The Effect of Understanding of Government Accounting Standard and Internal Control System on Quality of Finacial Statement from Local Government through Review Process of Financial Statement by Inspectorate Agency (A Study at Inspectorate Agencies in the

Abstract

This study is aimed to examine the effect of understanding of the government accounting standard and internal control system on quality of financial statement from local government through review process of financial statement by inspectorate. The population of this study are officers at inspectorate doing review of government financial statement from districts and municipals in Aceh province. Total population are 160 respondents and sample are 72 respondents in 18 districts and 5 municipals. The data source is the primary data obtained from the respondents by distributing questionnaires to respondents. Analysis method used is path analysis. Results of this study show that (1) understanding of the government accounting standard, both directly and indirectly through review process of financial statement by inspectorate, has a significant effect on quality of financial statement from districts and municipals in Aceh province. (2) understanding of the internal control system directly does not have significant effect on quality of financial statement, but it has significant effect on review process of financial statement by inspectorate, and then review process of financial statement by inspectorate has significant effect on quality of financial statement. The results also can be described that (1) review process of financial statement by inspectorate can mediate the effect of understanding of government accounting standard and internal control system on quality of financial statement (2) the effect of understanding of the government accounting standard on quality of financial statement is partially mediation, whereas the effect of understanding of internal control system on quality of financial statement is fully mediation.

Keywords: Government Accounting Standard, Internal Control System, Review Process of Financial Statement, Quality of Financial Statement.