description in the Literature Review section, the following is the

formulation of a hypothesis.

H1: Competencies of the government apparatus has a positive effect on

transparency and accountability in village budget management.

H2: Clarity of budget objectives has a positive effect on transparency and

accountability in village budget management.

H3: Effectiveness of internal control positively influences transparency and

accountability in village budget management.

H4: Competencies of the government apparatus, clarity of budget objectives, and

effectiveness of internal control have a positive effect on transparency and

accountability in the management of the village budget.

3 Research Method

This study is a quantitative study performed using scientiﬁc method to build hypothesis

and proved it. The data analyzed in this study is secondary data. The variables used in

this study consisted of the dependent variable and the independent variable. The

dependent variable in this study is transparency and accountability of village budget

management (Y). The independent variables in this study are Competencies of the

government apparatus (X1), clarity of budget objectives (X2), and effectiveness of

internal control (X3). The measurement of variables uses a Likert scale wherein the

respondent states the level of agreement or disagreement regarding the existence of

statements regarding behavior, objects, or events. Answers will be given a score: Score

1 = strongly disagree, Score 2 = disagree, Score 3 = neutral, Score 4 = agree, Score 5 =

strongly agree.

In this study we determined the object of research in all village governments in

Bengkalis Regency. Number of villages in Bengkalis Regency. 136 villages. Using the

Slovin formula, the number of samples in this study were 102 villages. Sampling was

done using random sampling techniques. We employ multiple linear regression to test

the effect of independent variables on the dependent variable. The data is processed

using SPSS 22.

Effect of Competency, Clarity of Budget Objectives and Effectiveness of Internal Control on Accountability and Transparency in Village

Revenue and Expenditure Budget Management in Bengkalis Regency

4 Result

4.1 Classic Assumption Test

Following is the hypothesis testing procedure. Multicollinearity test results can be seen

in the following table 1.

Table 1. Multicollinearity test results.

Mode

Col

ineari

Statis

ics

Tole

ance VIF

(Constant)

.713

1.402

Based on the test results in table 1, because the VIF value for all variables has a

value smaller than 5, it can be concluded that there are no multicollinearity symptoms

between the independent variables. While the results of heteroskesdasitas testing in this

study can be seen in Figure 1.

Fig. 1. Scatterplot.

Based on the scatterplot diagram above, visible points spread randomly and

scattered both below and above the 0-axis Y. This shows that there is no

heterokesdasticity of the regression model, so the regression model is feasible to predict

transparency and accountability in the APBDesa management based on the input of

independent variables. Normality test is carried out to determine whether the data is

normally distributed or not. The results of the normality test are presented in Table 2.

Table 2. The result of normality test.

Model Si

n Descri

tions

X1 .64 Normal

X2 .90 Normal

X3 .71 Normal

Y .54 Normal

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

From the results of table 2 above it can be explained that the Kolmogorov-Smirnov

values above can be concluded that the data has a normal distribution because the value

of Kolmogorov-Smirnov has a significant level greater than 5%.

4.2 Hypothesis Test

Hypothesis test results partially carried out referring to the t test. The t test is also called

the individual significance test. This test shows how far the effect of partially

independent variables on the dependent variable. Test results on the SPSS 22.0 output

can be seen in table 3.

Table 3. The result of t test.

Mode

l Unstandardized

Coefficients

Standardized

Coefficients

t Sig

B Std.

Erro

Beta

(Constant)

7.514

.148

.195

.679

2.893

.242

.148

.129

.143

.166

.662

.739

1.225

2.541

5.266

.018

.228

.000

Based on table 3, it can be seen hypothesis test 1 that the competencies of the

government apparatus variable has a t-test of 1.225 with a significance level of 0.228

that is greater than 0.05, meaning that it is not significant, where the value of t-count

(2.206) is greater from the t-table value; As for the t-table value (significance of 5%

with (df) = 102-3-1 = 98) is 1.985. Not significant here means the hypothesis is rejected.

This means that the competencies of the government apparatus do not significantly

influence the transparency and accountability of village budget management. Thus, the

first hypothesis stating the presentation of the competencies of the government

apparatus has a significant effect on the transparency and accountability of village

budget management is rejected. The results of this study indicate that the competencies

of the government apparatus do not have implications for increasing transparency and

accountability in village budget management. This supports the research conducted by

Widyatama [19].

Based on table 3, it can be seen the results of hypothesis 2 test that the variable

clarity of budget objectives has a t-count of 2.541 with a significant level of 0,000 that

is smaller than 0.05, meaning that it is significant, where the value of t-count (2.541) is

greater than the value of t -table. The t-table value (significance of 5% with (df) = 102-

3-1 = 98) is 1,985. Significant here means the hypothesis is accepted. This means that

the budgetary objectives have a significant effect on the transparency and

accountability of village budget management. Thus, the second hypothesis which states

the clarity of budget objectives has a significant effect on transparency and

accountability in the management of the APBDesa proven and accepted. The results of

this study are in line with research conducted by Kusumaningrum [6]. In this study

shows that the clarity of budget targets has a significant positive effect on the

accountability of the performance of the Central Java Province government agencies.

This study also supports research conducted by Putra [13] which shows that the clarity

Effect of Competency, Clarity of Budget Objectives and Effectiveness of Internal Control on Accountability and Transparency in Village

Revenue and Expenditure Budget Management in Bengkalis Regency

of budget targets has a significant positive effect on managerial performance of the

work unit in the Padang City area.

Based on table 3, it can be seen the results of hypothesis 3 test that the effectiveness

of internal control variable has a t-test of 5.266 with a significant level of 0.000 which

is smaller than 0.05, meaning that it is significant, where the value of t-count (5.266) is

greater than the value t-table. The t-table value (significance of 5% with (df) = 102-3-

1 = 98) is 1,985. Significant here means the hypothesis is accepted. This means that the

effectiveness of internal control has a significant effect on transparency and

accountability in village budget management. Thus, the third hypothesis stating the

effectiveness of internal control has a significant effect on transparency and

accountability in the management of the APBDesa proven and accepted. The results of

this study are in line with research conducted by Tresnawati [18], which shows that the

effectiveness of internal control has a positive effect on the performance of the Bandung

City Revenue Service. The results of this study also support Primayoni [8] research

which states that both partially and simultaneously the Clarity of Budget Objectives

and the Effectiveness of Internal Control have a positive effect on the Performance

Accountability of the Klungklung Regency Government Agencies.

To support hypothesis test 4, the following table 4 shows the results.

Table 4. The result of F test.

Model Sum of

Squares

df Mean

Square

F Sig

Regression

Residual

Tota

56.437

40.338

96.775

102

28.218

1.090

25.883 .000

Based on table 4, it can be seen that the test results show an F-count of 25,883 with

a significance level of 0,000 that is smaller than 0.05. Where the calculated F-value

(25,883) is greater than the F-table value; As for the F-table value (significance of 5%

with df 1= 4-1 = 3, and df 2 = 102-3-1 = 98) is equal 2,696, then Ha is accepted. Means

competencies of the government apparatus, clarity of budget objectives, and the

effectiveness of internal control together or simultaneously have a positive effect on

transparency and accountability in the management of the village budget. Thus, the

third hypothesis stating the competencies of the government apparatus, clarity of budget

objectives, and the effectiveness of internal control together or simultaneously has a

positive effect on transparency and accountability in the management of the APBDesa

proven and accepted. The results of this research support the research conducted by

Suharyanto [17] dan Mujiono [8].

5 Conclusion

Based on the results of data analysis and hypothesis testing described in the previous

chapter, the authors draw the following conclusions:

1. Competencies of the government apparatust does not have a positive and

significant effect on transparency and accountability in village budget

management. This is supported by the t-value of 1.225 at a significance level of

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

0.228 which is greater than 0.05, which means that the t-value is smaller than

the t-table value of 1.225 <1.985.

2. Clarity of budget objectives has a positive and significant effect on transparency

and accountability in village budget management. This is supported by the t-

count value of 2.541 at a significance level of 0,000 which is smaller than 0.05

which means that the t-count value is greater than the t-table value of 2,541>

1,985.

3. Effectiveness of internal control has a positive and significant effect on

transparency and accountability in village budget management. This is

supported by the t-test value of 5.266 at a significance level of 0.000 which is

smaller than 0.05 which means that the t-value is greater than the t-table value

of 5.266> 1.985.

4. Competencies of the government apparatus, clarity of budget objectives, and the

effectiveness of internal control together or simultaneously have a positive effect

on transparency and accountability in the management of the village budget.

This is supported by the F-calculated value of 25.883 at a significance level of

0.000 which is smaller than 0.05, which means that the F-calculated value is

greater than the F-table value of 25.883> 2.696

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