377 technology favorably impacts the accessibility and
quality of information. Furthermore, in this study, the overall mean
score of 3.78 for decision makers indicated that they positively believed that the use of computer has
improved their
decision-making quality.
The improvement the decision-making quality may be due
to their use of computer in their daily job routine. The results are consistent with the findings in the
literature.
5.3 Decision-
makers’ perceptions in relation to demographic characteristics
Based on the findings of this study, the relationships between demographic variables and the perceptions of
the decision makers toward computer technology showed negligible either positive or negative
relationships. Therefore, the high level of education attained by the respondents in this study 79 of them
have a bachelor‘s degree or higher as well as their relatively low average age 61.7 of them between
the age of 30 and 49 may provide a partial explanation for the generally negligible relationships
observed. In addition, these findings provide explanations that personal characteristics in adopting
new technologies are not as important as people expect.
However, this study proves that computer technology is being used, but not to its full capacity in
Jordanian public organizations, even though its advantages and impact are recognized by the majority
of the decision makers in these organizations. It seems that the process of innovation will probably take a
long time to reach the level of computer use seen in other parts of the world.
5.4 Recommendations for policy and practice
The results indicated that participants generally had positive perceptions toward computer use and
experienced substantial improvement in their work performance and productivity through the access to
quality information which is important for the overall goal of effective planning of social and economic
development, despite the different factorslimitations they had mentioned. Therefore, it is essential for the
government of Jordan to sustain and promote decision-
makers‘ perceptions as a requirement for deriving the benefits of this advanced technology.
Since positive perceptions toward such technology usually predict future technology use, the government
of Jordan policy-makers can make use of decision-
makers‘ positive perceptions toward computer technology in order to prepare them to integrate this
technology in their daily work practices.
5.5 Suggestion for future research Since the current study is the first of its kind and in
order to produce more knowledge in this area, similar studies are needed with some changes to the setting,
population, sampling procedures, or data collection methods utilized in the current study. For example,
examining the perceptions of decision makers from different cities. Future research similar to this study
should also be conducted in other developing countries.
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379
DETERMINANTS OF AUDIT RISK ASSESSMENT FOR GOVERNMENTAL AUDITS IN INDONESIA: A STUDY OF THE
NATIONAL AUDIT BOARD OF THE REPUBLIC OF INDONESIA
Agung Nur Probohudono, Payamta Payamta, Sri Hantoro Abstract
This study aimed to determine the influence of: geography, demography and topology; culture; maturity of organization age of government; maturity of people; auditors capability in the assigned
region; expertise education level; and experience of auditing team in risk assessment; on the examination of audit risk by The National Audit Board of The Republic of Indonesia Badan
Pemeriksa Keuangan BPK in Indonesia. This study found the factors affecting the audit risk model in general. This study identified several factors that influence the determination of audit risk
assessment which occur when conducting local governmental audits in Indonesia. This study was conducted by identifying the factors that might influence the risk of audit used by The National Audit
Board. The results of the identification are elaborated in some of the items included in the questionnaire. The number of respondents in this study was 143 respondents as Auditors of The
National Audit Board in Indonesia. This study conducted multiple regression analysis. Maturity of people, auditors capability, and expertise level have a significant influence on the risk assessment.
These factors are derived from an auditor’s judgment when they perform the examination seen from the condition of local government in Indonesia
Keywords: Auditing, Audit Risk, Local Government, Indonesia Universitas Sebelas Maret, Surakarta, Indonesia
1 Introduction Risk assessment is often used to identify the most
important areas within the scope of an audit. Risk assessment allows the auditor to design audit
programs and test the key controls in more depth. To perform a risk assessment, the auditor should conduct
an in-depth understanding of the organization, including understanding of the risks and controls
system to achieve organizational goals. The audit plan is designed to allocate more time to high-risk areas
and have a high-interest scale for the purpose of the organization Setyobudi 2006.
The National Audit Board Badan Pemeriksa Keuangan
in Indonesia BPK conducts audits of the Financial Reports of the Local Governments in
Indonesia LKPD in accordance with the State Auditing Standards SKPN that were issued and
established based on The National Audit BoardBadan Pemeriksa Keuangan
regulation No. 01 of 2007. Based on the Act No. 15 of 2004, article 17, audit
reports from The National Audit BoardBadan Pemeriksa Keuangan
BPK of the Financial Reports of the Local Governments contain:
1 The report of the local governments financial reports containing opinions.
2 The report of local governments performance, including
the findings,
conclusions, and
recommendations. 3 The report of the examination with a specific
purpose to reach a conclusion. 4 The response from the government officials
responsible for the findings, conclusions, and recommendations of the examination.
When performing the audit, the auditor uses the audit risk model to address the risks when planning
and collecting audit evidence. The audit risk model is used by the auditor to determine how much and what
type of audit evidence has to be collected in each audit process Arens et al. 2009 in order to detect and
assess fraud risk in the course of an audit examination Norman et al. 2010. When the factors of risk
assessment are carried out in an objective and correct manner, audit costs and the risk of audit failure can be
reduced Chang et al. 2008. The National Audit Board BPK performs audits equally, without
distinguishing between places with different cultures. The equal treatment of different areas and cultures
raises a risk that the audit is not in line with public expectation, referred to as the audit expectation gap.
Therefore, The National Audit Board requires an
―Audit Risk Alert,‖ so the auditors of The National Audit Board can reduce audit risks and improve
380 performance, providing assurance on the extent to
which the results of the audit adequately describe the state of the object of the audit Trotman and Wright
2012.
Indonesia is one of the unique countries in the world. It consists of thousands of islands with various
tribes and ethnicities spread from Sabang to Merauke. Indonesia is a multicultural country and has a wide
variety of cultures, compared with communities that have basic properties that are essentially the same
Kartawinata Ade 2011. The wide variety of cultures scattered throughout Indonesia raises uncertainty
about the audit risk model that will be implemented by The National Audit Board of each local
government and how culture will affect the behavior and attitude of auditors Christiawan 2004. This
uncertainty is the starting point of approaches to the contingency theory that have a direct implementation
in the experiments in various kinds of issues facing the decision problems. Uncertainty may cause a
negative impact risk or a positive influence opportunity for the organization. Uncertainty and the
achievement of organizational goals depends on the ability of management to identify these uncertainties
so that further management can devise measures and control procedures to minimize risks and maximize
the opportunity Trotman and Wright 2012. This study considers Indonesia as having specific
characteristics. Indonesia is a developing country and has
cultural factors
that greatly
affect the
determination of audit risk by the auditors. The different conditions in each of the different
local governments and the same treatment in different cultures raise the audit risk expectation gap. Local
governments in the form of city government are more complex than the district administrations and demand
greater transparency, along with the need for more frequent audits for city governments Zimmerman
1977. Based on this background, the title of this
research is ―Determinants of audit risk assessment for govermental audits in I
ndonesia‖.
2 Theoretical overview
Contingency theory is used as a grand theory in this study to know the considerations in assessing audit
risks arise from some factors constructing audit risks in a contingent environment Anandarajan et al. 2008;
Tubbs 1992; Yousef 1998 that are:
a. Geography, demography and topology
b. Culture;
c. Maturity
of organization
age of
government; d.
Maturity of people; e.
Auditors capability in the assigned region; f.
Risk assessment for different auditors; g.
Expertiseeducation level; h.
Experience of auditing teams. In order for the auditor to achieve good audit
risk assessment, risk assessment will depend on a certain conditions, such as level of education,
experience, and training possessed by the auditor. In auditing, the auditors attention is focused on risk
assessment. Auditors judge risks by focusing on the risks of continuity and development activities in order
to achieve organizational goals.
2.1 Geography, demography, topology and risk assessment
