Timeliness of Local Government Budgeting in Indonesia : Do Internal Audit Function and Political Factors Matter?

Sutaryo, - and Salawati, Sahari and Shaharudin, Jakpar and Sophee Sulong, Balia (2022) Timeliness of Local Government Budgeting in Indonesia : Do Internal Audit Function and Political Factors Matter? International Journal of Economics and Management, 16 (1). pp. 65-81. ISSN 2600-9390

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Abstract

Timeliness of budgeting plays a significant role in government financial management. We investigate the determinants of the timeliness of local government (LG) budgeting from the perspectives of internal audit and political supervision of Indonesian LGs from 2010 to 2018. LG internal audit function (IAF) characteristics consist of capability, maturity, and expertise. Meanwhile, the political factor is represented by the coalition. The study findings demonstrate that IAF capability, maturity, expertise, and legislative coalition positively affect LG’s budgeting timeliness. These characteristics play a role in the supervision of the budget preparation process. The results of the robustness test indicate that all the effects are consistent. Our study recommends that the Indonesian Financial and Development Supervisory Agency (BPKP) needs to develop the LG IAF continuously so that its supervisory and consulting role can be improved for better budgeting and budget implementation. Due to the limited studies on budgeting timeliness, especially in Indonesia, this research contributes to the literature as one of the novel studies to examine the timeliness of LG budgeting from the perspective of IAF and political factors.

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