The Effect of Local Government Characteristics and the Examination Result of Indonesian Supreme Audit Institution on Economic Growth, with Financial Performance as Intervening Variable in District and City Government of Lampung Province

Abstract

The importance of utilization local potential effectively and efficient resources use, is the motivation of writer to conduct this research.  The aim of this research is to examine empirically on the effect of local government characteristics and the examination result of Indonesian Supreme Audit Institution on economic growth in distric/city/province government of Lampung.  This research uses population of all districts/cities in the Province of Lampung, Indonesia.  The secondary data are tested statistically by using multiple regression to prove the hypothesis.  The result of this research proves that characteristics of local government can affect financial performance especially the ratio of effectiveness, but do not affect the ratio of efficiency and the ratio of autonomy.  The result of audit examination (audit opinion and audit findings) does not affect financial performance.  Then, financial performance does not affect economic growth.  The lack of fund source potential use effectiveness and the lack of fund source use efficiency may cause financial performance has not been able to increase economic growth. Financial performance can be improved through local governance characteristic, but is not affected by audit opinion and audit findings.

Keywords:  characteristics of local government, audit opinion, audit findings, financial performance, economic growth.