Authors: SUTARYO, IKE ARUM NAVIANTIA and MUHTAR

Abstract

We investigate the effect of local government characteristics namely APBD (Regional Budget for Revenue and Expenditure) ratification timeliness, local government complexity, financial supervision, LKPD (local government financial statement) submission timeliness,and local government size on the audit opinion of 1,034 local governments' financial statement in Indonesia for 2014 and 2015 fiscal periods. This research uses secondary dataand purposive sampling method. Data analysis is conducted with unbalanced panel data regression using random effect model. The results show that the local government complexity, financial supervision, and size have a positive effect on the audit opinion of LKPD; the timeliness of APBD ratification and LKPD submission affect audit opinion on LKPD; local government type have significant effect while geographical location and surplus/deficit of budget realization do not affect the audit opinion on LKPD. The result implies that the timeliness of local government financial management and supervision are substantial factors in determining the audit opinion on LKPD in Indonesia. Therefore, it isimportant for local governments to meet the timeliness of financial processes and improvethe quality of financial supervision in order to build on the accountability of local government financial management through the audit opinion on LKPD

Keywords: Audit opinion, Financial Supervision, Government complexity, Local government size.

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