Mutiara Zuryatina, Anggeraini Oktarida, Riza Wahyudi

The Influence of Audit Findings, Follow-Up on Recommendations, and Adequacy of Financial Statement Disclosures on Audit Opinions of Regencies and Cities in Lampung Province

Introduction

The influence of audit findings, follow-up on recommendations, and adequacy of financial statement disclosures on audit opinions of regencies and cities in lampung province. Investigate how audit findings, recommendation follow-up, and financial disclosures impact audit opinions of local governments in Lampung Province (2019-2023). Key insights revealed.

Abstract

Examine the influence of audit findings, follow-up actions on audit recommendations, and the adequacy of financial statement disclosures on audit opinions of local government financial statements in Lampung Province from 2019–2023 are the aims of this research. A quantitative approach is adopted by this study, using secondary data from the official website, www.bpk.go.id. The entire population was sampled using a saturated sampling technique with a total of 75 samples in the form of LKPD from districts/cities in Lampung Province taken from 15 entities. This study used SPSS version 26 to conduct a logistic regression analysis. Based on the results of the study, it was found that audit findings partially had a significant negative influence on audit opinions. On the other hand, follow-up on recommendations on audit results and the adequacy of financial statement disclosure did not significantly influence audit opinions. The results of the simultaneous test indicated that the variables Audit Findings, Follow-Up on Recommendations, and Adequacy of Financial Statement Disclosure collectively significantly influenced the Local Government Financial Statements (LKPD) of districts/cities in Lampung Province.

Review

This paper addresses a highly relevant topic concerning public sector accountability and transparency by examining the factors influencing audit opinions of local government financial statements. Specifically, it investigates the impact of audit findings, the follow-up on audit recommendations, and the adequacy of financial statement disclosures on audit opinions for regencies and cities in Lampung Province from 2019 to 2023. The study employs a quantitative approach, utilizing secondary data from the official BPK website, and its use of saturated sampling across 15 entities provides a comprehensive empirical basis for analysis within its defined scope, offering valuable insights into public financial management in an Indonesian provincial context. The research yields several intriguing findings through its logistic regression analysis. It confirms that audit findings partially exert a significant negative influence on audit opinions, suggesting that more critical audit findings tend to correlate with less favorable opinions—a result aligning with general expectations of audit effectiveness. However, a noteworthy divergence from anticipated effects is observed with follow-up actions on recommendations and the adequacy of financial statement disclosures, neither of which individually demonstrated a significant influence on audit opinions. This outcome is particularly interesting given the emphasis placed on these aspects in promoting good governance and accountability. Despite these individual non-significant results, the simultaneous test reveals that all three variables—audit findings, follow-up, and disclosure adequacy—collectively have a significant impact on local government financial statements, indicating a complex, interconnected relationship rather than simple independent effects. While the study offers robust empirical evidence, a deeper exploration into the potential reasons for the non-significant individual influence of follow-up actions and disclosure adequacy would significantly enhance its contribution. It would be beneficial for the paper to elaborate on the specific contextual factors within Lampung Province that might attenuate the individual impact of these variables, or to discuss potential mediating variables that could explain this phenomenon. Furthermore, expanding the theoretical framework to address the observed interplay between the individually insignificant variables and their collective significance could provide a more nuanced understanding of audit opinion formation in this unique public sector setting. Future research could potentially explore these dynamics through qualitative methods or comparative studies to bolster the generalizability and explanatory power of these findings.

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