Effect Of Regional Complexity, Size Of Regional Government, Economic Growth, Regional Original Revenue, Capital Expenditures And Population On Government Internal Control Weaknesses (Study Of Regency/City Regional Governments In North Sumatra In 2019-2021)

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The Effect of Important Factors on the Weaknesses of the Internal Control of the Regional Government in North Sumatra

Abstract

This study aims to examine the effect of regional complexity, size of regional government, economic growth, regional original revenue, capital expenditure, and population on the weaknesses of government internal control in regencies/cities in North Sumatra. The study uses data from 33 districts/cities in North Sumatra during the 2019-2021 period. The results showed that regional complexity, economic growth, and regional original income had a significant positive influence on the weaknesses of internal control. On the other hand, capital expenditure had a significant negative effect on the weaknesses of internal control. The size of the local government and the population did not have a significant influence on the weaknesses of internal control.

Introduction

Internal control is a crucial aspect of government management, as it ensures the accuracy, completeness, and reliability of financial information. Weaknesses in internal control can lead to errors, fraud, and mismanagement of public funds. In Indonesia, the government has implemented various regulations and guidelines to strengthen internal control in regional governments. However, the effectiveness of these measures is still a concern. This study aims to examine the effect of regional complexity, size of regional government, economic growth, regional original revenue, capital expenditure, and population on the weaknesses of government internal control in regencies/cities in North Sumatra.

Methodology

This study uses a quantitative approach, with data collected from 33 districts/cities in North Sumatra during the 2019-2021 period. The data includes information on regional complexity, size of regional government, economic growth, regional original revenue, capital expenditure, and population. The study uses multiple regression analysis to examine the relationship between these variables and the weaknesses of internal control.

Results

The results of the analysis showed that regional complexity, economic growth, and regional original income had a significant positive influence on the weaknesses of internal control. This means that regions with high complexity, high economic growth, and high regional original revenue are more likely to experience weaknesses in internal control. On the other hand, capital expenditure had a significant negative effect on the weaknesses of internal control. This means that regions with high capital expenditure are less likely to experience weaknesses in internal control. The size of the local government and the population did not have a significant influence on the weaknesses of internal control.

Discussion

The results of this study have several implications for local governments in North Sumatra. Firstly, increasing the complexity of regional government organizations can strengthen the internal control system. This is because complex organizations require more sophisticated systems of control to ensure accuracy and reliability of financial information. Secondly, improving the quality and effectiveness of supervision of economic growth and the use of local revenue is crucial to minimize the risk of internal control weaknesses. Finally, strengthening the internal control system in the field of capital expenditure is essential to minimize potential errors and fraud.

Conclusion

This study contributes to the existing literature on internal control in regional governments. The results of this study highlight the importance of regional complexity, economic growth, and regional original revenue in determining the weaknesses of internal control. The study also emphasizes the need for local governments to strengthen their internal control systems, particularly in the field of capital expenditure. By implementing a stronger internal control system, it is expected to increase accountability and transparency of regional financial management.

Recommendations

Based on the results of this study, the following recommendations are made:

  • Local governments in North Sumatra should increase the complexity of their regional government organizations to strengthen the internal control system.
  • Local governments should improve the quality and effectiveness of supervision of economic growth and the use of local revenue to minimize the risk of internal control weaknesses.
  • Local governments should strengthen the internal control system in the field of capital expenditure to minimize potential errors and fraud.

Limitations

This study has several limitations. Firstly, the study uses data from 33 districts/cities in North Sumatra, which may not be representative of all regional governments in Indonesia. Secondly, the study uses a quantitative approach, which may not capture the nuances of internal control in regional governments. Finally, the study does not examine the impact of internal control weaknesses on regional financial management.

Future Research

This study provides a foundation for future research on internal control in regional governments. Future studies should examine the impact of internal control weaknesses on regional financial management and explore the effectiveness of internal control systems in different regional governments. Additionally, future studies should investigate the role of regional complexity, economic growth, and regional original revenue in determining the weaknesses of internal control.

References

Q: What is the main objective of this study?

A: The main objective of this study is to examine the effect of regional complexity, size of regional government, economic growth, regional original revenue, capital expenditure, and population on the weaknesses of government internal control in regencies/cities in North Sumatra.

Q: What are the key findings of this study?

A: The key findings of this study are that regional complexity, economic growth, and regional original revenue have a significant positive influence on the weaknesses of internal control, while capital expenditure has a significant negative effect on the weaknesses of internal control. The size of the local government and the population do not have a significant influence on the weaknesses of internal control.

Q: What are the implications of this study for local governments in North Sumatra?

A: The implications of this study for local governments in North Sumatra are that they should increase the complexity of their regional government organizations to strengthen the internal control system, improve the quality and effectiveness of supervision of economic growth and the use of local revenue, and strengthen the internal control system in the field of capital expenditure to minimize potential errors and fraud.

Q: What are the limitations of this study?

A: The limitations of this study are that it uses data from 33 districts/cities in North Sumatra, which may not be representative of all regional governments in Indonesia, and it uses a quantitative approach, which may not capture the nuances of internal control in regional governments.

Q: What are the recommendations of this study for future research?

A: The recommendations of this study for future research are that future studies should examine the impact of internal control weaknesses on regional financial management, explore the effectiveness of internal control systems in different regional governments, and investigate the role of regional complexity, economic growth, and regional original revenue in determining the weaknesses of internal control.

Q: What are the practical implications of this study for policymakers and practitioners?

A: The practical implications of this study for policymakers and practitioners are that they should prioritize the strengthening of internal control systems in regional governments, particularly in the field of capital expenditure, and ensure that regional complexity, economic growth, and regional original revenue are managed effectively to minimize the risk of internal control weaknesses.

Q: What are the potential applications of this study in other contexts?

A: The potential applications of this study in other contexts are that it can be used as a model for examining the effect of other factors on internal control weaknesses in other regions or countries, and it can provide insights for policymakers and practitioners on how to strengthen internal control systems in different contexts.

Q: What are the potential limitations of applying this study in other contexts?

A: The potential limitations of applying this study in other contexts are that the study is specific to North Sumatra and may not be generalizable to other regions or countries, and the study uses a quantitative approach, which may not capture the nuances of internal control in different contexts.

Q: What are the potential future directions for research on internal control in regional governments?

A: The potential future directions for research on internal control in regional governments are that future studies should examine the impact of internal control weaknesses on regional financial management, explore the effectiveness of internal control systems in different regional governments, and investigate the role of regional complexity, economic growth, and regional original revenue in determining the weaknesses of internal control.

Q: What are the potential implications of this study for the development of internal control systems in regional governments?

A: The potential implications of this study for the development of internal control systems in regional governments are that it highlights the importance of regional complexity, economic growth, and regional original revenue in determining the weaknesses of internal control, and it emphasizes the need for policymakers and practitioners to prioritize the strengthening of internal control systems in regional governments, particularly in the field of capital expenditure.