Accounting Systems of Local Government

With the adoption of Act No. 22 1999 the year against the Government, and local law number 25 Year 1999, the budget balance of the Central Government and regions, and its implementing rules, especially Rule number 105 2000, on the activities of the regional financial management and reporting is calculated for fiscal year 2001 was the resumption in financial management. Taking into account this autonomy, given the broad authority to manage your own home with minimal intervention from the central Government. Local authorities have the right and authority to use financial resources in accordance with the needs and aspirations of communities, which developed in the field. However, with such broad authority, does not mean that local governments can use the financial resources they have at will, without a clear direction and purpose. Rights and powers granted to the regions, is basically a trust that must be accounted for accountable and transparent, both to the community in local and central Government to fund the balance that has been distributed to all regions in Indonesia, Renewal of local financial management in the era of regional autonomy, characterized by a very basic pcrubahan, ranging from system budgeting, treasury up to the responsibility of its financial statements. Before the adoption of local autonomy, accountability of local financial statements to be prepared by the Local calculation of the budget, the Government only herupa report and memorandum of computation and systems used to generate MAKUDA (financial management manual) in force since 1981. The implementation of regional autonomy entirely logical consequence of the implementation of governance and development based on sound financial management. In accordance with Government Regulation Number 105 Year 2001, local governments have the authority to establish financial management systems and procedures in the form of local regulations. This system is indispensable in meeting the obligations of accountability of local government financial reports dalarn make the area concerned. With the passage of local autonomy, financial accountability reports will be made by the Head of the Regional Budget Calculation Report, the Memorandum of Judgement, Statement of Cash Flow and Balance Sheet Region. The obligation to submit financial statements from the date of enactment of this area January 1, 2001, until finally the government already has the government accounting standards that can be used as a reference for local governments in the building in the areas of financial accounting system, as stipulated in Government Regulation No. 24 of 2005. THE MODERNITY ACCOUNTING SYSTEM IN REGIONAL Balance sheet and cash flow statement is a new form of reports and local governments to be able to set accounting standards is required. Government financial accounting system in place since the nation's independence 59 years ago based on the Law of Treasury Indonesia (ICW)

a. b. c. d.

Staatblads 1928, which is not directed or intended to produce a balance sheet and cash flow statements. With the reform or renewal in the areas of financial accountability system, the old system used by both governments at provincial and local government district / municipality Regional Administration Financial Guidance (MAKUDA) implemented since 1981 can no longer support the needs of Local Governments to produce financial statements in the form balance sheet and cash flow statements. To be able to produce financial statements that required a financial accounting system that is based upon the area of government accounting standards. The old system (MAKUDA) dertgan features include Single Sign (single accounting), Supplementary Budget (traditional budget) that: Not able to provide information about property owned by the region. or in other words unable to provide balance. Not able to provide information about the cash flow statement or the public so that management can not know what factors cause an increase or decrease in the local treasury. The old system (MAKUDA) is also not in a position to help the region to make accounting records of implementing results-based budget, as required by the public. Not able to provide information about property owned by the region, or in other words unable to provide balance. Renewal in the field of financial management as the statutory provisions which are desired by the central government has responded and the Indonesia Institute of Accountants (IAI) as a professional association that is by the formation of \ "Accounting Standards Committee of the Central Government and the Regions \". The Committee is tasked to formulate and develop the concept of the Central Government Accounting Standards and Local Government, whose membership consists of the bureaucracy (Ministry of Finance, Ministry of Home Affairs and BPKP), IAI and academics. With the Accounting Standards Committee of the Central Government and the Regions, a problem that berkewenangan sets accounting standards for central and local governments can already be solved. Under Law No. 1 of 2004, the implementation of Governmental Accounting Standards produced by the Standards Committee after requesting the opinion of the CPC set by Government Regulation. Governmental accounting standards produced by the Committee is expected to be the umbrella for accounting practices have been implemented by the Government today and for the foreseeable future. LOCAL GOVERNMENT ACCOUNTING Development of accounting at the government level region done through Accounting and Budgetary Control (SAPA) since 1986. Koinsidental important changes in the field of public finance reform. After years of Indonesia using the law in the state treasury which was formed since the colonial era in the 21st century have set three package legislation in the field of public finance reform law that became the basis in the field of public finance, namely Law no. 17 of 2004 on State Finance, Law No. 1 Year 2004 regarding State Treasury, and Law. 15 Year 2004 on the Audit of the Management and the State Financial Responsibility. The importance of

accountability in good governance seems to be very aware of this as seen from the rules specified in this rule. Presentation of financial accountability report contains, among others, Balance Sheet, Budget and Cash Flow Statement The above problem is actually not a political, mainly derived from theoretical issues, systems and procedures for accounting and financial reporting for accountability. Theoretical problems, systems and procedures are a logical consequence of the impact of progressivity update requires society. These reforms, mainly includes the following issues: 1. Renewal budget, through changes in the structure of the budget, the budget process, the format change implementation clan administration, and application of accounting standards; 2. Renewal funding through changes in the regional authority to use the funds, the principles of cash management, reserves, the use of loan funds, and deficit spending, and 3. simplification of procedures in both budget preparation and execution in its calculations Keywords from the total resumption of higher performance. And it is expressly specified in article State regulation that the budget for the criterion should be designed in such a way that it can be estimated or measured. The device of regional autonomy laws already provide good local government management by Government Regulation No. 108 of 2000 on Regional Head of Accountability Procedures. This regulation states that the Regional Head Liability benchmarks assessed by the Strategic Plan. Each region should establish a Strategic Plan for the period of 1 (one) month after the appointed Regional Head. This strategic plan along with planning documents other areas require ratification by Parliament. E. THE GENERAL POLICY OF GOVERNMENTAL FINANCIAL ACCOUNTING There are three objectives of government financial reporting is accountability mobility, managerial, transparency clan. Accountability is defined as an attempt to account for resource management and implementation. Organizational units entrusted to the government in achieving the goals set by the government's periodic financial statements of policy. Managerial means to provide financial information useful for planning and management of government finances and to facilitate effective control over all assets, liabilities, and equity funds. While transparency in financial reporting aims to provide financial information that are open to the public in order to realize good governance. The financial statements of government, hereinafter referred to as the accountability report is the result of the process of accounting for government financial transactions. Accountability reports for general purposes, consists of calculating the budget reports, balance sheets, cash flow statement and notes the budget calculations. There is a possibility of financial statements can be developed for a particular purpose.

THE BASIS OF GOVERNMENTAL FINANCIAL ACCOUNTING 1. Cash Basis Revenue is recognized when it is recorded in the Treasury of the State / region and expenses are recognized when they retire the cash Umurn country / region. 2. Universalitas Basis All expenditures should be reflected in the budget. This means that the budget is a commitment to the highest limit that can be done by the local government to burden the budget. 3. Bruto Basis There is no compensation between income and expenditure. For example, revenue income and expenditure needed to get it, then the reporting should be reported gross income means income for the income and expenditure recorded in the relevant expenditure items for expenditure incurred. 4. General Fund General Fund is a fiscal and accounting entity responsible for the overall state revenue and expenditure, including assets, liabilities, and equity funds. Referring to the General Fund Budget State / Region. Funds used to finance certain activities are specifically recorded as part and parcel of the General Fund. ENTITY To ensure the completion of the reporting procedure (reporting level) must be installed to indicate the person person accounting, which became centres for public financial reporting. Financial institution reporting refers to the concept that each responsibility center should be held accountable for discharging their responsibilities in accordance with your rules. Determination of the accounting office as local government entities based on the understanding that performance measurement would be more appropriate if done in the function. In the structure of local government, service is a unit of work that most mcndekati overview of local government functions. ACCOUNT CODE Government financial accounting includes all activities that include data collection, classification, accounting and financial reporting pemcrintah. Uniform and consistent estimation of the code is absolutely necessary to facilitate the preparation of consolidated financial statements at regional and central levels. Given that Indonesia is a unitary state means that the area is an integral part of the Unitary Republic of Indonesia, it is still necessary in the era otononipun financial information by region or nationwide for fiscal and macroeconomic analysis. The consequences of these demands is the need for harmonization of accounting practices between central and local governments. It is regulated via a standard chart of accounts is a reference point for national and local governments in developing akuniansinya system. In addition to promoting the consolidation of financial indicators of the local government or a central authority, classification, evaluation and coding is also required to align the financial

accounting system of the Government with the international financial statistics proposed by the International Monetary Fund in the areas of Finance Statistics (GFS) konsepGovernment. One thing that is fundamental in accordance with the classification of the GFS is that classification should be able to meet the measurement results of government activities. To meet these needs Selan estimates based on the classification of the old budget system, ie per penerimaar budget (MAP), the expenditure budget (MAK), then all the financial activities of local government should be broken up by the organization, function and economic classification.