THE ROLE OF INTERNAL CONTROL SYSTEM AND AUDIT OPINION IN FINANCIAL REPORTING ACCOUNTABILITY OF INDONESIAN LOCAL GOVERMENTS

Abstract

Financial reporting accountability is a fundamental pillar of good governance and public trust. This study examines the effects of internal control systems and audit opinions on the financial reporting accountability of local government agencies in Depok City, Indonesia. Using a cross-sectional survey with a quantitative approach, data were collected through questionnaires, interviews, and documentation. The novelty of this study lies in simultaneously examining the influence of internal control systems and audit opinions on financial reporting accountability at the local government level, providing empirical evidence from an Indonesian municipal context. The findings indicate that effective internal control systems significantly enhance financial reporting accountability, although weaknesses in the financial competencies of personnel remain a challenge. In contrast, audit opinions do not significantly affect accountability because they primarily assess the fairness of financial statements rather than the transparency and accountability of government performance. These findings suggest that strengthening internal control mechanisms alone is insufficient without improving human resource capacity and organizational governance. The study concludes that financial reporting accountability is more strongly driven by effective internal controls than by external audit opinions. The findings provide practical implications for policymakers to strengthen governance through capacity building, integrity-based organizational culture, transparent performance evaluation, and greater public participation in financial oversight