The Effect of Budget Management Quality and Internal Audit to Financial Statement Quality in the Ministries and Agencies

Abstract

The government's financial statement represents the state's financial management accountability. This research aims to analyze the factors that influence the quality of the state's financial statement using the variables of the state's budget management quality and internal audit. This research observed 52 data that covered the period of 2015-2017 using the multiple linear regression analysis based on the data panel. The variable also uses control variable to analyze data properly such as size and work unit. The results of the research suggest that budget management quality and internal audit have a positive effect on the central government's financial statement quality. This is also supported by correlation test of Pearson. Each ministry and agency should be empowered the budget management quality and internal audit to support the financial statement quality in ministries and agencies. As public sector institution control of budget should be the main concern to create good financial statement quality. This may the first paper which analyzes factors of budget management quality and internal audit to financial statement quality in ministries and agencies. Research in the public sector, especially for the government, is rare as the data may not be available.