Analysis of the Financial Condition West Java Provincial Government, Indonesia

https://doi.org/10.22146/jkap.37046

Sofik Handoyo(1*), Syaiful Anas(2), Ivan Yudianto(3)

(1) Universitas Padjadjaran
(2) Universitas Padjajaran
(3) Universitas Padjajaran
(*) Corresponding Author

Abstract


The purpose of the study is to assess the financial condition of 18 districts and 9 municipals in West Java Province. Assessing the financial condition was based on a 10 (ten) point financial ratio model developed by Kenneth Brown. Data on financial ratios for the 2013-2016 period was obtained from audited financial reports published by the west java provincial supreme auditor. Analysis of financial ratios was based on descriptive statistics and conducting Independent t-Test analysis. Research results showed that both district and municipal governments in West Java Province have a good financial condition. However, the performance of financial condition score for district governments shows a downward trend. In general, there is significant difference in the financial condition of district governments and municipal governments. In general, municipal governments showed better financial condition than district governments.


Keywords


district; financial condition; financial ratio; local government; municipal

Full Text:

PDF


References

Afandi, M. N. & Sianipar. R. (2016). Analisis Kemampuan Keuangan Daerah dalam Menunjang Pelaksanaan Otonomi Daerah Di Kabupaten Labuhanbatu Selatan. Jurnal Wacana Kinerja. 19(2). 1–22.

Arif, A.. & Maksum, I. R. (2017). Functional Decentralization Construct in Decentralization Policy in Indonesia ( A study of Irrigation Education and Free Trade Sectors ). Jurnal Kebijakan Dan Administrasi Publik. 21(1). 59–81.

Barika. (2012). Analisis Ketimpangan Pembangunan Wilayah Kabupaten/Kota di Propinsi Bengkulu Tahun 2005-2009. Jurnal Ekonomi and Perencanaan Pembangunan. 4(3). 1–11.

Beer-tóth, K. (2009). Local Financial Autonomy in Theory and Practice The Impact of Fiscal Decentralisation in Hungary. The University of Fribourg Switzerland.

Boys, C. Du. Padovani, E.. Orelli, R.. Financial. A.. Of. H.. & Boys. C. D. U. (2014). Assessing Financial Health of Local Governments: Going Beyond Accounting Standards. In EGPA Annual Meeting (pp. 1–30). Speyer: EGPA Organization.

Brown, K. W. (1993). The 10-Point test of Financial Condition: Toward an Easy-to-Use Assessment Tool for Smaller Cities. Government Finance Review. 12(5). 21–26.

Casal, R. C.. Buch Gómez, E. J.. & Liste, A. V. (2014). Financial situation and political parties in local governments: Empirical evidence in the Spanish municipalities. Investigaciones Europeas de Dirección y Economía de La Empresa. 20(3). 110–121. https://doi.org/10.1016/j.iedee.2013.11.001

Cohen, S.. Doumpos, M.. Neofyto, E.. & Zopounidis, C. (2012). Assessing financial distress where bankruptcy is not an option: An alternative approach for local municipalities. European Journal of Operational Research. 218(1). 270–279. https://doi.org/10.1016/j.ejor.2011.10.021

Dinapoli, T. P. (2008). Financial Condition Analysis. New York: Office of the New York State Comptroller.

Doumpos, M.. & Cohen, S. (2014). Applying data envelopment analysis on accounting data to assess and optimize the efficiency of Greek local governments. Omega (United Kingdom). 46(1). 74–85. https://doi.org/10.1016/j.omega.2014.02.004

Halim, A.. Moi, M. O. V.. & Baswir, R. (2016). Fiscal Distress of Local Government: Study on Regencies and Cities in The Provinces of East Nusa Tenggara. Maluku and North Maluku. Dinamika Akuntansi. 8(2). 151–158.

Hasthoro, H. A.. Sarnowo, H.. & Nurwiyanta. (2016). Proceedings-International Conference of Banking. Accounting. Management and Economics & Call For Papers (ICOBAME). October 26-27. 2016. Magelang. Indonesia. In International Conference of Banking. Accounting. Management and Economics (pp. 478–484).

Hrůza, F. (2015). Public sector organization financial ratios’ recent development as a matter of financial innovation. Investment Management and Financial Innovations. 12(2). 88–95.

Huang, C.-J.. & Ho, Y.-H. (2013). Analyzing the Fiscal Health of Local Governments in Taiwan: Evidence from Quantile Analysis. International Journal of Economics and Management Engineering. 7(7). 68–72.

Indonesia Act 15/2004. Pemeriksaan Pengelolaan dan tanggung Jawab Keuangan Negara (2004). Jakarta.

Indonesia Government Regulation 71/2010. Standar Akuntansi Pemerintahan (2010). Jakarta.

Kaldani, D.. Carter, A.. Kaye-zwiebel, E.. Aroskar, J.. Ang, K.. Ravi, M.. & Liu, J. (2016). Developing a Framework for Ranking State and Municipal Governments on Fiscal Sustainability. European Journal of Sustainable Development. 6(3). 285–296. https://doi.org/10.14207/ejsd.2016.v5n3p285

Kim, S.. & Ryu, S. (2017). Strategic public management for financial condition: Focus on fund balances of school districts. Social Science Journal. 54(3). 249–260. https://doi.org/10.1016/j.soscij.2017.02.002

Kloha, P.. Weissert, C. S.. Kleine, R.. Kloha, P.. Weissert, C. S.. & Kleine, R. (2005). Developing and Testing a Composite Model to Predict Local Fiscal Distress. American Society for Public Adminstration. 65(3). 313–323.

Maher, C. S.. & Nollenberger, K. (2009). Revisiting Kenneth Brown’s “10-Point Test.” Government Finance Review. 12(3). 61–66.

Maizunati, N. A. (2017). Analisis Kondisi Keuangan Pemerintah Daerah Kota Magelang dalam Klaster Kota di Jawa-Bali. Jurnal Riset Akutansi Keuangan. 2(2). 140–161.

McDonald, B. (2017). Measuring the Fiscal Health of Municipalities (Lincoln Institute of Land Policy. North Carolina State University No. Working Paper 17BM1). North Carolina.

Natrini, N. D.. & Ritonga, I. T. (2017). Design and Analysis of Financial Condition Local Government Java and Bali ( 2013-2014 ). In Y. Y. et al. Abdul Talib (Ed.). 17th Annual Conference of the Asian Academic Accounting Association (Vol. 34. pp. 1–10). Kuching: EDP Sciences. https://doi.org/10.1051/shsconf/20173403003

Nurpita, A.. & Nastiti, A. A. (2016). The Analysis of Development Disparities Inter Districts/City in Special Region of Yogyakarta (DIY) Province 2003 - 2013. Jurnal Kebijakan Dan Administrasi Publik. 20(1). 23–37.

Nursetyautami, A. F. (2013). Examining the Association between Local Government Financial Indicators and Public Service. In 8th Annual London Business Research Conference (pp. 1–19). London: Imperial College.

Nurtanzila, L.. & Kumorotomo, W. (2015). Faktor-Faktor yang Memengaruhi Penerimaan PBB P2 di Kota Yogyakarta Pasca Pelimpahan Kewenangan Pengelolaan PBB P2 oleh Pusat Kepada Daerah. Jurnal Kebijakan & Administrasi Publik. 19(2). 157–169.

Oulasvirta, L.. & Turala, M. (2009). Financial autonomy and consistency of central government policy towards local governments. International Review of Administrative Sciences. 75(2). 311–332. https://doi.org/10.1177/0020852309104178

Padovani, E.. Rossi, F. M.. & Orelli, R. L. (2010). The Use of Financial Indicators To Determine Financial Health of Italian Municipalities. In EGPA 2010 Conference – Study Group 5 “Regional and Local Government” (pp. 8–10). Toulouse: EGPA Organization.

Padovani. E.. & Scorsone. E. (2011). Measuring Financial Health of Local Governments A Comparative Framework. In A. Bergmann (Ed.). Yearbook of Swiss Administrative Sciences (First. pp. 93–104). Zurich: Ubiquity Press.

Paulais, T. (2009). Local Governments and the Financial Crisis: An Analysis. The Cities Alliance. Paris: Les Presses de Sciences.

Ramsey, T. K. (2013). Measuring and Evaluating The Financial Condition of Local Government. California State University. California. USA.

Ritonga, I. T. (2014a). Developing a Measure of Local Government’s Financial Condition. Journal of Indonesian Economy and Business. 29(2). 142–164.

Ritonga, I. T. (2014b). Modelling Local Government Financial Conditions In Indonesia. Victoria University. Melbourne. Australia.

Ritonga, I. T.. Clark. C.. & Wickremasinghe. G. (2012). Assessing financial condition of local government in Indonesia: an exploration. Public and Municipal Finance. 1(2). 37–49.

Ritonga, I. T.. Clark. C.. & Wickremasinghe. G. (2013). Factors Affecting Financial Condition of Local Government in Indonesia. In Seventh Asia Pacific Interdisciplinary Research in Accounting Conference (pp. 1–20). Kobe: Apira Organization.

Rodríguez Bolívar, M. P.. Navarro Galera. A.. Alcaide Muñoz. L.. & López Subirés. M. D. (2016). Risk Factors and Drivers of Financial Sustainability in Local Government: An Empirical Study. Local Government Studies. 42(1). 29–51. https://doi.org/10.1080/03003930.2015.1061506

Rusmin, R.. Astami, E. W.. & Scully, G. (2014). Local Government Units in Indonesia: Demographic Attributes and Differences in Financial Condition. Australasian Accounting. Business and Finance Journal. 8(82). 88–109. https://doi.org/10.14453/aabfj.v8i2.7

Sekaran, U.. & Bougie, R. (2016). Research methods for business. Wiley (seventh). West Sussex: John Wiley & Sons Ltd. https://doi.org/10.13140/RG.2.1.1419.3126

Sijabat, R. (2016). Fiscal Decentralisation and Sustainable Development : Lesson from Local Government Levels in Indonesia. OIDA International Journal of Sustainable Development. 9(3). 39–76.

Slack, E. (2017). How Much Local Fiscal Autonomy Do Cities Have? A Comparison of Eight Cities around the World. IMFG Perspectives. 19(2). 14–14. https://doi.org/10.1126/science.344.6179.14-b

The Civic Federation. (2013). Indicators of Financial Condition : A Comparison of the City of Chicago to 12 Other U . S . Chicago: The Civic Federation.

The World Bank. (2005). Indonesia: Local Government Financial Management A Measurement Framework. Jakarta: The World Bank Organization.



DOI: https://doi.org/10.22146/jkap.37046

Article Metrics

Abstract views : 4908 | views : 3545

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Copyright (c) 2019 JKAP (Jurnal Kebijakan dan Administrasi Publik)

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.