THE DETERMINANTS TRANSPARENCY AND ACCESSIBILITY OF INTERNET FINANCIAL REPORTING ON LOCAL GOVERNMENT IN INDONESIA

Abstract

Disclosure of information became a central issue in discussions about good governance. Good governance should be providing assurance to public in getting public information for free. In order to manage public information, the Government of Indonesia has formulated national action plans related to the transparency of the local budget management by issued a minister home affairs’ instruction number 188.52/1797/SJ / 2012. However, until 2014, only 13% website of local government that provides the transparency of Local Budget Management content menu based on minister of home affairs’ instructions number 188.52/1797/SJ /2012. This shows each local government has its own reasons and consideration to implement the instructions of the Minister. This study aims to examine the determinants of transparency and accessibility of the Internet financial reporting on the local government website which consists of financial conditions, dependency of local government, and the ratio of capital expenditure. Tests conducted on 341 local governments representing around 67% of the City and District governments in Indonesia. This study using multiple linear regression method as a test tool. The results showed that the average disclosure of financial information on government sites are relatively low that is only reached 40.85%. Financial condition proved positive and significant impact on the transparency and accessibility of the Internet financial reporting. Meanwhile, dependency of local government and ratios of capital expenditure significant negative effect on the transparency and accessibility of the Internet financial reporting. The implications of this study lead to the viewpoint of signaling theory, where the transparency and accessibility of the Internet financial reporting is one way that government done to reduce the asymmetry of information and give a good signal to the public. Local government are expected to improve accountability and transparency through disclosure of financial information on its website. Because of that, requires more specific regulation of the central government related disclosure requirements-based financial information sites. This is so the public can monitor the financial performance of local authorities directly and financial information among local governments can be compare.