RESEARCH METHODOLOGY Proceeding E Book 4A Turky

1848 After mapping PEεDA‘s FS disclosure level and identifying the influencing factors, eventually this research proposed str ategic and tactical steps to improve PEεDA‘s readiness in presenting a relevant and reliable FS. This proposal is expected to help the governmentregulators in formulating forthcoming policies to ensure the effectiveness of PP SAP implementation and other government regulations in 2011. This research does not construct any hypotheses or research models to answer the research problems. The first research problem about PEεDA‘s δK disclosure level will be resolved by calculating the disclosure index. An analysis will be conducted based on the descriptive statistic result of the disclosure level index score. For the second research problem about the influencing factors of PEεDA‘s FS, this research used an explorative approach, which was to freely identify those factors obtained from literature studies and interviews with parties related to the preparation of PEεDA‘s FS. As for the third research problem about the strategic and tactical proposals to improve the quality of PEεDA‘s FS disclosure, they will be achieved by mapping the disclosure index and the influencing factors. Therefore in general it can be concluded that this research does not propose any hypotheses that will be tested or any research models to test those hypotheses. The research variables used w ere local government‘s FS disclosure level index and the influencing factors. δocal government‘s FS disclosure index is the FS disclosure index based on PP SAP. This research developed a checklist based on PP SAP. PEεDA‘s FS were evaluated based on the checklist and the score from the completed checklist was calculated. Each checklist component would get a score of 1 one if the information was disclosed or Yes, 0 zero if the information was not disclosed or No or N.A. not applicable if it was assumed that PEMDA did not have the related information. Disclosure level score is obtained from comparing the number of Yes with the number of Yes and No. The checklist consisted of the checklists for Balance Sheet, LAK, LRA and CaLK. Meanwhile the operating 1849 variables that represent the influencing factors were obtained from literature studies and thorough interviews. Research population was 530 PEMDA of provinces, cities and municipalities. Of this number, based on the data from BAKD and BPK‘s website www.bpk.go.id , a sample research of such was obtained: - 266 PEMDA with 2007 Balance Sheet 50,4 of total population; - 269 PEMDA with 2007 LAK 50,8 of total population; - 267 PEMDA with 2007 LRA 50,6 of total population; and - 267 PEMDA with 2007 CaLK 50, 6 of total population. This data was obtained directly from the Indonesian State Department‘s BAKD and BPK‘s website. The sample above had exceeded the number of all PEεDA with β006 FS, which was 212 PEMDA. Meanwhile the data about influencing factors was acquired from interviews with parties related with the preparation of PEεDA‘s FS. In overall this research used two data analysis techniques. The first was descriptive statistics to analyze PEεDA‘s δK disclosure level. The second was explorative to analyze the influencing factors by literature studies and interviews.

3. RESULT AND REVIEW

The initial result of this research was PEεDA‘s FS disclosure level, at provinces, towns and municipalities. This disclosure level was obtained from the checklist score see research method sub-part variables operation. Disclosure level review below is presented based on FS components and on overall FS.

3.1 BALANCE SHEET DISCLOSURE LEVEL

Disclosure level average was fairly high at 84. This showed that the information presented in the balance sheet had included all information required by PP SAP. The 1850 deviation standard was very low at 5, which showed that the balance sheet disclosure level among PEMDA was relatively consistent. The highest score of 96 were the Pekanbaru, Ogan Komering Ulu, East Ogan Komering Ulu, Pagar Alam, Prabumulih, Batang, Landak, South Halmahera, Jayapura, Bau- bau, Jayapura and Nunukan; whereas the lowest at 60 was DKI Jakarta. The information disclosed by most local governments but not found in DKI Jakarta were: 1 inventory details; 2 receivables details; and 3 equity funds classification. As for the ranks based on the average score per province, PEMDA from eastern Indonesia dominated the top 5: Papua, North Maluku, West Papua, West Sulawesi and East Kalimantan average above 90. However four of the five provinces had very low ratio of balance sheet issued and reviewed by BPK to total number of PEMDA in the province. Papua, for instance, although it had the highest score of 96, there were only 2 provinces in Papua that had issued the 2007 balance sheets which had been audited by BPK, compared to the total 30 PEMDA in Papua province. Based on the ratio of number of PEMDA with issued FS to number of PEMDA in a province, then East Java, DI Yogyakarta, West Java, Bali and Gorontalo were placed on the top 5. Meanwhile the analysis of the information component in the Balance Sheet showed 5 information with the lowest disclosure: 1. Name of reporting entity or other identification visible on every page; 2. Scope of FS entity, whether it was a sole entity or a consolidation of several reporting entities; 3. Scope of FS entity, whether it was a sole entity or a consolidation of several reporting entities, on every page; 4. Date of reporting or the period included in the FS in accordance with other components of the FS visible on every page; and 5. Reporting currency and quantifier visible on every page.