EFFICIENCY AND EFFECTIVENESS ANALYSIS OF VILLAGE FINANCIAL MANAGEMENT (VFM) (Case Study Asahan Regency)
EFFICIENCY AND EFFECTIVENESS ANALYSIS OF VILLAGE FINANCIAL MANAGEMENT (VFM) (Case Study Asahan Regency)
1 2 3 Bukit Buchori Siagian 4 , Maryunani , Rahmad Krishna Sakti , Dwi Budi Santoso
1 The Government of Asahan Regency 2,3,4 Faculty of Economics and Business, Universitas Brawijaya
1 2 Email: 3 [email protected] , [email protected] , [email protected] ,
Abstract
As an implementation of decentralized development, village financial management (VFM) is a financing model in a way to closer the needs of development at the village level. Theoretically, the successful objectives achievement of this authority delegation is if VFM can be done efficiently and effectively. This study aimed to analyze these efficiency and effectiveness of VFM and analyze factors inhibiting. The results showed that 1) VFM in Asahan district has not implemented both efficiently and effectively that shown from the weak implementation of both good governance principles and continuous improvement and, 2) Factors inhibiting the efficiency and effectiveness of VFM are, (i) lack of musrenbang transparency specifically the quality of information, access to information, the transparency mechanism of information and the level of information disclosure, (ii) lack of budgeting transparency, in particular the level of information disclosure, access to information and quality of information, (iii) lack of supervision transparency in particular the level of transparency, information quality and information access, (iv) the weak of oversight participation, especially the satisfaction level of participation and involve the community, and (v) lack of monitoring accountability in particular public complaints mechanism, access to the audit report and the responsibility structure. Keywords: village financial management, efficient, effective
authority in the regencies/cities still covered
two important issues (World Bank, 2005), The role of government in economic
1. INTRODUCTION
namely: (i) the capacity of human resources development (Musgrave and Peggy, 1989),
(HR), and (ii) institutional capacity. The first issue indicate poor ability to build and run
namely: (i) the provision of public goods and services, (ii) the redistribution of income, and
either the structure of accountability, (iii) the economic stabilization. In Indonesia,
transparency and participation that leads to poor governance. While the second issue relates to
the government's role is now decentralized from the previous centralized based on the theoretical
the availability of regulations that provide space advantages of decentralization associated with
proportionally between innovation and prudence. The regulations are giving space to
efficiency, effectiveness (Shin, 2001) and responsiveness (Santoso, 2013). Nevertheless,
innovation tends to crash into the principles of until now, the implementation of fiscal
prudent and vice versa if to tight against the prudent were concerns that it did not leave
decentralization in Indonesia felt still less responsive to community needs. Therefore there
room for innovation. These innovation and prudent are the key of the coverage rule that
was a strong urge to give authority to the lower levels of the villages.
requires continuous improvement. An
These issues are the paradox of the spirit of authority delegated to the villages. Therefore,
decentralization to the village is the village financial management (VFM). But in fact,
the study of the efficiency and effectiveness of although it was supported by a governance
VFM will be very important. For that needs to
be translated into two research questions as structure that was much more solid and stable
than the villages, even delegated development
follows:
Siagian, Maryunani, Sakti & Santoso, Efficiency And Effectiveness Analysis … 137
1. Is the village financial management in the village is also determined by the village Asahan regency already done efficiently and
ability of managing public expenditure, related effectively?
to budget efficiency and effectiveness (Santoso,
2. If not, what is the problem to realize the
efficiency and effectiveness of village
2.2 Good Governance
financial management in Asahan regency? Governance is a performance management
2. LITERATURE REVIEW
system that aims to improve productivity in an efficient and effective (Harrison and Sayogo,
2.1 The role of government in rural 2014). The United Nations Development development through village finance
Programme (UNDP) in Sukmadilaga, et al, The essence of rural development is the
(2015) offers nine indicators of good right leveraged (optimal, efficient and effective)
governance namely 1) participation, 2) rules, 3) of all potentials and resources owned by the
openness, 4) sensitivity, 5) oriented group, 6) village to provide either safety, comfort, orderly
equity, 7) efficient and effective, 8) and can improve the welfare of rural
accountability, and 9) the strategic objectives. communities (Muhi, 2011). Theoretically, the
While the Asian Development Bank (2009), ultimate goal of decentralization to the village
further simplifying the concept of good is the achievement of rapid economic
governance into four basic principles, namely: development of the village. The activities of
(i) accountability, (ii) participation, (iii) government role as a form of economic and
predictability, and (iv) transparency. Harrison social interventions are divided into ((Dumairy,
and Sayogo, (2014) then narrow the aspects of 1996): (i) The role of allocation, (ii) The role of
into transparency, distributive, (iii) The role of stabilization, and
good
governance
participation and accountability. (iv) The role dynamisms.
2.2.1 Transparency
As one of the village autonomous rights of Transparency according to Florini (2000) is the decentralized implementation, village the information release by the relevant financial management (VFM) become an institutions. Transparency improves the flow of important instrument for creating the information in a timely and reliable economic, accelerated of village development. The village social and political accessible to all financial is the rights and obligations of the stakeholders (Vishwanath and Kaufmann, village that can be valued in money and 1999). Bauhr and Grimes (2012) prefers a everything (money or goods) that can serve as checklist approach, where transparency exists belonging to the village in connection with the only if certain criteria are met. Williams (2015) implementation of rights and obligations which makes two general criteria of transparency, give rise to the income, expenditure and village namely: (1) on improving the availability of the financial management (Law 32/2004 Article quantity and quality of information to 212) that united in the document budget of stakeholders, and (2) of increasing obstacles to village revenue and expenditure (APBDesa). public officials to act outside the framework of
According to the fiscal federalism theory, the rules because of possible demand the budget efficiency and effectiveness are
accountability from the citizens on their action. more likely to reach about through the
In the context of fiscal affairs, through the implementation of fiscal decentralization (Shin, transparency, the citizens will be able to 2001). Instead, the objective of decentralization pressure the government to improve the will only be realized if the implementation is performance and evaluate the effectiveness can create an increase in the efficiency and (Harrison and Sayogo, 2014). The absence of effectively of public procurement spending information disclosure is an obstacle to the (Barankay and Lockwood, 2007). For VFM operation of transparency that limits the context, the idea of good governance and understanding of the people affected by the continuous improvement were taken to policy (Mukhopadhyay, 2015). Therefore, establish a stable system that is capable of greater access to information can raise the cost producing optimal, efficient and effective of corrupt behavior and rent-seeking (Kolstad output. Therefore, the success of fiscal
and Wiig, 2009).
decentralization in economic development in
138 International Journal of Social and Local Economic Governance (IJLEG)
Vol. 2, No. 2, October 2016, pages 136-151
2.2.2 Participation
2) enforcement of the penalty if the actions and/or unsatisfactory reasons (incentives and
The mechanism of participation can disincentives); and 3) responsiveness, the improve two-way flow of information between responsible willingness for responding the citizens and governments that is expected to demands (monitoring). Mogiliansky composite increase the accountability and responsiveness concept (2015) implies that the three elements of government to contribute to the welfare of information, incentives or disincentives as (Shah, 2007; Speer, 2012). Citizen participation well as monitoring cannot be separated for an has a positive dominant influence on the quality
accountability rating.
of implementation (Drazkiewicz, et al, 2015). Citizen involvement in monitoring and
Krina, (2003) developed a set of indicators evaluating the implementation of the project
measuring the accountability principle at the might improve the efficiency of public
stage of a decision making process such as: 1) a spending (Speer, 2012). The importance of
written decision documentation and availability participation is for the reason that the society
to all citizens in need; 2) compliance with has better incentivized to monitor (Stiglitz,
ethical standards in decision-making; 3) clarity 2002 in Pagans, 2014).
of policy objectives and according to prevailing standards; 4) the existence of a mechanism
In the context of the budget, participatory which ensures for compliance; 5) consistency budgeting had increase the portion of the and feasibility of the target operational allocated of government spending to education, priorities. Krina, (2003) also developed a health and sanitation in Brazil (Boulding and
indicators measuring the Wampler, 2010), and increasing government accountability principle in the phase of policy spending alignment with the preferences of the promotion: 1) dissemination of a decision poor (Heller, 2001). If done properly, information, 2) accuracy and completeness of participation contributes to the improvement of information on how to achieve the objectives of efficiency (Schroeter, et al, 2016). Moreover, the program; 3) public access to information on participation should integrate monitoring decisions and public complaints mechanism; 4)
number
of
approaches for achieving a level of
the availability of management information transparency (Lestrelin, et al, 2011). systems and results monitoring.
Botes and Rensburg, (2000) noted the factors that affect participation ranged from
3. RESEARCH METHOD
social, cultural, political, technology and
3.1 Research Design
logistics. Tosun, (2000), was adding institutional factors as external factors other
This study uses quantitative methods. than socio-cultural context as internal factors.
Locations were selected by the method of Meanwhile, according to Goetz and Gaventa
criterion-based selection (LeCompte and (2001) the citizens’ participation interest
Preisle, in Asni, 2013). The respondents depends on the costs and benefits of the
numbered are 124 people consisting of villages governance
head, villages secretary, the treasurers of the participation. However, the information is a
village, the villages consultative body (BPD), prerequisite citizen involvement (Harrison and
community leaders, and the general public. Sayogo, 2014).
While at the district level is the section head of the districts community development (Kasi.
2.2.3 Accountability PMK). For the regency level is agency officials Accountability implies that the organization
of rural communities empowerment (Bapemas). that conducts the affairs of society through the
Data sourced from deployment questionnaire management of public funds ensure the
instruments/questionnaires and interviews realization of human rights in a way free of
Data questionnaire/ abuse and corruption and abide by the rule of
(Arikunto,
questionnaire compiled by providing a list of law (Aziz, et al, 2015). According to
questions prepared enclosed measured in terms Mogiliansky, (2015) accountability is a
of attitude Likert scale with four alternative composite concept that of consist of three
answers ranging from strongly disagree (1), elements: 1) the ability to answer of the
disagree (2), disagree (3) and strongly agree (4). obligation to justify one's actions (information);
3.2 Method of Analysis
Siagian, Maryunani, Sakti & Santoso, Efficiency And Effectiveness Analysis … 139
The analytical method used is a Table 1 Results of Goodness of fit test CFA confirmatory factor analysis (CFA). This
analysis is intended to reveal how well the Information
The Criteria
Cut-off
Test
Value Result
indicators measuring a latent concept (Dahlan,
≥ 0,05 0,000 Model Less Fit
≤ 2.00 2,145 Model Less Fit
2014). Approach to the analysis carried out by
Chi-Square/DF
the method of Plan, Do, Check, Act (PDCA) Model Less Fit
≥ 0,90 0,503 Model Less Fit
(Singh and Singh, 2015).
TLI
≥ 0,95 0,684 Model Less Fit
CFI
≥ 0,95 0,728 Model Less Fit
4. RESULTS AND DISCUSSION
RMSEA
≤ 0,08 0,096 Model Less Fit
Sources: Primary data is processed
4.1 Testing Data, Assumptions and Model
4.2 Estimation Results Confirmatory Factor
4.1.1 Testing Data
Analysis (CFA)
Tests on the validity and reliability of the The estimation results of CFA models of instrument were found not all items in each of VFM yield value of 1,550 degrees of freedom the indicators are valid. The value of r table for that goes beyond positive value required as a 124 respondents is 0.176. While the invalid
correlation values (r count ) is Pn.Par2 item of model identified. Furthermore, the model has a chi-squared value of 3432.853 with a p-value of
budgetary participation indicators in 0,023. 0.000. To test the significant level α = 0.05 p-
4.1.2 Testing Assumptions value is generated (0,000) is smaller than α.
1. Plan (Planning and Budgeting). On the data normality test obtained by
1. Normality Test
The diversity of Plan variable successively value of 303.513 CR univariate larger than the
more explained by an aspirations container of critical value of Z table 2.58. Then multivariate
musrenbang, the mechanism of public CR value of 19.592 is much greater than the
complaints of budgeting, decision making value of Z table 1.96. This means that the
musrenbang, decisions normality assumption for multivariate and
standard
of
documentation of musrenbang, audit system of univariate normality has not been fulfilled. In
budgeting, as an aspirations container of other words, the data is not eligible normality.
budgeting, involving the community of
2. Outlier Test musrenbang, audit system of musrenbang, Examination of the multivariate oultiers
decisions
documentation of budgeting, decision-making standards of budgeting, public
performed using mahalanobis criteria at the level of p <0.01. Mahalanobis distance from the
mechanism of musrenbang, table on the data found that the most distant
complaints
information
disclosure mechanism of budgeting, satisfaction levels of participation of
observation point is a point to 34 with a value of Mahalanobis d-squared = 95.889 with value
musrenbang and mechanisms of formal p1 and p2 = 0.002 = 0.242. The outlier not
objection of budgeting. In other words, empirically, Plan variable is more measured of
found in the data because there is no value p2 < 0.000.
the indicators.
3. Multicolinearity Test Meanwhile, the participation satisfaction level of budgeting, the level of information
Testing research data shows there is no R2 disclosure of musrenbang, formal mechanisms values greater than 0.90. Thus concluded not
objection of musrenbang, the quality of found multikolinierity on research data.
information of budgeting, access to information
4.1.3 Model Test of budgeting, mechanisms of information CFA model is built according to the theory
musrenbang, access to of representation and therefore all questions
disclosure
of
information of musrenbang, involving the were arranged in the questionnaire are in
community of budgeting, the level of accordance with the theory. Therefore, the test
information transparency of budgeting and result of goodness of fit model CFA which
quality of information of musrenbang tend indicates that the model does not fit indicates
strengthened, but not strong enough to explain VFM is still problematic. VFM problem is then
the variable of Plan.
that will be explored further in-depth interviews Table 2 The CFA estimation results of with several key managers VFM.
indicators verifiers construct ofPlan
140 International Journal of Social and Local Economic Governance (IJLEG)
Vol. 2, No. 2, October 2016, pages 136-151
Varia- Indicators
P bles
Indicators SRW Value
0.871 *** M.Tr2
M.Tr1 Information disclosure mechanism of
Information disclosure mechanism of musrenbang
D.Tr1
implementation
0.753 *** M.Tr3
The level of information disclosure of musrenbang
D.Tr2
The level of information disclosure of implementation
D.Tr3 Access to information of implementation 0.818 *** M.Tr4
Access to information of musrenbang
D.Tr4 Quality information of implementation 0.767 *** M.Par1
Information quality of musrenbang
0.696 *** M.Par2
Involving the community of musrenbang 0.712 *** As an aspirations container of
D.Par1
Involving the community of implementation
As an aspirations container of *** M.Par3
Satisfaction levels of participation of musrenbang
D.Par2
Satisfaction levels of participation of M.Par4
0.721 *** musrenbang
Do
Formal objection mechanism of
D.Par3
implementation
*** M.Ak1
D.Par4
Formal objection mechanism of 0.612
Decisions documentation of musrenbang 0.772 ***
implementation
0.778 *** M.Ak3
M.Ak2 The standard of decision making of musrenbang
D.Ak1
Decisions documentation of implementation
Audit system of musrenbang
Decision making standard of *** Public complaints mechanism of
D.Ak2
M.Ak4 musrenbang
D.Ak3 Audit system of implementation 0.748 *** Pn.Tr1
Information disclosure mechanism of
0.631 *** budgeting
D.Ak4
Public complaints mechanism of implementation
Pn.Tr2 The level of information transparency of
Sources: Primary data is processed
budgeting
Note: *) Significant at the 5% level
Pn.Tr3 Access to information of budgeting
3. Check (Control)
Pn.Tr4 Information quality of budgeting
Pn.Par1 Involving the community of budgeting
P-value < 0.05 (significant at the 5% level)
Pn.Par2 As an aspirations container of budgeting 0.77
Pn.Par3 Satisfaction levels of participation of
means that the path coefficients for all
indicators in predicting Check differ
Pn.Par4 budgeting
A formal objection mechanism of
significantly in the level of 0,001 (0.1%). In
Pn.Ak1 Decisions documentation of budgeting 0.707 *** Decisions-making standards of
other words, all the indicators of significant
Pn.Ak2 budgeting
form the construct Check. Therefore all
Pn.Ak3 Audit system of budgeting
indicators suitable to be used as a measuring
Pn.Ak4 Public complaints mechanism of
construct of Check.
Sources: Primary data is processed
Table 6.8 The CFA estimation results of
Note: SRW: Standardize Regression Weights
*) Significant at the 5% level indicators verifiers construct of Check
2. Do (Implementation).
Varia-
Indicators SRW P
bles
Value
All indicators are significant to measure
C.Tr1
mechanism Information disclosure of supervision
Do construct indicated by p-value < 0.05
(significant at the 5% level). Therefore all 0,005 supervision 0.217
C.Tr2
The level of information disclosure
indicators suitable to be used as a measuring of 0.569 ***
C.Tr3 Access to information supervision
C.Tr4 Quality information supervision 0.398 ***
Do construct.
C.Par1 Involving the community supervision 0.578 *** C.Par2 As a container aspirations supervision
The diversity of variable Do successively
Check
C.Par3
Satisfaction levels of participation supervision
more explained by the mechanism of information disclosure of implementation, C.Par4 Formal objection mechanism supervision 0.628 ***
access to information of implementation, as an ***
C.Ak1
The mechanism of public complaints oversight
aspiration 0.596 *** container of implementation,
C.Ak2 The structure in charge of supervision
C.Ak3 System surveillance audit 0.658 ***
decision documentation of implementation, the
C.Ak4
Access to the supervision of the audit report
decision-making standard of implementation, Sources: Primary data is processed information quality of implementation, the level
of information disclosure of implementation, Note: *) Significant at the 5% level audit system of implementation, satisfaction
Based on the calculation of the variable level of participation of implementation,
loading indicators that compose the check is involving the community of implementation,
known that the variation or diversity variable of public
Check successively more explained by the implementation
mechanism of information disclosure of mechanism of implementation. In other words,
supervision, as an aspiration container of all the indicators were able to well explain the
supervision, auditing systems of monitoring and variable of Do.
formal objection mechanisms of monitoring. Table 6.7 The CFA estimation results of
Meanwhile, the responsibility structure of indicators verifiers construct of Do
supervision, involving the community of
Siagian, Maryunani, Sakti & Santoso, Efficiency And Effectiveness Analysis … 141
supervision, access to information of all the indicators were able to explain the monitoring,
the satisfaction level
of
variable of Act properly.
participation of monitoring, access to audit
5. VFM
report of monitoring, community complaint All indicators are significant known to mechanisms of monitoring, information quality measure construct of VFM. This is indicated by of monitoring and the level of information
a p-value < 0.05 (significant at the 5% level). disclosure of monitoring tend to strengthen, but Therefore all indicators are suitable to be used not strong enough to explain the variable of as a measuring construct of VFM. check.
Table 6:10 The CFA estimation results of
4. Act (Accountability and Evaluation) indicators verifiers construct of VFM
All indicators
known significantly
Variabel
Indikator SRW P Value
measured the construct Act. This is indicated by
Plan
a p-value < 0.05 (significant at the 5% level).
Therefore all indicators suitable to be used as a
Check
measuring construct of Act.
0,613 *** Sources: Primary data is processed
Act
Table 6.9 The CFA estimation results of
Note: *) Significant at the 5% level
indicators verifiers construct of Act
Varia Indicators
From the values of indicators loading of
variable of VFM it can be concluded that the
A.Tr1 Information disclosure mechanism of report and evaluation
diversity of variables of VFM successively
A.Tr2 The level of information disclosure of report and evaluation
more described by Check, Plan, Act and Do.
A.Tr3 Access to information of report and
Furthermore, based on the description of the
estimation, it is known that all indicators have
A.Tr4 Information quality of report and evaluation
met all the requirements statistically. Therefore,
A.Par1 Involving the community of report and evaluation
in the next sub chapter discussion of the
A.Par2 As an aspirations container of report and
estimation carried out in the form of a
deepening of the facts relevant to the field of
A.Par3 Satisfaction levels of participation of
report and evaluation
research purposes.
A.Par4 Formal objection mechanism of report and evaluation
A.Ak1 Documentation of decisions of report and evaluation
village financial
A.Ak2 The standard of decision making of
report and evaluation
management efficiency and effectiveness
A.Ak3 Audit system of report and evaluation
A.Ak4 Public complaints mechanism of report and evaluation
The efficiency and effectiveness of VFM referred to in this article are measured from the
Sources: Primary data is processed Note: *) Significant at the 5% level
implementation of continuous improvement and From the values of indicators loading of
application of the principles of good governance in VFM. In other words, an
variable of Act it can be concluded that the diversity of variables of Act successively more
efficient and effective VFM is applying both explained by the mechanism of disclosure of
aspects. Therefore, the discussion of the results of
associated with the information on report and evaluation, decisions
estimation
documentation of report and evaluation, formal implementation of both aspects. mechanisms objection of report and evaluation,
1. Plan (Musrenbang and Budgeting) as an aspiration container of report and
A. Musrenbang
evaluation, access to information of report and Based on estimates on the models known evaluation, the quality of information of report
that all indicators on transparency aspects of and evaluation, the satisfaction level of
musrenbang which are the information participation on report and evaluation, system
disclosure mechanism, the disclosure level of audit of report and evaluation, involving the
information, access to information and quality community of report and evaluation, standard
of information, its loading value not reached of decision-making of report and evaluation,
0.6. The low value of the indicators loading public complaints mechanism of report and
indicated that the principles of transparency in evaluation and information disclosure on the
village musrenbang have not been strong level of report and evaluation. In other words,
implemented. On field results also indicate that
142 International Journal of Social and Local Economic Governance (IJLEG)
Vol. 2, No. 2, October 2016, pages 136-151
information about the activities of the village realized through the process of aspiration at the musrenbang were never distributed to the
neighborhood level.
community. Small number of people who take Through participation in the development part in village musrenbang are villagers who
planning process, communities gain the same have received an invitation from the village
rights and the power to sue or get a fair share of government.
the benefits of development (Krina, 2003). In According Sedmihradskaa, (2015), only
addition, according to Speer (2012), the with greater transparency, the improved of
mechanisms of participatory governance can efficiency
improve reciprocal information flow between transparency will suppress the possibility of
can
be achieved
because
citizens and government about the preferences mismanagement. Transparency can improve
of the need for public goods and services. High effectiveness (Heald, 2003). Thus, to the
participation in the planning reflects the context of village musrenbang transparency
effectiveness of public participation in the should be a priority so that people know
planning process (Nurudin, et al, 2015). everything related to planning meetings so that
Community participation was found to have a they can participate. But the fact of this
dominant influence positively on the quality of research musrenbang precisely has not been
implementation (Drazkiewicz, et al, 2015). conducted in a transparent manner. Therefore,
Speer, (2012) research in Guatemala showed the weak implementation of village musrenbang
that participatory planning has increased transparency is expected to lead to low
alignment with efficiency and effectiveness of VFM.
government
spending
community preferences. Based on the Then from the four indicators measuring
description of the theoretical and empirical the level of village musrenbang participation,
studies it can be said that high community three of them which are involving the
participation in planning meetings and village community, as a place of aspiration and the
support the creation of efficiency and satisfaction level of participation demonstrate
effectiveness of VFM.
the value that is relatively good loading ie Furthermore, the four indicators of between 0.6 to 0.9. Only the indicator of formal
accountability of musrenbang show loading objection mechanism that has a loading value
values greater than 0.6. The value loading of below 0.6. The number of indicators loading of
accountability indicator of musrenbang musrenbang participation having value above
indicated that villages musrenbang have already
0.6 indicates that the village musrenbang tend implemented accountable. to have been implemented in a participatory
Basically, this village musrenbang activity manner.
is ordinary villagers’ forum for discussing the The high level of participation in village
various needs of the community to be addressed musrenbang activities is the result of effort of
through the role of the villages budget planned the manager of the village planning in
that openly conducted. After all of the series of collecting the citizen’s aspirations. This effort
musrenbang activities finished then the results done through two ways: through the informal
are compiled in a document that village meeting of citizens and official activities carried
planning document of Village Medium Term by village government. Collecting aspirations
Development Plan (RPJMDesa) for a period of through informal activities conducted on the
5 years and the Village Government Work Plan activities of citizens associations who regularly
(RKPDesa) for a period of 1 year. held in every Thursday night. Aspirations of the
In line with the views of Speer, (2012), people noted by the head of hamlet (Kadus) in
then in the context of this study, activity the format of its own fields. While the official
villages musrenbang tend to be done in a activities is the forum of village musrenbang on
participatory manner will directly benefit to the
a schedule determined by involving various accountability of the planning results. In other stakeholders. Documented aspirations of the
words, the application of the principle of people previously brought to the village
participation in all aspects of planning has also planning meetings to determine priorities. So
resulted in the achievement of the principles of although not all citizens attending village
accountability as well as the principle of musrenbang activities, participation of citizens
transparency. Likewise with a view of Wampler
Siagian, Maryunani, Sakti & Santoso, Efficiency And Effectiveness Analysis … 143
(2004) that in the planning, the community participation is also a problem though not as participation of accountability in the planning is
weak as in the aspect of budgetary very closely related. Based on the theoretical
transparency. According to Speer, (2012) in description then it can be said that the high
addition to bringing the benefits of public accountability of village musrenbang support
policy that actually serves as an accountability the creation of efficiency and effectiveness of
mechanism, the impact of participatory VFM.
governance tends to vary in line with citizen
B. Budgeting
involvement in participatory budgeting, for example, tends to
involvement.
Citizen
Budgeting activity is the village have more effect on the response of the government
domain as the manager. allocation of public resources. Boulding and Nevertheless, the budget documents prior to go Wampler (2010) research showed that through the audit process of regency participatory budgeting has increased the stakeholders. After that, before being passed portion of government spending allocated to into a village law that legally enforceable to be education, health and sanitation in Brazil. implemented, the documents of APBDesa Therefore, based on the results of model should be discussed with the agencies village estimation and analysis of the theoretical consultative body (BPD). This means that even aspects of budgetary participation has been budgeting is the domain of villages government supporting the efficiency and effectiveness of but that still rules the must be accountable to
VFM.
superiors government. Meanwhile, all the indicators measuring
The estimation results of the models accountability budgeting shows loading values suggest that three of the four indicators above 0.6. Robust accountability budgeting measuring the transparency of budgeting had indicates that budgeting activity has been made loading values below 0.6. The weak aspects of
role of budgeting budgeting transparency indicate low budget accountability in the VFM sourced from the honesty (Kopits and Craig, 1998). Moreover, APBDesa audit process conducted by regency Rubin (1996), considered the government stakeholders and the process of discussion with budget transparency as key factors of BPD institutions. Despite some weaknesses accountability. Transparency also serves to related to aspects of transparency, this improve the effectiveness (Heald, 2003). This mechanism has been considered as part of the means that the efficiency and effectiveness of
accountable.
The
accountability budgeting.
VFM requires a high degree of transparency thus improve the prevention of mismanagement
Accountability according to Aziz, et al (Sedmihradskaa, 2015). The importance of
(2015), requires the management of public budget information is the key factor for good
funds free from acts of abuse and corruption. governance, because the budget is the most
Meanwhile, according to Wellens and Jegers, important government policy document
(2014) accountability means is a responsibilities (OECD, 2002). Thus, the alleged strength of the
of the external and internal. Therefore, the transparency of budgeting will lead VFM
estimation model indicates that the budgeting inefficient and ineffective.
aspect has been done accountable would support the achievement of efficiency and
Furthermore, the role of participation in
effectiveness of VFM.
the budgeting aspect sourced from previous stages of musrenbang. Musrenbang aspects
2. Do (Implementation) involving public participation is intended to
Based on estimates of the model known capture the
aspiration needs to be that the 12 indicators on the implementation accommodated in budgeting. That is, the
aspect shows loading value greater than 0.6. involvement of citizens in the context of policy-
The high value of loading for all 12 indicators making has been accomplished. The estimation
on the implementation aspects of the results show that of the four indicators
implementation indicates that the VFM tend to measuring participation budgeting, 2 of them
be transparent, participatory and accountable. are the satisfaction level of participation and
These three aspects are on the implementation involve the community has a loading values
of interrelated to create a good VFM. were 0.573 and 0.395 or below 0.6. This
transparency on the indicates that the aspect of budgetary
Robust
implementation aspect probably because of the
144 International Journal of Social and Local Economic Governance (IJLEG)
Vol. 2, No. 2, October 2016, pages 136-151
executor must perform transparency to its stakeholders ie public and government employers. Coglianese (2009) says that transparency can help organize governance in two ways: i) presents a dialogue between policy makers and citizens before decisions are made; and ii) prevent officials errors through increasing threat and overall monitoring by the public. Participating communities would receive information about matters relating to a number of activities if they are involved in it. The public informed what activities are built in their village, what is the budget for the building, how much wages as well as a number of other related information. Thus, this transparency also can prevent fraud and manipulation (Harrison and Sayogo, 2014). Based on these descriptions, the strong transparency on the implementation aspect is a factor that strengthens the efficiency and effectiveness of VFM.
Meanwhile, the
implementation participation strengthening the statement of Drazkiewicz, et al, (2015) that the public participation has a positive dominant influence on the quality of implementation. The role of participation fairly well marked by the involvement of the community in the implementation of activities sourced from village finances. For example, all physical construction activities carried out by using the labor of local villagers. In this context, the role of participation cannot be separated from wages as workers compensation. Therefore, it was natural that the role of participation in this implementation shows good rate for their reward. Based on these descriptions, the strong participation in the implementation of this aspect can be a factor that strengthens the efficiency and effectiveness of VFM.
Lastly, the
accountability
of
implementation is also well contributed in VFM namely upward accountability (Shaoul, et al, 2012). According Wellens and Jegers, (2014) the responsibility of accountability is a means of external and internal to the organization's performance. In the context of VFM, accountability to superiors’ government carried as liabilities from village financial manager mandated by regulations. Accountability is done through submission of a report on the progress of implementation of the work that comes from the village budget. When the village government proposed a plan using the
budget for the next stage, must first report work progress. Thus, the high role of accountability in the implementation aspect of this can be said to be an indication of strengthening the efficiency and effectiveness of VFM.
3. Check (Control) The estimation results of the models show
that from 4 indicators measuring the transparency of supervision, only the mechanism of information disclosure that has a value loading of 0.822 (above 0.6). While the three other indicators are the level of information transparency, access to information and quality of information has value loading below 0.6. Low transparency of supervision indicates that the surveillance activities VFM tend not done in a transparent manner.
According to Speers, (2012) the mechanisms of participatory governance will improve the flow of information from the citizens to the government and vice versa. If so then the principle of transparency in oversight will be created through the operation of the principle of participation. Therefore, public participation in supervision should be able to push the manager VFM in implementing all activity originating from APBDesa to act transparently to the stakeholders especially the community. In other words, if there is high level concern of development activities from local village community in the village should in line with the attitudes and actions of financial village operators’ transparent in providing information. The availability of information is expected to encourage the community to participate in supervising so that public policies can provide optimal results for society (Harrison and Sayogo, 2014). If disclosure of information does not exist then it will be a hindrance transparency operationalization and limit the people's understanding of the policy (Mukhopadhyay, 2015). Lack of transparency reflects the lack of public accountability (Halachmi and Greiling, 2013). Thus, based on the estimates and theoretical view, it can be said that the lack of transparency of supervision will weaken the efficiency and effectiveness of VFM.
Then, from 4 indicators measuring the level of participation of supervisory activities, 2 of them are as an aspirations container and formal mechanisms of objection had loading values above 0.6. While the two other
Siagian, Maryunani, Sakti & Santoso, Efficiency And Effectiveness Analysis … 145
indicators that involve the community and the accountability. Thus, the alleged lack of satisfaction level of participation had loading
accountability of monitoring also undermines values below 0.6. These estimation results
the efficiency and effectiveness of VFM. indicate a problem with the participation of
4. Act (report and evaluation) oversight. In other words surveillance activities
From the estimation of the model is also in VFM in Asahan tend still not participatory. known that transparency, participation and
The weak participation role of monitoring accountability are good enough implemented in in the VFM contrary to Speer (2012) statement.
VFM. This is shown on the 12 indicators on According to Speer, (2012), the involvement of
this aspect shows the loading values greater citizens in monitoring the implementation of
than 0.6. Even the aspect of transparency has the project of increasing the efficiency of public
the highest loading value compared with other spending more. Likewise with the conclusion of
indicators. The high value of the loading of all the Pagan (2014) that the community
indicators on aspects of the Act indicates that participation in surveillance is one of the keys
the stage of report and evaluation has been to improving public services in developing
conducted in a transparent, participatory and countries. The idea behind community
accountable.
participation in monitoring public services is Kolstad and Wig (2009) said that greater that the members of the community are the ones access to information can raise the cost of who ultimately benefit from a successful corrupt behavior and rent-seeking. This means program. Therefore, they are considered to have that transparency becomes an important factor better incentives to monitor and should be given to suppress corrupt behavior. Thus, the high the responsibility of oversight (Stiglitz, 2002 in loading value of transparency of this report and Pagans, 2014). Thus, based on the results of the evaluation indicate that the poor irregularities in estimation and review of the literature, the weak VFM. In other words, it has been a factor participation surveillance allegedly causing supporting the efficiency and effectiveness of VFM inefficient and ineffective.
VFM.
Furthermore, of the four indicators Furthermore, the principle of participation measuring the accountability of supervisory also contributed quite well on report and activities, 3 of which are responsible for the evaluation stages. The high loading value of structure, access to audit reports and public participation of report and evaluation indicated complaints mechanism has a loading value of being implemented in a participatory below 0.6. Only indicator of auditing system manner. Citizen involvement in monitoring and that has a loading value above 0.6. The low evaluation, are more likely to improve the value of the indicator loading gauge indicates a efficiency of public spending (Speer, 2012). problem with the oversight accountability. Therefore, report and evaluation have been
In the context of supervision, the type of implemented in a participatory manner a factor accountability is upward accountability
supporting the efficiency and effectiveness of (Shaoul, et al, 2012). Oversight accountability
VFM.
is to the superiors’ government and to the While the principle of accountability also community carried as liabilities from village contributed quite well on report and evaluation financial manager mandated by regulations. stages. In other words, the high loading value of Accountability is done through submission of accountability of report and evaluation progress reports on all activities of resource use indicated that the report and evaluation have APBDesa. When the village government been implemented accountably. proposed a plan using the budget for the next
stage, must first submit a report before the use Accountability according to Almquist et al, of funds disbursed. According Faguet (2014) if
(2013) was among the government to the public accountability is not running down to the
against the use of public resources. In terms of people who consume the services and local
report and evaluation VFM, the kind of public goods, then the local authorities only
accountability should upward and downward have the strong incentive to prioritizes higher
accountability (Shaoul, et al, 2012). However response to the government and weak incentive
Faguet (2014) explains that in accountability, of local residents. It means upward
local authorities only have the strong prioritizes accountability
incentive response to higher government and
146 International Journal of Social and Local Economic Governance (IJLEG)
Vol. 2, No. 2, October 2016, pages 136-151
weak incentive to the needs of local residents. It transparency. Yet according to Rubin (1996), means that upward accountability can ignore
transparency in government budgets is a key downward accountability. Thus, based on the
factor of accountability and a means to restore estimates and view the literature it can be said
the capacity of the government. Higher to achieve of accountability on report and
transparency, calling for increased efficiency, evaluation support the creation of efficiency
increased accountability or prevention of and effectiveness of VFM.
mismanagement (Sedmihradskaa, 2015). In Based on the analysis of efficiency and
other words for this musrenbang context of effectiveness of VFM is known that although
transparency to the public should be a priority the aspects of continuous improvement has
so that the various elements of the community been made, but there are still some aspects of
can know and participate participate. good governance are still problematic.
Meanwhile, the transparency of the Problems in the aspect of good governance are
budgeting activity is also an issue, especially known from weak implementation of the
the level of information disclosure, access to principles of good governance in some aspects
information and information quality. Moreover, of continuous improvement, especially in the
in this budgeting there is also a problem that the aspect of Plan and Check. Therefore, in the