SANTECEDENTS OF REVIEW QUALITY ON THE QUALITY OF REGIONAL GOVERNMENT FINANCIAL REPORTS IN NORTH SULAWESI PROVINCE

Abstract

This research aims to explore the factors that influence the quality of local government financial reports in North Sulawesi Province. The background to this research focuses on the importance of good governance to increase transparency and accountability in regional financial management. The quality of financial reports is the key to accountability for financial performance to the public. This research has novelty in empirical testing regarding the mediating role of review quality in the relationship between organizational compliance, competence, integrity and auditor commitment and the quality of financial reports. A research gap was identified related to the lack of in-depth studies regarding the specific mechanisms of how these factors influence the quality of financial reports in the Indonesian public sector. The aim of this research is to fill this gap by using a quantitative method based on Structural Equation Modeling-Partial Least Square (SEM-PLS). The research population consisted of 220 internal auditors who worked at Provincial, City and Regency Inspectorates in North Sulawesi. The sampling method used is the saturated sampling method, where the entire population is used as the research sample. Primary data was collected through a questionnaire with a 5 point Likert scale. The research instrument was tested for validity and reliability through the Pearson validity test and Cronbach's Alpha reliability test. Data analysis was carried out using SEM-PLS with SmartPLS software.

The research results show that organizational obedience, competence, integrity have a significant effect on the quality of financial reports through the quality of reviews, except that auditor commitment does not have a significant effect on the quality of financial reports but through the quality of reviews it has a significant effect. Review quality acts as a mediating variable that strengthens the positive influence of these variables on the quality of financial reports. Organizational compliance, competency, integrity, and auditor commitment each show significant direct and indirect influence through review quality. Practical implications of this research include recommendations for improving auditor training and strengthening internal control systems. Auditors must be provided with ongoing training to improve their competency in reviewing financial statements. Management must build a work culture that supports auditor integrity and commitment, and ensure that procedures and regulations are strictly followed. Internal control systems must be strengthened to ensure that the quality of financial reviews and reports meets high standards.