The Comparison of Local Government Financial Health

Abstract

Measurement of the financial health of local governments is essential to assess the sustainability of services for the community. This study aims to compare the financial health of local governments using three approaches. The data used are BPK audited financial reports for Regency and City Governments in Jambi Province and data from BPS Jambi Province. The analytical tool used is a different test with Kruskal Wallis. The results showed that all hypotheses were proven, meaning that there were differences in the financial health condition of the district and city governments in Jambi Province for the three approaches used. Jambi City is the area with the healthiest financial situation for the FTMS model. Regencies and cities in Jambi Province with the Kloha model are in a healthy position. No region is in a place of fiscal emergency. All areas also do not face problems for the solvency-financial flexibility model. Overall, the financial condition of districts and cities in Jambi province is in a healthy financial situation. This research has implications for local governments in making monetary policies, especially related to optimizing asset management. In addition, the financial flexibility index is also fundamental to be considered by regions that have the potential for extraordinary events. Further researchers can develop other research methods such as qualitative and add research variables to obtain more complete results.

Keywords: Local Government Health, Revenue, Expenditure, Financial Report

DOI: 10.7176/RJFA/12-14-07

Publication date:July 31^st 2021