THE IMPACT OF LOCAL GOVERNMENTS CHARACTERISTICS TO AUDIT QUALITY INDONESIA PERSPECTIVES

Abstract

This research exposes the impacts of local government characteristics, i.e.: size, dependency level, population, welfare level, local government type, and BPKP assistance toward audit quality on financial reporting of local governments. Audit quality will be reviewed from audit opinion side and audit findings side (internal control weaknesses, compliance deficiencies, and deviation level) of 297 local governments in Indonesia from 2008 to 2009. This research finds that audit quality has a positive correlation with audit opinion. In contrast, it has negative correlation with audit findings. From audit opinion side, population and local government type have positive impact on audit quality. On the contrary, size and BPKP assistance have negative impact on audit quality. In terms of compliance deficiency, number of population gives positive impact on audit quality. Meanwhile, from deviation level side, dependency, population and welfare level have positive impact on audit quality. This research does not find the correlation between local government characteristics toward internal control weaknesses.