PREFACE

The 1st International Conference on Business and Accounting Studies

(ICBAS) was held on November 4-5, 2016 in Jember, East Java, and was hosted by
the Faculty of Economics and Business, University of Jember. The theme of the
Conference was Socio-Culture Entrepreneurship and Corporate Accountability.
There were six subthemes of the papers presented in this Conference, i.e.: (1)
Accounting Information System/Management Information System (AMS); (2)
Capital Market (CPM); (3) Entrepreneurship, Small and Medium Enterprise (ENT);
(4) Financial Accounting and Auditing (FAA); (5) Sharia (SHA); (6) Taxation and
Public Sector (TPS).
The Proceedings contains most of the papers presented during the
Conference. There are 60 papers published in these proceeding consist of 5 (five)
papers under AMS subtheme; 5 (five) papers under CPM subtheme; 9 (nine) papers
under ENT subtheme; 20 papers under FAA subtheme; 8 (eight) papers under SHA
subtheme; and 13 papers under TPS subtheme.
I would like to thank all participants for their contributions to the Conference
program and for their contributions to these Proceedings. Also, I would like to
extend my appreciation to my colleagues at the Faculty of Economics and Business,
University of Jember for their support to this Conference. Finally, I would like to
express my sincere thanks to all members of the Organizing Committee of the 1 st
ICBAS for their hard work before the Conference, during the Conference, and after
the Conference including preparing these Proceedings.

Chairman of the Organizing Committee

Dr. Yosefa Sayekti, SE, M.Comm, Ak, CA

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 TABLE OF CONTENTS

ACCOUNTING INFORMATION SYSTEM/MANAGEMENT

INFORMATION SYSTEM ......................................................................... 1
AMS-01 Cloud Computing in the Public Sector.......................................... 1
AMS-02 Effectiveness Delone and Mclane Information System Success
Model (D & M Is Success Model) ................................................ 12
AMS-03 Factors Affecting Information Systems Performance On
Regional Planning Departement in Bondowoso District .............. 22
AMS-05 Application of Accounting Environment in Hospital Clinic
Jember ........................................................................................... 36
AMS-06 Accounting Education Research: Extended Dramaturgical
Interventionism Approach ............................................................. 48

CAPITAL MARKET .................................................................................... 62

CPM-01 Effect of Size, Profitability and Leverage Disclosure of
Corporate Social Responsibility (Empirical Study in
Manufacturing Company Listed in Indonesia Stock Exchange
Year 2013 To 2015) ...................................................................... 62
CPM-03 The Investor's "Individualistic" Behavior in Sukuk Investment ... 72
CPM-05 Indonesia Capital Market Reaction to The Implementation
Ramadan Month 2016 In Indonesia Stock Exchange (Studies
Case Companies Registered in JII Index 2016) ............................ 85
CPM-06 Does Monday Effect Really Occur in Indonesia? Evidence
From Indexed LQ45 Companies ................................................... 93
CPM-07 Optimal Portfolio Analysis of Formation of Food and Beverage
Industry Listed in Indonesia Stock Exchange Case Study 2011-
2014 ............................................................................................... 105

ii
ENTERPRENEURSHIP, SMALL AND MEDIUM ENTERPRISE ....... 115
ENT-01 The Effect of Price, Promotion and Quality Product to Purchase
Decision On Moment in Batam (Case Study in Pt. Moment
Global International) ..................................................................... 115
ENT-02 Performance Improvement Model Home Based Manufacturer
Tahu and Tempe Groups Based in The District of Jember ........... 144
ENT-03 Analysis of Micro and Small Industry Performance in Indonesia,
2013-2015...................................................................................... 158
ENT-06 Values of Global Business Paradigm Share Culture of Value:
Understanding Locality and Culture Values as Basic Growth
and Productivity ............................................................................ 181
ENT-07 Building Social Capital Towards Growth Smes: A Case of Tapai
SMEs ............................................................................................ 188
ENT-08 A Var Approach to Examines the Economics and Sosial Factors
to The Enterpreneur in Indonesia .................................................. 196
ENT-09 Social Capital Roles in Creating Tourism Entreprenuer Through
Preserving Culture in The Village of Padang Tegal, District of
Ubud, Gianyar, Bali) ..................................................................... 205
ENT-10 The Impact of Macroeconomics on SMES Profitability in
Indonesia: Evidence Vector Autoregression ................................. 215
ENT-12 Creation Excellence Small and Medium Enterprise to Compete
in National and International Markets ........................................... 233

FINANCIAL ACCOUNTING AND AUDITING ....................................... 246

FAA-01 Review of The Implementation of Understanding the Actors
Smes Financial Accounting Standards Entities Without Public
Accountability (Fase WPA) in The Process of Preparation of
Financial Statements (Case Study On Smes Performers District
of Batam City) ............................................................................ 246
FAA-02 Potential Fraud on Capitation Funds Management of National
Social Health Insurance Scheme................................................. 274

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FAA-03 Accounting Interpretation as Ngudi Kasampurnan(Thought
Concepts Java Culture: Abdullah Ciptoprawiro/ 1986) .............. 284
FAA-04 Comparison Conventional Audit with Perspective Shariah
Audit ..................................................................................... 296
FAA-05 The Making of Sosial Assistance Budgeting Performance
Based ..................................................................................... 310
FAA-06 Strategic Csr, Production Performance, And Business
Efficiency in Sugar Factories ...................................................... 320
FAA-07 Changes in World Oil Prices and Fiscal Policy in Indonesia
(Dynamic Systems Model Approach)......................................... 335
FAA-08 The Meaning of Assets, Asset Sources, And Reporting Form in
Al-Imam Islamic Boarding House .............................................. 348
FAA-09 Financial Accountability in The Management of Village
Fundallocation ............................................................................ 359
FAA -10 The Analysis Relationship Between Professionalism and
Ethics of the Quality of Audit ..................................................... 367
FAA-15 Ratio Analysis to Measure Accounting Performance in Mineral
Water Territory Company (PDAM) Of Probolinggo. ................ 375
FAA-16 Factory Overhead Costs (FOH) Accuracy Analysis with Using
Activity Based Costing Method to Determined Cost of Goods
Manufactured in The CV. Agnieh Printing Lumajang ............... 386
FAA-17 Determinant of The Sustainable Growth Rate ............................ 401
FAA-19 Standard Cost Analysis of Raw Materials and Direct Labor
Cost as direct Production Cost Control at UD. Sinar Abadi
Probolinggo ................................................................................. 417
FAA-21 Analysis Services Quality, Complaint Handling, Image
Satisfaction and Loyalty in PT Bank BNI 46 Branch Jember .... 427
FAA-22 Empirical Analysis of Audit Delay: A Study of Companies
Listed in Indonesia Stock Index Sharia ...................................... 440
FAA-25 Differential Analysis in Decision Making Accept or Reject
Special Orders On UD. Mayong Sari ......................................... 456

iv
FAA-26 The Effect of Individual Commitment and Pattern of Feedback
Presentation On Judgment of Usefulness in The Context Of
Cost Allocation ........................................................................... 470
FAA-27 The Effect of Good Corporate Governance and Audit Quality
On Earning Management ............................................................ 485
FAA-28 Increasing Cassava Farmers Income by Creating Value Added
of Cassava as Tape and Chips..................................................... 494

SHARIA .......................................................................................................... 507

SHA-01 Measuring The Performance of Islamic Banking with Syaria
Value Added Approach: Implementation of Sharia Enterprise
Theory in Islamic Banking in Indonesia ....................................... 507
SHA-02 The Finance Reporting Construction of Mosque: Sharia Basis .... 522
SHA-03 Implementation of Psak 105 In Funding and and Financing of
Mudharabah Transaction On Syariah BMT (Case Study On
KSPS BMT UGT of Sidogiri Indonesia Branch of Leces) ........... 536
SHA-05 Theory of Islamic Accounting: Accounting Perspective of Social
and Responsibility ......................................................................... 548
SHA-06 Optimization of Quality in Islamic Banking Finance
Mudharabah ................................................................................... 570
SHA-07 The Value of Islamic Social Reporting Disclosure ....................... 579
SHA-08 The Treatment Principles Accounting of Zakat, Infaq, and
Sedekah Based On PSAK 109 ...................................................... 591
SHA-11 The Views of Islamic Financial Institutions On Audit Shari'a ..... 601

TAXATION AND PUBLIC SECTOR ......................................................... 614

TPS-01 The Village's Financial Management Accountability (Case

Study on Klompangan Village Ajung Jember Regency) .............. 614
TPS-02 Acquaint The Management of Inventories in The Application of
Accrual-Based Government Accounting Standards ...................... 639

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TPS-03 The Implementation of Fixed Assets Administration and
Accounting Based On Accrual in The Government of
Bondowoso Regency ..................................................................... 651
TPS-04 Detectors Voluntary Compliance in Tax Amnesty Program ........ 662
TPS-05 Analysis of Performance Measurement District Government
Bondowoso in The Period 2010-2014 Using The Principles of
Value for Money ........................................................................... 671
TPS-07 The Trend of National Government During the Reign of Jember
M.Z.A. Jalal in 2010 2014 ......................................................... 687
TPS-08 Factors Affecting On the Budget Absorbtion at Health
Department of Bondowoso Regency............................................. 699
TPS-09 Tax Planning Through A Method Of Depreciation And
Adjustment Fiscal To Minimize The Tax Expense (Case Studies
On PT Dwijaya Gasindo Makmur) ............................................... 706
TPS-10 The Rule of E-Catalogue in Procurement of Government's
Goods/Services .............................................................................. 719
TPS-11 Effect of Application of Accounting Standards Administration
and Good Governance of the Quality of Financial Statements
(Case Study On Local Governments Banyuwangi) ...................... 730
TPS-12 Optimization of Idle State Asset: A Framework ........................... 747
TPS-13 Microfinance Institution and Household Institution in Jember
Regency for Finance Inclusive ...................................................... 758
TPS-14 The Mapping of Audit Opinions, the Finding of the Audit by
BPK, Local Government Financial Capability, and Incentive
Funds of District in Indonesia ....................................................... 771

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AMS-01

CLOUD COMPUTING IN THE PUBLIC SECTOR

Diana Sugiyantari
Purnamie Titisari
Sumani
University of Jember
sveta.mirana@gmail.com

ABSTRACT

Cloud computing is the application of computer-based information systems by

utilizing the internet. Cloud computing can be accessed from any tool from any
location and origin of the connected network. Cloud computing also offers excellent
service 24 hours a day and 7 days a week, consumers need only pay based on the
resources they use. The main issues in cloud computing is security and privacy. The
provider always offer more security and privacy, in addition to a variety of
convenience and cost efficient in their products. Cloud computing has penetrated all
areas of Government, including as E-government. Cloud computing is considered
able to suppress corruption and improve government performance in serving the
community. This study describes the benefits, barriers, and challenges the adoption
of cloud computing for Government based on a wide range of literature. The study
also various things that must be prepared to adoption this application.

Keywords: cloud computing, public sector, information system

1. Introduction

Excellent service from the public prosecution is one of the main driving
factors of the public sector in utilizing computer-based information technology.
Currently the development of computer-based technology from the latest is cloud
computing. Cloud computing is "a means for enabling on-demand access to shared
and scalable pools of computing resources with the goal of minimizing management
effort or service provider interaction." (The National Institute of Standards and
Technology/NIST in GAO, 2016; and Sofana, 2012). The Internet is regarded as a
large cloud. Cloud computing for the public sector are usually called e-Government.
e-Government is applied in various forms. In Indonesia e-Gov apply in
procurement services, taxation and licensing. In Canada used in 77 (seventy-seven)

1
different types of service, in Singapore to apply for submission of questions,
licensing and management of documents, while in Malaysia for electronic
procurement, E-services and taxation (Hardjaloka, 2014). Cloud computing allows
an agency to pay for only the IT services it uses. Purchasing it services through a
provider enables agencies avoid to paying for all the assets (e.g., hardware, software,
networks). According to The Office of Management and Budget (OMB), cloud
computing is economical, flexible, and fast (GAO, 2016). Based on the research of
Alshomrani and Qamar (2013) the benefits of cloud computing for the public sector
are Availability and Accessibility, Cost savings, Efficiency, Flexibility, and
Scalability. Sofana (2012:24) says cloud computing is considered more
environmentally friendly, more cost effective and faster.
To take advantage of these benefits, Information and Communications Technology
(ICT) investment in Indonesia's Government reaches Rp 14 trillion (US $ 1.2 billion)
in 2013 and Rp 36 Trillion (US $ 2.8 Billion) in 2014 (Anggono, Ministry of
communication and Information Technology of the Republic of Indonesia). The
United States government plan to spend more than $ 2 billion on cloud computing
services in fiscal year 2016 (GAO-Highlights, 2016 : 3) and the Australian
Government spends approximately $ 6 billion in 2011-2012. (Australian
Government Department of finance, 2014).
The adoption of cloud computing in Government is also facing some challenges and
barriers. Effective challenges in e-government are classified into three groups that
include social, economic and political barriers (Hashemi et al (2013). While
according to Tsaravas & Themistocleous (2011) Barriers of E-Government Does
classified into four groups that include Social, Technological, Organizational, and
Policy and. Sen (2013) three critical challenges in cloud computing are regulatory,
security and privacy issues.
The following research is trying to illustrate the benefits, challenges and barriers of
cloud computing for government. Researchers want to find out what the benefits,
barriers and challenges in the adoption of cloud computing in the public sector?

2
2. Literature Review

2.1 Cloud Computing

There is some notion of cloud computing from different articles or books,

among them:
Cloud computing is internet based technology offers computing resources as a
service to end users support various IT business process (Ramamoorthy, 2016).
Cloud computing is the combined utilization of computer technology (computing)
and cloud-based development (Jamil, 2016:4). Cloud computing is "a means for
enabling on-demand access to shared and scalable pools of computing resources with
the goal of minimizing management effort or service provider interaction." (The
National Institute of Standards and Technology/NIST in GAO, 2016; and Sofana,
2012:9). Cloud computing is a model of computation, where activities of processing,
storage, software, and other services are provided as a source of virtual integrated
into one network. The network generally used is internet (Laudon, 2015:190).
Of the various opinions of the above can be said that cloud computing is a
computer-based data storage processing for end users by leveraging the internet.
According to Jamil (2016:8); Sofana (2011:11); Hashemi URet.eal (2013);
Alshomrani and Qamar (2013); and Gen. (2011) Here are five characteristics cloud
computing :

1. On demand self services means Using this feature when needed

the customer can easily and automatically access to computing facilities like
servers, net, storage and soon from any provider..
2. Ubiquitous/Broad network acces: It implies that the facilities are accessible on
the net and they can be used following standard methods like laptops and mobile
phones.
3. Location Resource pooling: This features pools, customers needed different
resources in the same place dynamically by the providers include the storage,
memory, the bandwidth of the net and the virtual machines..
4. Rapid elasticity Using this feature, the user can always be updated and improved
and accessible anytime for the users.

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5. Measured services. All these features cover the coherence and appearance of the
clouds.
Laudon (2015:194); Hashemi et al (2013); Bassi and Chaudhary (2015); Sen
(2013); Alshomrani and Qamar (2013); Wyld (2010); and Kavitha (2014) does NIST
development models include the aim and the identity of the cloud and the way they
are settled.

1. Public cloud: it is for the public use and accessible for everyone, in which the
resources, applications and web-services are provided over the internet and
public organizations help to provide infrastructure.
2. The Private cloud: Private cloud is for the exclusive use and only for an
organization, the Organization's members can just access the data, services and
applications.
3. Community cloud: Infrastructure can be shared between one or some
organizations with specific community. Its cost is cheaper than the public cloud
but more than the private cloud
4. Hybrid cloud: Hybrid ones which are combination of two or more (public,
private and community) clouds. It is in fact an environment which uses multiple
cloud providers, internal and external suppliers.
The benefits of using cloud computing by Sofana (2012:24) cloud computing
is considered more environmentally friendly because less electricity use so that less
use of solar, meaning less pollution smoke. Cloud computing more cheaper because
users pay only needed, faster because the internet support the faster and cheaper.
Challenges in cloud computing is security, performance, availability, exitra.
Cloud computing applications from Iphone can help the effectiveness of
corporate mobility, flexible, cost-effective, and efficient electricity (Laudon, 2015).
The main issues in cloud computing is the data security and reliance on the cloud
service provider and internet network. Cloud computing is an internet-based
application, where there is a negative side of the utilization of the internet in job that
is the threat of malicious software, hackers and computer crimes, internal threats
from employees, legal, and health disorders.

4
3. Reseach Method

Research methods researchers use is descriptive qualitative research methods

with the study of literature. This researcher collect data using documentation
method. Types of data used in this research is secondary data in the form of the
words, the images have been recorded without the intervention of researchers in the
form of writing, record, sound, digital image, and which is contained in a document
such as a previous research, books, journals and articles related to research
(Daymon, 2008:344).

4. Result And Discussion

There are some benefits, challenges and barriers of E the author of the
Government auto summary of various studies. The following are some of the
benefits and challenges for those who offer cloud computing-based services and
applications:

Table 1
Benefits, Challenges, and Barriers of cloud computing
No. Benefits Challenges/Barriers
1 (Kavitha: 2014):
1. Cost saving 1. Security and Privacy
2. Mobile access 2. Lack of Standards
3. Scalability and Capacity 3. Continuously Evolving
4. Resource Maximization 4. Compliance Concern
5. Collaboration
6. Customization
2. Muhammed et.al (2015) 1. Poor quality can hinder
1. virtually unlimited processing, new the prompt availability of
storage capabilities (Uwaje: 2012) data.
2. Kuyoro et al (2012) enables the 2. The Fear of hackers
measuring of used resources 3. Companies are not
3. Hinchcliffe (2009) payment just for contented privacy.
only software used 4. Lack of technical skills
5. Lack of flexibility of the
policy or legal framework
6. Lack of detailed
information
7. ICT infrastructures and
social
needed to establish cloud
computing data centre

5
 across the country.
8. insecurity problem facing
the nation will also hinder
cloud technologies
providers from investing
in the country
3. Alshomrani and Qamar (2013);
1. Availability and Accessibility 1. Privacy
2. Cost saving 2. Lack of user control
3. Efficiency 3. System failure
4. Flexibility 4. Security
5. Scalability 5. On demand self service
6. Data leakage
4. Hashemi et.al (2013)
1. Rapid elasticity 1. social, economic and
2. Protection, Care and Technical political
Support barriers
3. Cost and Efficiency
4. Auditing and Logging
5. Disaster Recovery
6. Reporting and intelligently
7. Systems Integration and Software
LEGACY
8. Policies Management
9. Migrating to New Technologies
10. Green technology
11. Security

5 Dhumal (2015)
1. efficient delivery of services at door 1. Low technology literacy
step 2. Language Problem
2. reducing corruption 3. Contradiction regarding
3. Use four models of E-Gov Government services
a. Government to Government: 4. Lack of Internet facility in
increased the speed of work and Villages:
performance of government 5. Population
b. Government to Citizen: provides 24
hours and 7 days services to the
citizen and reduces the effort for
citizens accessing the government
services.
c. Government-to-Business: increased
transparency and speed of work
d. d. Government-to-Employee model:
pay employee's tax bills and other
payments
6. Tsaravas & Themistocleous (2011)

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 1. efficient and cost-effective (Carter 1. Technological: hardware
and Blanger, 2005; Tokunbo, 2010) and soft ware, computer
2. reduced the corruption power, data storage,
levels, enhanced transparency and security, privacy
increased revenue (Tokunbo, 2010). 2. Organisational: issues,
3. improved satisfaction levels among human resources,
citizens, reduced their governance, the
rejection against public sector complexity of
services and effaced personal governmental processes
interaction (Gilbert and Balestrini, 3. Policy: cost, security, data
2004; Kumar et al., 2007). ownership, privacy
a. 4. more responsive governance can be 4. Social: lack of skills, data
achieved by citizens ' involvement, ownership, citizen trust,
leaving instant feedback on receiving governance
services or government policies
(Brooks and Ofosu-Agyekum, 2010).
7. Hardjaloka (2014)
1. Increase the effectiveness, efficiency, 1. Lack of local regulations
and reduce costs governing the application
2. Increase public participation of e-Gov
3. Improving transparent and reducing 2. the existence of a
corruption tradition of sharing
4. Improve services information and creating
documentation not yet
3. reliable human resources
and the community's
ability in using
technologi.
4. Limited Access
Infrastructure
Source: the data processed
Based on some of the above research benefits e-Gov is a cost effective,
flexible, disaster recovery and improve performance, quality of service and
transparency of Government. While the major problem is security, human resources,
law, economic, social, and technology. The element of confidentiality also into
consideration because of the wealth of the country concerned and the important
secrets that should not be known by people who are not interested (Wardani: 2013).
In Indonesia to protect data security cloud computing is order by law PP number 82
year 2012 , Government mandating electronic service providers opens data center in
Indonesia. (tekno.kompas.com: 2014). It will make easier for security of governance
and communities data from other parties inside and outside the country.

7
(puspiptek.ristekdikti.go.id: 2016). With this rule will also encourage the growth of
the cloud computing industry in Indonesia. (kominfo.go.id: 2011)
E-government in Indonesia beginning 2000s the laws in the field of e-
Government is the instruction of the President (presidential instruction) number 3
year 2003 about the policies and Strategies of e-Government and Ministerial
Regulation Ministry of Communication and Information Technology of the Republic
of Indonesia number 28 year 2006 about the management of the domain name of the
Government, and law number 11 year 2008 of the information and electronic
transactions. (http://opensource.telkomspeedy.com/ ).
The Ministry of communications and Information in cooperation with various
parties doing e-Government Ranking Indonesia (PeGI) to provide an overview of
development, and the utilization of ICT in environmental governance, through the
evaluation of the whole, balanced, and objective, and get a map of the condition of
environmental governance in ICT utilization nationwide (kominfo.go.id, 2013).
Dimensions examined the dimensions of planning, policy, institutional,
infrastructure and applications. Based on the PeGI DKI Jakarta Province in year
2015 was ranked first, while for the Ministry/Agency assigned the Ministry of
finance and for LPNK occupied the Central Bureau of statistics (BPS)
(pegi.layanan.go.id)
e-Gov is the new system for the Organization of Government in Indonesia. Before
adopting this system the Government was supposed to hold some of the feasibility
study to evaluate the feasibility of the system. The feasibility study covering
technical, economic, operational, human resources and legal/political. (O'Brien and
Marrakech, 2014:155)
The feasibility of human resources include employees, managers,
customers/users and suppliers. Human resources readiness before the application is
applied to prevent resistance to the adoption of information and communication
technology and the impact of further could create harmonious environment within a
company or organization (Florestiyanto: 2012).

8
4. Conclusion
From some research it can be concluded that benefits the adoption of cloud
computing is efficient and cost-effective, reduced the corruption levels, enhanced
transparency, improve government performance and service quality, flexibility and
Disaster Recovery. While the challenges and barriers to adoption of cloud computing
is the Technology, social, economic, law and policy.
There are five things that should be hold by Government before adopting
cloud computing are operational feasibility, economic, technical, legal and human
resources/politics. This research is only wearing a secondary data source based on a
variety of research and reading material, which did not use primary sources such as
interviews and direct observation. For further research primary data is used in order
to make research results more realistic and up to date.

REFERENCES

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Shahzad Qamar. Cloud Based E-Government: Benefits and Challenges.
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No. 6, July 2013.
Anggono, Ibenk Dwi. eGovernment Indonesia Update 2015 2019. Ministry of
Communication and Information Technology the Republic of Indoensia
Bassi, Sonia and Anjali Chaudhary. 2015. Cloud Computing Data Security-
Background & Benefits. IJCSC. Volume 6. Number 1 september March
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Government: Challenges and Benefits. World Academy of Science,
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http://tekno.kompas.com/read/2014/06/23/1414000/Batu.Sandungan.Bisnis.ClouddiI
ndonesia
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computing/0/sorotan_media. 26 Oktober 2011

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http://puspiptek.ristekdikti.go.id/?p=380#JzKiscdLXQr4EmJZ.99 . 28 Mei 2016
https://id.wikipedia.org/wiki/Komputasi_awan
(http://opensource.telkomspeedy.com/).
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Indonesia--PeGI-/0/e_government
http://pegi.layanan.go.id/tabel-hasil-pegi-4/

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AMS-02

EFFECTIVENESS DELONE AND MCLANE

INFORMATION SYSTEM SUCCESS MODEL (D & M IS
SUCCESS MODEL)

Diah Wahyu Puspitarini

email : didie99@gmail.com

ABSTRACT

The development of information technology is growing rapidly, encourage (spurred)

companies both in the private sector and the public sector to use as processing and
information provider. However, not all information systems used can be beneficial to
both. For that we need a model to test the effectiveness of an information system.
DeLone and McLane information systems success model is one model that can be
used to test the success of information systems. From some research, there is a
difference between information systems that are voluntary and mandatory. It can be
concluded that D & M IS Success model is proven effective to test the success of an
information system because the model is simple and valid.
Keywords : information system, effectiveness, D & M IS Success model

1. Introduction
Advances in information technology as part of the era of globalization can
not be separated from modern society as it is today. Today information technology
has experienced rapid growth followed by progress in the field. With the rapid
advancement of information technology to grow and encourage companies to use
technology such as processing and information provider. Not only in the private
sector, public sector development of information systems has also increased.
According to O'Brien and Maracas (2011), the information system is a
combination of regular between people, hardware, software, communication
networks and data resources (fifth element is called the components of information
systems) that collect, transform and distribute information within an organization.
The information system consists of subsystems that can be broadly grouped into
operation support system and system management support. Operations support
systems (such as: transaction processing systems, process control systems and
enterprise collaboration systems) produces a variety of information for internal and

12
external purposes, but does not emphasize the specific information used by
management. The management support systems (such as management information
systems, decision support systems, and executive information systems) to provide
information in the form of reports and views for managers and business
professionals.
Jogiyanto (2007) distinguish failures in the implementation of an information
system into two aspects. The first is the technical aspect, the aspects related to the
system itself which is the technical quality of the information system. Poor technical
quality concerns still many mistakes writing program (syntax), logic errors and even
mistakes of information. While the second is the non-technical aspects, which is
associated with the perception of users of information systems that cause users want
or do not use information systems that have been developed.
The presence of information technology systems has given so much influence
over an organization, not just the organization but the effect extends to the business
processes and transactions of the organization. But if all information technology
systems are applied to the organization can be considered effective? Then how
organizations can determine the effectiveness of applied information technology
systems and how to create effective information technology system.
Many research have been conducted to measure the effectiveness of
information systems. One is the famous research study conducted by William H.
DeLone and Ephraim R. McLean in 1992. The success of the information technology
system model developed by DeLone & McLean (1992), quickly got a response
because it is a simple model but considered quite valid.
Based on the explanation above, this paper will discuss the effectiveness of
information systems using DeLone and McLane information systems success model.

2. Literatur Review
2.1 Information System
According to Mc. Leod (2001), Information Systems is a system that has the
ability to gather information from all sources and uses various media to display
information. The information system is data collected, classified and processed in
such a way that it becomes a unity of related information and support each other so

13
that it becomes a valuable information for those who receive. (Tafri D. Muhyuzir,
2001).
Meanwhile, according to Tata Sutabri (2005), the information system is a
system within an organization reconcile the needs of daily transaction processing
that supports managerial functions of the organization in strategic activities of an
organization to be able to provide certain outside parties with the reports required.
Leitch Rosses (in Jogiyanto 2005) suggested the information system is a system
within an organization that brings together the needs of daily transaction manager,
support the operation, managerial and strategic activities of an organization and
provide certain outside parties with the necessary reports.
Based on some of the above understanding can be concluded that the
information system is a set of data to be processed so as to produce information that
can be utilized by the organization.

2.2 Effectiveness Information System

Effectiveness is an essential element for achieving the goals and objectives
that have been determined by an organization. Effectiveness also called effective, if
the achievement of goals or targets that have been defined. This is in accordance
with the opinion of Mahmudi (2005) in his book "Public Sector Performance
Management" Effectiveness defines a relationship between the output with the goal,
the greater the contribution output to the achievement of the goal, the more effective
the organization, program or activity. While Mardiasmo (2002) states that the
effectiveness of the comparison of the level of achievement of program outcomes
(outputs) with the targets set (outcome).
According to Seddon, Graeser and Willcocks (2002), Effectiveness of
information systems is a value judgment made by the point of view of stakeholders,
regarding the net benefits obtained in using an information system. In Maharsi, 2000
stipulates that before the management of the organization to implement new
information technologies, they should consider the costs and benefits required to be
obtained (cost - benefit analysis). Information technology will be applied if the
benefits obtained by the use of information technology is greater than the costs
incurred to implement information technology.

14
 Effectiveness assessment of information systems necessary to evaluate how
far the planning information system has reached the goal - the goal is the availability
of local development planning information relevant accurate, timely and
accountable. According to Bodnar (2000), an indicator of the effectiveness of
technology-based information system that is data security, time, variety and
relevance of the report.

2.3 DeLone and McLane Information System Success Model

In the past two decades, many researchers have discussed the performance
evaluation of information systems. The criteria for evaluation and classification of
information system performance and success in many organizations have formulated.
One of the popular models in measuring the success of information systems is a
model developed by DeLone and McLean (1992), known as DeLone and McLean
Information Systems Success Model (D&M IS Success Model). The model proposed
by DeLone and McLean (1992) is a model that focuses on successful implementation
at the organizational level that is based on the causal relationships of the elements of a
system for measuring the success of information contained in this model. A
preliminary overview of this model is as Figure below

Figure 1.
DeLone and McLean Information Systems Success Model (1992.

From the picture above, it can be explained briefly that the success of
information systems is shown by the six dimensions, namely: system quality,
information quality, user satisfaction, use, individual impact and organizational

15
impact. The proposed model reflects the dependence of system quality and
information quality, which was later independently and together affect both elements
of use and user satisfaction. The amount of use of the element may affect the value of
user satisfaction positively and negatively. And use and user satisfaction severely
individual impact and further affects organizational impact.
DeLone and McLean then revised model into update DeLone and McLean
Information System Success Model (2003). In the model of this revision, DeLone and
McLean added dimension of quality service and combines two dimensions: the
influence of individuals (individual impact) and the influence of the organization
(organizational impact) into the dimensions of net benefits (net benefit) so that
itbecomes a model as figure 2 below:
Figure 2.
Update DeLone dan McLean Information System Success Model (2003)

This model is built on three components, namely the manufacture of the system,
the use of the system, and the impact of the use of the system. The components are:
1. System Quality
System quality was measured in terms of ease-of-use, functionality, reliability,
flexibility, data quality, portability, integration, and importance. Individual
impacts were measured as quality of work environment and job performance.
2. Information Quality
Information quality was measured in terms of accuracy, timeliness,
completeness, relevance, and consistency. Individual impact was measured in
terms decision-making performance, job effectiveness, and quality of work.

16
3. Service Quality
Service quality was measured in terms of up-to-date hardware and software
(tangible), dependable (reliability), employees give prompt service to users
(responsiveness), employees have the knowledge to do their job well (assurance),
and has users best interests at heart (empathy).
4. Intention to use/Use
System use was typically voluntary and was measured as frequency of use, time
of use, number of accesses, usage pattern, and dependency. Individual impacts
were measured in terms of job performance and decision-making performance.
5. User Satisfaction
User Satisfaction was measured in terms of in content, accuracy, format, easy to
use, dan timeliness
6. Net Benefit
Net Benefit was measured in terms of make job easier, usefall, increase
productivity, enchance effectiveness, improve job performance

3. Research Method
This research is a literature study research is research by studying and
reading various previously references of the problem which is the object of research,
namely management of inventories in local government. The literature used in the
form of books, articles and journals.

4. Discussion
From the model developed by DeLone and McLane there are few studies on
the effectiveness of information systems. Among Rai et al. (2002) conducted a study
to test the model DeLone and McLean (1992) in the context of the use of
information systems of voluntary. Data were collected by questionnaire of 274
students of the student information system (integrated student information system) at
Midwestern University. Data were analyzed with structural modeling (SEM). The
results of empirical tests support the model DeLone and McLean (1992), namely, the
quality of information significant effect on the use and user satisfaction, user

17
satisfaction significantly influence the use but not vice versa. For the record, Rai et
al. (2002) did not test the model to the organizational impact.
Roldan and Leal (2003) conducted a study on the model DeLone and
McLean (1992) in the field of Executive Information System (EIS) in Spain. This
study took a sample of 100 users of the system in 55 companies that have applied the
EIS. This study uses three variables to analyze the effect of the EIS to impact
individuals, namely: the speed of identification of the problem, the speed of
decision-making, and an extension of the analysis. While the variable is used as a
measure of the organization impact are: the vision of an organization that is spread,
the effectiveness of organizational decision making, and perceived organizational
performance. From the empirical results demonstrated that the quality system and
quality of information positively affects user satisfaction EIS, but found no
significant relationship between information quality and systems quality with the
use.
Hanmer (2004) conducted a study on the implementation of computerized
hospital information system in South Africa on a public hospital owned by the
government. The study is based on a model of update DeLone and McLean
information systems success model (2003). The empirical test results showed that
system quality affect the use, and information quality provides weak influence on
user satisfaction.
Livari (2005) conducted a study to test the model DeLone and McLean
(1992) on the accounting information system in the City Council Oulu, Finland.
Field studies done using longitudinal data by taking 78 samples are the primary users
of the system. Consistent with research Roldan and Leal (2003), this study
demonstrated that system quality is perceived is a significant predictor of the use and
user satisfaction. While the perceived information quality affects user satisfaction
but does not affect the use. Between the use of the user satisfaction not proved
mutually affect one another (reciprocaly). Individual impacts are significantly
influenced by user satisfaction, but not by use.
Elpez and Fink (2006) conducted an analysis of three case studies that
examine the success of information systems in the public sector in Western
Australia. From the literature study found some of the key variables that play an

18
important role in the success of information systems in the public sector that
differentiates it from the private sector. According to them several variables from a
user who was instrumental in the success of information systems in the public sector,
namely: meeting user requirements, system usability and performance, information
quality and use, user acceptance and IS ownership, and interactions with the rest of
the IT infrastructure.
Purwanto (2007) conducted a study to test the effectiveness of e-government
applications in Sragen government. The model used is DeLone and McLean IS
Success Model (2003). The test results revealed that the information quality models
of e-government and e-government service quality significantly affect e-government
user satisfaction. Instead, these results indicate a weak correlation between the
quality of e-government and e-government user satisfaction. The results showed no
significant relationships between the use of e-government and predictor variables,
such as system quality of e-government, e-government information quality, service
quality e-government and e-government user satisfaction. E-government user
satisfaction is predominantly affects all the benefits of e-government net compared
to the use of e-government. Therefore, the quality of e-government (such as system
quality, information quality, and service quality) to affect net benefits of e-
government through e-government user satisfaction.
Radityo and Zulaikha (2007) conducted a study to test the use of applications
SIMAWEB (Academic Information System Based Website) at the Faculty of
Economics, University of Diponegoro. As a result, only 2 of the 8 hypothesis that the
use of a significant positive effect on the impact of individual and individual impact
significant positive effect on the impact of the organization. While six other
hypotheses are not empirically proven: quality system does not have a significant
effect on the use, the quality of the system does not have a significant influence on
user satisfaction, and between use and user satisfaction not proved mutually affect
one another.
Istianingsih and Wijanto (2008) has conducted research related to the success
of information systems using variable service quality, system quality, information
quality, user satisfaction and individual performance. The results of these studies
provide evidence that the service quality, system quality, information quality positive

19
and significant impact on user satisfaction, as well as user satisfaction information
system positively affects the performance of individuals.

5. Conclusion
From the results of empirical studies above show that the context of the use
of voluntary and mandatory information systems give different results. Model
DeLone and McLean (1992) is more appropriate to be applied for the voluntary use
of information systems, it is proved by this model empirically supported by several
studies in the system of voluntary information (Rai et al. 2002; Hanmer 2004). While
several other studies (Roldan and Leal 2003; Livari 2005; Radityo and Zulaikha
2007) demonstrated the inaccuracy of measurement variables by the use of other
variables in the model. This may have been influenced by the nature of the use of
information systems is a mandatory policy.
The variabels used were system quality, information quality, service quality,
intention to use-use, user satisfaction and net benefits. Of course, with variable
variation of existing research results. So basically, DeLone and McLane information
systems success model can be used as a tool to measure the effectiveness of an
information system.

REFFERENCES

Andrianto, Nico. 2007. Transparasi dan Akuntabilitas Publik Melalui e-

Government. Malang: Bayumedia Publishing.
DeLone, W. H., and Ephraim R, McLean. 2003. The DeLone and McLean Model of
Information Systems Success: A Ten-Year Update. Journal of Management
of Information System. Vol. 19 Iss. 4, p. 9-30 (Diunduh dari:
http://www.mesharpe.com.)
Elpez, I. dan Fink, D. 2006. Information Systems Success in the Public Sector:
Stakeholders Perspectives and Emerging Alignment Model. Issues in
Informing Science and Information Technology (Volume 3). pp. 219-231.
Hanmer, Lyn. 2004. Assessment of Success of a Computerised Hospital Information
System in a Public Sector Hospital in South Africa. MEDINFO. IOS Press.
Februari 12. Available at:
cmbi.bjmu.edu.cn/news/report/2004/.../128_d040004715.pdf

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Istianingsih dan Wijayanto. 2008. Pengaruh Kualitas Sistem Informasi, Kualitas
Informasi dan Percived Usefulness terhadap Kepuasan Pengguna Software
Akuntansi. SNA IX. Pontianak
Jogiyanto HM, 2007, Model Kesuksesan Sistem Teknologi Informasi, Yogyakarta:
Andi Offset.
Livari, J. 2005. An Empirical Test of The DeLone McLean Model of Information
System Success Database for Advance in Information System (DFA).ISSN:
1532-0936 .Volume 36. ProQuest Company.
Muhyuzir, T.D., 2001, Analisa Perancangan Sistem Pengolahan Data, Cetakan
Kedua, PT. Elex Media Komputindo, Jakarta
OBrein, James A., (2005), Pengantar Sistem Informasi, Penerbit : Salemba 4,
Jakarta.
Purwanto, Arie, 2007. Ranvcangan dan Implementasi Model Pemeriksaan Kinerja
Badan Pemeriksa Keuangan republik Indonesia Atas Aplikasi E-
Government di Pemerintah Daerah : Studi Kasus di Kabupaten Sragen.
UGM, Yogyakarta
Radityo, Dody dan Zulaikha. 2007. Pengujian Model DeLone and McLean Dalam
Pengembangan Sistem Informasi Manajemen (Kajian Sebuah Kasus).SNA
X. Makasar.
Roldan, J.L. dan Leal, A. 2003. A Validation Test of an Adaptation of the DeLone
and McLeans Model in Spanish EIS Field. Idea Group Publishing.
Seddon, Peter B. Graeser, Valerie and Willcocks, Leslie P. (2002) Measuring
Organizational IS effectiveness: An Overview and Update of Senior
Management Perspectives.The Database for Advances in Information
Systems, 33 (2). ISSN 0095-0033.
Tata Sutabri, Sistem Informasi Manajemen, 2005, Yogyakarta, Andi.

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AMS-03

FACTORS AFFECTING INFORMATION SYSTEMS

PERFORMANCE ON REGIONAL PLANNING
DEPARTEMENT IN THE BONDOWOSO DISTRICT

Eko Slamet Wahyudi

University of Jember, Indonesia
Email : ekosw123@gmail.com

ABSTRACT

This study aims to determine affect information quality, tehnical personal

information system and user training and education on information systems
performance. Population were 56 employees. Sampling techniques used purposive
sampling by certain criteria. Samples were 35 employees. Analysis is used validity,
reliability and multiple linear regression test. The first hypothesis testing showing
that information systems quality have effects on information systems performance.
The second hypothesis testing showing that tehnical personal information system
have effects on information systems performance. The third hypothesis testing
showing that user training and education influence have effects on on information
systems performance. The fourth hypothesis testing showing that information
quality, tehnical personal information system and user training and education have
simultan effects on information systems performance.

Keywords: Quality Of Information, Tehnical Personal Information System And User

Training And Education And Information Systems Performance

1. Introduction
In globalization era, most people increasingly feel the information as one of the
staples in addition to the need for clothing, food and shelter. Along with it, the
information has been transformed into a commodity that can be traded. This situation
is evident with the development of business information services, such as television
stations, newspapers, radio and the Internet that has entered the joints of human life.
Rapid environmental changes, dynamic, and broad was supported by advances in
information technology in all fields. This has encouraged the transformation of
traditional society into an information society. The development of information
technology has had an impact in people's lives. Since the invention of the computer
in 1955, the civilization the world has entered the information age. Technology
information with computers as the driving motor has changed everything. Processing

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computer based information began to familiar people and until now has been a lot of
software that people can use as a data processing tool to generate information.
Information technology enables people to obtain information from a remote place in
a short time and at a low cost. Besides information technology led to a system that
we call information systems.
Information systems play a role in accounting for information processing
system of computer-based accounting plenty on offer with the aim to make it easy
for accountants to produce information that is reliable, relevant, timely, complete,
comprehensible, and tested. Accounting Information Systems can be defined as an
information system that is changing the business transaction into useful financial
information for the wearer.
Statement of Financial Accounting Concept No. 2, the Financial Accounting
Standards Board defines accounting as an information system. Financial accounting
standards also states that the primary purpose of accounting is to provide information
for decision makers. The information system will provide facilities for management
accountants to produce financial information that is reliable, relevant, timely,
understandable and tested so it will help in decision making. American Institute of
Certified Public Accountants (AICPA) recently has made a new certification is the
Certified Information Technology Professional (CITP). CITP documenting systems
expertise accountants are accountants who have extensive knowledge in technology
and understand how information technology can be used in a variety of
organizations. This reflects the AICPA recognition of the importance of technology
or information systems and its relation to accounting (Hand, 2007).
Both the poor performance of an Accounting Information System can be seen
from the user's decision Accounting Information System itself. An information
system will be successful if it is supported by some of the supporting factors.
According Soegiharto and Tjhai Fung Jen (in Almilia and Briliantien, 2006) some of
the factors that affect the performance of accounting information systems, among
others: the involvement of users in system development, engineering capabilities of
personal information systems, top management support, formalization of information
systems development, and training and user education Accounting Information
Systems. With training and education users of the system, the user can gain the

23
ability to identify information requirements and sincerity as well as the limitations
and capabilities of information systems can lead to improved performance. Prior to
accepting on the new system, someone must first be aware of these changes and then
will try to understand it. This can be achieved through proper training. Training will
also increase the confidence of employees in the face of the new system (Lester,
2010: 22).
The technical capability of personal user information systems play an
important role in the development of information systems to be able to produce
information to create accurate planning report. Therefore, every employee should be
able to master the use of computer-based systems that can process a number of
transactions quickly and integrated, can store data and retrieve the data in large
quantities, can reduce errors mathematical, generate timely reports in various forms,
and can be decision aids (Yullian, 2011: 6).
Many studies have been conducted to identify the factors that led to the
success of information systems. According to Bailey and Pearson (1983) in the
journal entitled Development of a Tool For Measuring and Analyzing Computer
User Satisfaction, classify the factors that affect the level of satisfaction of users of
the system to 39 variables to test the level of success of the system. Of the 39
variables, Pearson and Bailey determine the five most important variables, namely
accuracy, reliability, timeliness, relevancy, and confidence in the systems that will
affect end-user satisfaction.
Another eminent research study conducted by DeLone and McLean (1992).
Success model information system developed by DeLone & McLean (1992), quickly
got a response. The reason is their model is a simple model but it is considered
sufficiently valid by the researcher. Model DeLone and McLean (1992) is created
based on the study of theoretical and empirical information system created by
researchers in about the 1970s and 1980s. According to them, the success of an
information system can be represented by the qualitative characteristics of the
information system itself (system quality), the output quality of the information
system (information quality), consumption of the output (use), the user response
information system (user satisfaction), the influence information systems

24
performance to the user (individual impact), and its effect on the performance of the
organization (organizational impact).
As an effort to improve service quality REGIONAL PLANNING
DEPARTEMENT (BAPPEDA) at Bondowoso district hold a new system in order
to control the business processes and presenting reports in real time can be applied
properly so that the system will be more effective and efficient. For that
REGIONAL PLANNING DEPARTEMENT at Bondowoso district excitedly high
service implements these applications as a strategic move to meet the challenges
aimed at the creation of revenue assurance, efficiency of human resources, the
efficiency of system maintenance costs and hardware, uniformity of business
processes across units and subsidiaries REGIONAL PLANNING DEPARTEMENT
at Bondowoso district ease of system management, availability a centralized data
source, the credibility of the financial statements, the consolidated report more
effectively and speed cash flow can be monitored at any time. Through this
application, the service system can be done anywhere, anytime, cross-border / online
web bases, more scalable service assurance and decision making in order to answer
customer requests and complaints can be faster. This study aims to examine effect on
information quality, tehnical personal information system and user training and
education on information systems performance.

2. Literature Review and Hypothesis

2.1 The Effect Information Quality on Information Systems Performance
Information quality is associated with the concept of product information using
the data as input and information is defined as data that has been processed so as to
give meaning to the recipient information. information quality has a strong
significance to the influence the success of information systems. Thus, the system
designer must make full use four indicators of information quality that is complete
(completeness), mutual understanding (understandability), safety (security),
availability (availability), and accuracy (accuracy) of information that increase
behavioral intention and satisfaction of users to use the system information (DeLone

25
and McLean, 1992). Based on the description can be formulated the first hypothesis,
namely:
H1: information quality have significant effect on system information performance

2.2 The Effect Tehnical Personal Information System On Information Systems

Performance
Personal engineering capabilities here pertains to the capabilities of the users
of the information system. There are two types of specialist engineering capability is
the ability (include engineering design system associated with the system, the
computer, and the system model), and a general ability (include engineering analysis
relating to the organization, the human, and the surrounding environment). Jen
(2002) argues that the higher tehnical Personal Information System will improve due
to the positive relationship between Tehnical Personal Information System On
Information Systems Performance. Mechanical ability Personal user information
systems play an important role in the development of information systems to be able
to produce information to create accurate planning report. Therefore, every employee
should be able to master the use of computer-based systems that can process a
number of transactions quickly and integrated, can store data and retrieve the data in
large quantities, can reduce errors mathematical, generate timely reports in various
forms, and can be decision aids (Yullian, 2011: 6). Based on the description can be
formulated the first hypothesis, namely:
H2: Technical ability personal information systems have significant effect
information systems performance.

2.3 The Effect User Training and Education on Information Systems Performance
Their training and education, users can gain the ability to identify their
information requirements and sincerity as well as the limitations and capabilities of
information systems can lead to improved performance Montazemi (in Komara,
2005). Research Holmes and Nicholls (in Komara, 2005) showed that formal
training affect the preparation of accounting information. The other researchers have
proposed a positive relationship between training users, the attitude of the wearer,

26
and the success of information systems. Similarly, according to Cheney, Courtney
Sanders, Yaverbaum, and Nosek, Nelson and Cheney (in Komara, 2005).
To raise awareness and understanding of the importance of information and
utilization of information and communication technologies (e-literacy), both in
government and the autonomous regional government and in the community in order
to develop the information culture towards the realization of the information society
(information society). Improvement through awards / appreciation to all the human
resources in the field of information and communication central and local
governments and communities that are actively developing innovations into works
that are beneficial to the development and implementation of e-government. Based
on the above can be formulated in the second hypothesis, namely:
H3: User training and education on the system have a significant effect on
information systems performance.

2.4 The Relationship Between Information Quality, Tehnical Personal

Information System and User Training and Education on Information
Systems Performance Simultaneous.
Their personal technical ability and training and education, can improve
information systems performance. The other researchers have proposed a positive
relationship between training users, the attitude of the wearer, and the success of
information systems. Similarly, according to Cheney, Courtney Sanders,
Yaverbaum, and Nosek, Nelson and Cheney (in Komara, 2005). Improvement
through awards / appreciation to all resources both personal ability and training and
education can improve system performance. Based on the above can be formulated
third hypothesis, namely:
H4: Information Quality, Tehnical Personal Information System and User Training
and Education have significant effect as Simultaneous on information systems
performance.

3 Research Methods
The population were 56 employees on REGIONAL PLANNING
DEPARTEMENT at Bondowoso district. Sampling techniques using purposive

27
sampling that the sample selection by certain criteria, among others, employees who
used information systems in their work. Selected samples were 35 employees.
The method of collecting data on survey methods in the study done by that
personally administered questionnaires. Most questionnaires were distributed
directly to the respondents (personally administered questionnaires) that the
researcher can provide the necessary explanations and questionnaires can be
collected immediately after the questionnaires were collected after completion
questionnaire answered by the respondent.
Based on the background and issues that have been presented, the variables
used in this study were:
a. Information Quality Variable
Quality system means the quality of the combination of hardware and software
in information systems. The focus is the performance of the system, which refers to
how well the capabilities of the hardware, software, policies, procedures of
information systems can provide the information needs of users (DeLone and
McLean, 1992). Information quality is associated with the concept of product
information using the data as input and information is defined as data that has been
processed so as to give meaning to the recipient information. Information quality has
a strong significance to the influence the success of information systems. Thus, the
system designer must make full use four indicators of information quality that is
completeness, understandability, security, availability, and accuracy information that
enhances the behavioral intention and satisfaction of users to use the system
information (DeLone and McLean, 1992).
b. Tehnical Personal Information System Variable
Personal technical ability variable was related to the capabilities of the users of
the information system. There are two types of specialist engineering capability is
the ability (include engineering design system associated with the system, the
computer, and the system model), and a general ability (include engineering analysis
relating to the organization, the human, and the surrounding environment). This
variable relates to whether the ability of the staff have can be used on its activities
and whether any staff have at least one engineering capabilities.

28
c. User training and education Variable
User training and education on the system variable was related to the existence
of training and education in order to teach how to use the correct system to the staff
of the department as well as the benefits of the training and the education. Variables
used in this research is information system performance as a vehicle of REGIONAL
PLANNING DEPARTEMENT at Bondowoso district in its duty to provide services
to the community. Methods of data analysis using normality test, regresli linear and
hypothesis testing

4 Result
Multiple regression analysis is concerned with the study of a dependent variable
dependence on one or more independent variables in order to determine how much
influence the independent variable on the dependent variable. The results of multiple
linear regression analysis between the independent variables are information quality,
personal technical ability and user training and education on information system
performance dependent variable based on the regression coefficient regression
equation that can be established are:
Y = 0,024 + 0,510X1 + 0,035X2 + 0,281X3
Hypothesis testing is done by the F test is intended to determine the effect of
information quality (X1) and training programs and user education (X2) on the
dependent variable (performance information system) simultaneously. Based on data
analysis known F count equal to 8.641 and F table (k) (n-k-1), F table (0.05: 5: 30)
with a 5% significance of 2.49 was obtained. These results indicate that the F count>
F table (8.641> 2.49) then reject Ho and accept Ha means the simultaneous
information system performance REGIONAL PLANNING DEPARTEMENT at
Bondowoso district significant effect on information systems performance
REGIONAL PLANNING DEPARTEMENT staff Bondowoso.
Having performed classical assumption, the next step is to test t to interpret the
results of multiple regression analysis. This test is performed to determine whether
the independent variables affect the dependent variable significantly partially. The
results of multiple regression analysis is to determine the effect of information

29
quality, personal engineering capabilities, and training and education programs to the
users of information systems performance.
Based on the results of multiple linear regression analysis with t test (in this
case to examine the effect of partially) obtained results that may be expressed as
follows:
The information quality variable in the development process accounting
information system has a significance level (sig t) of 0.002. This value is less than
(= 0.05), then Ho is accepted, which means partial information quality variable
companies have a significant effect on information systems performance.
Tehnical Personal Information System variable at accounting information
system has a significance level (sig t) of 0.022. This value is less than (= 0.05),
then Ho is rejected, which means that in partial, personal techniques ability of
accounting information systems significantly affect information systems
performance. training and user education variable have a level of significance (sig t)
of 0.044. This value is less than (= 0.05), then Ho is rejected, which means in
partial training and user education programs have a significant effect on information
systems performance.
Based on t-test, then the coefficients of multiple linear regression equation can
be interpreted as follows:
a. The information quality variable companies have a significant effect on the
quality of corporate information means any increase or decrease in the
information quality variable companies one unit affect the performance
improvement of information systems employees.
b. Tehnical personal information system variable of accounting information
systems have a significant effect means that any increase in personal technical
ability variable accounting information system of the unit affect the increase or
decrease in information systems performance.
c. User training and education variable have a significant effect means that any
increase or decrease in variable and user education training program for the unit
affect the increase or decrease in information systems performance.

30
5 Discussion
5.1 Effect of Information Quality on Performance Information Systems.
The result showed that information quality had significant effect on Performance
Information Systems. Quality system means the quality of the combination of
hardware and software in information systems. The focus is the performance of the
system, which refers to how well the capabilities of the hardware, software, policies,
procedures of information systems can provide the information needs of users.
Quality system means the quality of the combination of hardware and software
in information systems. Quality system in this study is defined as the quality of
accounting software. The focus is the performance of the system, which refers to
how well the capabilities of the hardware, software, policies, and procedures of
information systems can provide information to the user's needs. In connection with
the development of a system and that the system can meet the expectations of users,
the system must be made so that the quality expectations of users to improve
performance can be achieved. Therefore, why would any system development should
be of a quality that is based on the reasons 1) consistency, 2) efficiency, 3) leading,
4) reducing costs, and 5) the ability to adapt.
Information quality systems can improve information systems performance.
Information systems quality is the performance of the system, which refers to how
well the capabilities of the hardware, software, policies, procedures of information
systems can provide the information the user needs. The better information systems
quality, the better the performance of the system so as to provide convenience for
users. Ease of use is an assertion about the decision-making process. If users believe
that the information system is easy to use, the user would use. Conversely, if users
feel confident that the information system is not easy to use, users will not use the
information system. The results support the research that has been done by Almilia
and Briliantien (2006) who found the result that the information quality variable in
the development of accounting information systems have significant effect
information systems performance.

31
5.2 The Effect Tehnical Personal Information System on Information Systems
Performance
Based on the results of statistical tests showed that Tehnical Personal
Information System had a significant effect on information systems performance.
Personal technical ability of accounting information systems affect information
systems performance. This suggests that employees who use the system should have
the capability information corresponding to the information systems used by
employees. Users of accounting information systems are required to have the ability
and skills about computers and information systems that are used in order to expedite
and improve system performance informasi.Adanya good skills in implementing
system will make the application of informai system also will be the better so that
the performance will also increase.
User information system that has the ability gained from education and
experience will improve performance in the use of information systems and will
continue to use to help finish the job because the user has sufficient knowledge and
ability. It means their personal engineering capabilities will provide enhanced
information systems performance. The results support the research that has been
done Syahdan (2006) who found that the result of personal technical ability variable
system of accounting information on information systems performance. According
Syahdan (2006), this was due to personal technical ability is very good information
systems that result in users of the system are satisfied with the existing system.

5.3 The Effect User Training and Education on Information systems

performance.
User training and education had significant on information systems
performance. The existence of training and user education programs affect
information systems performance. This means training and user education programs
affect information systems performance for education and training programs aimed
at the user that the user can use the system properly. With the training for employees
to make personal technical ability, the better so in running the system and employee
information as a brain-ware able to improve information systems performance to
expedite all access to information needed for the benefit of the company.

32
 Training and education will further enhance the skills and knowledge so that
employees can have the necessary skills to carry out their duties in the accounting
information system. Along with the procurement of expertise or skills of the income
received by individuals will increase. In the end the result of the user training and
education will open up an increase in the work and performance of information
systems. In the context of career advancement or promotion will be determined by
the possession of skills qualifications. While in difficult situations where the
organization tends to reduce the number of employees, user training and education
provide reinforcement for individuals with job security guarantees mastery of
competencies required by the agency. The results support the research that has been
done Komara (2005), Syahdan (2006) who found results that user training and
education variable on information systems performance.

5.4 The Relationship Between Information Quality, Tehnical Personal and User
Training and Education on Information Systems Performance Simultaneous
The results showed that there is influence between information quality, personal
technical ability of information systems and training programs and educational users
of the system on information systems performance simultaneously. Their personal
technical ability and training and education, can improve information systems
performance. The other researchers have proposed a positive relationship between
training users, the attitude of the wearer, and the success of information systems.
Similarly, according to Cheney, Courtney Sanders, Yaverbaum, and Nosek, Nelson
and Cheney (in Komara, 2005). Improvement through awards / appreciation to all
resources both personal ability and training and education can improve system
performance.

6 Conclusions and Suggestions

This study aimed to analyze the influence of factors such as information quality,
personal technical ability, user training and education on information systems
performance. Based on the hypothesis that the analysis can be drawn some
conclusions. The first hypothesis testing showing that information systems quality
affect information systems performance. These results are consistent with research
conducted by Komara (2005) and Syahdan (2006), but it is consistent with research

33
conducted by Almilia and Briliantien (2006). The second hypothesis testing results
showing that tehnical personal information system affect information systems
performance. These results are consistent with research conducted by Syahdan
(2006), but is not consistent with research conducted by Almilia and Briliantien
(2006). The third hypothesis testing results indicate that the user training and
education influence on information systems performance. These results are
consistent with research conducted by Komara (2005) and Syahdan (2006).
Suggestions for further research : the need to broaden the object of study, not
just a single company so it can be used as a reference to the interests of the
generalization problem. Also need to increase the population of the study in order to
more complex data can be read easily. It should be added during the interview
method of data collection in order to avoid the possibility of bias or not the objective
of the respondents in filling out questionnaires. For Regional Planning Departement
can improve information systems performance by continuing to do the evaluation
and development of the system in accordance with the company's internal
environment and procedures have been established, so it can continue to compete in
an increasingly competitive business environment.

REFERENCES

Almilia, Luciana Spica dan Briliantien, Irmaya. 2006. Faktor-Faktor yang

mempengaruhi Kinerja Sistem Informasi Akuntansi. Jumal Akuntansi.
Almilia, Luciana Spica dan Briliantien, Irmaya. 2007. Faktor-Faktor yang
mempengaruhi Kinerja Sistem Informasi Akuntansi. Jumal Akuntansi.
Bodnar, H. George dan William S. Hopewood. 1996. Sistem Informasi Akuntansi,
Terjemahan Indonesia. Jakarta: Penerbit Salemba Empat.
DeLone, W. H., and Mclean, E. R. 1992. Information System Success: The Quest for
the Dependent Variable, Information System Research, 3(1): 60-95.
Hall, James A. 2002. Sistem Informasi Akuntansi (Buku 1 & 2). Edisi Ketiga Jakarta:
Salemba Empat.
Handayani, Rini. 2007. Analisis Faktor-faktor Yang Mempengamhi Minat
Pemanfaat Sistem Informasi dan Penggunaan Sistem Informasi.
Symposium Nasional Akuntansi 10. Makasar.
Indriantoro, Nur dan Bambang Supumo. 1999. Metodologi Penelitian Bisnis untuk
Akuntansi dan Manajemen). Edisi pertama, cetakan pertama. Yogyakarta:
BPFE.
Jogiyanto. 2001. Sistem Teknologi dan Informasi. Yogyakarta : BPFE

34
Jusup, Al Haryono. 2001. Dasar-Dasar Akuntansi. Jilid 1, Edisi 6. Yogyakarta:
Bagian Penerbitan Sekolah Tinggi llmu Ekonomi YKPN.
Kieso, Donald E., Weygandt, Jerry J.,Warfield, Terry D. 2002. Akuntansi
Intermediate. Edisi kesepuluh. Jakarta: Penerbit Erlangga.
Komara, Acep. 2005. Analisis Faktor-Faktor yang mempengaruhi Kinerja Sistem
Informasi Akuntansi. Simposium Nasional Akuntansi 8. Solo.
Kuncoro, Mudrajad. 2001. Metode Kuantitatif: Teori dan Aplikasi untuk Bisnis dan
Ekonomi. Yogyakarta: UPP AMP YKPN.
Montazemi, A.R., 1988. Factor Affecting Information Satisfaction In The Context
Of The Small Business Environment. MIS Quarterly, Vol 12 (2): 239
256.
Tjhai Fung Jen. 2002. Faktor-Faktor Yang Mempengaruhi Kinerja Sistem Informasi
Akuntansi. Jurnal Bisnis dan Akuntansi Volume IV No. 2.

35
AMS-05

APPLICATION OF ACCOUNTING ENVIRONMENT

IN HOSPITAL CLINIC JEMBER
Norita Citra Y.
University of Muhammadiyah Jember

ABSTRACT

The purpose of this study was to examine the method of recording financial
statements Hospital Clinic Jember whether it has been implementing environmental
accounting system in terms of the allocation of waste management costs with
accounting theory existing environment.The data obtained in this study were
obtained through interviews, documentation and observation. Once all the required
data or information collected in this study, then presented and analyzed with
descriptive-qualitative manner. Data analysis is done by comparing the financial
statements presented by the Hospital Clinic Jember accounting theory existi ng
environment.

Keywords: environmental accounting, hospital, waste management costs

1. Introduction
The Company was established with a view to achieving certain goals. In
achieving these objectives, the company has always interacted with their
environment because the environment contribute and contribute to the company.
During this time the company is considered as an institution that can provide many
benefits to the surrounding community and society in general. The existence of the
company are considered able to provide the needs of society for consumption and
employment providers. Companies within the communities have a legitimacy to
move freely carry out its activities, but over time as the company's position becomes
very vital in the life of the community then the impact will be enormous. Impacts
that appear in each operational activity is certain to bring due to the environment
around the company was doing business. The negative impact that appear most
frequently found in each of their operational implementation of the company's
business is noise pollution, waste production, gaps, etc. and the impact of this kind is
called Eksternality

36
 In this case, pollution and waste production is one example of the negative
impact of the company's operational systems that require environmental accounting
as a control to corporate responsibility because waste management is carried out by
the company requires measurement, valuation, disclosure and reporting of waste
management costs of operational results company.
Calculation of costs in the waste handling required tersistematis their
accounting treatment properly. Treatment of the problem of waste handling
company's operational results to be very important in terms of control as a corporate
responsibility towards the environment.
Based on that later researchers tried to raise the issue of the environmental
accounting in research that will reveal the application of environmental accounting at
a company that has the potential to produce waste production, namely medical waste
in the public health service company. Outcomes in this study are:
5.5 The results of this study will be very useful for hospitals
5.6 Enrichment of teaching materials in an effort to support the accounting
curriculum
5.7 scientific publications in local journals with the ISSN or accredited national
journal "Journal of accounting" Unej Jember
5.8 Proceedings of the seminar or well-scale scientific symposium of local,
regional and national

2. Literature Study
2.1 Social and Environmental Accounting
Based on the theory that has been elaborated at the previous, social and
environmental accounting line for the company because the company trying to meet
the expectations of the parties in an attempt to gain legitimacy.
Stakeholder theories explain that the company will meet the expectations of
stakeholders of the company so that the company will attempt to deliver a report that
presents information about the company's efforts to fulfill its social responsibility
and the environment. Social and environmental accounting recognizable form of
corporate social responsibility (CSR) and sustainability reporting (SR). In addition,

37
social and environmental accounting can also be applied in the field of management
accounting and auditing.

2.2 Environmental Management Accounting

Environmental accounting is not limited to financial accounting, but also
applied to the environmental management accounting manajemen.Akuntansi used to
monitor and evaluate the efficiency of resource use, reducing the environmental
impact of operations perusahaan.Sesuai with previous theoretical discussion,
stakeholder theory, Arfan (2008: 112) identified the benefits of environmental
management for the enterprise, government, and society.

2.3 Social Audit

One part of the social accounting is a social audit. The purpose of social audit
is to assess the company's performance in relation to the expectations and needs of
the community (Deegan, 2004: 322). The results of social audit is used as a material
consideration to disclose the company's corporate social activities and as a basis for
dialogue with the public.

2.4 Environmental Accounting

Legitimacy is based on theory explains that the organization will periodically
operate in accordance with the limits and the value received by the community
around the company in an attempt to gain legitimacy. Norma company always
changes with changes from time to time so that the company must follow its
development. Venture companies following the change to gain legitimacy is a
process on an ongoing basis. The process to gain legitimacy with regard to the social
contract between made by the company with various parties in the community. The
company's performance is not only measured by the profit generated by the
company, but other performance measures related to the various parties
berkepentingan.Untuk have legitimate companies have an incentive to conduct social
activities that are expected by the community around the company's operations.
Failure to meet the expectations of the community will result in LOSS legitimacy
and then will have an impact on the support given by the public to the company.

38
Disclosure of the company through the annual financial statements of the company's
efforts to communicate the social activities that have been undertaken by the
company to gain legitimacy from the public so that the company's survival is
assured. The company will show that the company is able to fulfill the social
contract with the surrounding community.
While stakeholder theory considering the various groups (stakeholders) are
available in the community and bagimana expectations of stakeholder groups have a
bigger impact (smaller) against perusahaan.Teori this strategy has implications for
policy management in managing expectations stakeholder.Stakeholder companies
basically have different expectations about how the company operated. The
Company will seek to achieve the expectations of stakeholders ruling by
penyampaikan disclosures, including social and environmental reporting activities.

3. Research Methods
3.1 Types of research
This study is exploratory research, and actionresearch survey conducted in
the region Kab.Jember using triangulation method.

3.2 Data analysis

This study used a descriptive analysis and comparative method that is done
by collecting, preparing and analyzing data so that it gets a clear picture of the
issues, and analyze the data starts by collecting primary data obtained by the method
of interviews with stakeholders then developed and analyzed based on secondary
data such as financial statements. The analysis will provide an overview of the
application of accounting standards used are the foundation of the recognition,
measurement, disclosure and reporting.
The results of this analysis are then compared with the theories derived from
the literature that support. The purpose of this analysis is to determine the application
of environmental accounting Hospital Clinic Jember.
The design of the activities to be performed during the observation, among others:
1. Interviews with financial staff, HR staff and office staff to find out why
the use of standards used.

39
 2. Looking at the way financial reporting Hospital Clinic Jember
3. View the form of financial statements Hospital Clinic Jember
4. Comparing the differences in the financial statements Hospital Clinic
Jember with environmental accounting theory.

4. Results And Discussion

4.1 Research result
Hospital Clinic Jember is one of the hospitals that have met the standard
installation of Wastewater Management (WWTP) are based on the rules of the
government, in this case the Office of the Environment (MOE).
Equipment and machinery WWTP incinerator (incineration of hazardous wastes and
toxic / B3) has been installed in accordance with the layout of the site plan of the
building Hospital (RS). Hospitals already have the tools WWTP and Incenerator
since 2000.
Hospitals have hope useful to society and the corresponding expectations of
the patient, not to harm the public hospital. Because the waste water can endanger
the community if it is not processed according to standard rules.
To be sure, the hospital always produce waste, both medical waste, non-medical, B3,
and should be treated special division. If the non-medical waste is placed differently.
Inside the hospital placed a small garbage bins to facilitate waste collection
daily. Liquid medical waste, glass, plastic, needle too late treated at incinerator. To
get a perfect process, the combustion temperature of 1200 degrees B3 wear
celcius.Itu perfection incinerator. So that glass, plastic, needles will be ashes.
Impact of B3 waste is dangerous because there is the content of radiology,
infeksium of blood and fluids of the human body, so it must be destroyed as well. As
such infectious needle in the HIV virus if held small children can be infected.
Hospital waste water is processed and can be tested by freshwater fish. This
incinerator engine capacity of 50 kg.
Interviews with financial staff, HR staff and office staff to find out why the
use of standards used. Standart Environmental Accounting Application Regulation is
a standard that has been compiled and published to provide guidance in every

40
environmental management assignment. As well as in waste water management
stipulated in decree Kep-03 / Men. KLH / VI / 1993 on wastewater.
1. General Standart
Common standards are conducted in order to process the application execution
environment accounting Hospital Hospital Clinic Jember is by preparing the
budget on planned activities to be conducted in the management of municipal
waste sakit.Setiap waste control activities must also do research to find out
whether it's activities on the ground running well or not.
2. Standard Implementation
In the management of the environment, there are three components that must be
managed and monitored, these components are abiotic components (water, air,
soil, etc.) kompenen biotic (flora and fauna), and social components.
Analysis Examination of Waste and Wastewater Levy regularly conducted
every month also did not experience any difference. The activities carried out well
costs are not increased. Standard wastewater treatment was appropriate. Basically,
the environmental costs are always related to the cost of products, processes, systems
or facilities essential to making better management decisions. The portrayal of the
environmental costs of a company that depends on the intention of the company
itself to use the information generated from the information lingkungan.Biaya
environmental costs represent costs incurred by the company due to environmental
degradation.
It is also revealed by the Hospital Clinic Jember that: "Environmental costs
as expenses - costs incurred relating to cope with the environmental impact both for
the management of waste generated by the operations of the company and the social
impact of the operations of the company."

Recognition
Recognition of the problem associated with the transaction will be recorded
or not into the recording system, and thus the transaction will affect the company's
financial statements. Hospital Clinic Jember recognize these elements as an expense
when these costs are already used in the company's operations in managing the
environment

41
Measurement
Hospital Clinic Jember in measuring environmental costs (in terms of waste
treatment costs) using monetary units based on the costs incurred and the realization
of the budget taken from the previous period

Presentation
Presentation of issues related to how a financial information will be presented
in the financial statements. Costs incurred in terms of environmental management
(waste management) at the Hospital Clinic Jember is presented together with other
similar fee to the sub overheads and the cost of direct labor and direct material costs
and other indirect costs

Disclosures
The disclosure relates to a problem that a financial information or the
company's accounting policies disclosed or not.
Based on observations made during the study, the company revealed
accounting policies, activities contingent liabilities in connection with environmental
management (PLH) in the Notes to the Financial Statements of the Company.
Comparing the differences in the financial statements of the Hospital Clinic Jember
with environmental accounting theory.

The costs included in cost accounting environment

Environmental costs can be defined as costs incurred in order to achieve
objectives such as cost reduction environment that increase revenue, improve
environmental performance to be considered current and future. Environmental cost
is the cost incurred by the company related to environmental damage caused and
protection do. Environmental costs include both internal costs (associated with a
reduction in the production process to reduce the environmental impact) and external
(related to repairs damage caused by waste generated) (Susenohaji, 2003)
1. The cost of maintenance and replacement of the impact caused by waste
and waste gas (waste and emission treatment), which are expenses

42
 incurred to maintain, repair, replace environmental damage caused by
waste companies. At Hospital jember Clinic at the beginning of the
accounting period receive a Budget Funds for a period of one year, but
padadasarnya is that cash is still the form of budget allocations
(rencanabiaya) which still can not be called a charge, as the financing
untuklingkungan (in terms of waste treatment) was conducted danpada
every month accounting period will end on the sum to be reported on this
line with the views financial reporting. This the article the
GreeningAccounting (in Winarno, 2008) which suggests his views that
allocation of financing for environmental management costs
dialokasikanpada new beginning of the period and are recognized when
received a number of values wherewith issued
2. The cost of prevention and environmental management (prevention and
environmental management) are the costs incurred for preventing and
managing waste to avoid environmental damage.
3. Cost savings environment (environmental revenue) is a cost savings or
revenue improvements sebgai company as a result of environmental
management.
4. The hospital is one of the public sector organizations engaged in health
services. Hospitals in its operations may generate waste. The hospital as a
public servant agencies are expected to show social responsibility by
implementing environmental accounting.
5. Steps that could be done by the company is to present the notes in the
financial statements regarding the waste management costs, then amplified
and reinforced as an important policy overview of our environmental
policy accounting.
The next step to do is present "environmental report" as an additional
complement of financial statements in addition to providing accounting records on
environmental policies that have been taken. According to Mathew and Parrerra
(1996), environmental accounting as social information is used to provide a
comprehensive overview of the accounting forms extrenalities enter into a corporate
account information such as labor, product, and environmental pollution. In this

43
case, pollution and waste production is one example of the negative impact of the
company's operational systems that require environmental accounting as a control to
corporate responsibility because waste management is carried out by the company
requires the identification, measurement, presentation, disclosure, and reporting of
waste management costs of the results of operations of the company.

4.2 Discussion
Examination Analysis of Waste and Wastewater Levy regularly conducted
every month also did not experience any difference. The activities carried out well
costs are not increased. Standard wastewater treatment was appropriate.
Hospitals in revealing that the hospital waste treatment intended to reduce substance
- substance pollutants before they disappeared kelingkungan. To treat wastewater
coming out of hospital waste treatment installation required (WWTP).
Cost allocation method for the management of these environments are
generally allocated as additional costs, the cost for one year accounting period to
manage the various possibilities of environmental pollution and the negative impact
the rest of the businesses included in the post operational common costs (Kohln,
2003). In practical terms, the allocation is not problematic at tackling the negative
impact, but in the accounting allocation of costs that are not carried out
systematically by the method of cost allocation explanation may reduce the
accountability of the companies concerned. Accountability of the use of
environmental costs that are not included in the post in detail to reveal the
identification, classification, measurement, assessment, and reporting of the use of
such charges being biased. (Hadisatmoko.2000). Hospitals have implemented
environmental costs in accordance with the standards that have been made.
The amount of waste is estimated each year is different, this is what led to the
addition of costs incurred for the destruction increased. If no additional budget costs,
there will be lean with garbage. This is what makes this environmental pollution
terjadi.Sejauh Hospital has not been highlighted with regard to disclosure of social
information, especially the practice of application of environmental accounting. As a
unit of services that are considered gentleness on the "social path", Information
responsibility to the environment as a result of activities Hospital services go

44
unnoticed. Moreover, the ownership status Hospitals generally do not go public and
are usually located in the control group of foundations tend to be regarded not profit
oriented. In reality Hospital is one of the largest potential waste, ranging from
chemical wastes that come from drugs until the radioactive waste from radioactive
equipment is very dangerous.
Hospital Clinic Jember, as the entity that could potentially generate B3
should have a good accounting system environment as a form of corporate social
responsibility. The problem faced today is the application of sistemakuntansi
unfavorable, especially with regard to the implementation of environmental
accounting.
This is because companies still combine the costs associated with processing
this waste yangsejenis other expenses in the financial statements. In fact, the
inclusion of these costs in the financial statements may be added value (value added)
separately for the company. Therefore, the authors felt it necessary to propose any
improvement in the implementation of environmental accounting firm.
Steps that could be done by the company is to present the notes in the
financial statements regarding the waste management costs, then amplified and
reinforced as an overview of important environmental policy in
kebijakanakuntansinya. In addition to providing accounting records on
environmental policies that have been taken.

5. Conclusion
Based on the results of research and discussion that has been discussed in the
previous chapter, produced some of the following conclusions, among others:
1. Treatment allocation of environmental costs carried out by the Hospital
Clinic Jember carried out by the finance department and Logistics
Hospital directly with Environmental Sanitation Section recognized as one
of the fixed assets (fixed assets) of the hospital.
2. The management of hospital waste has followed the applicable procedures
in the hospital, the state of the environment is healthy or normal matter
seen from the results or performance evaluations that have been conducted
by the Hospital Clinic Jember and -pihak third party to work with. All

45
 research or evaluation carried out in accordance with standards prescribed
rules Jember Hospital Clinic.

5.1 Suggestion
Based on the analysis, discussion and conclusions, the suggestions of the
study's findings are;
1. It is expected that further research could take another research object for
comparison. It would be better if the object of study more than two so
they can dikomparasi with more varied.
2. In conducting further research is expected to last longer and use time
effectively and efficiently as possible in order to understand and know
more about its accounting cycle to the financial reporting process.
3. The Ministry of Health also should create guidelines for the
implementation of environmental accounting for the hospital, so that
each hospital is required to apply environmental accounting in its
operations and have clear guidelines on how should implement
environmental accounting.
4. The environmental accounting standards required for accounting
standards be the key to the company in serving the community so that
this agency should be able to present sufficient information, trustworthy,
and relevant for its users.

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______. 2007. Law of the Republic of Indonesia Number 40, Tahun2007 on Limited
Liability Companies.
Satyo. 2005. "Strong Political Will Need". Accounting. 47.Tahun XII edition, July
2005. Page. 10-11.
____. 2005. "Sustainability Reporting: New Paradigm PelaporanPerusahaan".
Accounting. 47. In the XII edition, July 2005. Hal.5-9.
Suharto, Harry. 2004. "Environmental Accounting Standards: KebutuhanMendesak".
Accounting. Issue 42. Year XI, July 2004. Page. 4-5.

47
AMS-06

ACCOUNTING EDUCATION RESEARCH:

EXTENDED DRAMATURGICAL INTERVENTIONISM APPROACH

Whedy Prasetyo
Accounting Departement of Jember University
Email: whedy.p@gmail.com

ABSTRACT

This paper describes a research perspective of accounting education in a extended

dramaturgical interventionism approach is methodology for the study of cultural
policies that selection pragmatis and self-reflexive method. Therefore, extended
dramaturgical interventionism approach developed a method of using any available
empirical material. The choice of method depends on the accounting research
issues and problems which otherwise depends on the context of what is available
and what can be done research in these settings. This study discusses viewing
accounting education as scenarios, extended dramaturgical interventionism
approach and contribution of extended dramaturgical interventionism for
accounting education approach. The result is to create, critically assess, and
communicate the policy-relevant knowledge in one or more stages of the policy
making process. Applications that can generate knowledge relevant to policies that
directly affect the assumptions, decisions and actions in one step, which then
indirectly affect future performance.

Keywords: Accounting education research, Extended Dramaturgical, and

interventionism

Me in the Genuineness of the Number Words

Imy pacehalted, perplexed before the wall of submission

The domain of the weary desire of the heart trueness
The determination in the swaying move of the artists of the fibrous brain
The direction guidance of My identity through the chalk cracks of number balance
Gun in framing exploding the clouds that bring the balance away
My shape is not a rebellion against the product of the fibrous brain of My
intellectual
Bestowing love and affectionin the pace unity of the genuineness of the number
words
In the harmonious mind beauty of My accounting for the achievement of my way
y accounting way that has been revealed in My map of change
In creating the interconnection of number words that grants the liberation
When expression is offered to the trail of knowledge
As it shall be.giving the space of exploitative expression

48
 Forthe growth of various bonds of expression
As the expression of knowledge trail that never stand alone
Whose existence is from, for and in favor of itself
Only the play and the mosaic of citations of previous texts
To avoid the isolation of My cultural object
Ibounced...bumpedin the freedom of creating My fibrous words
I hold My posture upright, facing My liberation through interactions I shall undergo
Inow no longer in the darknessnot strolling in arrogancein the shelter of the
eternal candle of enlightenment
Starting to step in the interception of My whole physical self
Now I am walking in consciousness and tranquility in the interconnection of number
word
Because
I think that is the reason why I exist
Bring me into the eternality.Amin

Whedy Prasetyo, Malang I belong to , 09 July 2012

1. Intoduction
Dramaturgical approach represents a shift towards humanism and the
avoidance of the scientific model. Dramaturgy more interested in studying men as
abstractions rather than adjust their behavior to the propositions and theories that are
already known. Dramaturgy allowing the individual to his role. This is evident from
the discussion on controlling the impression (which let mistakes or mis-
management), as well as in the concept of the role and engagement gap role.
Therefore, Blumer (1971) states without prejudice to the fact that in each of
the human presence is very responsive to the presumption against him, then it is very
unfortunate if we assume that this form of self-awareness as a basic human problem
dealing with him. In the association, people do not just sink to the etap attention
focused on the assessment of him and how it affects the way the votes. This is done
continuously and some of them do it more than others. But this is not the core of
what humans do in interacting with him.
From this it can be concluded that the dramaturgy was less attention to the
social structure in which actors organize their experiences. Data for theoretical
thought Goffman (1959) about the "self" in the Presentation of Self in Everyday Life
be the beginning of dramaturgy methodology. The concept of "self" (self) Goffman
greatly influenced by the ideas of the tension between "self" spontaneous. "I" and

49
"me", the self which is limited by social life. According to the theory of dramaturgy,
as according to other symbolic interactionist, "self" is not something organic nature
that has a special place. Furthermore, Goffman argued that in analyzing the "self" we
take from the owner, of the people who will benefit or be harmed by it, because he
and his solely provide the basis for something that generates cooperation.
Dramaturgy is a social theory that is above episode and see life just because
he lives in a narrow circle interpersonal, historical and non-institutional, an existence
that transcends history and society, and live only in the moment of time, temporary
and fragile. Society is composed of human acts, and people's lives can be seen as a
form of their actions. That is, the public is action, group life complex ceaseless
activity, and there is a collective action that requires adjustment and action of each
individual into a line of action of each actor that each give a sign to one another, not
only to ourselves (Blumer, 1969). From here, it takes a development on a concept
called extended dramaturgy. So, extended dramaturgical interventionism approach
not only see self as "I" and "Me" but also "Us".
Extended dramaturgical interventionism approach is a multiple focus
method involving an interpretive and reasonable approach to any subject matter.
Extended dramaturgical interventionism approach identifying itself in the realm of
qualitative research, work in a natural setting, attempting to understand, given the
interpretation of the phenomenon yan seen from the meaning given to her people.
Therefore, study methods of extended dramaturgical interventionism approach
involves the use and collecting empirical materials such as case studies, personal
experience, introspection, biography, interviews, observation, historical texts,
interactional and visual, participatory observations that describe routine and
problematic moments, and its meaning in the life of the individual and the collective.
In this case extended dramaturgical interventionism approach is a method of
communicating knowledge relvan policy can be viewed as a four-stage process
involving policy analysis, manufacturing of materials, interactive communication,
and utilization of knowledge. For extended dramaturgical interventionism approach,
policy analysis is made on the basis of assessment of knowledge relevant to policy
issues, the results of policies and policy performance. To communicate this
knowledge, analysis of extended dramaturgical interventionism approach create a

50
variety of documents relevant to the policy. The purpose of creation of the
documents that are relevant to policy and oral presentations is to increase the
prospect of exploiting knowledge and open discussion among stakeholders at some
stage in the policy-making process.

2. Viewing Accounting Education as Scenarios

Is accounting education changing? Are there individuals who are responsible
for its change? Do changes in accounting education prone to challenges? Do
changes in accounting education involve power? I see that all these questions
provide yes for answers, which show quite clearly that changes are inevitable and
that society is not always in order or at a status quo.
Fogarty (1997:45-46) explains that there are three reasons why accounting
education in this modern world is always changing. First, accounting education has
reached the peak of modernity that rationalizes areas of human life even if there is
little evidence of its success. Second, social meanings are contested in this era and
therefore changes are unavoidable. Third, modernity invests heavily in market
ideology which substitutes actual freedom, although the market implies aggregated
autonomous decision making. Accounting education is therefore brimmed with
changes. Such changes have been termed by Perks (1993:195) as scenarios.
Just as choreography of dances has intrigued Janesick, as edited by Denzin and
Lincoln (2003), to use as metaphor for qualitative research, the word scenario has
triggered my interest to use theatres as metaphor in viewing accounting education for
several reasons.
In my days of youth, I was often intrigued and drawn into the attraction of art,
literature and play. My involvement in school productions such as Midsummers
night dream, Romeo and Juliet, The Twelfth Night as well as literature readings
such as To Kill a Mockingbird, Hamlet, Animal Farm, Pride and Prejudice
has always made such great impression to me because of their cunning plots. Both
entertaining and enlightening, such plays have their messages: they are life lessons
watched.
Further, there was this unexplainable energy rush as I stood on the center stage
to play my part. It was not just because of the lighting, attention or the grandness of

51
theatre, but it also conveyed a feeling of power to lead the audiences empathy,
hatred, anger, pity, sorrow and joy. There was a sense of power of knowledge since
those who were involved in the play knew exactly how the story was built and
ended. On the other hand, the audience may have the joy of unknowing. The life of
a theatre is invigorated by the known and the unknown; dynamics of emotions as the
story telling goes on. This is the beauty of a theatrical performance or a play.
Now, accounting education that becomes life itself, and especially my life,
could also be regarded as a play. It tells a story! Allow me to elaborate.
The discourse of accounting education and its changes could be viewed under
different spectacles. Rebeleet al. (1998), as they recapitulate accounting education
changes through accounting curriculum development during 1991-1997 in several
accounting education journals, namely Journal of Accounting Education, Issues in
Accounting Education, The Accounting Educators Journal and Accounting
Education: A Journal of Theory, Practice and Research, see that it is accounting
educations purpose to be able to face significant changes in practice developments.
Such practice developments are referred to the need of the market. This is
supported by the trend that shows how accounting education adjusts to the dominant
need of the market. The current progress of accounting standards namely
International Financial Reporting Standards (IFRS), which is needed by capital
owners to facilitate investment (Ratnatunga, 2010), has affected accounting
education in most countries. Munter and Reckers (2010) have affirmed that one
important benchmark for the US Stock Exchange Commission (SEC) is the progress
being made by educators in incorporating IFRS content into their accounting
programs. Although in a recent survey it is found that the top twenty universities in
the United States do not see the need to integrate IFRS into their curriculum (Bates
et al., 2011), Munter and Reckers (2010) see that this is caused by uncertainties and
budget shortfalls that are faced by universities.
In different view, Ainsworth (2001) may see changes to accounting education
as a call to transform what we teach to how we teach. Yet, there are other views
that are beyond the prescriptive (what educators should be doing) and descriptive
(what educators are doing) approaches. Such view could be more critical (Truan and

52
Hughes 1999, Oakes and Berry 2009), postmodern (James 2008; Hines 1999), or
religious spiritual (Triyuwono 2010, Mulawarman 2007, 2008).
Under a theatrical perspective, the dynamics of accounting education have
therefore been presented in a range of collection of scenarios. There are changes in
accounting education that are propounded in calm drama and there are those who see
accounting education changes as romance, satire, comedy or tragedy. Chambers
(2005) Poverty in Accounting Discourse could be viewed as satire as he elucidates
the irony of accounting fallacious arithmetical propriety that leads to discrepancies
between the financial statement and business value. James (2008) might be viewed
to tell his story in romance as he details the process of accounting theory learning
process through music, literature and films. Hines (1992:314) Filling up Negative
Spaces could be regarded as a comedy as it tickles our senses of status quo while
proposing how willingly we have taken our stances in Absolute Masculine.
When accounting education is viewed in such way, then there will be all traits
of what a theatrical performance would possess. There will be plot, cast, stage,
dialogues, interlude, applause and encore. All of these would build and tell a
complete set of a story that depicts accounting education journey through its players
or actors.
In a play, one could sometimes become director who designs the plot, scenery,
dialogues, then watches the play knowing how the story would progress in the hands
and creativity of its cast. Yet, one could also be positioned as audience experiencing
the joy ride of the unknown and wait for either the unexpected or expected finale.
Being a director, a researcher could introduce changes into accounting education that
is currently existing. Bearing this in mind, dramaturgical interventionism offer an
alternative way to create a change in accounting education as well as present the
findings in a refreshing fashion.

3. Extended Dramaturgical Interventionism Approach

The spirit of play isthe core of thekind of accounting education research that
holds on to viewing accounting education as scenarios. The researcher will act as
director, actor as well as audience. As play director, one would design the play
while plotting how accounting education should change in an institution. As player

53
or actor, one would use immense creativity and commitment to play ones part while
experiencing the change in accounting education. As audience, one would watch
and enjoy how the play commences while observing and understanding the progress
of change in accounting education. One could be all these in different settings and
the story of accounting education would be presented inscenarios.
The use of theatrical metaphor might be similar to dramaturgy. Berg (2004:76-
77) describes that dramaturgy is derived from symbolic interaction stream that views
everyday life as theatrical performance. It sees that in research, the line between the
performer and the audience sometimes blurs. Therefore, dramaturgy is an orientation
of interviewing, in which researcher creates appropriate climate for establishing
rapport, instead of using mere words or sentences. This study will certainly employ
such interviewing technique. Interviewer (or researcher) will be actor, director and
choreographer (Berg, 2004:103). Taking this stance, the research would be written as
lively and dynamic as it happens, capturing thoughts and beliefs.Capturing thoughts
and beliefsare important because they are parts of consciousness (Audi, 2005).
In this way, this kind of research could also be classified as narrative study.
There are several types1 of narrative study, but this research dwells on narrative
approach that has a specific contextual focus. Similar narrative study in accounting
education, especially portraying classroom, teacher and students have been
conducted by Ollerenshaw and Creswell (2002) as described by Creswell (2007:55).
However, dramaturgical approach alone can not be used in a study that tries to
introduce changes into prevailing accounting education. This is simply because
dramaturgy is limited to interviewing technique using theatrical metaphor. Similarly,
if narrative approach is used, it would only be able to portray accounting education
perse. An extension to intervene is therefore necessary.
Keeping in mind that both dramaturgy and narrative study need intervention,
extension to these methods is carried out also by using interventionism.
Interventionism is simply described as an approach that presupposes actions, for

11
A biographical study is a form of narrated study in which the reseracher writes and records the
experience of another persons life. Autobiography is written and recorded by individuals who are the
subject of study. Life history portrays an individual entire life. Oral history consists of gathering
personal reflections of events and their causes and effects from several individuals (Creswell,
2007:55)

54
example forcing changes in an organization (Jonsonn, 2010). Therefore,
interventionism is very unique with infinite variations as well as very contextual. It
provides progress of knowledge about changes that work in an organization.
Interventionism is different to experimental research. Experimental research is built
upon artificial context that is designed to test hypothesis derived from theory. In this
way, experimental research is concerned on measurement. On the other hand,
interventionism hinges on realism (Jonsonn, 2010:131):
Realism is not a major concern in experiments. Measurement is. The
meaning of the measurements comes from theory in the case of
experiments. The meaning of observations in interventionist research
comes from context and it tends to be narrative in form (Bruner, 1990).
A narrative meaning comes about by being high-lighted by a story
line (like how mercifulness is illustrated by the biblical story about the
merciful Samaritan).

This shows that dramaturgical and narrative approaches are compatible if

they are extended by interventionism. Therefore, by Burrell and Morgans (1986)
quadrants, this research could not be categorized as a research in pure interpretive
paradigm. Rosile (2003) might classify this type of research as critical dramaturgy.
In an organizational theatrics contexts, dramaturgy can be classified in several
domain as elucidated in the following table.

Table 1
Contexts of Organizational Theatrics
Audience is insiders Audience is outsiders
Authors/actors are Critical Dramaturgy Persuasive Spectacles
insiders Corporate theatre by Traditional theatre,
workers infomercials, PR,
galas
Spectators/participants- Theatre for Social Ethnography
observers Change Documentaries, some
Theatre of the street theatres
oppressed, street
theatre
Authors/actors are Corporate theatre by Simulacral
outsiders theatre professionals Spectacles
Las Vegass Paris,
Luxor, Venice and so
forth
Source: Rosile (2003:309)

55
 Audience can be regarded as insiders if they are part of the system in
question. The intended audience or readers of this study are accounting educators,
students or those who have concern on accounting educators. Therefore, this kind of
study can fall in the first upper left-hand side quadrant, since it is persuading the
actors (accounting educators) to believe that accounting education must change.
Clearly this study is not merely with the purpose of to explain and understand, it also
extends to introducing changes or stimulants into accounting education practices. It
exerts power to change accounting educators consciousness and portrays as well
as understands its process.
This makes language the most important tool in this study. Language is not
viewed as simply a medium of representation. Through language, changes can
emerge. Arrington (1997:9) explicates:
Now in a range of research projects, we are beginning to understand the
power of accounting discourse to constitute identities rather than simply
report upon identities presumed given...a body of research is surfacing that
seeks to understand this constitutive force of accounting through a very
profound sense of the moral ontology of language rather than from the more
Foucaldian view of discourse as a medium of power.

This type of accounting research has embraced the postmodern possibility

which has recognized that the extant focus of subjectivity or identities will make it
possible for self-presentation, values and discursive practices to surface. If
accounting is viewed in such way, then accounting has a power that does not have to
be subordinate to presumed realities. Accounting, and accounting education, are
realities, not independent, but intertwined with other realities.
The intervention to change educators consciousness through language is
therefore necessary. Similar to solipsism tradition, this research sees that accounting
education changes are perceived in the most subjective approach. Burrell and
Morgan (1979:239) describe solipsism as the most extreme form of subjective
idealism, in that it denies that the world has any distinct independent reality.
Changing accounting education can therefore be seen through accounting
educatorsas well as the researhers consciousness. Consciousness can be a very
good source of knowledge. Audi (2005:85-86) affirms the importance of
consciousness in knowledge building:

56
 If we now ask whether consciousness, ...is a basic source of belief,
justification, and knowledge, the answer should be evident. It is. In the inner
world, by sharp contrast with the external world, there is far more at our
beck and call...This is perhaps another reason why introspectively grounded
beliefs have sometimes seemed to be such good material to serve as
foundations for knowledge and justification.

He further explains that consciousness has two claims why it can be come a
good source of knowledge. First, it follows a thesis of infallibility (impossibility of
error), which states that one cannot be mistaken in a belief to the effect that one is
now in an present mental state (such as imaging) or that one is undergoing a mental
process (such as thinking) or that one is experiencing something(such as pain). The
infallibility thesis rests largely on the idea that we are in a strong position regarding
present mental phenomena, that we cannot be mistaken in thinking that they are
going on inside us. The second claim suggests a thesis of omniscience (all-
knowingness) with respect to the current contents of consciousness: if one is in
present mental state, undergoing a mental process, or experiencing something, one
can not fail to know that one is. The omniscience thesis rests largely on the idea that
present mental phenomena are so dominant in consciousness that one cannot help
knowing of their occurrence. Together, these two theses constitute the strong
doctrine of privileged access (Audi, 2005:80).

4. Contribution of Extended Dramaturgical Interventionism for Accounting

Education Approach
This approach about accounting educators consciousness mainly hopes to
add to a theoretical contribution, especially in accounting education changes, that
Llwellyn (2009) would classify as metaphor theorizes. Liwellyn (2009:668-670)
describes that:
metaphor provides both a ``way of thinking about organizations and a
``way of seeing metaphor theorizes through linking the unfamiliar to the
familiar; it creates meaning and significance through ``picturing or
``image-ing the world.

Such metaphor frequently occurs in literature, one of which in a famous

balcony scene of Romeo and Juliet by Juliet:

57
 Whats in a name? That which we call a rose
By any other name would smell as sweet;
So Romeo would, were he not Romeo calld,
Retain that dear perfection which he owes
Without that title. Romeo, doff thy name,
And for thy name, which is no part of thee,
Take all myself.

In the above verse, the use of the word rose has explained that it is not the
name that matters, but the essence of the rose. Hence, the name Romeo of Montague
who is the sworn enemy of Juliets family, the Capulet, would not change the love
between them. The metaphor has exposed the true feeling of Juliet through its
simplification of the familiar concept (in this case the rose) to a more private and
complex concept (Juliets love for Romeo).
Similarly, the use of theatrical perspective as a metaphor to accounting
education, would help to explain and enhance understanding of how new concepts
emerge through the grounding experience of both the educators and the researcher.
The research is not only designated to enrich accounting education researches, but
also to employ metaphor theorizing, that according to Llwellyn (2009), has been
under-utilized as theoretical tool in accounting discipline.
Other contribution of this study can be seen under interventionism. Jonsonn
(2010:129) describes the theoretical contribution of such study:
The crucial aspect of interventionist approaches to organizational studies is
the question of what kind of knowledge such research may generate.
Obviously the whole idea is that the intervention must be designed in such a
way that it works in practice, and offers a theoretical contribution as well...
It is more likely that interventionist approaches will yield knowledge in the
form of vocabulary/grammar for analysing/diagnosing organizational
situations.

This theoretical contribution (which is what works in practice) brings us to

realize the ontological foundation of reality being studied. The ontology is that
accounting education can be established and changed by its actors through the power
of language.

58
5. Summary
Realizing the ontological foundation of accounting education being studied is
very important to decide methodological choice of research. Accounting education is
viewed as a reality that is brimmed with dynamics of changes, and changes can be
triggered. These changes can be seen as a scenario or play, and therefore theatrical
metaphor theorizing (Lwellyn, 2009) can be used in this study to portray changes.
Dramaturgy and narrative approaches are providing good bases to produce
findings that would suit theatrical metaphor theorizing. Dramaturgical outlook of
interview will help researcher to play his/her role in obtaining detailed and dense
data. On the other hand, narrative approach offers a descriptive and live presentation
of changes observed. However, when accounting education research is concerned on
bringing about changes in accounting education, then dramaturgical interviewing
techniques and narrative approach are not sufficient.
For this reason, intervention to arouse critical consciousness in accounting
educators is the most important issue. Interventionism approach (Jonsonn, 2010) to
change accounting educators must be used. This extension will be suitable and
compatible with either dramaturgy or narrative approach because interventionism
requires narrative presentation of study. Through persuasion (intervention), in the
medium of language and role playing (dramaturgy), accounting education changes
especially in accounting educators will be narrated and portrayed using the metaphor
of theatre. This will make dramaturgical interventionism based research very
contextual in nature.
The methodological choice will provide a theoretical contribution to
understanding how organization changes occur contextually with its own uniqueness
through its players. Further, it helps explore the use of metaphor theorizing as a
perspective which is rarely used in accounting research. This way, the study will
enrich not only accounting education research, but also empirical qualitative
approach at its one ofmost subjective and refreshing form.

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61
CPM-01

EFFECT OF SIZE, PROFITABILITY AND LEVERAGE

DISCLOSURE OF CORPORATE SOCIAL
RESPONSIBILITY
(Empirical study in Manufacturing Company Listed in
Indonesia Stock Exchange Year 2013 to 2015)

Budi Santoso
University of Jember, Indonesia
Email: budisantoso@unmuhjember.ac.id

ABSTRACT
The aim of the research is to examine the influence of earning management,
profitability, leverage to corporate social responsibility disclosure. Earning
Management is measured by discretionary accrual, profitability is measured by
return on asset and leverage is measured by dept to equity ratio. The sample of this
research is mining companies which are listed in Indonesian Stock Exchange (IDX)
in 2013-2015. Samples are obtained by purposive sampling method. Hypothesis
testing method used is multiple regression analysis. There are 36 companies
fulfilling cretirion as the research sample. Result of the research indicates that
Earnings Management has not significant effect to corporate social responsibility
disclosure. Profitability also has not significant effect to corporate social
responsibility disclosure. Leverage has significant effect to corporate social
responsibility disclosure.

Keywords : Corporate Social Responsibility Disclosure, Earnings Management,

Profitability, Leverage.

1. Background
A growing issue since the 1960s or the post-war period after World War II
II.Pada the masyarat compelled to menentut poverty and backwardness, and that the
attention of players and investors to share social responsibility disclosure to both the
environment and the internal externally. In the global context, the term CSR is used
since the 1970s CSR is becoming more popular, especially after the presence of the
book Cannibals With Forks: The Bottom Line tiple the Business in the 21st Century
(1998), by John Elkington.Elkington pack CSR intothreefokuf
3P,standsforprofit,planetandpeople.(Kinaah,2011)

62
 The concept of corporate social responsibility has been known since the early
1970s, which is generally defined as a set of policies and practices relating to the
stakeholders, the values of the fulfillment of legal requirements appreciation society,
the environment, and the commitment of business to contribute to sustainable
development (Corporate SocialResponsibility) in this case CSR is not only a
company's creative activity and is not limited to mere compliance with legal rules.
(Linda San d Erlin, 2012).
In Indonesia, the discourse about the awareness of the need to safeguard the
environment and social responsibility has been regulated by the Law on Limited
Limited 2007 No. 40 Article 74ayat 1 states that the limited liability company which
carries on business in the field and / or concerned with natural resources required to
carry out social responsibility and the environment , Then in Act no.25 of 2007
section 15 (b) states that any investment obligation to implement corporate social
responsibility, in this case interpreted as evidence of corporate responsibility that
leads to the development of local communities around the company itself, while the
central government and devices provide regulatory regions as a reference in the
relationship between the public, private and government (Bambangand Melia, 2013).
Many people, especially the workers, did not believe that the company 'did
not mean it in implementing Corporate Social Responsibility. They assume that an
institution that only the pursuit of profit is not likely to have the intent and noble
purpose to empower people respect workers' rights and does not damage the
environment, therefore it is not possible to sue companies that are socially
responsible, Bambang and Melia, (2013) .Corporate Social Responsibility does not
provide financial reporting results in the short term, but the Corporate Social
Responsibility will have an impact, either directly or indirectly on the company's
financial future. Investors also want investment and public confidence in the
company has a good image in the eyes of the public. Thus, if the company conducts
programs of Corporate Social Responsibility in a sustainable manner, then the
company will be able to run well, therefore the program CorporateSocial
Responsibility is more appropriate where digolongka as an investment and should be
the business strategy of a company (Siragar, 2007; 2856) .in Kinaa(2011).
In a previous study found several different results in researching the factors

63
affecting CSR in annual reporting. Among the researchers on the size of the
company is research Sandy (2013) which states that there is influence between firm
size, profitability and leverage on the disclosure of corporate social responsibility,
these results are not consistent with the research Linda and Erline (2011), while
leverage has no effect on the disclosure of social responsibility. Different results
found by researchers Lestari (2007) which states that the positive effect on the
leverage CSR disclosure in its annual report. Selanjutya, research Ahmat (2009)
states that priofitabilitas pengkapan influence positively to social responsibility.
The difference in this study lies in research that is years 2011-2013 and
several dependent variables that are not used in this study. This study used a sample
of the companies listed on the Stock Exchange Indonisia (BEI) in the year 2013-
2015. The reason is because the manufacturing companies more easily affected by
economic conditions and have a high level of sensitivity to any internal or external
events company, but it is also a manufacturing company had
environmentalimpactssociety. From the above presentation of researchers interested
in conducting research with the title: Effect of Size, Profitability, laverage Against
Social Responsibility Disclosure Manufacturing companies listed on the exchange
Securities Indonesia (BEI) 2013-2015.

2. Research methodology
The dependent variable in the study of Coporate Social Responsibility
symbolized by (Y), given the small number of companies in Indonesia which
reported the economic performance, social, and environment in the form of
sustainability reporting. CSR is measured using CSR disclousure / CSRDI, while the
indicator of CSR disclosure categorized into seven themes, which consists of 78
items social disclosure for manufacturing companies. The formula used to measure
CSR
X
=
Nj
Information :
CSD: Corporate Social Disclosure Index company j
Xj: the number of items disclosed by the company j

64
Nj: number of items disclosure of CSR for companies j

3. Independent variables
3.1 Size (X1)
The size of the company is a scale which can be classified on the size of the
company (Helfert, 1997) in his book on the analysis of financial statements. States
that: The value associated with the base of an asset's ability to provide after-tax cash
flow kepda companies. of several studies, the size of the company can be measured
by the number of employees, total assets, sales volume, or ranking index. In this
study the variable firm size is presented in the form of logarithms, because of the
value and distribution which is greater than the other variables. Meneurut Linda
(2012), said the company's size was measured by using the natural log of assets
owned by the company.= The natural logarithm of firm size (total assets)
3.2 Profitability (X2)
This ratio is the ratio of net profit after tax to amount aseet overall, this ratio
is a measure to assess how much the rate of return (%) of the assets. If this ratio is
high, indicating the efficiency undertaken by the management.
Profitability is defined as a company's ability to generate income or profit in order to
increase shareholder value. There are several sizes to determine the profitability of
the company, namely: return of equity indicators used to measure the size of this
company is the Return on Assets (ROA). Return on assets (ROA) is a measure of the
effectiveness of the company in generating profits by exploiting its assets. ROA
researchers used as a measure of profitability, because the ROA is a profitability
ratio that measures the effectiveness of the company to generate profits by
leveraging their assets. (Helfert, 1997: 87).
The measurement using the formula:
EAT
= X 100 %
Total aktiva

3.3 Laverage
Leverage is the use of assets or funds in which to use the company must cover
fixed costs or pay a fixed load. If the "operating leverage" use of the asset at a fixed

65
cost is the hope that the revenue generated by the use of the assets that would be
enough to cover fixed costs and variable costs, then on "financial leverage" the use
of funds with fixed load it is with the hope to increase revenue width per ordinary
share. (EPS = Earning Per Share). (D: \ csr \ goddess septianawati leverage analytics
and bep.htm). laverage measurements performed by comparing the total debt by total
assets, in line with the measurement of leverage for developing countries. Debt to
Asset Ratio (DAR) is the ratio of total liabilities to assets. This ratio emphasizes the
importance of debt financing by showing the percentage of the company's assets
backed by debt. DAR used in this study because it is able to demonstrate the
feasibility and risks of the company. Leverage in this study is symbolized by (X3).
(Helfert, 1997: 97).
Total debt
= 100%
Total Aktiva

4. Population and Sample Research

Population companies listed BEI in 2013-2015. The sample is part of the
population which is considered to represent the population (Supormo and Indriantoro
2013: 117). Samples were manufacturing companies listed in Indonesia Stock
Exchange, while the sample using purposive sampling of the population, purposive
sampling is a type of sample selection is not random and making willful whose
information is obtained by using certain considerations and generally adapted to the
purpose of research / research problem (Dwi cahyono: 2010: 84). Samples were
selected are the financial statements for 2013-2015 based on the characteristics of the
sample with a sample selection criteria specified. Criteria-criteria for companies that
can be sampled is: The sample is manufacturing companies listed on the Stock
Exchange during the period of 2013-2015 study year, has annual report

5. Data analysis
5.1 Descriptive statistics
Variables used in this research is the Size (X1), profitability (X2), Leverage
(X3), and the disclosure of Corporate Social Responsibility (Y).
Table

66
 Results Descriptive Statistics Variable Research
Variabel Minimum Maximum Mean Std Deviation
X1 10,00 213.994,00 7.222,33 21.569,82
X2 -72,73 65,71 8,01 13,13
X3 3,72 526,25 57,19 54,32
Y 0,09 0,74 0,30 0,14

Based on Table it can be seen that the disclosure of Corporate Social

Responsibility variable (Y) has an average of 0,305. Variable disclosure of
Corporate Social Responsibility (Y) has a minimum value of 0.090 which is the
disclosure of Corporate Social Responsibility (Y) in the company of PT. Mayora
Indah Tbk. (MYOR) in 2013, while the maximum value of 0.744 is the disclosure of
Corporate Social Responsibility (Y) in the company of PT. Argo Pantes Tbk.
(ARGO) 2015 Variable Size (X1) has an average of Rp. 7222.33 billion. Variable
Size (X1) has a minimum value of Rp. 10.00 billion which is Size (X1) at PT. Alam
Karya Unggul Tbk. (AKKU) in 2014, while the maximum value of Rp. 213,994.00
billion is Size (X1) at PT. Astra International Tbk. (ASII) 2015 Variable Profitability
(X2) has an average of 8.01%. Profitability variables (X2) has a minimum value of -
72.73% which is Profitability (X2) in the company of PT. Alam Karya Unggul Tbk.
(AKKU) in 2013, while the maximum value of 65.71% a Profitability (X2) in the
company of PT. Multi Bintang Indonesia Tbk. (MLBI) 2015 Variable Leverage has
an average of 57.19%. Variable Leverage has a minimum value of 3.72% that is the
leverage on company PT. Jaya Pari Steel Tbk. (JPRS) in 2014, while the maximum
value of 526.25% is the leverage on company PT. Asia Pacific Fibers Tbk. (POLY)
in 2013.

5.2 Classic Assumption Test

a. Normality Test Data
Testing normality of the data used to determine whether the data is normally
distributed or not. Test equipment used is Kolmogorov-Smirnov test with the testing
criteria, if the figure of significance (GIS)> 0.05, the normal distribution of data,

67
whereas if the figure of significance (GIS) <0.05 then the data are not normally
distributed.
b. Test Multicollinearity
Based on analysis of collinearity Statisticdapat concluded that there is no
g there occurs a linear relationship
between the independent variables used in the regression model.
c. Test Heteroskidastity
Based on Figure 4.2 shows that the regression model did not show any
element of heterokedatisitas. This can be proved by obtaining scatterplot graph
which does not form a pattern, as well as the points spread above and below zero on
the Y axis
5.3 Multiple Linear Regression Analysis
Variabel Koef. Regresi Taritmetic Sig. information
Konstanta -0,0520 -0,413 0,680 -
X1 0,0274 2,658 0,008 Signifikan
X2 0,0014 2,328 0,020 Signifikan
X3 0,0003 2,201 0,028 Signifikan
R = 0,514
Adjusted Squere R2 = 0,238
R Square = 0,264
Fhitung = 6,041
Fsig = 0,001
N = 381
Based on these results can be obtained by multiple linear regression equation as
follows:
Y = -0,052 + 0,0274X1 + 0,0014X2 + 0,0003X3 + e

5.4 Hypothesis Testing (Test F)

In Table it can be seen that diperleh calculated F value of 6.041 with a
probability value of 0.001. The value of F table at n = 381 and df = 377 is equal to
2.629. This indicates that the value of F count> F table and the probability value is
less than t
that the Size (X1), profitability (X2), and Leverage (X3) simultaneously have

68
influence on the disclosure of Corporate Social Responsibility variable (Y). So the
hypothesis which states that the Size, profitability and leverage effect silmutan on
the disclosure of social responsibility unsubstantiated (H4 accepted).

5.5 Hypothesis test (t test)

Size (X1), Under the Table variable size (X1) has a positive and significant
impact on the disclosure of Corporate Social Responsibility (Y), beta coefficient of
0.0274 and obtained t value of 2.658 and t table where the value of 1.86 t count
2.658> 1.96 and significant 0.008 <0.05. Statistically positive beta coefficient
indicates a significant influence, which means the greater the Size greater disclosure
of Corporate Social Responsibility (Y). Thus the hypothesis which states that the
size effect on the company disclosure of social responsibility unsubstantiated (H1
accepted) and reject H0
Profitability (X2), Based Profitability Table variables (X2) has a positive and
significant impact on the disclosure of Corporate Social Responsibility (Y), beta
coefficient of 0.0014 and obtained t value of 2.328 and t table by 1.96 where the
value t count> t table and significant 0.020 <0.05. where <0.05. Statistically negative
beta coefficient indicates the influence in the opposite direction which means that the
greater profitability of the greater disclosure of Corporate Social Responsibility (Y).
So the hypothesis that affect the profitability of social responsibility disclosure
unsubstantiated (H2 accepted).
1) Leverage, Leverage Based on Table variable (X3) has a positive and
significant impact on the disclosure of Corporate Social Responsibility (Y),
beta coefficient of 0.0003 and obtained t value of 2.201 and t table by 1.96
where t value > t table significant 0.028 <0.05. where P <0.05. Statistically
positive beta coefficient indicates the direction of influence, which means the
greater the leverage the greater disclosure of Corporate Social Responsibility
(Y). Thus the hypothesis which states that the leverage effect on the
disclosure of social responsibility unsubstantiated (H3 accepted)
.

69
6. Conclusion
Based on the descriptions that have been disclosed in the discussion, it can be
some conclusions in response to the main issues raised in this research, namely:
1. Size Companies positive and significant impact on the disclosure of social
responsibility.
2. Profitability positive and significant impact on the disclosure of social
responsibility.
3. Leverage positive and significant impact on the disclosure of social responsibility.
4. Size, profitability and leverage significant silmutan positive effect on the
disclosure of social responsibility.

REFERENCES
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Angling Mahatma Pian KS. 2010, the Company and Regurasi Karakteristik
government on the disclosure CSR.University Diponogoro Semarang.
Amaliah, Yurika. 2008.the factors that influence the amount of CSR information
disclosure. Andalas University in Padang
Bramantya Adhi Cahya. 2008. Analysis of the influence financial performance of the
corporate social responsibility. thesis, University of Diponegoro in
Semarang.
Bambang sunggono. 1995. Introduction to Banking law, MandaMajuBandung
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Budi Angga P. 2011. The characteristics Effect Against Corporate Social
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Diponegoro University Thesis.
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EtiYuniarti. 2007. Analysis of social responsibility information disclosure In the
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Erlyn Nur Fitriana. 2011. Influence of Corporate Social Responsibility Disclosure in
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degree program Diponegoro University, Semarang.
ChairulAmala, Influence Analysis CSR Positioning Against Custtomer Company
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Hendri Haryo S. 2009. Liquidity Ratio Analysis, Ratio Laverage, And Profitability
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Manufacturing listing in the Stock Exchange. Thesis, Faculty of Business and
Management University Widyatama.
Imam Gosali.2006. Multivariate Analysis With SPSS Program. Agency Publisher
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Indonesia Institute of Accountants. 2007. Financial Accounting Standards. Jakarta:
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Januarti And Apriyanti. 2005. Influence of Social Responsibility And the company
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Jayanti P.2011. Analysis of the effect of size, profitability and leverage on the
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71
CPM-03

THE INVESTOR'S
"INDIVIDUALISTIC" BEHAVIOR IN
SUKUK INVESTMENT
Anisa Kusumawardani
Fibriyani Nur Khairin,
Wulan Indrawati
Yoremia Lestari Ginting
University of Mulawarman
Email: wulan.indrawati18@yahoo.com

ABSTRACT

This study is a qualitative research which aimed to analyze and study the behavior
of investors who invest in Sukuk Retail from the perspective of Retail Sukuk selling
agent by using the theory of investor behavior as tool of analysis. The research data
was the result of observations in the field, and through interviews with five
informants of Retail Sukuk selling agent, namely: customer service, supervisor, and
priority banking officer who directly interact conference with investors Retail Sukuk
as much as five informants, then the data is presented naturally. The results showed
that the factors that shape the behavior of investors who individualistic consists of a
risk-averse, high educated and low cost

Keywords: Individualistic, Investor Behavior, Qualitative, Retail Sukuk, Selling

Agent.

1. Introduction

The current whereabouts of the shariah-based capital market is a reality and is

becoming a current phenomenon. Even almost countries worldwide has been using
the capital markets as an instrument of economic importance. So also in countries
which were Muslim. So in the Indonesia-based Islamic capital markets emerge
which have been tailored to Islamic jurisprudence. In general, the activities of
Islamic capital market has no difference with conventional capital markets, but in the
Islamic capital market products and transaction mechanism must not be contrary to
the principles of the shariah.

72
 Effect of principled shariah in the international world is already more
popular long before in Indonesia. For example, in the United States, the superpower
was pioneered by Amana Fund in 1986 has launched stocks that comply with
Islamic jurisprudence in February 1999 with the name Jones Islamic Market Index
(DJIMI). In neighboring Malaysia Islamic stocks launched in April 1999 with the
name Kuala Lumpur Shariah Index (KLSI) (Yuniasih, 2006).
Indonesia's shariah-compliant stocks pioneered since 1997 was marked with
the release of the Danareksa Shariah on July 3, 1997 by PT. Danareksa Investment
Management and launched on 3 July 2000 as the Jakarta Islamic Index (JII) which
aims to guide the investors who want to invest. Shariah capital market in Indonesia
was launched officially on March 14, 2003 concurrently with the signing of the
MoU between BAPEPAM-LK with the National Council of Shariah-MUI
(Rizkiyani, 1999).
The wide variety of products offered within shariah index on JII or ISSI
(Shariah Indonesia Stock Index) as stocks shariah, Islamic bonds are often called
Sukuk, shariah-compliant mutual funds, collective investment contract effect of
Underlying Assets, and other securities (Yuniasih, 2001). On the effects of Islamic
bonds or Sukuk that is often called also experienced a fairly rapid development.
Referring to the report
The current whereabouts of the shariah-based capital market is a reality and
is becoming a current phenomenon. Even almost countries worldwide has been using
the capital markets as an instrument of economic importance. So also in countries
which were Muslim. So in the Indonesia-based Islamic capital markets emerge
which have been tailored to Islamic jurisprudence. In general, the activities of
Islamic capital market has no difference with conventional capital markets, but in the
Islamic capital market products and transaction mechanism must not be contrary to
the principles of the shariah.
Effect of principled shariah in the international world is already more
popular long before in Indonesia. For example, in the United States, the superpower
was pioneered by Amana Fund in 1986 has launched stocks that comply with
Islamic jurisprudence in February 1999 with the name Jones Islamic Market Index

73
(DJIMI). In neighboring Malaysia Islamic stocks launched in April 1999 with the
name Kuala Lumpur Shariah Index (KLSI) (Yuniasih, 2006).
Indonesia's shariah-compliant stocks pioneered since 1997 was marked with
the release of the Danareksa Shariah on July 3, 1997 by PT. Danareksa Investment
Management and launched on 3 July 2000 as the Jakarta Islamic Index (JII) which
aims to guide the investors who want to invest. Shariah capital market in Indonesia
was launched officially on March 14, 2003 concurrently with the signing of the MoU
between BAPEPAM-LK with the National Council of Shariah-MUI (Rizkiyani,
1999).
The wide variety of products offered within shariah index on JII or ISSI
(Shariah Indonesia Stock Index) as stocks shariah, Islamic bonds are often called
Sukuk, shariah-compliant mutual funds, collective investment contract effect of
Underlying Assets, and other securities (Yuniasih, 2001). On the effects of Islamic
bonds or Sukuk that is often called also experienced a fairly rapid development.
Referring to the report of the Study Team Interest Issuers in the capital market
market (2009), within the period between the years 2002 until mid-2009 has done 35
times the issuance of Sukuk conducted by 22 issuers.
The Government of Indonesia viewed the development of Retail Sukuk
quite rapidly because of high demand by the community. Until now the Government
has published Retail Sukuk regularly starting from February 25, 2009 with the
series SR-001 up to 2016 is with the series SR-008 and get a very good response
from the public. Retail Sukuk is intended for individual investors Indonesia citizen is
published with a variety of purposes, including diversification of sources of
financing the State Budget, expanding the base of investors in the domestic market,
providing opportunities to small investors to invest in the capital market instruments.
With the development of Retail Sukuk, then how does the behavior of Retail
Sukuk investors? Thus, this research aims to analyze and find out the behavior of
investors who invested Retail Sukuk from the perspective of the selling agent by
using the theory of the behavior of investors as a tool of analysis. Through the
results of this research are expected to give an overview of the Retail Sukuk investor
behavior.

74
2. Literature Review
In conventional economic theories, investment is very dependent on the rate
of return that is often referred to as the flower. When the interest will accrue in doing
high investment then the volume of investments will also increase. Vice versa, if the
interest rate is low then the volume of investment will decrease. If it is connected
with the practice of investing in the capital market which is based on shariah sure
investors want to make investments that do not contain riba, maysir and gharar.
It is supported by investors in Indonesia are starting to understand the
Islamic investment, then the DSN-MUI/2008 set a fatwa about the application of
shariah principles in shariah-compliant securities trading mechanisms to be used as
guidelines. It is done so that investors know that investing does have in accordance
with shariah principles. In line with that, the DSN-MUI in Fatwa Number 80 in
2011 does not allow the existence of a transaction the effect of which is not in
accordance with the shariah principle that transactions should be done according to
the principle of prudence and not allowed to do the speculation and manipulation in
which contain elements of gharar, dharar, riba, maysir and risywah.
After knowing the intended investment and investment in shariah principles,
researchers will discuss the behavior of investors. The behavior of is activities that
do someone who is directly involved in all human activity. In this case, the behavior
of investors can be described as activities performed by an investor in decisions to
invest.
The description of the behavior of a variety of investors in the capital
markets have been formulated Bailard, Biehl, and Kaiser in Chambali (2010), the
classification of the investor's investment agency has done in California categorize
five kinds of behavior of investors in the capital market, then people know as the
Five-Way Models, namely: 1). Adventurer. Investors who belong on this point
generally ignore the risk, even tend to love the risk (risk takers), 2). Celebrities, the
behavior of this group always wanted to appear, stand out, and be the center of
attention. They often do not really care on cost-benefit calculations of investment,
as long as their decisions to buy or sell securities is seen and heard by many people.
And they belong in the tendency of risk takers. 3). Individualistic. The behavior of
the Individualist is made up of people who tend to work alone and do not care about

75
other people's investment decisions (so the opposite of the behavior that tends to go
with the flow). They tend to avoid high risk and do not mind to face the risk of
being moderate. 4). Guardians. Patterns of behavior that included investor "ripe",
they are more experienced and knowledgeable is relatively broad. They tend to be
very cautious in taking investment decisions. 5) Straight Arrows, namely those who
are members of these groups sometimes are risk averse, and sometimes vice versa.
When they take decisions on the basis of confidence in their ability as with any
group of individualistic, but at other times appeared properties follow the crowd.
After discussing the investment or investor behavior, researchers will discuss
this research investment instruments namely Sukuk. Sukuk is derived from the
Arabic "sakk", plural "Sukuk" or "sakaik", which means "hit or bend", and it could
also means "printing or forge" so if it says "sakkan nukud" meaning "money printing
or forging (Majma ' al-Lughah al-' Arabiyyah, 1980:648 and oral al-' Arab,
1985:172) in Pramono (2012). The term sakk affix stamp action starts when the hand
over of a document by a person as a representative of a formation of contract rights,
bonds and cash. In the modern concept is referred to as a safety financing which
gives entitlement to wealth and dependents as well as other forms of property rights
other (Adam and Thomas, 2004:43) in Pramono (2012).
While according to the decision of the Chairman of the capital market
Supervisory Agency and financial institution (Bapepam-LK Number KEP-
179/BL/2009), Sukuk Shariah Effect is defined as either a certificate or proof of
ownership of the same value and represents part of the inclusion of inseparable or
does not consist of certain intangible assets, ownership, the value of benefits and
services over certain project assets or certain investment activities, as well as the
ownership of the assets of a particular project of the activities of a particular
investment. Next Fatwa number 33/DSN-MUI/X/2002 concerning Islamic bonds
stated that Islamic bonds is a long-term securities based on shariah principles issued
by the issuer to the holders of Islamic bonds which require issuers to pay revenue to
the holder of the Islamic bonds be for results/ margin / fee and pay the bond funds at
maturity (Manan, 2009).
The Accounting and Auditing Organization for Islamic Financial Institution
(AAOIFI) defines the Sukuk as a certificate with the inclusion of the same value, the

76
value of the receipt of the certificate and put that value in the use of which has been
planned. Sukuk is an expression of common ownership and rights in intangible assets,
goods and services, as well as equity in the project with special investment activity
(Nasir, 2009 in Almara, 2015).
Starting in 2009 the Government began publishing the country's the State
Budget for financing instruments namely Retail Sukuk Sukuk Issuance. Countries
could be carried out directly by the Government of Indonesia through the publishing
company or directly by the Government of SBSN RI. Payment for results or fee
will be made by the Government of Republic Indonesia cq. Minister of Finance.
Based on the Regulations number 7 of 2008 Securities Shariah State (SBSN) or
State Sukuk (Sukuk sovereign) is the State securities issued based on shariah
principles, as evidence against the inclusion of part of the assets of top SBSN, both in
rupiah or foreign currency (paragraph 1 verse 1).
The buying process based on multiple SBSN contract i.e. the written
agreement does not conflict with Islamic principles and in accordance with the
legislation. Akad Ijarah is comprised of contract that one party acting alone or
through his Deputy rent rights over an asset to another party on the basis of the
agreed rent.
Furthermore, the related research conducted by Puspitaningtyas (2011) about
the behavior of investors in making investment decisions in the stock market. The
result showed that investors tend to behave rationally taking into account the
information clearly over an economic event if will do the restitusion investment
decisions. These considerations can be done to estimate the relatedness that
information with changes in stock prices.

3. Research Method
This research used the qualitative method which is a research method based
on post-positivism philosophy, is used to examine the conditions of natural objects,
where researchers are as key instruments (Sugiyono, 2011:8). The data used in this
study is the result of interviews with five informants. Informants in this study was
the supervisor, customer service, and priority banking officer at banks that become
selling agent. Furthermore, the analysis tool used is the theory of the behavior of

77
investors in the capital markets have been formulated Bailard, Biehl, and Kaiser in
Chambali (2010), the classification of the investor's investment agency has done in
California categorize five kinds of behavior of investors in the capital market, then
people know as the Five-Way Model: Adventurer, Celebrities, Individualistic,
Guardians and Straight Arrows.

4. Result and Discussion

4.1. The Retail Sukuk Investor Behavior From The Perspective Of The Selling
Agent

Data analysis research is the analysis of data obtained from the results of
interviews with informants is five peoples vending selling agent, where they know
exactly about Retail Sukuk and meet directly with the investors who invest in
shariah-compliant Retail Sukuk. Based on the results of interviews with informants,
researchers get information the reason investors bought Retail Sukuk tribes that will
establish a behavior as investors, including:
1. Risk Averse
This type of investor is dislike investors against risks. This type of investor
usually prioritizes the security level of its investments, compared with the rate of
return offered by a product investment. These investors typically still use banking as
a means of their investments or investments in the SBI or Government bonds. It is
powered by a factor into the findings of researchers, namely a sense of security. As
expressed by informants while investigators dig up information.
"A sense of security. Because of the borrowing countries, the community will feel
safe and return at maturity remains intact." (Mr. I)
In line with the statements delivered by the informant further:

"The Sukuk was certainly safe, as pledged to the country, and the
customer was proverbial, important do not withdraw before maturity it
will not lose because the Government will restore full, whereas if the
investment in kind usually depends on the up and down of other
investment and sometimes even customer loss because the value of that
investment is down. Nah, but if Sukuk this state loss, the state must
return a value of Sukuk in full. It is the difference between Sukuk,

78
 because people who have money (investors) they save their money in
Sukuk. " (Mrs. A)

In addition other informants mentioned that the presence of Underlying Asset

guarantees by the Government was another factor that made consideration of the
Retail Sukuk investors. Retail Sukuk investors willing to wait even a Sukuk issued
compared to investment in other instruments.

" It might be who bought that Sukuk are not obtain part ORI, but not
infrequently communities more waiting for Sukuk issued compared to
ORI because Sukuk shariah principled safer, and have the underlying
asset that guarantees ownership of Sukuk by society. " (Mrs S)

The rate obtained investors also the reason investors buy Sukuk. Because coupon
rate reached 8.3% higher than deposits and savings.

"Yes, it can be a high rate compared to deposits and savings amounted

to 8.3% and it became one of the reasons investors buy Sukuk." (Mrs.A)
"Coupon rate yesterday amounted to 8.3% of an annual. In case you
buy the retail Sukuk Rp 100,000,000.00/year then it would get Rp
8,300,000 or Rp 691,667 per month (still not taxed). So you have helped
the country can coupon rate monthly again. " (Mr.I)

So it can be inferred that a sense of security, the guarantee of the Underlying

Asset by the Government, and a high percentage of the top rate who retrieved the
reason investors buy Sukuk.

2. Conservative
An investor who is highly educated and a lot of experience usually acted
conservatively, full of calculations and always finding and collecting the data as
much as possible be used as consideration before investing. It is supported by the
findings of researchers that is, Retail Sukuk investors belong to those who are highly
educated.

"That is definitely surely highly educated. Because the bottom line if

Sukuk that identical almost similar to bonds. People who are not
familiar with meaning I did not mention that the person is stupid or not.
This means that if he is not studied till College, he did not know what
the meaning of the bond. If we tell it is definitely not going to
understand. So if we describe it as deposits or savings, automatically it

79
 is already public knowledge of science. Well the bonds it is a bond that
is guaranteed by the Government issued by the Government like that. "
(Mr. S)

This is in line with Bhandari and Deaves (2005) in Zarah (2011) which states that
the higher the level of education the higher also tolerance of the potential risks of
losses that will be obtained when making investments.

3. Low Cost
Sukuk investors tend to avoid the risk of State high and do not mind to face
the risk of being moderate. They chose this type of investment because Retail Sukuk
cost is very low, with nominal Sukuk which is light and inexpensive and taxes are
low. "Cheap, with a minimum of Rp 5 million can already invest Sukuk." (Mrs. A)
So the researchers can deduce that, investing in Sukuk are lightweight and
inexpensive because with only Rp 5 million people can do a very profitable
investment.
Tax for Sukuk is lower than deposits or savings. So, the researchers conclude
that a low tax became one reason investors in investing in Retail Sukuk "It's cheaper
than deposits, his taxes because the deposits are typically 20% are to Sukuk only
15%. " Now there is a more interesting customer interest is only 15% taxes. " (Mrs
S)
Behavior risk-averse, conservative, and low cost shows that investors behave
individualistic, where this behavior is made up of people who tend to work alone and
do not care about other people's investment decisions (with higher education
background/conservative) and tends to avoid high risk and do not mind to face the
risk of being moderate.

4.2. Sukuk Investors Should be a Socially Responsible Investor

As researchers mentioned that the behavior of investors who invested in the
Retail Sukuk is highly individualistic. This is the goal difference against a
publication of Sukuk Retail by involving community participation Government to
finance the State Budget that will be utilized by the Government in the construction
of the infrastructure of public interest in Indonesia, but investors in the Retail Sukuk

80
has a reason that does not lead to such matters and tends to be concerned with the
profit for themselves.
As the case on a Sukuk Sustainable and Responsibility Investment Sukuk is
aimed at encouraging the participation and financing activity involving social
responsible society (investors). So, applications on SRI is the contribution by
investors to the Government as a social responsibility, the maintenance of the natural
surroundings and meet ethics in tune with the will of the individual to meet the
humanity whose goal is to help countries and responsibility as people who want to
earn rewards from God through the practice of virtues in the hereafter.

5. Conclusion
Basically, there are two inherent goals of Retail Sukuk investment: social
impact and financial gain. However, Sukuk investors in Indonesia, from this
research results show that investors still aims at financial gain, not to toward the
social impact. Investors choose Retail Sukuk because of avoiding risk (risk averse)
where a sense of security, a guarantee from the Government, and a high rate
percentage becomes the investors main considerating factor. In addition, the low
risk forms a highly individualistic behavior of investors who tend to avoid high risk
and do not mind a moderate risk. Factor in the consideration is the low cost that
includes low tax and cheap administration costs.
Retail Sukuk similar to social investment which combines both investor s
financial purpose and personal values, it gives good impact for society. The behavior
of Retail Sukuk investor should be different from the conventional investor, because
it is the investment for community contributions, particularly Muslims, for society
and environment.
Suggestions for further research are expected to investigate more about the
behavior of investors by interacting directly with the Retail Sukuk investors and can
compare with another instruments of Sukuk. For investors, are expected to support
the Government in financing the State Budget with participated in shariah- compliant
investment safe and profitable.

81
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Almara, Dheni Saraswati. 2015. Analisis Pengaruh Nilai Sukuk, Rating Sukuk dan
Risiko Sukuk Terhadap Last Yield Sukuk. Skripsi: UNDIP
Anwar, Dani Arsyad. 2010. Akad Sale and Lease Back pada Transaksi Sukuk Ritel
Di PT.
BNI Securities.Skripsi: UIN Syarif Hidayatullah
Aziz, Musdalifah, Sri Mintarti dan Maryam Nadir. 2015. Manajemen Investasi
(Fundamental, Teknikal, Perilaku Investor, dan Return Saham).
Yogyakarta: CV. Budi Utomo. Deepublish.
Azwar. 2015. Perkembangan Perbankan Syariah Di Indonesia : Pengaruh Penerbitan
Sukuk
Negara Sebagai Pembiayaan Defisit
Fiskal. http://www.bppk.kemenkeu.go.id/publikasi/artikel/150-artikel-
keuangan-umum/20958-perkembangan-perbankan-syariah-di-indonesia-
pengaruh-penerbitan-sukuk-negara-sebagai-pembiayaan-defisit-
fiskal&ei=GZJpfnY0&lc=id-
ID&s=1&m=630&host=www.google.co.id&ts=1457181631&sig=ALL1A
j5e7- daKWlOlwYOXlKzYMIjtID99w diakses pada 23 Maret 2016
Christanti, Natalia dan Linda Ariany Mahastanti. 2011. Faktor-faktor yang
dipertimbangkan dalam melakukan investasi, Jurnal Manajemen Teori dan
Terapan I: Desember
Chambali, Moch. 2010. Analisa Faktor-Faktor Yang Mempengaruhi Minat
Masyarakat Berinvestasi Sukuk Melalui Agen Bank Syariah. Skripsi: IAIN
Walisongo
Entong, Andi Tenri Ellyanti. 2015. Anasilis Tingkat Keuntungan Investasi Surat
Berharga Syariah Negara (Sukuk Negara Ritel).Skripsi: UNHAS
Falih, Noor Muhammad. 2015. http://investasi.kontan.co.id/news/daftar-resmi-22-
agen- penjual-sukuk-ritel-007. diakses pada 28Juni 2016
Farmida, Bi. 2008. AAOIFI Statement on Sukuk and Its
Implications.
http://www.nortonrosefulbright.com/knowledge/publications/16852/aaoifi-
statement-on-sukuk-and-its-implications diakses pada 24 Maret 2016
Fatwa DSN-MUI NO:69/DSN-MUI/VI/2008 Tentang Surat Berharga Syariah
Negara
Handayani, Dian. 2016. Bersama Membangun Bangsa dengan Sukuk Ritel.
http://www.perpustakaan.kemenkeu.go.id/FOLDEREBOOK/Buku_Tanya
_Jawab_S
BSN_Edisi_Kedua_2010.pdfdiakses pada 25 Februari 2016
Haris Herdiansyah. 2011. Metodologi Penelitian Kualitatif. Jakarta: Salemba
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Hariyanto, Eri. Strategi Pengembangan Pasar Sukuk Negara.
http://www.kemenkeu.go.id/sites/default/files/Strategi%20Pengembangan
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Kementerian Keuangan Republik Indonesia. 2016. Sukuk Ritel.
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Kholis, Nur. 2011. Sukuk: Instrumen Investasi Yang Halal Dan Menjanjikan
http://nurkholis77.staff.uii.ac.id/sukuk-instrumen-investasi-yang-halal-
dan-menjanjikan/ diakses pada 24 Maret 2016
Kurniawan, Deny Cisna. 2016. Faktor-faktor Yang Mempengaruhi Mahasiswa
Investor UIN Sunan Kalijaga Terhadap Keputusan Investasi Saham
Syariah Di PT. Oso Securities. Skripsi. UIN Sunan Kalijaga
Kusumawati, Melisa. 2013. Faktor Demografi, Economic Faktors dan
Behavioral Motivation Dalam Pertimbangan Keputusan Investasi Di
Surabaya, Jurnal Finesta Vol. 1
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Rate, dan Tingkat Bagi Hasil Deposito Mudharabah Terhadap Tingkat
Permintaan Suku Ritel SR-003. Skripsi: UIN Sunan Kalijaga Yogyakarta
Manan, Abdul.2009. Aspek Hukum Dalam Penyelenggaraan Investasi di Pasar
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Pendekatan Analytical Hierarchy Process (AHP). Jurnal Ilmu
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Salemba Empat. Jakarta
Pangestuti, Clara Desi. 2014. Aplikasi Teori Utilitas Untuk Melihat Minat
Pembelian Produk Asuransi Pendidikan. Skripsi: Universitas Pendidikan
Indonesia
Piwi, Theresia Tyas. (2013). Pengaruh Karakteristik Psychographic dan
Demographi Terhadap Perilaku Investor dan Jenis Investasi. Disertasi:
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PSAK 110. Skripsi: UI
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Investasi di Pasar Modal, Jurnal: Universitas Jember
Rizal, Rahma. 2013. Pengaruh Underlying Asset, Jenis Seri dan Struktur Sukuk
Terhadap Volume Transaksi Sukuk Negara Di Pasar Sekunder 2008-2012.
Tesis. UNHAS Rizkiyani, Wilda Faiz. 2016.
Pasar Modal Syariah.
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Fiskal Di Indonesia. Skripsi: UIN Syarif Hidayatullah

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Dalam Pengambilan Keputusan Investasi Sekuritas Di Bursa Efek
Indonesia (BEI). Jurnal Ekonomi Voume 4 Nomor 2: November
Silmy, Fikri Indra. 2011. Faktor-Faktor Yang Mempengaruhi Pertimbangan
Investasi Saham Syariah. Skripsi: UIN Syarif Hidayatullah
Sugiyono. 2012. Metode Penelitian Kuantitatif Kualitatif dan R & D. Bandung:
Alfabeta. Cetakan Ke-17.
Undang-Undang Nomor 19 Tahun 2008 Tentang Surat Berharga Syariah Negara
Yuniasih, Eli. 2014. Pengertian Pasar Modal Syariah.
http://www.ekonomiplanner.com/2014/06/pengertian-pasar-modal-
syariah.html. diakses pada 25 Februari 2016

84
CPM-05

INDONESIA CAPITAL MARKET REACTION TO THE

IMPLEMENTATION RAMADAN MONTH 2016 IN
INDONESIA STOCK EXCHANGE (Studies Case
Companies Registered In JII Index 2016)

Nanang Asfufi
University of Jember
Email :Asfnng15@gmail.com

ABSTRACT
The purpose of this study was to determine whether there is a significant
difference between the normal average stock retrun around the outside of
Rahmadhan 2016 and to determine whether there is a significant difference in the
average before and during Ramadan. In this study using secundary data. The results
of analysis performed on 30 companies belonging to the JII, which began on May
17, 2016 to June 25, 2016. In this study using the test tool of analysis used two
different test average - average (paired). The results of the study will direct the
execution Rahmadhan 2016 has little impact seen from the results of the data
analysis obtained by value t count amounted to 2,193 bigger than t-table at 1.73961
with a probability value of less than 0.05, then a decision could be taken Ho
accepted. whereas for the period before and after the implementation Rahmadhan
seen from the results of the data analysis process described above, obtained
arithmetic t value of 3601 is greater than t-table at 1.73961 with a probability value
of less than 0.05, then a decision can be taken Ho accepted, meaning there is no
significant difference in the average abnormal return before the date of execution
after Rahamadhan.

Keywords : Stock, Stock Retrun, average

1. Introduction
The share price movement is an influence that it is important to know that the
stock market affect investors' decision to take a decision to carry out capital market
transactions. Investors usually take a concerted decision making information
obtained from public and information is obtained directly. From that information, the
investor has no meaning in terms of the value can affect the transactions in the
capital market so as to reflect the state buying and selling stocks, causing their share
prices up and down. Rise and fall of stock prices alone is influenced by many factors

85
such as the economy, the state, the moment of the big day, changes in currency
crucible, the capital market itself as an economic instrument acts to escape from
several factors such as the company's environmental performance factors, Factor
dividends and corporate reports. In addition macroeconomics of a country jugak very
influential in stock trading in the country.

2. Literature Review
According to Sigit Triandaru (2007), the capital market is the financial
markets to fund long-term and concrete markets. Meanwhile, according to the
dictionary of the money market and the capital market are concrete or abstract that
bring together offerand requiring long-term funds, which is the duration of one year
and above. According to Suad Husnan (2002) factors affecting the success of the
capital market are:
a) Supply securities
b) Demand securities
c) political and economic conditions
d) Problems of Law and regulations
e) The existence of institutions that regulate and supervise capital market
activities.
While the instruments in the capital markets, among others:
a) Shares
b) Bonds
c) Rights Issue
d) Warrant
e) Mutual Funds

2.1 Market efficiency

The concept of efficient markets was first proposed and popularized by
Fama (1970) in Jogiyanto. In this context what is meant by the market is the capital
market. A market is said to be efficient if no-one, both individual investors and
institutional investors, will be able to earn abnormal returns (abnormal return), after
adjusting for risk, using existing trading strategies. That is, the prices formed on the

86
market is a reflection of the information or the (stock prices reflect all avalaible
information). Another expression suggests that in an efficient market asset prices or
securities quickly and fully reflect available information about the assets or
securities. In studying the concept of an efficient market, our attention will be
directed to what extent and how quickly the information can influence the market as
reflected in changes in the price of securities.
In Jogiyanto (2013: 585) A market information system terhadapsuatu
efficient workmanship, IF and only IF security prices act as if ANY systeminformasi
observe the orangutans. Definition Beaver singer has a sense that the market is said
to be efisienterhadap A set of Specific information (to result from a system
information) IF the price Happens taxable income information received by the
Market Participants same price WITH IF ANY What will Happen orangutans will
get the information set. Happens market price That process is efficient WITH Singer
called "fully pricing information".

2.2 Data And Variable Research

The data in this study is data sekuder. All data neighboring JII company
incorporated in the period May 2016 - June 2016 by 30 companies that obtained
from web Excheng Indonesia Indonesia Stock Exchange. The data used is the data
daily stock price May 17, 2016 period - June 25, 2016.

3. RESEARCH METOHD
3.1 Process Flow Research And Analysis Tool
Process Flow In this study include calculating return true and returns the
stock market calculate the return is not normal (abnormal return) shares JII,
calculating carriage average return is not normal (abnormal return) shares JII,
Testing Statistics conducted to test the research data seen from tcount and the value
of paired sample t test.
In this study, using analytical tools and models calculation of stock back to
the testing process abnormal return and t-test. Determination of the abnormal return
and the average share price of Jakarta Islamix Index (JII) are as follows:

87
Return the real and the stock market return JII
According Jogiyanto (2013: 263) the actual return is the return that occurs
when all twhich represents the difference between current prices relative to the
previous price. Calculated per day each stock.
Rit = Pit Pit-1
Pit-1
Information:
Rit = Actual exchange for stock i on day t
Pit = price of stock i on day t
Pit-1 = The share price i on day t-1

Return the market is used as a performance evaluation standards in general.

Scale to calculate market return used index JII.
Rmt = Indeks JIIt indeks JIIt-1
Indeks JIIt-1
Information:
Rmt = Back Market ON day t
JIIt Index = Index JII ON day t

Abnormal Return
According Jogiyanto (2013: 397) abnormal return is the difference between
actual returns that occur with return expectations.
Arit = Ri,t E[Ri,t]
Information :
Ari, t = return not normal (abnormal return) securities all in the period I-t .
Abnormal Return
According Jogiyanto (2013: 398) calculates the average abnormal return
for 30 shares each day in the event period. Used as the basis for calculating
signifiansi abnormal return so that it can determine the reaction of the market, speed
to market information content, and market efficiency
Arit==1 Arit
K

88
Arit = Average abnormal return on day t
K = Number of securities affected by the announcement event.

4. Results and Discussions

To determine whether the market will react to the fasting month of year
2016 visits from abnormal return, use the following hypotheses:
Ho1: There is no significant difference in the average abnormal stock returns around
the outside of an implementation with Rahmadhan months of 2016.
Ha1: There are significant differences in the average abnormal stock returns around
the outside of an implementation with Rahmadhan months of 2016.
Ho2: There is no significant difference in the average abnormal stock returns before
and during the implementation of the 2016 Rahmadhan months.
Ha2: There are significant differences in the average abnormal stock returns before
and after the implementation of the 2016 Rahmadhan month.

89
 Table 1.
The average abnormal return around and beyond the period of Ramadan events

HARI SEBELUM SELAMA HARI SEBELUM SELAMA

8 2 7 6
1 11
5 2 5 3
2 12
8 4 9 3
3 13
6 4 6 5
4 14
5 6 5 4
5 15
7 3 4 3
6 16
4 3 5 3
7 17
7 5 7 3
8 18
5 4 9 5
9 19
6 3 6 4
10 20

Paired Sample T-test

4.1 Hypothesis I
Table 2.
The Average Yield Return Abnormal Return Around And Outside Of Ramadan
Paired Samples Test
Paired Differences T Df Sig.
Mean Std. Std. 95% Confidence (2-
Deviatio Error Interval of the tailed)
n Mean Difference
Lower Upper
Outside 1,350 2,753 ,616 ,061 2,639 2,193 19 ,041
Pair
- around
1

90
 The results of the data analysis process described above, obtained by value
t count amounted to 2,193 bigger than t-table at 1.73961 with a probability value less
than 0.05 then the decision can be taken Ho is accepted, it means that there are
significant differences in the average abnormal return around with outside
Rahmadhan 2016 implementation date.

4.2 Hypothesis II
Table 3.
The Average Yield Return Abnormal Return Around And Outside Of Ramadan
Paired Samples Test
Paired Differences T Df Sig.
Mean Std. Std. 95% Confidence Interval (2-
Deviation Error of the Difference tailed)
Mean Lower Upper
Pair Before- 2,200 1,932 ,611 ,818 3,582 3,601 9 ,006
1 During

The results of the data analysis process described above, obtained by value
t count amounted to 3,601 bigger than t-table at 1.73961 with a probability value less
than 0.05 then the decision can be taken Ho is accepted, it means that there are
significant differences in the average abnormal return before the with Rahamadhan
after the date of implementation.

5. Conclusion

1. From the statistical tests above can be seen there are no differences in average
abnormal return significantly between periods around Rahamadhan the period
beyond Ramadan. This is evidenced by the t test and obtained t-count equal to
2,193 bigger than t-table is 1.73961. Investors felt economic conditions around
and outside of Rahamadhan same, despite the importance of a happening
event. But investors still need to perform capital market transactions.
2. From the statistical test above can be seen there is no difference in the average
abnormal return between before implementation with Rahmadhan after

91
 implementation. This is evidenced by the t-test and t-test values obtained at
3,601 smaller than t-table is 1.73961 The investors feel Ramadan implemented
in 2016 has been running smoothly. They also responded well to the
implementation of this year's Ramadan.

REFERENCES

Gumanti, T. A. and E. S. Utami (2004). " This form of market efficiency and
testing. " Journal of Accounting and Finance 4 (1) :. Pp 54-68.
Jogiyanto.2013."Portfolio Theory and Investment Analysis". Six editions, BPFE,
Yogyakarta.
Kusumarini, K. C. (2014). Market Reaction To The Sustainability Information
Company ON, Accounting Studies FEB-UKSW.
Latifah, U. and P. PRASETIONO (2012). analysis of differences in stock returns
before and after the religious holidays and national holidays (Empirical
Study on Stock Price Index (CSPI) in Indonesia Stock Exchange) Period
2007-2011, Faculty of Economics and Business.
Sundari, V. (2009). "Indonesian capital market reaction on the implementation of
the general elections of April 9, 2009 on Indonesian stock exchange."
Journal of the Faculty of Economics, University Gunadarma. Hal: 20-29.
Sigit Triandaru and Totok Budisantoso (2007). "Banks and Other Financial
Institutions". Four Salemba, Jakarta
Widyaningrum, l. (2014). the effect of the announcement of the legislation's
financial services authority (FSA) of the abnormal returns and trading
volumes (case studies on companies that entered in jakarta islamic index)
UIN Sunan Kalijaga Yogyakarta.

92
CPM-06

DOES MONDAY EFFECT

REALLY OCCUR IN INDONESIAN?:
EVIDENCE FROM INDEXED LQ45 COMPANIES

Bunga Maharani
University of Jember
Email: bungamhrn@gmail.com

Ririn Irmadariyani
University of Jember
Email: irmadariyaniririn@yahoo.co.id

Venna Melinda

ABSTRACT

One of the widely studied seasonal effect and market anomaly is Monday Effect. It
happens when stock returns were significantly negative on Monday. This study
examines empirically the phenomenon Monday Effect on indexed LQ45 companies
in Indonesia for the period from January to December 2015. There are 38 companies
sampled in this study. This study uses nonparametric statistical analysis to test the
hypothesis which consisting of the Kruskal-Wallis test, Wilcoxon test, and Tau-
Kendall test. Our results prove that there is a difference of return on the day-to-day
trading. Our study also present the Monday Effect in real terms and partial. In
addition, we found that the return on Monday affected by return on Friday the
previous week.

Keywords: Seasonal Anomalies, Monday Effect, Return

1. Introduction
Market anomalies are the deviation of the concept of an efficient market.
Nothing could prevent the market anomalous phenomena. The phenomena is caused
investors could receive abnormal return that should not be there. According
Ramadhani and Subekti (2014), anomalies cause bad effects by causing the stock
market is no longer display the state of the real economy. The effect is a result which
is the very opposite of the previous expected. Some studies reveal that the market
anomaly is a informationally deviation from the efficient market hypothesis.

93
 Most researchers investigate seasonal anomalies phenomena. Seasonal
anomalies is an anomaly that depend on time. One example is a Day of the Week
Effect anomaly or the effects of the trading day. Day of the Week Effect anomaly is
the difference in a decrease in average return on trading days. Monday Effect is one
part of its.
There are few studies that show evidence of Monday Effect. Budileksmana
(2005) and Iswardhini (2013) discovered the Monday Effect on companies listed on
the Indonesia Stock Exchange. Similar results were found by Iramani and Mahdi
(2006), where returns stock on Mondays tend to be negative and the lowest
compared to other trading day in 2005. Other researchers show Monday Effect
happened in indexed LQ45 companies in various period (Putri and Fauzie, 2014;
Ramadhani and Subekti, 2014; Sumiyana, 2008). Sumiyana (2007) proved the
existence of Monday Effect in real terms, but the results are not consistent, in other
words not always Mondays produce returns the lowest compared to other trading
days.
However, there are several other studies showing different results. Sularso, et
al. (2011) did not find Monday Effect on the indexed LQ45 companies for third
period from August 2010 to January 2011. Thadete (2013) also can not prove the
Monday Effect on the Indonesia Stock Exchange in the years 2007-2012.
Based on the inconsistency of Monday Effects empirical results, we
interested in re-examine the Monday effect on LQ45 companies in Indonesia for
period from January 2015 to December 2015. The purpose of our study was to show
empirically the difference of return on trading days, proving the occurrence of the
phenomenon Monday effect and prove the influence return previous Friday to return
Monday .

2. Literature Review

According to the Random Walk theory, the market is informationally

efficient, which means the stock market illustrates all the available information about
the value of the asset. The stock price change for the stock information changes
(Gregony, 2007: 92). If the company's prospects rise, then the value of the company
will increase, and the stock price rises, vice versa. Possible stock prices rise or fall

94
cannot be predicted by monitoring the stock price in the past, because the price of the
past cannot be the benchmark stock price, now or in the future. Thus, the theory of
random walk this has implications similar to the concept of market efficiency in
weak form as stock prices move randomly and can not be predicted (Mishkin, 2008:
67).
Rystom and Benson (1989) revealed that the Monday effect caused more by
investors psychology. Investors do not like Mondays (bad day) because Monday was
the first day of the week. This causes investors often act irrationally. Actions that are
not rational in the deal is likely to get return the lowest on Monday trading day
compared to other trading days.

2.1 Hypothesis Development

The phenomenon of the Day of the Week effect occurs because the behavior
of investors to trade on the exchange. Profit taking action led to the difference in
average return in the trading day. It is because technical analysts believe that they
can see trading patterns from the stock price information in the past. Moreover, in
terms of psychological theory, average return lows on Monday with a negative value
most likely due on Monday (beginning of trading days), which is the beginning of
day work. It affects their mood in buying or selling stocks.
Research regarding the market anomaly the Day of the Week effect showed
different results. Sularso, et al. (2011) showed that average return on Tuesday is the
lowest compared to other days. Iramani and Mahdi (2006) reveals the influence of
the significant trading on return stock daily at the Jakarta Stock Exchange in 2005.
Lutfiaji (2013) revealed no difference average return on stocks LQ45 in 2012. In
addition, Putri and Fauzie (2014) also shows the effects of the trading day on the
LQ45 index period January 2012 to December 2013. Sumiyana (2008) proved that
the day of week phenomena occur consistently in Indonesian Stock Exchange, but
the occurence are not evenly in the same day. She also proved that Monday Effect
exists partially and incidentally only. Based on that, this research can be formulated
hypotheses:
H1: There is a difference of return on a day-to-day trading on companies
indexed LQ45

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H2: There was a Monday Effect on companies indexed LQ45
Irrational investor behavior affect the correlation between negative return
Monday preceded by negative return on Friday the previous week. It is depend on
psychological factors. On Monday, the selling pressure from individual investors
would be higher if it is preceded by an event on Friday which had a negative return
(Thadete, 2013). Abraham and Ikenbery (1994) found that the overall average return
on Monday was negative, this is a consequence of the information announced in the
prior trading session. Based on this, then formulated the following hypothesis:
H3: Return on Friday affects subsequent Mondays return on indexed LQ45
companies

3. Research method
Our research is event study aimed to test the efficiency of the market in weak
form and show the reaction of investors at the time of trading day and non-trading
day as a result of the stock price information on the previous trading day. To avoids
the sleep-stock, we chose indexed LQ45 companies as the population because they
actively traded on the Indonesia Stock Exchange (Hartono, 2013: 130). This study
uses purposive sampling method. Our sampling criteria is companies which listed in
LQ45 respectively, during the period January 2015 to December 2015. According to
these criteria, 38 companies were obtained as the sample of the our study.
We use time series data consisting of daily closing stock prices of companies
listed on the LQ-45. It is issued and published on the site www.finance.yahoo.com.
The study period is for one year from January to December 2015. Our study focuses
on the trading days are Monday, Tuesday, Wednesday, Thursday, and Friday.
The analytical method used to test the market anomalous phenomena such as
Monday effect is as follows:
1. Calculating the stock returns of each company using the realized returns
formula (Hartono, 2013: 236):
1
=
1
where Rit is the return of stock i on day t, Pt is the closing price for today and Pt-1
is the closing price of the prior day.

96
2. Grouping of return based on the trading day, ie Monday, Tuesday, Wednesday,
Thursday, Friday.
3. Calculating average return on Monday, Tuesday, Wednesday, Thursday Friday
during the period in 2015 in the formula:

=

4. Efficient Market Testing
Testing efficient market in Indonesia has the objective to determine the weak
form efficient market. The way to prove it is by examining the stock price
movement is random or not. Another way is to examine whether there is a
correlation or influence stock prices today with the previous day. Statistical
methods for testing the weak form of the efficient market using heteroskedastity
test, multicolinierity test and autocorrelation test, if the data are normally
distributed. If the data is not normally distributed, we use Larian test (Run tests)
and Correlation Serial

3.1 Hypothesis Testing

3.1.1 Hypothesis 1
The first hypothesis testing is to test whether there is a difference of return on
Monday with the return on other trading days. This is similar to the phenomenon of
the day of the week effect testing. If the data are normally distributed, we used
ANOVA (Analysis of Variance). If the data is not normally distributed, we used the
Kruskal-Wallis test. This test aims to test whether the value of certain variables
differently to the two or more groups.
3.1.2 Hypothesis 2
Monday Effect can be proven if average return on Monday is the lowest and
most significantly compared to other trading days (Sumiyana, 2008). If the data are
normally distributed, the t-test was used to test the Monday Effect. Here is a multiple
regression equation (French, 1980) in Budileksmana (2005):
R t = a1 SEN + a2 SEL + a3 RAB + a4 KAM + a5 JUM
Where R t is daily return stock index on day t; a1 , a2 , a3 , a4 , a5 is the regression
coefficient for dummy variable of each day; SEN is dummy variable is given a value

97
of 1 if the t fell on Monday and given a value of 0 if it falls on a day other than
Monday; SEL is dummy variable is given a value of 1 if the t fell on Tuesday and
given a value of 0 if it falls on a day other than RAB, KAM, JUM is dummy variable
for Wednesday, Thursday, Friday as well as variable SEN and SEL for Monday and
Tuesday in advance.
If the data is not normally distributed, we used the Wilcoxon-test. Following
statistical hypothesis H0 : 1 2 ; H1 : 1 < 2 , where 1 is average return on
Monday and 2 is the average return of the non-Monday (Tuesday, Wednesday,
Thursday, Friday). If the signification value is more than 0.05, H0 is accepted, vice
versa.

3.1.3 Hypothesis 3
Our study correlates the average negative return on Monday to negative
return on Friday the previous week to test whether the return Monday's negative
preceded by negative return on Friday the previous week. If the data is normally
distributed, three hypotheses can be tested with variable RJUM. Here is a regression
equation to test the hypothesis 3 (Thadete, 2013):
= 1 + 2 1 +
Where Rt is the return on Monday at week t; a1 is a constant; a2 is the regression
coefficient; 1 is return on Friday which precedes Monday at week t and e is
the error. If the data is not normally distributed, we use Tau-Kendall test.

4. Results and Discussions

4.1 The Difference of Average Return on Trading Day
Testing the hypothesis 1 of this study uses the Kruskal-Wallis test because
the data is not normally distributed. Here are presented in Table 1 of the test results.

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 Table 1
Results of the Kruskal-Wallis test
Day N Mean Rank Return_saham
Senin 1.976 4338,33 Chi-Square 144,876
Selasa 2.014 4997,35 Df 4
Rabu 2.014 4900,40 Asymp. Sign. 0,000
Kamis 1.976 5291,82
Jumat 1.938 5276,10
Total 9.918

Source: Processed Data

Table 1 shows the significant value of 0.000, means that the hypothesis 1 is
accepted. This proves that there are differences in the average return stock that is
significantly over 5 trading days. Empirical evidence supports the theory of market
anomaly that is the day of the week effect, which states that there are differences in
stock returns in a week. This result is consistent with the finding of Iramani and
Mahdi (2006), Sularso et al. (2011), Lutfiaji (2013), and Putri and Fauzie (2014).
As previously explained, phenomenon of the day of the week effect is a
deviation from the concept of an efficient market. This phenomenon explains that
average return on trading days are the same or not different. However, the results of
this study shows the difference in average returns and prove the existence of market
anomalies that occurred.
The cause of the day of the week effect is the discrepancy between the
information received by the investor. Differences arise because of the different of
sophistication in processing information in market players. The information available
on the market can not be directly applied. Investors further should manage such
information whether the information is favorable or not.

4.2 The Occurrence of Monday Effect

Testing the hypothesis 2 of this study uses the Wilcoxon test because the data
are not normally distributed. Here is presented in Table 2 of the test results.

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 Table 2
Results of Wilcoxon test
Negative Positive Asymp. Sign.
Mean
rating a rating b (2-tailed)
Senin-Selasa -0.0060 -0.0002 19 31 0.085
Senin-Rabu -0.0060 -0.0011 21 31 0.161
Senin-Kamis -0.0060 0.0030 17 33 0.006
Senin-Jumat -0.0060 0.0017 18 32 0,003

Source: Processed Data

Table 3
Monday Effect Test
Mean x negative a Mean x positive b Conclusions
Senin-Selasa -0.006 x 19 -0.0002x 31 Unidirectional
= 0.1114 = 0.0062
Senin-Rabu -0.006 x 21 -0.0011 x 31 Unidirectional
= -0.216 = -0.0341
Senin-Kamis -0.006 x 17 0.0030 x 33 Unidirectional
= -0.102 = 0.099
Senin-Jumat -0006 x 18 0.0017 x 32 Unidirectional
=-0.108 = 0.0544

Description: If a <b, it is unidirectional

If a> b, it is undirectional
Source: Processed Data
Table 2 shows that Senin-Selasa and Senin-Rabu have significance value
more than 0.05 and have a unidirectional relationship (see Table 3). Meanwhile,
Senin-Kamis and Senin-Jumat have significance value less than 0.05 and have a
unidirectional relationship. The existence of a unidirectional relationship indicates
that Monday has average return the lowest compared to other days of the week, but
the significance of the results showed that not all significance value is less than 0.05.

100
Based on those result, our finding indicates the occurance of Monday effect in real
terms. However, Monday Effect occurs partially.
The results are consistent with the finding of Budileksmana (2005), Iramani
and Mahdi (2006), Sumiyana (2008), Iswardhini (2013), Putri and Fauzie (2014),
and Ramadhani and Subekti (2014). There are several reasons to explain our finding.
Psychological effects making investors tend to dislike Monday (bad day) as the
beginning of the workday. According to Rita (2009), investors feel less passion and
pessimistic when trading in the stock on Monday. Institutional investors do less
trading activity on Monday, while individual investors do more activity but with
more sales orders dominate their trading activities. Finally, the stock price will fall
with respect to the increase in the offer.

4.3 The Influence of Fridays Negative Return to Subsequent Mondays Negative

Return
Testing the hypothesis 3 of this study uses the Kendall Tau test. The results
of Kendall Tau test in Table 4 shows that correlation coefficient is less than 5%
level of significant (0,012). It shows that there is the influence of negative returns on
Monday, which is preceded by a return negative on Friday the previous week. These
results are consistent with the finding of Budileksmana (2005), Rita (2009),
Iswardhini (2013), and Thadete (2013).
Table 4
The Results of Correlation Between Average Negative Return on Friday of The
Previous Week with Negative Return on Monday

Jumat_negatif Senin
Kendall's Correlation
Jumat_negatif 1,000 0,486*
tau_b Coefficient
Sign. (2-tailed) 0,012
Correlation
Senin 0,486* 1,000
Coefficient
Sign. (2-tailed) 0,012
Sumber: Data Diolah

101
 Our finding proves that there is a correlation between negative return on
Monday, which is preceded by a negative return on Friday of the previous week.
This is a clear violation of the Efficient Market Hypothesis (EMH) in its weak form
which states that stock price movement cannot be predicted in advance to form a
trading strategy. This can be explained by the psychological aspect of investors who
tend to dislike Mondays. According to Supriyono and Wibowo (2008), on Monday,
investors are likely to review the prior received information and determine the
strategy of the transaction. This led to selling pressure on Monday is larger than any
other trading days.

5. CONCLUSION
The literature has documented a Monday effect phenomenon in Indonesian.
This study provide additional piece of evidence to the occurence of Monday Effect
on Indexed LQ45 Companies period from January to December 2015. The results
showed a significant difference between average stock return during the five trading
days. It indicates the presence of the day of the week effect in indexed LQ-45
companies in 2015. The study also proves that the average return on Monday was
significantly lower than other day of the week. So, it indicates the occurrence of the
phenomenon of effect Monday the LQ-45 index in 2015. In addition, this study also
showed a correlation between negative return on Monday that preceded negative
return on Friday of the previous week. So, we can conclude that the stock price
movements are not random and can be predicted systematically based on market
conditions on Friday of the previous week.
Similar to other studies, this study has its own limitations. First, our study
used average stock return in the method of analysis. This method is less rigorous for
proving the occurence of Monday effect. Second, our study only uses companies
included in the LQ-45 index. So, it cannot be the benchmark of the market
anomalous phenomena in the Indonesia Stock Exchange. Third, this study has not
include other factors that might influence the pattern of stock return changes such as
firm size, trading volume, and ask-bid spread.

102
 REFERENCES

Abraham, A., and Ikenberry. 1994. "The Individual Investor and The Weekend
Effect". Journal of Financial and Quantitatives Analysis (29): 263-277.
Budileksmana, A. 2005. "Fenomena Monday Effect di Bursa Efek Jakarta".
Prosiding. Simposium Nasional Akuntansi VIII. Solo: 491-503
Gregony, N. M. 2007. Makroekonomi. Edisi Keenam. Jakarta: Erlangga.
Hartono, J. 2013. Teori Portofolio Dan Analisis Investasi. Edisi 8. Yogyakarta:
BPFE.
Iramani and A. Mahdi. 2006. Studi Tentang Pengaruh Hari Perdagangan Terhadap
Return Saham pada BEJ. Jurnal Akuntansi dan Keuangan 8 (2) November:
63-70.
Iswardhini, T. D. 2013. Pengaruh Monday Effect Terhadap Return Saham di Bursa
Efek Indonesia tahun 2010-2012. Skripsi. Jember: Universitas Jember.
Lutfiaji. 2014. Pengujian The Day of The Week Effect, Week-Four Effect, dan
Rogalsky Effect Terhadap Return Saham LQ-45 di Bursa Efek Indonesia.
Skripsi. Malang: Universitas Brawijaya.
Mishkin, F. S. 2008. Ekonomi Uang Perbankan dan Pasar Keuangan. Jakarta:
Salemba Empat.
Putri, S.F.A.S., and S. Fauzie. 2014. Analisis Monday Effect dan Rogalsky Effect
pada Saham Perusahaan LQ45 di Bursa Efek Indonesia (BEI) Periode 2012-
2013. Jurnal Ekonomi dan Keuangan 2 (11): 685-699.
Ramadhani, R. and I. Subekti. 2014. PengujianAnomaliPasarMonday Effect,
Weekend Effect, Rogalski Effect Di Bursa Efek Indonesia. Jurnal Ilmiah
Mahasiswa FEB Universitas Brawijaya 3 (2): 224-237
Rita, M. R. 2009. Pengaruh Hari Perdagangan Terhadap Return Saham: Pengujian
Day of the Week Effect, Week-Four Effect dan Rogalski Effect di BEI.
Jurnal Ekonomi dan Bisnis 15 (2). September: 121-134.
Sularso, H., E. Suyono, and D. Rahmawanto. 2011. Analisis Monday Effect Dan
Weekend Effect pada Saham Perusahaan LQ45 di Bursa Efek Indonesia.
Prosiding Seminar Nasional Sustainable Competitive Advantage 1:
Purwokerto: Universitas Jenderal Soedirman
Sumiyana. 2007. Monday Effect: Penalaran Logis Sebagai Akibat Dari Pengaruh
Psikologis, Pengaruh Periode NonPerdagangan, Atau Pengaruh
Kombinasian Keduanya: Studi Empiris Berbasis Intraday, Bursa Efek
Jakarta 1999-2005. Jurnal Ekonomi dan Bisnis Indonesia 22 (2): 133-161.
Sumiyana. 2008. Day of the Week dan Monday Effect: Fenomena yang
Terbuktikan Tidak Konsisten di Pasar Modal Indonesia. Jurnal
Manajemen Teori dan Terapan 1 (1) April: 1-27.
Supriyono, E. and W. Wibowo. 2008. "Pengaruh Hari Perdagangan Terhadap Return
Saham: Pengujian Week-Four Effect di Bursa Efek Jakarta". Utilitas Jurnal
Manajemen dan Bisnis 16: 54-62.

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Thadete, M. G. S. 2013. Fenomena Monday Effect di Bursa Efek Indonesia (Periode
2007-2012). FINESTA 1 (2): 96-101.

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CPM-07

OPTIMAL PORTFOLIO ANALYSIS OF FORMATION

OF FOOD AND DRINK INDUSTRY LISTED IN
INDONESIA STOCK EXCHANGE CASE STUDY 2011-
2014
Irene Lilin Yunita Puspita Rini
Jember University
Irene.lilin@gmail.com

ABSTRACT

This study aims to identify the optimal portfolio combination which is formed of five
shares of food and beverage industry for the period 2011-2014. Method of approach
through the level of expected return and risk (standard deviation) produced from the
combined portfolio. Secondary data used in this study by the Indonesia Stock
Exchange as IDX is the closing price and dividends are distributed each year. Data
were processed using an analysis tool that includes the calculation of the actual
return, expected return, variance and standard deviation, coefficient of correlation.
The value of all of the parameters used in the form of searching for the optimal
portfolio. From the results of this study concluded that: (i) a combination of the
portfolio acquired from five shares of the company formed into four types of
combination of shares. The optimal portfolio of all the combinations there is a
portfolio with a combination of three stocks are stocks of A (PT. Indofood CBP
Sukses Makmur Tbk.), B stocks (PT. Tiga Pilar Sejahtera FoodTbk) and C stocks
(PT. Mayora Indah Tbk) the proportion of funds amounting to 70% A, 5% B and
25% C, which shows the expected return of the portfolio of 0.33% to the value of the
spread or risk (standard deviation of the portfolio) amounted to 0.27% in coefficient
of variance of 0.77.

Keywords: portfolio analysis, optimal portfolio

1. Introduction
Investment is an investment directly or indirectly, either short term or long
term in order to obtain the expected profit or other forms of benefits as a result of
capital investment. Risk is the primary factor that should be considered by investors
before their funds, because in the daily life of uncertainty will always exist and
signage.
Investments are sacrificing present value for money in the future. Investment
risk is a form of investment that the rate of profit or benefit depends on internal
factors (political, security, condition information). While external factors (changes in

105
exchange rates, political and economic changes in the world, the development of
information systems).
Almost all investments contain an element of uncertainty or risk. Financiers
do not know exactly who will be received from its investments, especially investors
who invest in the stock market. In such circumstances it is said that these investors
face risks in its investments, which he could do was to estimate how the expected
profit from the investment and how far the possibility that actual results will be
deviated from the expected results.
An investor or investors face a risky investment opportunities. Investment
options can not rely solely on the expected profit rate. If the investor expects to
obtain a high level of profit then he should be willing to bear the higher the risk that
the investment in the capital market in particular.
Investors in investing are always trying to minimize the risks that arise, both
short term and long term(Irham and Yovi 2011: 150). Zubir (2011: 20), states that a
rational investor would invest funds with an efficient stock picking, which gives the
maximum return with a certain risk or a certain return with minimal risk. In order to
minimize the risk of stock investment in the stock market, investors portfolio
(diversification) that shares a lot with less to invest in the stock so that the risk of
losses on the stock closed with gains on other stocks.
To be able to know which stocks that have a high rate of return with a certain
risk, and minimize the risk, the authors try to apply the analysis of a portfolio of
shares in one of the consumer goods industry that listing on the Jakarta Stock
Exchange, namely food and beverage industry in order to obtain the level of profits
optimal.
Based on the explanation above, the issues to be examined in this study is how
the combination of the optimal portfolio can be formed of five shares of the company
the consumer goods industry. With the aim to determine the optimal portfolio
combinations that can be formed from the five stocks consumer goods industry
2012-2014 case study, which is done by looking at the level of expected return
(expected return) and risk (Standard Deviation) generated combined portfolio per
share.

106
 This research is expected to be useful as an adjunct to the authors knowledge on
the formation of an optimal portfolio and as a special consideration for potential
investors engaged in the Indonesia Stock Exchange is an alternative in the selection
of the right investment.

2. Literature Review
Investment is a capital budgeting is done by an individual or an entity that
has excess funds with the expectation of capital budgeting that do will benefit big in
the future. Some experts and other authors define investment as follows: "The
investment is an investment for one or more of assets owned and usually long-lasting
in the hope of benefit in times to come (Sunariyah, 2006: 4).
In investing activities before making a decision to invest in a particular
company's stock, investors should consider two important things that risk and return.
According Jogiyanto (2003: 108), return is result earned from investments. Return
may be a return realization has already happened or return expectations that has not
happened yet but is expected to occur in the future. Return of investment in the stock
comes from two components: capital gain (loss) and yield. Capital gain (loss)
represents the increase (decrease) in the price of shares that can provide gains
(losses) for investors. While the dividend yield is the amount that was obtained
investors.
The formation of the portfolio came from business investment diversification
to reduce risk. If the investors who invest capital market, it is usually not just pick
one stock alone as investments. The reason, by doing a combination of stocks,
investments can achieve optimum return would simultaneously reduce risk through
diversification.
In the establishment of a portfolio investor always wants to maximize
expected return at a certain level of profits or minimize the risk to a certain level of
return in other words, investors are trying to get a high rate of return with the same
risk or gain tingkta minimal risk with the same advantages. Characteristics of the
portfolio is called efficient portfolio. While the optimal portfolio is a portfolio
selected by an investor of the many options that exist on the set of efficient portfolio

107
is a portfolio that generates profit rate (return) highest with certain risk or portfolio
that produces minimal risk to the rate of profit (return) specific
.
3. Research Methods
The object of this research is the Indonesian Stock Exchange (BEI) for the
period of 2011-2014. The sample for this study is the Company's Consumer Products
Food and drinks are already registered or listing.
The type of data in this research is secondary data from the Indonesia Stock
Exchange. The data obtained from the Indonesia Stock Exchange (IDX) website
(www.idx.co.id) is the closing price (Close price) stocks each month and the
dividends are distributed every year period 2011-2014.
Secondary data has been collected, then examined and analyzed. As an
analytical tool that can be used in this study can be explained by the steps below:
1. Calculate Actual Return of each company's stock per year.
The actual return can be calculated according to each company (Jogiyanto,2014:
264) is:

Where : Pt = Closing price of the period

t Pt-1 = Shares Closing Price Previous Period
Rt = Profit (return) individual stock
D = Stock dividend distributed
2. Calculate the expected rate of return Expected Return or shares of each
company. Expected Return can be calculated with the formula quoted Jogiyanto
(2014: 281)

where : E(Rt) = Expected profit rate of i investment

Rij = The amount of asset return i stock
N = Number of investment perio

108
3. Calculating Variance and Standard Deviation (Risk) shares of each company.
Variance and standard deviation can be calculated using the formula (Jogiyanto
2014: 285):

Where : 2 = Varian (squared)

= Standard deviation
E(Ri) = Advantages The expected level of investment
i Rij = Return i Asset
4. Determine the combination of shares of five companies set up food and
beverage industry. Next determine the proportion of funds that will be invested
in each company. The proportion of funds is calculated by distributing the funds
by comparison evenly. Through a comparison with the level of profit and risk
level comparison.
5. Calculate the expected profit rate (Expected Return) portfolios. The calculation
can use the formula:

where : E(Rp) = Expected profit rate

Xi = The proportion of the fund invested in the i stock

E(Ri) = Expected profit rate of the i stock
6. Calculating the correlation coefficient between the company's stock price, which
can be calculated using the formula of Husnan (2001: 60)

The authors calculate correlation coefficient using SPSS, due to a combination

of more than one stock.

109
7. Calculate the variance and standard deviation (risk) portfolio of shares, which
can be calculated by the formula of Husnan (2001: 66)

8. Calculating Coefficient of Variance

Coefficient of Variance can be calculated with the formula of Tandelilin (2001:
56)

4. Results and Discussion

4.1 The general state of object research
Food and beverage industry is the company that produces food and drink
processed.This industry covering fourteen a company that listing recorded on
2016.Of the twelve the company researchers take a sample company already listing
having expected return positive to the time research four years. Actual return,
expected return, variance, standard deviations investment as an object
research.Calculation the expected return each company based closing price every
year during the period 2011-2014, or the average of the closing price monthly.
Based on the calculation formula (1) the actual return (2) the expected return (3)
the variance and standard deviation of the investment will be obtained calculation
results as shown in Table 1 and Table 2.
Based on Table 1 the five companies has a positive expected return, this
means that the five companies could make a profit is expected therefore to do the
research process analysis of optimal portfolio formation.
Based on Table 2, the standard deviation / lowest risk acquired PT Mayora
Indah Tbk 0.33%, while the standard deviation / highest risk Ultrajaya Milk Tbk PT
gained 0.75%.

110
 Table 1
Value Expected Return on Investment of Food and Beverage Industry

Expected
Companies Return
Indofood CBP Sukses Makmur Tbk, PT 0,32
Tiga Pilar Sejahtera FoodTbk, PT 0,55
Mayora Indah Tbk, PT 0,33
Siantar Top Tbk, PT 0,69
Ultrajaya Milk Industry and Trading Company Tbk, PT 0,75

Table 2
Variance and Standard Deviation Investment of Food and Beverage Industry
Standard
Companies Variance Deviation
Indofood CBP Sukses Makmur Tbk, PT 0,07 0,27
Tiga Pilar Sejahtera FoodTbk, PT 0,09 0,30
Mayora Indah Tbk, PT 0,05 0,23
Siantar Top Tbk, PT 0,44 0,66
Ultrajaya Milk Industry and Trading Company Tbk,
PT 1,52 1,23

4.2 The Correlation Coefficient Between The Companies Stock Price

The correlation coefficient shows the relationship between the variables. In this
study, the coefficient in question is the correlation coefficient showing the
relationship between the companies profit rate reflected in the stock price.
Correlation calculations performed with the help of statistical program SPSS (table
3).
Based on Table 3 the correlation coefficient between the companies
valued above 0.5 indicates a tendency increase or decrease the rate of profit
among stocks have a strong relationship.

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 Table 3
The Correlation Coefficient

Correlations

A B C D E
A Pearson *
1 ,951 ,940 ,961* ,911
Correlation
Sig. (2-
,049 ,060 ,039 ,089
tailed)
N 4 4 4 4 4
B Pearson
,951* 1 ,811 ,998** ,904
Correlation
Sig. (2-
,049 ,189 ,002 ,096
tailed)
N 4 4 4 4 4
C Pearson
,940 ,811 1 ,819 ,906
Correlation
Sig. (2-
,060 ,189 ,181 ,094
tailed)
N 4 4 4 4 4
D Pearson * **
,961 ,998 ,819 1 ,887
Correlation
Sig. (2-
,039 ,002 ,181 ,113
tailed)
N 4 4 4 4 4
E Pearson
,911 ,904 ,906 ,887 1
Correlation
Sig. (2-
,089 ,096 ,094 ,113
tailed)
N 4 4 4 4 4
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).

4.3 Determination of Optimal Portfolio of all combinations

In determining the calculation of the level of expected return and standard
deviation for the combination of the stock portfolio to determine the optimal
portfolio, the expected return and standard deviation of each investment that we find
inserted into the formula (4) expected return and (5) the standard deviation of
portfolios optimally using microsoft excel. To perform the determination of optimal
portfolios used the coefficient of variance (CV) to rate each kind of combination of
shares. This was done to facilitate the selection of the optimal portfolio. The selected
optimal portfolio is a portfolio that generates the smallest CV.

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 Table 4
Portfolio The Most Optimal Combination Of Stocks

The proportion of funds in

No percent CV Erp p
Combination A B C D E
1 AB 93 7 - - - 0,85 0,34 0,29
2 AC 74 - 26 - - 0,91 0,32 0,29
3 AD 97 - - 3 - 0,91 0,33 0,30
4 AE 88 - - - 12 1,49 0,37 0,55
5 ABC 70 5 25 - - 0,77 0,33 0,26
6 ABCD 69 5 24 2 - 0,83 0,33 0,27
7 ABCDE 63 4 22 2 9 0,90 0,50 0,45

Based on Table 4 can be conducted to determine the optimal portfolio of five

stocks of companies, which are formed into 4 types of combinations that is a
combination of two stocks, three stocks, four stocks and 5 stocks.
In Table 3, it can be seen that the optimal portfolio of all the combinations there
is a portfolio with a combination of three stocks are stocks of A (PT. Indofood CBP
Sukses Makmur Tbk.), B stocks (PT. Tiga Pilar Sejahtera FoodTbk) and C stocks (
PT. Mayora Indah Tbk) with the proportion of funds of 70% stocks of A, 5% Stocks
of B and 25% stocks of C, which shows the expected return of of 0.33% to the value
of the spread or risk (standard deviation of the portfolio) of 0.27% on the value of
the coefficient of variance of 0.77

5. Conclusion, Implications, Limitations and Suggestion For Further Studies

5.1 Conclusion and implications
Based on the results and discussion can be concluded that the formation of the
optimal portfolio of five stocks consumer goods industry companies formed into four
types of combination of shares. The optimal portfolio of all the combinations there is
a portfolio with a combination of three stocks are stocks of A (PT. Indofood CBP
Sukses Makmur Tbk.),stocks of B (PT. Tiga Pilar Sejahtera FoodTbk) and stocks of
C (PT. Mayora Indah Tbk) the proportion of funds amounting to 70% A, 5% B and
25% shares C, which shows the expected return of the portfolio of 0.33% to the

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value of standard deviation of the portfolio amounted to 0.27% in value coefficient
of variance of 0.77.
The implication of this study is for investors in forming the optimal portfolio
should consider the level Expected Return and risk (standard deviation) that will be
generated by the portfolio formed is a portfolio that generates a certain level of profit
with minimal risk.

5.2 Limitation and Suggestion for Further Research

This study has some limitation as follow :
1. This study just conducted an analysis on the establishment of a portfolio
company's consumer goods industry sub-sectors of food and beverages
2. In forming a combination of equity portfolios do not rank for this type of
combination of shares that may be formed.
Based on the research limitation mentioned above, following are some
suggestion for futher research:
1. Research should be able to increase the types of companies as research
samples.
2. In forming a combination of separation portfolios researchers should
make the rank of a combination of shares that may be formed as a result
of the rating of optimal portfolio is the basis for determining the optimal
portfolio ratings of all the existing combinations.

REFERENCES

Husnan, S, Dasar-Dasar Teori Portofolio dan Analisis Sekuritas. UUP AMP YKPN.
Yogyakarta. 2001.
Irham, Fahmi dan Yovi. (2011). Teori Portofolio dan Analisis Investasi. Cetakan
Kedua. Bandung: Alfabeta
Jogiyanto, Hartono.2014. Teori Portofolio dan Analisis Investasi, Edisi Kedelapan.
Yogyakarta : BPFE..
Sunariyah., 2006, Pengantar pengetahuan Pasar Modal, Edisi Kelima, Penerbit UPP
AMP YKPN, Yokyakarta
Tandelilin, E. Analisis Investasi dan Manajemen Potofolio. Edisi I. BPFE.
Yogyakarta. 2001.
Zubir, Zalmi. (2011). Manajemen Portofolio: Penerapannya dalam Investasi Saham,
Edisi Pertama. Jakarta : Salemba Empat.

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ENT-01

The Effect of Price, Promotion and Quality Product to

Purchase Decision on Moment in Batam (Case Study in
Pt. Moment Global International)
Lukmanul Hakim
University Of Riau Islands,
E-mail: lukmann14@gmail.com

ABSTRACT

This study aims to identify and analyze the product purchase Moment in Batam. The
sample used in this study amounted to 55 people. Questions are given a
questionnaire which is distributed through simple random sampling techniques and
analytical method used are validity test, reliability test, classic assumption test and
multiple regression analysis. The results showed that the value of t hitung for the
variable of price equal to 1.446 and signification level 0.154, value of t hitung for the
promotion equal to 2,493 and signification level 0.016 while t hitung for the variable
quality of the product equal to 8.754 with a signification level equal to 0.000 which
is less than 0.05. It showed a positive and significant results from variable
promotions and product quality on product purchasing decisions Moment in Batam.
In addition, the variables that most influence in product sales in Batam moment is
the variable quality of the product .

Keywords: Price, Promotion, Product Quality, Purchasing Decision

1. Introduction
Each company is required to be ready to face increasingly fierce business
competition with other companies from around the world to face the era of
globalization are often said to be a world without limits. Thus the environment faced
by the company will also become increasingly complex. Nationally although exports
are one type of business that can provide added-an / exchange income countries, but
the complexity of the competition faced by the company will force each company to
always strive to improve services to consumers.
In this free business competition, the requirement that a company can be
successful in the competition is trying to achieve the goal of creating and retaining
customers. So that goal is reached, then every company should be able to produce

115
and deliver goods and services that consumers want in accordance with the needs
and desires.
Likewise with health products Moment, must strive to win the competition to be
always in the hearts of consumers, PT. International Global Moment manage the
marketing of health and beauty products comprising Glucogen Moment, Moment
Teragen, Slimmer Moment, Moment Propolis, Elastica and Moment Moment
Exotiva. PT. Internasional Global Moment offers a product with a high enough price
compared to other distributors.
In the mechanism of the company and competitors vying to produce and offer
"value" for customers and companies that managed to tie a customer is a company
that failed to provide superior value (superior value).
The entrepreneurs as producers not only a duty to create a product or service
itself, but also with the ability to know the needs of consumers for a product and
services. entrepreneurs vying to find the factors that influence the backs of
consumers in choosing a product and the right marketing strategy, so that it can
dominate an existing market. While from the consumers themselves are required to
become more critical in selecting the goods needs, because so many choices in the
market. One effort to recognize the state of the targeted consumer sales is to study
how their behavior in buying a product or a particular product.
Generally before buying behavior occurs, preceded by a lack of interest or desire
to buy is driven by a particular motive. Buying interest among individuals to one
another is not always the same and is influenced by many factors. In addition, the
consumer is now more rational and more careful in their purchases and of collecting
information about a product or goods to be bought and the selection of the place
where such purchases will be made.
Relative to the amount of competition in the field of health products in the
market, then the PT. Global Moment International which is one of the distributors
who manage the marketing of health products in anticipation of the competition with
respect to some matters relating to the improvement of health product marketing
Moment among others by offering a bonus pack but it is not yet supported with
appropriate promotional strategies.

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 According to (Kotler, 2009) the company's success in marketing their products
is determined by the four P's, namely:
a. Product
b. Price
c. Promotion
d. Place
One Moment in Batam Agent Commercial Complex is located at Pier No. 8
block E Sukajadi Batam, which is quite crowded places visited by the public for the
culinary side of Batam.

2. Materials and Methods

2.1. The Study of Theory
2.1.1 Price
Price is the only elements of the marketing mix that generate cash-flow. Also
clicking directly generate sales revenue. It is very different when compared to other
elements that exist within the marketing mix, which generally raises the cost
(expenditure).
According to (Lupiyoadi & Hamdani, 2006) is the price is set by the amount
of money to be paid by the consumer products or customers in order to cover the
costs of production, distribution and sale of goods including the return of the marks
for the effort and risk.
When a product requires customers to pay greater than the benefits received,
then what happens is that the product has a negative value. Consumers may be a
think as bad grades then will reduce the consumption of these products. If the benefit
received is greater, then that will happen is that the product has a positive value

2.1.2 Promotion

According Djaslim Saladin (2007) campaign is one element in the marketing

mix of companies that is utilized to inform, remind and persuade consumers about
the company's products.
Promotional activities of a company using a reference / promotional mix
consisting of:

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 1. The advertisement is a form of presentation and promotion of ideas, goods
or services financed by a particular sponsor that is nonpersonal. The media
are often used in advertisements are radio, television, magazines,
newspapers, and billboards.
2. Personal selling is an oral presentation in a conversation with someone or
more prospective buyers with the aim to realization of sales.
3. Promotional sales are sales promotion activities pe-Masaran other than
personal selling, ad-vertensi and publicity, the me-excitatory purchases by
consumers and the effectiveness of agents such as exhibitions,
performances, demonstrations and all sales efforts are not done on a
regular basis.
4. Publicity is an attempt to stimulate demand for a product is nonpersonal to
make, either in the form of news that is of a commercial nature of such
products in printed media or not, as well as the results of an interview
aired in the media.

2.1.3 Product Quality

According to (Fandy Tjiptono 2015) reflect all dimensions of quality product
offerings that generate benefits (benefits) for customers. The quality of a product in
the form of goods or services are determined through dimensions. Dimensions of
product quality according to (Tjiptono 2015) are:
1. Performance (performance), are connected with the basic operating
characteristics of a product.
2. Durability (endurance), which means how long or life of the product
concerned to survive before the product must be replaced. The greater the
frequency of use of consumer to the product, the greater the power of the
product.
3. Conformance to specifications (conformity to specifications), namely the
extent to which the basic operating characteristics of a product meets
certain specifications of a consumer or is not temukannya defects in the
product.

118
 4. Features (features), is karak-teristik products designed to enhance the
functionality of the product or add all the consumers of interest in the
product.
5. Reliability (reliability), is the probability that the product will work
satisfactorily or not in a period of time ter-course. The smaller the damage
could have taken then the product is reliable.
6. Aesthetics (aesthetics), since late with how the appearance of the product.
7. Perceived Quality (image quality), often say it serves as a result of the use
of measurements carried out indirectly because there is a possibility that
consumers do not understand or lack of information on the product
concerned.
8. Serviceability, include speed and ease for direpa constellation, as well as
the competence and hospitality of the service staff.

2.1.4 Purchasing Decision

According Ginting (2008) purchases decision is to buy the most preferred
brand of consumers. In general purchases decision is an activity purchase of goods
and services were selected based on information obtained about the product and
immediately when the needs and desires arise and this activity into information for
future purchases. For marketers this stage of the purchase decision is a very
important step to understand because it will relate to the success of a marketing
program, specifically marketers have to identify who is making purchasing decisions
and steps in the purchase process (Kotler 2009). Estab-purchase decision making of
consumers vary dependent kind of purchase decision. According to Kotler (2009)
purchase decision-making process consists of five stages of the process as follows:
1. Introduction Problems: Marketers need to identify circumstances that trigger
certain requirements with mengum-to get that information from a number of
consumers.
2. Information Search: Consumers who aroused kebutu-spotted and will be
encouraged to seek more information. Sources of the information comes
from: the source of the personal (family, friends, neighbors, acquaintances),
commercial sources (advertising, sales representatives, distributors,

119
 packaging display in the store), public sources (mass media, organizational
determinants of customer ratings), source of experience (handling,
assessment and discharging)
3. Evaluation of Alternatives: Some basic concepts will help us understand
consumer evaluation process. First the consumers-men trying to make ends
meet. Both consumers seek certain benefits of the product solution. Third,
consumers view each product as a collection of attributes with different
capabilities in delivering the benefits are used to satisfy that need.
4. Purchase Decision: In carrying out the purpose of the purchase, the consumer
can take five sub decision: brand, dealer, quantity, timing and method of
Pemba-postdated.
5. Post-Purchase Behavior: Every purchase, consumers may experience a
mismatch due attention to certain features that are disturbing or hear things
that are fun about other brands, and will always be alert to information that
supports its decision. Marketers must monitor the satisfaction post-purchase,
post-purchase action, and use of the product after purchase.

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 6. Conceptual Framework
Figure 1.
Conceptual Framework

4. Hypothesis
Based on the obtained hypothesis framework as follows:
1. H1: Presumably there are significant positive and significant correlation between
prices on consumer purchasing decisions.
2. H2: Presumably there are significant positive and significant correlation between
promotions on consumer purchasing decisions.
3. H3: Presumably there are significant positive and significant correlation between
the quality of products on consumer purchasing decisions.
4. H4: Presumably there are significant positive and significant correlation between
price, promotion and product quality jointly influence consumer purchase
decisions.

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4.1 Research Methodology
The object of this study conducted in Agen Moment in Batam is located at
Pier Sukajadi office block E No 8. This study is a quantitative research with the
acquisition of data using distributing questionnaires according to the variables
studied were the price, promotion and product quality as the independent variables
and decisions purchase as a dependent variable

4.2 Population and Sample

The population in this study were taken from the customer product Moment in
Batam totaling 120 people. The sample in this study amounted to 55 people with the
results obtained using the formula slovin theory (Husein Umar, 2008).

1 +

120
n = 1+120 (0.10)

120
n= 2,2

n = 54,54
Thus, the number of samples to be taken in this study is 54.54 which is
rounded up to 55 people

4.3 Type Data

Research in order to get maximum results in this study, the type of data
used are:
1. Qualitative data is data obtained in the form of both oral and written
information. Data obtained from interviews, observation, and literature.
2. Quantitative data is data obtained in the form of numbers that can be
calculated and processed. This data was obtained from a questionnaire that
will be distributed and dealing with the problems examined.

122
4.4 Data Sources
Based on the source, the researchers collected data are divided into two
types, namely:
1. Primary Data
Data obtained directly from the institutions studied, through observation
and distribution of questionnaires.
2. Secondary Data
Data collected by researchers from the documents that exist in the
company, the results of the research literature, as well as from other agencies or
companies involved.

4.5 Data Collection Techniques

This study uses a below many types of data collection techniques, namely
the library research, field research such as observation, documentation, interviews
and questionnaires.

4.6 Operational Definitions

Aspects examined in this study consists of two variables: Effect of Price,
Promotion and Product Quality as variable X (independent variable), and product
purchase decisions Moment in Batam as a variable Y (the dependent variable).
Operational definitions of variables to be used in this study are as follows:
1. Variables (Independent)
According Sugiyono (2014) independent variable is a variable that affects
or is the cause of the change or the emergence of the dependent variable (dependent).
In this study, the independent variable is the price, promotion and product quality
Table 1

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2. Variable Bound (Dependent)
According Sugiyono (2014) dependent variable is the variable that is
affected or which become due for their independent variables. In this study, the
dependent variable is the purchase decision.
Table 2

4.7 Data Analysis Techniques

Technique data analysis was conducted after the data needed to conduct this
research are collected, the data analysis is also intended to obtain a picture or
interpretation of the answers to the variables studied based on the data collected
relating to the formulation of the problem and the hypothesis proposed in this study ,
In order for the variables used in this study can function properly and as expected,
then these variables need to be tested for validity and reliability. In a test of validity
and reliability study was conducted on 55 customer products Moment in Batam.

124
4.8 Test Validity
Validity test conducted to ascertain how well an instrument used to measure the
concept should be measured. According Sugiyono (2009) to test the construct
validity was done by correlating between the scores of the questions with a total
score.
1. When the correlation coefficient or r count> r table then declared invalid
2. When calculating the correlation coefficient or r <r table declared invalid
Researchers testing the validity of the instrument be done using statistical
software package for social science (SPSS).

4.9 Test Reliability

Reliability was measured by Cronbach Alpha statistical test (a). The
instrument used is said to be reliable (reliable) if it has a value of more than 0.6
croncbach alpha. To test the reliability of the questionnaire conducted using
statistical software pakckage for social science (SPSS).

4.10 Normality Test

Normality test aims to test whether the regression model, the dependent
variable, independent variable or both have a normal distribution or not. A good
regression model is to have a normal data distribution or dissemination of statistical
data on a diagonal axis of the graph of a normal distribution (Ghozali, 2013).

4.11 Heterokedastisitas Test

Heteroskedastisitas test test whether a variable regression occurred
inequality variance of residuals from one observation to another observation. If the
variance of the residuals of the observations to other observations remain then called
and if different homoskedastitas called heteroskedastitas. A good regression model
did not happen heterokedastitas (Ghozali, 2013).

125
4.12 Multikolinearitas Test
According Priyatno (2012), multi-collinearity is a situation where there is a
linear relationship completely or almost reached perfect between the independent
variables in the regression model. A good regression model is free from
multicollinearity problem. Konse-kuensi their multikolinieritas is no particular
correlation coefficient and the error becomes very large or infinite. Variables that led
to multi-collinearity can be seen from the value of tolerance that is smaller than 0.1
or the value of VIF (Varian Inflation Factor) is greater than 10 (ten). From the
regression output obtained tolerance value of more than 0.1 and VIF is less than 10,
so it does not happen multikolinieritas.

4.13 Multiple Linear Regression Analysis

Model analysis of the data used to answer the first hypothesis is multiple linear
regression, with the formulation as follows:
Y = o 2X2 + + + 1X1 3X3 + e
Where :
Y = Purchase Decision
X1 = Price
X2 = Promotion
X3 = Quality Products
o = Constant
1 = variable coefficients X1
2 = coefficient X2
3 = Coefficient X3
e = Epsilon or variables that are not investigated

4.14 Hypothesis Testing

The accuracy of the sample regression function in assessing the actual value
can be measured from the Goodness of Fit. Statistically at least this can be measured
from the value of the coefficient of determination, the value of F statistics and
statistical values T. According Ghozali (2013) statistical calculation called
statistically significant if the value of the test statistics are in critical regions (regions

126
where Ho is rejected). Otherwise referred not significant if the statistical test value is
within the area where Ho is accepted.

4.15 T Test ( Parsial)

T test was conducted to determine how far the independent variable (X) affects
the dependent variable (Y), which is, how much the price, promotion and product
quality influence purchasing decisions (Ghozali, 2013).
Tcount will be compared with ttabel, decision-making criteria for partial test are
as follows:
a. Ho accepted if t t table thitung table on = 5% or 0.05
b. Ho is rejected (Ha acceptable) if thitung <t table or thitung> t table on = 5% or
0.05

4.16 F Test (Simultaneously)

Test F basically indicates whether all the independent variables (X) together can
influence the dependent variable (Y) (Ghozali, 2013). Fhitung value will be
compared with the value Ftable decision-making criteria are:
a. Ho accepted if Fhitung <Ftable at a = 5%
b. Ho is rejected (Ha acceptable) if F count> F table at a = 5%

4.17 Test of determination (R2)

Coefficient of determination (R squared) essentially measures how much
the power of model in explaining the dependent variables. Coefficient determination
value is between zero and one. Rated R squared is small means that the ability of the
independent variables in explaining the variation of the dependent variable is very
limited. A value close to the mean of independent variables provide almost all the
information needed to predict the variation of the dependent variable. In general the
coefficient of determination for the data cross (cross section) is relatively low due to
the large variation between each observation, whereas for series data (time series)
usually has a high value of coefficient of determination.

127
5. Result and Discussion
The company was founded at the end of the end of 2012 under the name
PT Moment Global International, engaged in the provision of health supplement
products and world-class high quality, deng's way of marketing Multi Level
Marketing. Moment head office is located at Jalan Jaya Klampis Kav. A 26 No 8E
Surabaya, East Java and operational activities covering the entire territory of
Indonesia. And within a few years, the region operational

5.1 Testing Data

Methods of data analysis used in this study is a statistical analysis that uses
a questionnaire tabulation. Data analysis started by processing the data using
Microsoft Excel, further testing using logistic regression. Testing statistical
regression analysis and hypothesis testing was done using SPSS software version 16.
The procedure starts with entering the study variables into the SPSS program and
generate outputs according to the method of analysis that has been determined.

6.2 Test Validity

Validity test used to measure the validity of a questionnaire. A questionnaire
considered valid if the questions in the questionnaire were able to reveal something
that will be measured by the questionnaire. According Ghozali (2013) significant test
is done by comparing the value of r count with a table for degree of freedom (df) =
n-2, da-lam this case n is the number of samples of 55 people with an alpha of 0.05.
If r count larger than r table and a positive value, the item or question is valid while
if the count r is smaller than r table then negative values or questions Invalid be
revealed.

128
 Table 3.
Item Questions Validity of Test Results Research variable
Price Variable (X1)

Question r r Informatio
s hitung tabel n

Butir 1 0,703 0,26 Valid

6

Butir 2 0,699 0,26 Valid

6

Butir 3 0,783 0,26 Valid

6

Butir 4 0,553 0,26 Valid

6

Butir 5 0,293 0,26 Valid

6

Butir 6 0,396 0,26 Valid

6

Butir 7 0,610 0,26 Valid

6

Butir 8 0,688 0,26 Valid

6

Butir 9 0,791 0,26 Valid

6

Source: Appendix Output SPSS 16

129
 Tabel 2
Promotion Variable (X2)

Questions r r tabel Information

hitung

Butir 1 0,424 0,266 Valid

Butir 2 0,683 0,266 Valid

Butir 3 0,448 0,266 Valid

Butir 4 0,505 0,266 Valid

Butir 5 0,597 0,266 Valid

Butir 6 0,440 0,266 Valid

Butir 7 0,773 0,266 Valid

Butir 8 0,740 0,266 Valid

Butir 9 0,776 0,266 Valid

Butir 10 0,682 0,266 Valid

Butir 11 0,281 0,266 Valid

Butir 12 0,280 0,266 Valid

Source: Appendix Output SPSS 16

Product Quality Variable (X3)

Questions r r tabel Information

hitun
g

Butir 1 0,564 0,266 Valid

130
Butir 2 0,761 0,266 Valid

Butir 3 0,797 0,266 Valid

Butir 4 0,701 0,266 Valid

Butir 5 0,762 0,266 Valid

Butir 6 0,728 0,266 Valid

Butir 7 0,572 0,266 Valid

Butir 8 0,680 0,266 Valid

Butir 9 0,719 0,266 Valid

Source: Appendix Output SPSS 16

Purchase Decision Variable (Y)

Questions r r tabel Information
hitung

Butir 1 0,482 0,266 Valid

Butir 2 0,566 0,266 Valid

Butir 3 0,862 0,266 Valid

Butir 4 0,839 0,266 Valid

Butir 5 0,831 0,266 Valid

Butir 6 0,890 0,266 Valid

Butir 7 0,540 0,266 Valid

Butir 8 0,811 0,266 Valid

Butir 9 0,572 0,266 Valid

Source: Appendix Output SPSS 16

131
5.3 Reliability Test

Test Reliability is used to test the extent to which the reliability of gauges to
be used again for the same research. Here measurement only once and then the
results were compared with late pertanya other or measure the correlation between
answers to questions. Reliability was measured by Cronbach Alpha statistical test
(a). Imam Ghozali (2013) states that a construct or variable is said realiabel if
Cronbach alpha values> 0.60. Reliability testing results for each variable that
summarized can be seen in Table 4 below:

Table 4
Reliability Testing Results
Variable Item Koefisien Informati
Cronbach on
Alpha

Price 10 0,750 Reliabel

(X1)

Promotio 13 0,725 Reliabel

n (X2)

Product 10 0,769 Reliabel

Quality
(X3)

Purchase 10 0,773 Reliabel

Decision
(Y)

Source: Appendix Output SPSS 16

Reliability test results in Table 4 show that if the Cronbach Alpha values
greater than 0.60. This indicates that each item in the questionnaire statement reliable
or unreliable. Or in other words, all point statement that is used is stable and
consistent in measuring each study variable.

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5.4 Normality Test Data
Data normality test aims to test whether the regression model, or residual
confounding variables have a normal distribution. As it is known that the T test and
F test assumes that the value of the residuals follow a normal distribution. There are
two ways to determine whether residual normal or not is by analysis of graphs and
statistical tests according Ghozali (2013).

One-Sample Kolmogorov-Smirnov Test

Unstandar-dized
Source: Residual Appendix Output
SPSS 16
N 55
1. Analysis Graph
Normal Mean .0000000
Parametersa Std. Deviation 2.75933962
Most Extreme Absolute .077
Differences Positive .077
Negative -.073
Kolmogorov-Smirnov Z .568
Asymp. Sig. (2-tailed) .903

a. Test distribution is Normal.

Source: Appendix Output
b. Calculated from data
SPSS 16
From the
picture above can be seen that the purchase decision variable distribution is close to
normal, this is indicated by the data distribution is not skewed left or right.

133
5.6 Statistical Analysis

Source: Appendix Output SPSS 16

Based on the above picture menun-show that the regression model is used
normally. A variable can be considered normal if the image points on the distribution
of the data spread around the diagonal line

5.5 Multicolinearity Test

Testing multikolinieritas aims to find the perfect relationship between the
independent variables in the regression model. Multikolinieritas symptoms can be
seen from the value of tolerance and variance inflation factor (VIF). When the VIF
value smaller than 10 and its tolerance value above 0.1 or 10%, it can be concluded
that the regression model did not happen multikolinieritas Ghozali (2013).
Multikolinieritas test results can be seen in the following table:
Table 6
Test Results Multicolinearity

No Colinierity statistic Information

Variable Tolerance VIF
Free
1 Price 0,703 1,422 Multikolinearity
Free

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 2 Promotion 0,825 1,212 Multikolinearity
Free
3 Product 0,839 1,192 Multikolinearity
Quality

Source: Appendix Output SPSS 16

Based on the above table above shows the tolerance values of the variables that
the price is equal to 0.703> 0.1 and VIF amounted to 1.422, then the variable has a
value of tolerance promotion 0.825> 0.1 and VIF amounted to 1,212 and the variable
quality of the product has a .839 tolerance value> 0, 1 and VIF amounted to 1,192 so
that it can be stated that in this study the model there are no issues multikolinieri-bag
or free multicollinearity between the independent variables for the value of tolerance
under 1 and VIF is far below the number 10.

5.7 Test Heterokedastisitas

Testing heterokedastisitas aims to test whether the regression model occurred
inequality residual variance from one observation to another observation.

Source: Appendix Output SPSS 16

135
 The spread of the points on the image above to spread and do not form a
particular pattern. Based on this it can be concluded that the study variables are free
from the classical assumption test heteroskedastisitas.

5.8 Multiple Linear Regression Analysis

Where multiple linear regression analysis is used to determine the relationship
between price (X1), promotion (X2) and Product Quality (X3) of the Purchase
Decision Product (Y) by examining the significance of the regression coefficients.
The formula Y = a + b1x1 + b2X2 + b3X3
Where :
Y: The dependent variable Pembe Decision-lian
X1: independent variable price
X2: The independent variables sale
X3: independent variable product quality
b1: regression coefficient
b2: regression coefficient
b3: regression coefficient
a: constant

Source: Appendix Output SPSS 16

Based on the above table can be made linear regression equation is as follows:
Y= a + b1X1 + b2X2 + b3X3
Y= -5.679+ 0,141X1 + 0,205X2 + 0,759X3
From the results of the regression equation can be described as follows: a =
-5.679 which means that with their price, promotion and product quality are
favorable it will reduce product purchasing decisions moment of -5.679. The above

136
equation explains that the coefficients X1 (price) is positive (0.141), suggesting that
the effect of the price is in line with purchasing decisions. In other words, the price
has a positive influence on purchase decisions. When the prices of both will have a
positive impact on product purchasing decisions moment in Batam.
The above equation explains that the coefficient X2 (Promotion) is positive
(0.205), suggesting that the effect of the promotion is in line with purchasing
decisions. In other words, the promotion has a positive influence on purchase
decisions. When the sale is already high will have a positive impact on product
purchasing decisions moment in Batam. The above equation explains that the
coefficient X3 (Product Quality) is positive (0.759), suggesting that the influence of
the quality of products is in line with purchasing decisions. In other words, the
product quality has a positive influence on purchase decisions. When the product is
high quality will have a positive impact on product purchasing decisions moment in
Batam.

5.9 Hypothesis Test

5.9.1 Parsial Test ( T Test )
T test was used to test how far the level of significance of the effect of
each or partially independent variables (price, promotion and product quality) in
backing affect the dependent variable (purchase decisions).
Decision-making criteria:
a. If the t count> r table (level of significance) then Ha Ho accepted and rejected.
b. If t <r table (level of significance), then Ho is accepted and Ha rejected.

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 Table 7.
Partial Test Results (T Test )

Source: Appendix Output SPSS 16

From the table above, it can be explained that the price variable (X1) has t value
(1.446) <t table (2.009) and a significant level of 0.154> 0.05 then Ho is accepted
and Ha rejected, meaning that there are positive and significant influence between
price variables (X1) to variable-making Kepu-purchase (Y). On the Campaign
variables (X2) the value of t arithmetic (2.493)> t table (2.009) and the significance
level-fikan 0.016 <0.05 then Ha Ho accepted and rejected, meaning that there is a
positive and significant influence between the variables sale (X2) to purchase
decision variable (Y).
And further on Product Quality variable (X3) t value (8.754)> t table (2.009) and a
significant level of 0.000 <0.05 then Ha Ho accepted and rejected, meaning that
there are significant positive and significant correlation between the variable quality
of the product (X3 ) on the purchase decision variable (Y).

5.9.2 Simultan Test ( T Test )

F test conducted to examine the effect is there together (simultaneously)

between each independent variable with the dependent variable.
The criteria used are:
a. If F count F table with a significant 5% ( = 0.05), the Ha Ho accepted and
rejected
b. If F arithmetic F table with a significant 5% ( = 0.05), then Ho is accepted and
Ha rejected.

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 Table 8.
Simultan Test Results (Test F)

Source: Appendix Output SPSS 16

5.10 Test The coefficient of determination (R2)

In R2 test (test the coefficient of determination explains how large variety
of independent variables (price, promotion and product quality) is able to explain the
variation in the dependent variable (purchase decisions). The coefficient of
determination is between zero and one. R2 value is small means that the ability of
the independent variables in explaining the variation of the dependent variable is
very limited. A value close to the mean of independent variables provide almost all
the information needed to predict the variation of the dependent variable. The
calculation result of determination R squared is presented in the following table:

139
 Table 9
Results Coefficient R2
Model Summary

Adjusted R Std. Error of

Model R R Square Square the Estimate

1 .841a .707 .689 2.839

a. Predictors: (Constant), X3Total, X2Total, X1Total

b. Dependent Variable: YTotal
Source: Appendix Output SPSS 16

According to the table above, the value of R2 adjusted (Adjusted R square) of

0.689 or 68.9%. This shows that the percentage contribution of the influence of the
independent variables (price, promotion, product quality) on the dependent variable
(purchase decisions) amounted to 68.9% or variations of the independent variables
used in the model (price, promotion, and product quality) was able to explain at 68 ,
9% (purchase decisions).
While the remaining 31.1% influenced or explained by other variables not
included in this research model.
Table 10
Relationship between Variables
Nilai R Interprestasi
0,00 0,19 Sangat tidak erat
0,20 0,39 Tidak erat
0,40 0,59 Cukup erat
0,60 0,79 Erat
0,80 0,99 Sangat erat

Source: Syafrizal, et al (2010)

From Table 10 above it can be seen that the value of R = 0.841 which means the
relationship between a variable pricing, promotion, and product quality on

140
purchasing decisions by 84.1% means that relationships are extremely closely match
the criteria above table.

6. Conclusions and Recomendation

6.1 Conclusions
Based on the results of research and discussion that has been done in the
previous chapter on the effect of price, promotion and product quality on product
purchasing decisions Moment in Batam city, it can be concluded as follows:
1. The price is not positive and significant impact on product purchasing
decisions Moment in Batam city Spss evidenced by the results of the t
(1.446) <t table (2.009) and a significant level of 0.154> 0.05.
2. Promotion of positive and significant impact on product purchasing decisions
Moment in Batam city Spss evidenced by the results of the t (2.493)> t table
(2.009) and a significant level of 0.016 is lower than 0.05.
3. The quality products and significant positive effect on product purchasing
decisions Moment in Batam city Spss evidenced by the results of the t
(8.754)> t table (2.009) and a significant level of 0.000 is lower than 0.05.
4. The price, product, and product quality simultaneously positive and
significant impact on product purchasing decisions Moment in Batam city
evidenced by the results of the calculation of F count 40.924 2.79 and
significant level of 0.000.

6.2 Recommendation
After learning the whole process of research that involves all the problems we
tested it can be given the following advice:
1. To attract more consumers are advised to the owner of PT International
Global Moment in order to set an affordable price, set prices according to
benefits, and set the price according to the quality of its products.
2. Recommended on vaiabel sale, in order to add to campaign in other ways
because not all individuals can attend to the seminar every weekend. For that
is expected PT International Global Moment could conduct seminars online
via whatsapp, bbm, facebook and so forth so that can not be present at the

141
 seminar could read the related info Moment product through online media
respectively.
3. What needs to be suggested with regard to product quality, first by providing
quality products, can be done by maintaining the features, reliability,
performance, and durability of the product.
4. To assist consumers in reaching a decision to purchase, the owner must
create consumer confidence with good service, provide product information
and what their success with good payment needs to be maintained by PT
International Global Moment. By providing information and ensuring the
success of what their payments by having multiple bank accounts, making it
easier for consumers to make payments.

REFERENCES

Djaslim Saladin (2007). Manajemen Pemasaran. Bandung : Linda Karya

Fandy Tjiptono (2015). Strategi Pemasaran. Edisi ke 4. Yogyakarta : Andi
Ghozali, Imam (2013). Aplikasi Analisis Multivariate dengan Program SPSS.
Semarang : Badan Penerbit Universitas Diponegoro
Husein, Umar (2008). Metode Penelitian Untuk Skripsi dan Tesis Bisnis. Jakarta: PT
Raja Grafindo Persada
Lamb, Charles W, Joseph F. Hair, Carl Mc. Daniel. 2006. Pemasaran. Jakarta:
Salemba Empat
Lipiyoadi, Hamdani (2006). Manajemen Pemasaran, Edisi kedua. Jakarta: Salemba
Empat
Peter, J Paul dan Jerry C. Olson (2008). Perilaku Konsumen dan Strategi
Pemasaran. Jakarta : Erlangga
Philip Kotler dan Kevin Lane Keller (2006). Manajemen Pemasaran. Jilid 11.
Jakarta : PT. Indeks
Philip Kotler dan Kevin Lane Keller (2009). Manajemen Pemasaran. Jilid 13.
Jakarta : Erlangga
Philip Kotler and Gary Amstrong (2012). Prinsip-Prinsip Pemasaran. Edisi 13. Jilid
1. Jakarta : Erlangga
Schiffman dan Kanuk (2008). Perilaku Konsumen, Edisi 7. Jakarta : Indeks
Sekaran, Uma (2011). Research Methods for Business, Edisi 1 dan 2. Jakarta:
Salemba Empat
Siregar, Sofyan (2013). Statistik Parametrik untuk Penelitian Kuantitatif. Jakarta:
PT. Bumi Aksara
Sugiyono (2009). Metode Penelitian Bisnis (Pendekatan Kuantitatif, Kualitatif, dan
R&D). Bandung : Alfabeta

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Sugiyono (2012). Memahami Penelitian Kualitatif. Bandung : Alfabeta

143
ENT-02

PERFORMANCE IMPROVEMENT MODEL HOME

BASED MANUFACTURER TAHU AND TEMPE
GROUPS BASED IN THE DISTRICT OF JEMBER

Istatuk Budi Yuswanto

Bhayangkara WD
Isti Fadah*
University of Jember
Email: istitatuk@yahoo.co.id

ABSTRACT

Tahu dan tempe is a product of the soybean meal that has been known since long in
Indonesia. Tahu is a Chinese food products, in contrast to tempe an authentic
Indonesian food ,. As tempe, tahu also favored by the people of Indonesia because it
has a taste that delicious, nutritious and affordable price.Industries that produce tahu
dan tempe are generally small-scale home-based businesses with the number of
workers a little less than 2-6 people and investments that are not too large. The use
of technology in small business home-based producer of tahu dan tempe quite simple
and easy to learn so it can be run by anyone. The success of small business home-
based manufacturers to survive and evolve toward more advanced by knowing their
strengths, weaknesses, opportunities that can be taken by small business home-based
and threat, or better known as the SWOT (Strength, Weakness, Opportunity,
Threath) that can be retrieved strategies that affect the success and development of
small business home-based manufacturer of tahu dan tempe.Constraints faced by
small businesses and home-based manufacturers know that the soybean Tepe that
include budget constraints, limited access to banking, limited human resources,
marketing only the scope of Jember and lack of good management. No group or
cooperative, does not have a good recording, making it difficult to make financial
reports, manufacturing planning and operational supervision and finances into this
industry employers' group lemah.Pembentukan help solve problems and maximize
its potential.

Keywords: Model-based groups, performance, home base industry, tahu, tempe

1. Introduction
1.1 Background
Tahu dan tempe is a product of the soybean meal that has been known since
long in Indonesia. Tahu is a Chinese food products, in contrast to tempe an authentic

144
Indonesian food. As tempe, tahu also favored by the people of Indonesia because it
has a taste that delicious, nutritious and affordable price.
In Indonesia, tahu has become very familiar foods consumed by the lower
classes and upper classes. Tahu has become very familiar dishes often found in stalls
class warteg up to the restaurant on board. In addition to a menu of dishes side
dishes, knows also be processed into a variety of different typical food products such
as; know meatballs, dumplings, fried tofu, tahu gejrot, gado-gado and snacks like
chips out and others. This shows that the know have a large market share.
In addition, tempe also no less popular with the public. Tempe is also rich in
nutrients become one of the dishes that every day is consumed by people in
Indonesia. Many processed tempe which is characteristic of processed soybean
snacks in several cities including tempe crisps, mendoan, tempe blankets and so
forth.
Tahu dan tempe is a perishable food product because it has a high water
content and protein is a medium growing potential for spoilage microorganisms.
Products and tahu has a short shelf life of 2-3 days, it is becoming a limiting factor to
reach a wider market. Generally, the tahu and tempe production in home scale
production capacity in accordance with the ability to market their products.
Industry know generally a small-scale home-based businesses with the
number of workers a little less than 2-6 people and the investment required is not too
great. Technological processes in the industry know the simple and easy to learn so
that industry knows can be run by anyone. The success of small business home-
based in order to survive and evolve toward more advanced by knowing their
strengths, weaknesses, opportunities that can be taken by small business home-based
and threat, or better known as the SWOT (Strength, Weakness, Opportunity,
Threath) so it can be retrieved strategy that affect the success and growth of small
home-based manufacturer of tahu dan tempe.
SWOT Analysis is used as an analysis determining the strategies adopted by
home-based small businesses to survive and develop their business. The analysis
views of internal and external factors of small home-based business condition itself.
Strategies adopted are intended to illustrate the company's ability to optimize the
resources possessed, overcome situations faced into opportunities in achieving such

145
tujuan.Namun home-based businesses have not been able to develop optimally
because some of the obstacles encountered.
Constraints faced by small businesses and home-based manufacturers know
that the soybean Tepe that include budget constraints, limited access to banking,
limited human resources, marketing only the scope of Jember and lack of good
management. No group or cooperative, does not have a good recording, making it
difficult to make financial reports, manufacturing planning and operational and
financial oversight is becoming weaker.

1.2 Research Purposes

Are:
1. To know and identify potential map small business home-based businesses and
tahu producers in Jember.
2. To identify and analyze the fundamental problems faced by any small business
home-based manufacturers and tahu in Jember, Why is this and identify the
alternatf solution.
3. To identify and analyze internal and external factors picture where small
business home-based manufacturers and tahu in Jember
4. To know and analyze altaernatif home-based small business marketing strategy
and tahu producers in Jember.
5. To know and analyze and make design model of group-based strategies and
integrated partnership home-based small businesses and tahu producers in
Jember?

2. Review of Literature
2.1 Small Business Home Based Manufacturer Tahu and Tempe
Tahu is a food made from freshly precipitated soy beans undergo coagulation or
clotting. In contrast to tempe an authentic Indonesian food, tahu is a Chinese food
products. As product tempe, tahu also favored by the people of Indonesia because it
has a taste that delicious, nutritious, and the price is also affordable
In Indonesia, tahu has become very familiar foods consumed by the lower
classes and upper classes. Tahu has become very familiar dishes often found in stalls

146
class warteg up to the restaurant on board. In addition to a menu of dishes side
dishes, knows also be processed into a variety of different typical food products such
as; know meatballs, dumplings, fried tofu, tahu gejrot, gado-gado and snacks like
chips out and others. This shows that the know have a large market share.
In addition, tempe also no less popular with the public. Tempe is also rich in
nutrients become one of the dishes that every day is consumed by people in
Indonesia. Many processed tempe which is characteristic of processed soybean
snacks in several cities including tempe crisps, mendoan, tempe blankets and so
forth.
Tahu dan tempe is a perishable food product because it has a high water content
and protein is a medium growing potential for spoilage microorganisms. Products
and tahu has a short shelf life of 2-3 days, it is becoming a limiting factor to reach a
wider market. Generally, the tahu and tempe production in home scale production
capacity in accordance with the ability to market their products.

2.2 Definition Synergy

Synergy (Synergy) is a form of win-win cooperation generated through the
collaboration of each Party without feeling Defeated. According to Stephen Covey in
his book 7 Habits of Highly Effective People, if 1 + 1 = 3, then that is what is called
"Synergy". Synergies are mutually complementary differences to achieve results for
Larger Than Total parts. The concept of air-Synergy include the following:
1. Orientation and Positive Results
2. Perspektif diverse replace or complement Paradigm
3. Cooperate and air-Same Goal as well as their agreement
4. Effective
5. Very cultivated and a Process
According Deardorff and Williams (2006) Synergy is a process where the
interaction of two or more agents or forces will produce a combined effect greater
than the sum of their influence individually. The synergy is not something we can
hold our hands but a term that means multiplying effect (multiplier effect) that
allows the energy of individual works or services multiplied exponentially through
mutual efforts. Synergies group described as the action develops and flows of a

147
group of people working together in sync with each other so that they dapatat move
and think as one. This synergy of actions carried out by instinct, positive,
empowering, and use resources group as a whole.
Through Synergy, cooperation from a different paradigm will realize the results
Larger and Effective Processes undertaken in connection shows the Same
Destination and agreement for the sake of Positive Results. The example we often
see on the concept of Synergy namely:
1 + 1 = 3 -> Synergy
1 + 1 = 1 -> Compromise
1 + 1 = <1 -> Synergy negative (Anergy)
Air-Synergy means Mutual Respect Differences Ideas, Opinions and willing to
share. Air-Synergy unselfish, but think win-win and no losers or feel disadvantaged.
Air-Synergy aims to integrate separate parts
Examples of synergies that can be seen in the world around us is the concept
Pujasera in many places, where there are many food and beverage outlets gathered
together, so that customers will have an alternative choice of food and drinks were
varied. This automatically increases the turnover of each outlet than when they stand
apart in different places.
Synergies can reduce cost or operational costs without reducing the operating
income. The common language in the world of business is Sharing Budget.
Synergies is a process, and it takes time to build it. Once awakened, the synergy will
make forms Creative and Innovative Cooperation.

2.3 Co-branding strategy

Co-branding is one of the pricing strategy for the brand that is currently widely
used in modern business cooperation ranging from multinationals through to small
companies on a local basis. Co-branding is not just a collaboration of two or more
brands, but rather a form of cooperation that generate value mutually reinforce one
another brand. And Hirmawan Wijarnako a.b Susanto (2004: 170) mentions co-
branding is a form of cooperation between two or more brands without removing
their respective brands. While Lamb et al. (2001: 429) states that co-branding is the
establishment of two or more brand name on a product or its package.

148
 According Rhenald Kasali (1998) doctoral field of consumer sciences-
business administration, co-branding is "any activity that must be able to increase the
value added, either in the form of the new association is positive, the product
differentiation is more cespleng, consumer confidence is better because of the
certainty of the quality larger, or even a new marketing strategies such as new
distribution channels and new products ".
There are several forms of co-branding delivered by Philip Kotler which has
been translated by Benjamin Maloan (2002; 479), such as:
1. Components of co-branding is where a company makes a product by adding
one of the companies making the products by adding one of the components
of the products of another company that is already established and herb
quality. Examples such as the car Volvo advertises that his car tires from
Michelin.
2. Some-company co-branding is the same company or sejanis do co-branding
to reduces competition and to dominate the market.
3. Joint-ventury co-branding is when two companies are engaged in the same
joint venture not only on one type of product but in all activities of the
company.
4. Multi-sponsors co-branding where more than two companies merged to form
a single product with the brand together.
Co-branding strategy has several advantages and shortcomings in its
implementation. As mentioned by Surachman S.A (2008: 125) that co-branding has
advantages and disadvantages, namely:

2.4 Excess
a. Deals done may capture two or more sources from a common brand that
strengthens the goals and the sale value and differentiation.
b. Can generate greater sales from the existing target markets and also open up
additional opportunities for consumers and new channels.
c. Reduce the cost of launching the product, as it combines two well-known
image and accelerate adoption.

149
 d. Can be a valuable tool for studying consumers and how other companies
approach them.

2.5 Shortage
a. Shortage of potential co-branding is a risk and a lack of control to connect with
other brands in the minds of consumers. Consumers' expectations about the
level of involvement and commitment to the brands together will be high, so
that unsatisfactory performance could give a direct negative impact for both
brands. If other brands included in a number of co-branding arrangement,
excessive exposure may dilute the transfer of each association.
b. Co-branding can cause deficiencies focus on existing brands. Kasali (1998)
reveals there are four things that must be considered by companies that do co-
branding to be successful in the market or are acceptable and meet consumer
expectations, namely:
a. factors partner
Companies that will be co-branded association should pay attention to
the brand of the company acting as an ingredient branding as well as a
host of branding. Not always co-branding between the company and
brand associations are equally strong always succeed in the market.
According to research there is an association of companies with a strong
brand in the long term it would be beneficial if the co-branded with a
company that has a weaker brand association.
b. Ad campaign
The results of research studies state that the host partner should not
support the activities of the ad campaigns ingredient partner if the ad
emphasizes the benefits previously owned by the host partner. In
addition cobranding requires a number of substantial funds for an ad
campaign.
c. Experience with product
There are times when a stronger brand creating excessive expectations on
the co-branded products that can cause dissatisfaction in trying the

150
 product. Where such satisfaction may be forwarded to the brand
ingredients that cause so the lower the quality evaluation.
d. quality attributes
If the quality attributes can not be observed mainly on experience
products (products that require the experience of consumers to these
products in order to provide an assessment of the product), cobranding
can provide quality assurance. But otherwise if the quality attributes can
be observed, the presence of a strong brand lesser role because
consumers judge directly

3. Methods
3.1 Object Research
In this study the object is a small business home-based manufacturer of tahu dan
tempe in Jember. The collection of data by way of in-depth interview and extracting
information through focus group discussion (FGD) to find the phenomenon of a
more holistic and comprehensive.
Excavation Data Primer
1. The basic method used in this research is descriptive and correlational
method that produces a picture of the actual problem solving that exist at the
present time. Problem solving is done by collecting data, organize and
analyze it. The results of this study are rekomendatif giving direction to the
government of Jember in determining policy, strategic measures, anticipatory
and participatory in the development of home-based small businesses and
tahu in Jember Regency East Java in particular and in general.
2. From the results of data mining is done tabulation, compilation and summary
identification data will be followed up by action analysis.
3. Activity analysis is done by reviewing and analyzing the cases in accordance
with activity limitations. Then, the results of this analysis are used to answer
the research objectives.

151
3.2 Analysis method
3.2.1 Analysis Deskripstif
In order to achieve the 1st and 2nd in this study are: (a) know the description of
potential small business home-based tahu dan tempe in Jember district, and (b) know
the issues underlying the existence of small business home-based tahu dan tempe,
used approach analysis 'descriptive'.

The next step is to formulate a grand strategy SWOT interaction. Declared by

Susilo (2000), a grand strategy of interaction SWOT analysis is basically an
interaction of the analytical results of evaluation of internal factors (EFI) and
external (EFE). Grand strategy SWOT interaction is a systematic way to formulate
an alternative strategy that describes the suitability best among other analyzes
(Salusu, 2000). If the grand strategy of interaction SWOT analysis is applied
accurately, this simple assumption has an enormous impact on the design of a
successful strategy (Susilo, 2000).
The existence of the alternative chosen strategy is positioned within one of the
four (4) quadrant options strategy (positioning strategy) on a matrix of grand
strategy, namely (David, 2002: 131): (a) SO strategy, (b) WO strategy, (c) strategy
ST, and (d) WT strategy. As to determine the strategy selected will be used the
results weighted value of the matrix IFI and IFE matrix (as illustrated in Table 3.3
and Table 3.4 earlier). Chosen strategy can be determined from the sum total value
weighted with the greatest value (highest). The illustrations can be observed in Table
3.5

152
4. Results and Discussion
4.1 Design Know Tempe-Based Management Strategy Group and Partnership
Referring to the needs of each business group, small-scale (manufacturer of tahu
dan tempe) and large scale (Outlet Stores Know Pong and Poo), then it may be
possible to provide mafaat relationship for each party. This is done as a strategy to
give greater opportunities to the sales value of the production and tahu so that it can
be profitable in each party.
Design management strategies and tofu-based groups and the partnership
will generally consist of three positions important relationships therein, which are:
1. Individual to Group
Manufacturers of home-cooked tahu dan tempe home to get the materials and
processing soybeans into tahu products so. Manufacturers said housing lots have
many weaknesses and lack of creativity in the processing and marketing. So it can be
done by making the producer group housing so that the problems of processing,
marketing and capital can be resolved.
2. Group to Buyers
Small businesses and home should have its own characteristics concern the
production of tahu and tempe. Besides innovation tahu and tempe production
processing into other foodstuffs should also be optimized to meet consumer demand.
Implementation of a co-branding strategy as a way to open a new breakthrough in
marketing.
Company to the Buyer
Consumers who would be facing the company more focused on a large scale.
Exports of processed tahu dan tempe that can last a long time and become the
supplier needs and tahu for a large company or a great restaurant to have a brand that
has become one of the things that will bring great opportunities. So that will expand
the market share of different.
4. Stakeholders and Researcher with the Group and Company
This relationship becomes a kind of coordination of activities between the developer
and financier. The developer can from research centers, educational institutions, and
other parties who assist in the development of business activities into a bridge
towards better improvement. The threat of fraud on the cooperation between the

153
companies and business groups tahu dan tempe producers and dairy will be
minimized during the business group as the weaker party to get support from the
developer.
Party financiers nothing more than investors who want to invest. With the
further development of producers out of business, an temped processed, it is possible
that investors will come in with a cash injection that would make the quality of the
business better.

Chart 1.
Partnership Pattern

buyer

individua
all

individual
group group
group
individual

Developer,
Investor
corporate

buyer corporate
exporter

SWOT Analysis Production Management Strategy Design Tahu, Tempe and

other dairy-based group and Partnership.
In analyzing the design of strategies formulated then used a SWOT analysis as
the material to see the advantages and disadvantages of the model created. So that
later can be improved and the solution to the problems existing models.

154
Strengths:
1. Cooperation in the form of co-branding will indirectly introduce the
production of tofu, tempe or processed to the wider society. So that people
will know if the processing of raw materials, namely soy and tahu has a taste
of its own.
2. Additional production quantities of processed tahu dan tempe for example,
into chips or other processed into value-added better in marketing their
production.
Weaknesses:
1. Small businesses are home-based manufacturer of tahu dan tempe are
generally a business unit of the family, have very limited business networks
and low market penetration capabilities, plus the resulting product is very
limited and has qualities that are less competitive.
2. With the cooperation, the greater the burden on companies to market the
products of co-branding for the company that has more dibading with the
group name. If there is no development plan, the marketing of existing
products will fail
Opportunities:
Consumer products tofu, tempe and other dairy increasingly want to live healthy or
vegetarian or not give a definite opportunity for the company to expand its market
share.
Threats:
Tahu tempe and preparations has become one of the typical food in some areas pose
a threat to the marketing of products of co-branding.
Table 1
SWOT Analysis To Model Strategy
S W
Promotion indirectly Network marketing is
Production volumes limited
processed increased Marketing is becoming
harder for companies

O S-O W-O
Increase Finding ideas for the sale of
vegetarian processed tahu and tempe, especially Door-to-door in-store and outlet
consumption at the center of souvenirs center souvenirs
Improve cooperation with

155
 companies and looking for
loopholes marketing

T S-T W-T
Processed Improve the quality and focus onbranding promotion
typical in creativity of processing tahu
some areas and tempe which gives a
taste of its own
Competing at a cheaper
price than other refined
products were first
circulated

5. Conclusion
1. Small businesses are home-based weakness tahu dan tempe producers in
general is a business unit of the family, have very limited business networks
and low market penetration capabilities, plus the resulting product is very
limited and has qualities that are less competitive.
2. Consumer products tofu, tempe and other dairy increasingly want to live
healthy or vegetarian or not give a definite opportunity for the company to
expand its market share.
3. The establishment of this industry employers' group helps resolve problems
and maximize the potential of the

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Kerja, Prisma No.5 Tahun VIII, Jakarta
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ENT-03

ANALYSIS OF
MICRO AND SMALL INDUSTRY PERFORMANCE
IN INDONESIA, 2013-2015

Farida Komalasari
President University
faridakg@gmail.com

Sutyastie S. Remi
Padjadjaran University

Achmad Kemal Hidayat

Padjadjaran University

Ferry Hadiyanto
Padjadjaran University

ABSTRACT

In Indonesia, Small Medium Enterprise (SME) has a significant role in economic

growth and job creation. Therefore, government has tried to maintain and enhance
the role of SME in Indonesia. Many goverment policies are implemented to develop
the SMEs, but some problems still exist. Those problems cause the low
competitiveness of Indonesia SME among Asia Countries. Those kind of problems
also happened in micro and small size enterprise in manufacturing industry sector
(a.k.a. Micro and Small Industry=MSI). The number of MSI increases, the number
of employee in MSI increases, but the number of output decreases. It shows that
there is decreasing on MSI performance from number of output point of view.
Studies on MSI and SME performances have been developed in many countries.
They show that MSI and SME performances are significantly influenced by
macroeconomics variables. What about Indonesia MSI? So, there is a question
addressed in this research: what are macroeconomics variables infleuncing Indonesia
MSI performance?
There are two groups that become main focus on this research. Those are micro-size
enterprise and small-size enterprise. Using 12 variables, secondary data are
collected from 33 provinces during 2013-2015. Statistical inferens is used to test the
hypotheses, using Linear Seemingly Unrelated Regression (Linear SUR) Analysis.
Research result shows that micro-size enterprises value added is significantly
influenced by number of employee, wage, and financial access; while small-size
enterprises value added is significantly influenced by those three variables and
number of enterprise.

Keywords: Micro and small industries(MSI), MSI performance, value added,

macroeconomic variables, Linear SUR Analysis.

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1. Introduction

In Indonesia, Small Medium Enterprise (SME) has a significant role in

economic growth and job creation. It can be seen from its Gross Domestic Product
(GDP) share and employment share. In 2015, Badan Pusat Statistik (BPS) stated
that 57.9% of Indonesia GDP are created by SME; and 97.2% labor are employed by
in SME (BPS, 2016). Therefore, government has tried to maintain and enhance the
role of SME in Indonesia. Many goverment policies are implemented to develop the
SMEs, but some problems still exist. Some common problems of SME explained by
Tambunan (2008) and Pangestu (2011) can be summarized as follows (a) limited
access to technology, information and markets; (b) limited capital and low access to
financial institutions; and (c) lack of managerial and entrepreneurial skill.
Furthermore, those problems cause the low competitiveness of Indonesia SME
among Asia Countries. Table 1 shows the lowest position of Indonesia SME among
Asia Countries.
Table 1 Competitiveness Rank of SME in Asia, 2013
Those two pieces of information lead us to conclude that Indonesia SME has a
serious problem and need to be solved. Those kind of problems also happened in
micro and small size enterprise in manufacturing industry sector (a.k.a. Micro and
Small Industry=MSI). Table 2 shows the MSIs indicator comparing to Medium
and Big Industry (MBI) in Indonesia. It can be seen that the number of MSI
increases, the number of employee in MSI increases, but the number of output
decreases. Those data show that there is decreasing on MSI performance from
number of output point of view.
Table 2 Indonesia MSI Indicator, 2010-2011
Studies on MSI and SME performances have been developed in many countries.
Studies done by Govori (2013) in Kosovo, Kodocsa and Francsovics (2011) in
Hungary, Bekeris (2012) in Lithuania, and UK Essays (2014) in Tanzania show that
MSI and SME performances are significantly influenced by macroeconomics
variables. Those macroeconomics variables are financial access, government policy,
inflation, interest rate, exchange rate, labor supply, quality of labor, wage, and
number of enterprise.

159
Based on previuos explanation, there is a question addressed in this research: what
are macroeconomics variables infleuncing Indonesia MSI performance? So, this
research aims to know the influence of macroeconomics variables on Indonesia MSI
performance. There are two groups that become main focus on this research. Those
are micro-size industry and small-size industry.

2. Literature Review
2.1 Definition of SME and MSI in Indonesia
This research object is MSI as a part of SME. Table 3 shows the criterias of
SME in Indonesia. Based on those criterias, SME could be defined as economic
entity with assets worth Rp 10 billion or less and consists of less than 100 workers.
Law No. 20/2008 states that SME should be an independent economic entity, not a
subsidiary or branch of a large or medium enterprise, and not directly or indirectly
controlled by a large or medium enterprise.
Table 3 SME Criterias in Indonesia

In manufacturing industry, SME is classified into 4 (four) groups (see Table

4). This research focuses on the first and the second groups. They are micro-size
enterprise (with less than 5 workers) and small-size enterprises (with 5-19 workers).
Furthermore, both of them are called by Micro and Small Industry (MSI). So, MSI is
micro-size and small-size enterprises in manufacturing induastry, which employ 1-4
workers and 5-19 workers.
Table 4 SME Classification in Manufacturing Industry
The scope of manufacturing industry, based on International Standard
Industrial Classification of all Economic Activities (ISIC) Revise 4, and justified to
Klasifikasi Baku Lapangan Usaha Indonesia (KBLI) Year 2009, is stated on Table
5.
Table 5 The Scope of Manufacturing Industry in Indonesia

2.2 MSI Performance

Performance is the results of activities of an organization or investment over
a given period of time (http://www.investorwords.com/3665/performance.html).
Performance also could be defined as a result of person or group of people in an

160
organization for achieving organizations objective. It is the assessment of how well
an organization executes on its resources. In MSI, this definition could be applied
using two measurements. They are value of output and value added.
Value of output is the goods and services produced by an enterprise during
an accounting year constitute its output. It could be calculated from total number of
output times unit price. Meanwhile value added is the addition of value to the raw
material (intermediate goods) by a firm by virtue of its productive activities. Value
added shows the contribution of an enterprise to the current flow of goods and
services. It shows the difference value between value of output and value of
intermediate inputs (http://www.impactdatasource.com/economic-output-vs-gdp/).
These two measurements are used by Rahmana (2008), Salman (2009), Sari and
Hanoum (2012), Rocha (2012), Moorthy et.al. (2012), Bekeris (2012), Handayani
(2013), Pramuka (2013), Anggadwita & Mustafid (2013), Li (2013), Govori (2013),
Abel (2014), Gordon and Alvin (2014), and Khan (2016). Since value added shows
the productive activities of enterprise, this research uses value added as MSI
performance measurement, instead of value of output.

2.3 Factors of MSI Performance

Solow-Swan Model of Economic Growth says that output (Y) is determined
by two factors, capital (K) and labor (L) (Blanchard and Johnson, 2006).
Furthermore, this model is developed into Mankiw-Romer-Weil Model by adding-up
two other factors related with labor. They are stock of human capital (H) and labor-
augmenting technology or knowledge (A). This developed model can be written as
follows:
= (, , , )) ............................... (1)
By using this model, many pieces of research in SME area have been
developed with various proxies. Otoritas Jasa Keuangan (OJK) (2016) and BI
(2014) stated, financial inclusion has an important role to boost up MSI performance
in term of capital. Financial inclusion has 6 pillars. Intermediary facilities and
distribution channel are the two of them (BI, 2014). For business entity, the
indicator of intermediary facilities is availability of third-party funds (deposit) in
commercial banks. Research using deposit as outputs factor was done by Kuznet in

161
United State on 1980, Kinnon and Shaw in emerging market countries on 1983,
Haris in Malaysia on 2000, and Mochtar in Indonesia on 2006 (cited in Muliansyah
2012). The research results showed that there is a significant influence of deposit
towards output.
The second pillar is distribution channel. Distribution channel indicates
financial access. It could be measured by the number of bank branch office.
Research using bank branch office as outputs factor was done by Peek (2013),
Govori (2013), and Classle (2016). Their research results showed that the number of
bank branch influences output. In Indonesia, using the number of bank branch office
is not a good idea as an outputs factor because there is a lack of bank branch office
distribution between provinces. This research adjusted this variabel by a ratio of
number of population on number of bank branch office in each province.
Another capitals proxy is real interest rate. Real interset rate is the
difference between interest rate and inflation rate. The highest inflation rate, the
lower real interest rate is. This theory was found by Irving Fisher (Barro, 1984).
Barro (1996) and Kasidi & Mwakanamela (2013) showed that there is a negatif
significant influence of inflation rate towards SMEs output. It implies that real
interest rate has positive influence on SMEs output.
The second, third and fourth factors from Mankiw-Romer-Weil Version are
related with labor. Labor could be proxied by number of employee, wage, and
quality of employee. The importance of number of employee was introduced by
Adam Smith (1729-1790) and Thomas Robert Malthus (1766-1834) (Todaro and
Smith, 2015). Both of them said that number of employee and its allocation give
impact on output growth. Research done by Govori (2013), Parkin (2013), Kedogo
(2013), Syuhada (2014), Handayani (2015), and Suhariyanto (2016) used number of
employee as outputs factor. Their results showed that number of employee has
influence on output.
Furthermore, John Maynard Keynes (1883-1946) stated that increasing on
number of employee causes decreasing on their bargaining power in labor market
(Parkin 2013). So, they tend to design a labor union to increase their bargaining
power and to get higher wage. Miller and Meiners (1993) cited in Sholeh (2007)
said that wage influences output through labor market.

162
 The other labors factor is quality of labor. Research result from
Noorderhaven (2012), Hisrich-Peter-Shepperd (2012), Kedogo (2013), Handayani
(2015), and Suhariyanto (2016) stated that quality of labor will boost-up SMEs
output. Getting higher quality of labor could be achieved by human development
program. To know the result of human development program, United Nations
Development Program (UNDP) introduced Human Development Index (HDI) as a
single measurement (Stanton, 2007). HDI is a summary measure of average
achievement in key dimensions of human development: a long and healthy life,
being knowledgeable and have a decent standard of living
(http://hdr.undp.org/en/content/human-development-index-hdi).
The other variables used in this research are number of enterprise and tax
policy. Number of enterprise is used because studies in some countries showed that
increasing the number of enterprise gives high impact on output growth (Kuncoro
and Abimanyu, 1995; Tambunan, 2000; Suprapto, 2008). Tax policy is used
because study done Blanchard and Perotti (1999), Perotti (2000), Mountford and
Uhlig (2002), Kruscek (2003), and Castro (2003) (cited in Surjaningsih, et.al., 2012)
showed that fiscal policy has positif impact on output. Related with SME activities,
Goverment Regulation No. 46/2013 has been implemented to enterprises who have
maximum Rp 4.8 billion gross sales a year. The final tax rate is 1% of gross sales.

2.4 Conceptual Framework and Hypotheses

To summarize the above explanation, this research uses Mankiw-Romer-
Weil Output Model, with two additional variables, number of enterprise and tax
policy. So, finally this research uses two dependent variables and 10 independent
variables. The dependent variable are micro-size enterprise value added and small-
size enterprise value added, as MSI performances proxy. Because both of them
work in the same area, assumed that there is a correlation between them. It means
the value added of micro-size enterprise is influenced by small-size enterprise, and
vice versa.
The 10 independent variables are capital with 3 proxies (number of third-
party funds (deposit), ratio of number of population on number of bank branch
office, real interset rate), labor with 4 proxies (number of employee for both micro-

163
size and small-size enterprises, wage, HDI), number of enterprise for both micro-size
and small-size enterprises, and tax policy. The conceptual framework can be seen on
Figure 1.
Figure 1 Conceptual Framework
Based on Figure 1, the hypotheses below are applied for both micro-size and small-
size enterprises. The hypotheses are:
a. H1: Number of deposit influences value added.
b. H2: Ratio of number of population on number of bank branch office
influences value added
c. H3: Real interset rate influences value added
d. H4: Number of employee influences value added
e. H5: Wage influences value added
f. H6: HDI influences value added
g. H7: Number of enterprise influences value added
h. H8: Tax policy influences value added
i. H9: Number of deposit, ratio of number of population on number of bank
branch office, real interest rate, number of employee, wage, HDI, number
of enterprise, and tax policy altogether influence micro-size enterprises
value added
j. H10: Number of deposit, ratio of number of population on number of bank
branch office, real interest rate, number of employee, wage, HDI, number
of enterprise, and tax policy altogether influence small-size enterprises
value added

3. Research Method
This research design is quantitative research using secondary data. Data were
collected from 33 provinces (not included Kalimantan Utara) during 2013-2015. So,
the data structure is panel data or longitudinal data or cross section time series data
(Rheyna, 2007). Cross section because consists of 33 groups/provinces; time series
because consists of 3 years. Data are collected to fulfill 12 variables used in this
research and to satisfy all of 99 observations. The last aims to get strongly balanced
panel data (Baltagi, 2005). Table 6 shows the variables explanation.

164
 Table 6 Variables Explanation
Since this research focuses on two groups analysis and assumed have
correlation between them, Linear Seemingly Unrelated Regression (Linear SUR) is
used to do inferential analysis (Baltagi, 2005). The Linear SUR equation can be
written as follows:
a. Model 1 (Micro-size Enterprise):
MIVA = f (DEPO, ACCE, RINT, MIEM, WAGE, HDIN, MIFR, DTAX)
b. Model 2 (Small-size Enterprise):
SMVA = f (DEPO, ACCE, RINT, SMEM, WAGE, HDIN, SMFR, DTAX)
Linear SUR is done by following steps (Greene, 2012 and Moon & Perron, 2006):
a. Estimate regression parameter using Ordinary Least Square (OLS) for both
models
b. Test the model using Breusch-Pagan Lagrangian Multiplier Test to determine the
model, fixed effect model or random effect model
c. Calculate the contemporaneous correlation between error of Model 1 and Model 2
d. Estimate Linear SUR parameter using Feasible General Least Square (FGLS)

4. Result and Discussion

Statistical software output is presented on Appendix. From the first and the
second step, estimating Model 1 and Model 2, and testing the model using Breusch-
Pagan Lagrangian Test, the result shows that Model 1 is fixed effect model
(Prob>chibar2 = 0.3874), and Model 2 is random effect model (Prob>chibar2 =
0.0056). Fixed effect model means, for micro-size enterprise, there is different
influence of macroeconomics variables toward its value added between provinces,
but not within provinces. Meanwhile, for small-size enterprise, which has random
effect model, the influence of macroeconomics variables toward its value added is
different on different province (between province) and different year (within
province).
From the third step, calculating contemporaneous correlation between Model
1s error and Model 2s error, the result shows that contemporaneous correlation
between Model 1s error and Model 2s error is 0.83368. It means that both of them

165
has correlation. So, the analysis could be continued to the fourth step, estimating
Linear SUR parameter using FGLS. The result could be explained below:
a. Model 1:
(i) There are three variables have significant influence on micro-size value
added. They are number of employee, wage, and financial access. While
the other five variables do not have significant influence on micro-size
value added.
(ii) The eight variables altogether have significant influence on micro-size
value added.
b. Model 2:
(i) There are four variables have significant influence on small-size value
added. They are number of enterprise, number of employee, wage, and
financial access. While the other four variables do not have significant
influence on micro-size value added.
(ii) The eight variables altogether have significant influence on small-size value
added.
Those two results support the previuos statement that small-size enterprise is
more dynamic than micro-size enterprise. Small-size enterprise performance is
influenced significantly by 4 variables, but 3 variables for micro-size enterprise
performance. For both of them, number of employee, wage, and financial access are
significant. It shows that MSI has an important role on labor creation. The higher
number of employee, the higher value added is. For wage, the higher wage, the
higher value added is. For financial access, the higher access ratio the higher value
added is.
HDI as quality of labors proxy has no significant influence on MSI
performance. It means quality of labor does not give any impact on MSI
performance. This result supports Tambunan (2008) and Pangestu (2011) statement,
that many of MSIs labor are low-skill and non-educated labor. So, lack of
managerial and entrepreneurship skill still exist in MSI.
Real interest rate has no significant influence on MSI performance, so does
the third-party funds (deposit). It means that real interest rate and the third-party
funds do not give any impact on MSI performance. This result indicates that the

166
activities of bank as intermediary agent does not give any impact on MSI
performance. This result proves that many MSIs do not use bank as formal financial
institution, as their partner on financing. There is a problem in financial inclusion
and need to be solved.
Goverment tax policy, especially SME tax policy, has no significant
influence on MSI performance. It shows that the policy effectiveness is still
questioning. It could be because of the policy still new, or most of MSIs do not care
with tax, or low tax coverage done by tax agency. More detail study is needed to
explain this fact.

5. Conclusion
This research uses 8 independent variables for each model. From 8 variables,
3 variables are significant on micro-size enterprise and 4 variables are significant on
small-size enterprise. But, the 8 variables altogether have significant influence on
MSI performance, both in micro-size enterprise and small-size enterprise.
Based on the research result, the recommendation below are suggested to all
parties. Those are:
a. Developing MSI in Indonesia is a must, since MSI has a significant role on labor
creation.
b. Decision making in province minimum wage policy shoud be done carefully,
since wage has significant role on increasing MSI performance.
c. Increasing on financial access and distribution channel as part of 6 pillars in
financial inclusion is needed.

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Penghasilan atas Penghasilan dari Usaha yang Diteroma atau Diperoleh
Wajib Pajak yang Memiliki Peredaran Bruto Tertentu. Jakarta:
Kementerian Sekretariat Negara RI.
Todaro, Michael P. dan Stephen C. Smith. 2015. Economic Development. Edisi
Keduabelas. Singapura: Pearson.
UK Essays. 2014. How does Macroeconomics Factors Affect SMEs in Tanzania.
http://www.ukessays.com/essays/economics/how-does-macroeconomics-
factors-affect-smes-in-tanzania-economics-essay.php>
<https://www.bps.go.id/linkTabelStatis/view/id/911> (08/08/2016)
<https://www.bps.go.id/Subjek/view/id/170> (06/09/2016)
<https://www.bps.go.id/Subjek/view/id/9> (06/09/2016)
<https://www.bps.go.id/Subjek/view/id/170> (06/09/2016)
<https://www.bps.go.id/linkTabelDinamis/view/id/1011> (29/09/2016)
<https://www.bps.go.id/linkTabelDinamis/view/id/896> (29/09/2016).
<https://www.bps.go.id/linkTabelDinamis/view/id/1012> (29/09/2016)
<https://www.bps.go.id/linkTabelStatis/view/id/1063> (29/09/2016)
<https://www.bps.go.id/linkTabelDinamis/view/id/1014> (29/09/2016)
<https://www.bps.go.id/linkTabelStatis/view/id/1068> (29/09/2016)
<https://www.bps.go.id/linkTabelDinamis/view/id/1211> (16/10/2016)
<http://hdr.undp.org/en/content/human-development-index-hdi> (18/09/2016)
<http://www.investorwords.com/3665/performance.html> (16/10/2016)
<http://www.impactdatasource.com/economic-output-vs-gdp/> (16/10/2016)
<https://www.ojk.go.id> (11/08/2016)

171
 Appendix 1

Table 1
Competitiveness Rank of SME in Asia, 2013
Highest Rank Singapore
Malaysia
Japan
Thailand
Phillipine
South Korea
China
Lowest Rank Indonesia
Source: Kadin-West Java, 2014

Table 2
Indonesia MSI Indicators, 2010-2011
2010 2011
Remarks
MSI MBI Total MSI MBI Total

Number of 2.732.724 23.345 2.756.069 2.979.071 23.370 3.002.441

Enterprise-
Unit (%) (99,2) (0,8) (100,0) (99,2) (0,8) (100,0)

Number of 6.447.260 4.501.145 10.948.405 8.274.635 4.629.369 12.904.004

Labor-
Person (%) (58,9) (41,1) (100,0) (64,1) (35,9) (100,0)

Value of 187,7 2.208,0 2.395,7 83,1 2.618,1 2.701,1

Output-Rp
Trillion (%) (7,8) (92,2) (100,0) (3,1) (96,9) (100,0)

Note: MSI = Micro and Small Industry

MBI = Medium and Big Industriy
Source: Processed based on data as of 29 September 2016, from:
https://www.bps.go.id/linkTabelDinamis/view/id/1011
https://www.bps.go.id/linkTabelDinamis/view/id/896
https://www.bps.go.id/linkTabelDinamis/view/id/1012
https://www.bps.go.id/linkTabelStatis/view/id/1063
https://www.bps.go.id/linkTabelDinamis/view/id/1014
https://www.bps.go.id/linkTabelStatis/view/id/1068

172
 Table 3
SME Criterias in Indonesia
Micro-size Small-size Medium-size
Regulation/Institution
Business
Business Business

Law No. 20/2008 Net assets worth Rp Net assets worth Rp

50-500 million 500 million-Rp 10
(excluded building billion (excluded
and land), or yearly building and land), or
total sales Rp 300 yearly total sales Rp
million-Rp2.5 billion Rp2.5-50 billion

Ministry of Net assets worth less than Rp 200 million Net assets worth Rp
Cooperation and SME (excluded building and land), or yearly total 200 million-Rp 10
sales less than Rp 1 billion billion
(Kemenkop & UKM)

Ministry of Trade Net assets worth less than Rp 600 million (excluded building and land),
and working capital less than Rp 25 million

Indonesia Central Bank Net assets worth less Net assets worth Rp Net assets worth Rp
(Bank Indonesia=BI) than Rp 50 million 50-500 million 500 million-Rp 10
(excluded building (excluded building billion (excluded
and land), or yearly and land), or yearly building and land), or
total sales less than total sales Rp 300 yearly total sales Rp
Rp 300 million million-Rp2.5 billion Rp2.5-50 billion

Statistic Central Enterprise with 1-4 Enterprise with 5-19 Enterprise with 20-99
Agency (Badan Pusat workers workers workers
Statistik=BPS)

Sources: Compiled from Kemenkop & UKM (2013), BI (2015), BPS (2014)

173
 Table 4
SME Classification in Manufacturing Industry
No. Business Scale Number of Workers
(Person)
1 Micro-size 1-4
2 Small-size 5-19
3 Medium-size 20-99
4 Big-size >100
Sources: https://www.bps.go.id/Subjek/view/id/170
https://www.bps.go.id/Subjek/view/id/9,
Retrieved on 6 September 2016

Table 5
The Scope of Manufacturing Industry in Indonesia
Code Main Group
10 Manufacture of food products
11 Manufacture of beverages
12 Manufacture of tobacco products
13 Manufacture of textiles
14 Manufacture of wearing apparels
15 Manufacture of leather and related products and footwear
16 Manufacture of wood and of products of wood and cork, except
furniture; manufacture of articles of straw and plaiting materials,
bamboo, rattan and the like
17 Manufacture of paper and paper products
18 Printing and reproduction of recorded media
19 Manufacture of coke and refined petroleum products
20 Manufacture of chemicals and chemical products
21 Manufacture of pharmaceuticals, medicinal chemical and botanical
products
22 Manufacture of rubber and plastic products
23 Manufacture of other non-metallic mineral products
24 Manufacture of basic metals
25 Manufacture of fabricated metal products, excepts machinery and
equipment
26 Manufacture of computers, electronic and optical products
27 Manufacture of electrical equipment
28 Manufacture of machinery and equipment n.e.c
29 Manufacture of motor vehicles, trailers and semi-trailers
30 Manufacture of other transport equipment

174
 31 Manufacture of furniture
32 Other manufacturing
33 Repair and installation of machinery and equipment
Source: https://www.bps.go.id/Subjek/view/id/170. Retrieved on 6 September
2016

Table 6
Variables Explanation
Variable Name Notation Scale Unit Source
Independent Variables
Number of deposit DEPO Rasio Rp Billion OJK
Ratio of number of population ACCE Rasio Thousand/ BPS, OJK
on number of bank branch office Unit
Real interset rate RINT Rasio Persen (%) BPS, BI
Number of employee on micro- MIEM Rasio Person BPS
size enterprise
Number of employee on small- SMEM Rasio Person BPS
size enterprise
Province minimum wage WAGE Rasio Rupiah BPS,
Governors
Decree,
Governors
Regulation
Human Development Index HDIN Rasio - BPS
Number of micro-size enterprise MIFR Rasio Unit BPS
Number of small-size enterprise SMFR Rasio Unit BPS
Tax policy DTAX Dummy - Researcher
Dependent Variables
Value added of micro-size MIVA Rasio Rp Million BPS
enterprise
Value added of micro-size SMVA Rasio Rp Million BPS
enterprise

175
 Figure 1
Conceptual Framework

MIFR MSI Performance

MIEM

DEPO
MIVA
ACCE

RINT

Inflasi
WAGE

HDIN
SMVA
DTAX

SMFR

SMEM

176
 Appendix 2
1. Decsriptive Analysis
Variable | Obs Mean Std. Dev. Min Max
-------------+---------------------------------------------------------
No | 99 50 28.72281 1 99
Code | 0
Kode | 99 17 9.570362 1 33
Tahun | 99 2014 .8206518 2013 2015
MIVA | 99 3029225 5160791 103338 2.76e+07
-------------+---------------------------------------------------------
SMVA | 99 3151266 6239883 5148 3.10e+07
MIFR | 99 95881.3 175481.7 1442 934814
SMFR | 99 11098.53 25001.33 39 160148
MIEM | 99 180918 341071.9 2623 1830429
SMEM | 99 90087.24 202136.3 351 1287590
-------------+---------------------------------------------------------
WAGE | 99 1534169 336912.2 915796 2700000
HDIN | 99 67.99667 4.224259 56.25 78.99
RINT | 99 5.855875 1.451966 2.864843 9.95727
ACCE | 99 66.61186 26.22319 17.36916 136.7603
DEPO | 99 122845.1 356230.5 2868 2219848
-------------+---------------------------------------------------------
DTAX | 99 .6666667 .4738035 0 1

2. Model 1
a. Fixed Effect Model
Fixed-effects (within) regression Number of obs = 99
Group variable: Kode Number of groups = 33

R-sq: Obs per group:

within = 0.8615 min = 3
between = 0.8651 avg = 3.0
overall = 0.8198 max = 3

F(8,58) = 45.11
corr(u_i, Xb) = -0.9567 Prob > F = 0.0000

---------------------------------------------------------------------------
MIVA | Coef. Std. Err. t P>|t| [95% Conf. Interval]
----------+----------------------------------------------------------------
MIFR | 49.67986 32.1179 1.55 0.127 -14.61111 113.9708
MIEM | 3.608051 15.3932 0.23 0.816 -27.20478 34.42088
WAGE | .1061418 1.491105 0.07 0.943 -2.878629 3.090913
HDIN | 793388.1 573290.2 1.38 0.172 -354177 1940953
RINT | 36031.3 102867.3 0.35 0.727 -169880 241942.6
ACCE | 28023.35 56491.65 0.50 0.622 -85056.97 141103.7
DEPO | 4.331177 3.780117 1.15 0.257 -3.235549 11.8979
DTAX | 117199.4 447390 0.26 0.794 -778349 1012748
_cons | -5.92e+07 3.73e+07 -1.58 0.118 -1.34e+08 1.56e+07
----------+----------------------------------------------------------------
sigma_u | 7169899
sigma_e | 948928.9
rho | .98278528 (fraction of variance due to u_i)
---------------------------------------------------------------------------
F test that all u_i=0: F(32, 58) = 3.99 Prob > F = 0.0000

b. Random Effect Model

Random-effects GLS regression Number of obs = 99
Group variable: Kode Number of groups = 33

R-sq: Obs per group:

within = 0.7590 min = 3
between = 0.9735 avg = 3.0
overall = 0.9357 max = 3

Wald chi2(8) = 778.19

corr(u_i, X) = 0 (assumed) Prob > chi2 = 0.0000

---------------------------------------------------------------------------
MIVA | Coef. Std. Err. z P>|z| [95% Conf. Interval]
-------------+-------------------------------------------------------------

177
 MIFR | -83.8825 24.22947 -3.46 0.001 -131.3714 -36.39366
MIEM | 57.7808 12.42377 4.65 0.000 33.43066 82.13094
WAGE | 1.798153 .7975267 2.25 0.024 .2350294 3.361277
HDIN | 69272.21 54110.78 1.28 0.200 -36782.98 175327.4
RINT | 152124.2 110400.6 1.38 0.168 -64257.08 368505.5
ACCE | 14720.4 9599.672 1.53 0.125 -4094.611 33535.41
DEPO | -.3742102 .715767 -0.52 0.601 -1.777088 1.028667
DTAX | 377245.7 409735.4 0.92 0.357 -425820.9 1180312
_cons | -8927447 4189350 -2.13 0.033 -1.71e+07 -716471.5
-------------+-------------------------------------------------------------
sigma_u | 680142.1
sigma_e | 948928.9
rho | .33937868 (fraction of variance due to u_i)
---------------------------------------------------------------------------

c. Lagrange Random Effect Test

Breusch and Pagan Lagrangian multiplier test for random effects

MIVA[Kode,t] = Xb + u[Kode] + e[Kode,t]

Estimated results:
| Var sd = sqrt(Var)
---------+-----------------------------
MIVA | 2.66e+13 5160791
e | 9.00e+11 948928.9
u | 4.63e+11 680142.1

Test: Var(u) = 0
chibar2(01) = 0.08
Prob > chibar2 = 0.3874

3. Model 2
a. Fixed Effect Model
Fixed-effects (within) regression Number of obs = 99
Group variable: Kode Number of groups = 33

R-sq: Obs per group:

within = 0.6711 min = 3
between = 0.3172 avg = 3.0
overall = 0.3452 max = 3

F(8,58) = 14.79
corr(u_i, Xb) = -0.1676 Prob > F = 0.0000

---------------------------------------------------------------------------
SMVA | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+-------------------------------------------------------------
SMFR | -556.1277 199.3738 -2.79 0.007 -955.2177 -157.0378
SMEM | 83.11662 23.4084 3.55 0.001 36.25961 129.9736
WAGE | .06648 2.105006 0.03 0.975 -4.147147 4.280107
HDIN | -190263.8 789390.4 -0.24 0.810 -1770400 1389873
RINT | -139343.3 147278.8 -0.95 0.348 -434153.9 155467.3
ACCE | 61540.81 81192.67 0.76 0.452 -100984 224065.6
DEPO | -5.830132 5.462951 -1.07 0.290 -16.76542 5.105152
DTAX | 392273.8 648816.7 0.60 0.548 -906474 1691022
_cons | 1.18e+07 5.13e+07 0.23 0.818 -9.08e+07 1.14e+08
-------------+-------------------------------------------------------------
sigma_u | 5062657
sigma_e | 1359204.4
rho | .93276653 (fraction of variance due to u_i)
---------------------------------------------------------------------------
F test that all u_i=0: F(32, 58) = 4.36 Prob > F = 0.0000

b. Random Effect Model

Random-effects GLS regression Number of obs = 99
Group variable: Kode Number of groups = 33

R-sq: Obs per group:

within = 0.6232 min = 3
between = 0.9377 avg = 3.0
overall = 0.9001 max = 3

Wald chi2(8) = 482.35

178
 corr(u_i, X) = 0 (assumed) Prob > chi2 = 0.0000

---------------------------------------------------------------------------
SMVA | Coef. Std. Err. z P>|z| [95% Conf. Interval]
----------+----------------------------------------------------------------
SMFR | -269.2657 160.3433 -1.68 0.093 -583.5328 45.00145
SMEM | 57.55158 19.57341 2.94 0.003 19.18839 95.91476
WAGE | .8748158 1.077558 0.81 0.417 -1.237158 2.98679
HDIN | 74348.95 78912.57 0.94 0.346 -80316.84 229014.7
RINT | 26002.47 149721.4 0.17 0.862 -267446.1 319451
ACCE | 35365.23 13494.44 2.62 0.009 8916.616 61813.84
DEPO | 2.249701 1.031847 2.18 0.029 .2273187 4.272083
DTAX | 120826.1 547632.3 0.22 0.825 -952513.4 1194166
_cons | -8307467 6046789 -1.37 0.169 -2.02e+07 3544021
----------+----------------------------------------------------------------
sigma_u | 1159306.9
sigma_e | 1359204.4
rho | .42112559 (fraction of variance due to u_i)
---------------------------------------------------------------------------

c. Lagrange Random Effect Test

Breusch and Pagan Lagrangian multiplier test for random effects

SMVA[Kode,t] = Xb + u[Kode] + e[Kode,t]

Estimated results:
| Var sd = sqrt(Var)
---------+-----------------------------
SMVA | 3.89e+13 6239883
e | 1.85e+12 1359204
u | 1.34e+12 1159307

Test: Var(u) = 0
chibar2(01) = 6.44
Prob > chibar2 = 0.0056

4. Contemporaneous Correlation
MIVA SMVA
MIVA 1
SMVA 0.83368 1

5. Linear SUR Analysis

Seemingly unrelated regression
--------------------------------------------------------------------------
Equation Obs Parms RMSE "R-sq" chi2 P
--------------------------------------------------------------------------
MIVA 99 8 1348086 0.9311 1439.44 0.0000
SMVA 99 8 1921960 0.9042 1025.51 0.0000
--------------------------------------------------------------------------

------------------------------------------------------------------------------
| Coef. Std. Err. z P>|z| [95% Conf. Interval]
-------------+----------------------------------------------------------------
MIVA |
MIFR | -32.73117 17.85845 -1.83 0.067 -67.73308 2.270744
MIEM | 30.28885 9.175502 3.30 0.001 12.3052 48.2725
WAGE | 1.867638 .6310877 2.96 0.003 .6307292 3.104548
HDIN | 67984.1 37162.3 1.83 0.067 -4852.681 140820.9
RINT | 157634 102786.3 1.53 0.125 -43823.53 359091.5
ACCE | 22981.89 6715.771 3.42 0.001 9819.223 36144.56
DEPO | .0442677 .506202 0.09 0.930 -.94787 1.036405
DTAX | 396964.8 377523.9 1.05 0.293 -342968.5 1136898
_cons | -9524265 3001541 -3.17 0.002 -1.54e+07 -3641353
-------------+----------------------------------------------------------------
SMVA |
SMFR | -363.5657 136.0176 -2.67 0.008 -630.1553 -96.97602
SMEM | 72.71265 16.82038 4.32 0.000 39.74531 105.68
WAGE | 1.892542 .8977298 2.11 0.035 .1330242 3.65206
HDIN | 70225.83 54912.5 1.28 0.201 -37400.69 177852.4
RINT | 132335.2 153407.3 0.86 0.388 -168337.7 433008

179
 ACCE | 27227.53 9824.285 2.77 0.006 7972.289 46482.78
DEPO | 1.284171 .7592891 1.69 0.091 -.2040083 2.77235
DTAX | -113647 549395.6 -0.21 0.836 -1190443 963148.6
_cons | -9713380 4435470 -2.19 0.029 -1.84e+07 -1020018

180
ENT-06

VALUES OF GLOBAL BUSINESS PARADIGM SHARE

CULTURE OF VALUES:UNDERSTANDING LOCALITY
AND CULTURAL VALUES AS BASIC GROWTH AND
PRODUCTIVITY
Teguh Purnomo
Faculty accounting in economic department of 17 agustus 1945
University of Banyuwangi
Email: teguh_purnomo.2015@yahoo.co.id

ABSTRACT

As indonesia delivere liberal economy and become globally in system economy and
politics have changed economy fundamental in indonesia. Indonesia become growth
country that surprised others and attract others to invest in indonesia.As investors
produce here, they make changes in values that making progress and crash in politic,
social and culture and environment tendency. Cultural values give tendency in
conducts, way of thoughts, productivities and superiorities manifestation as
perceived by locality values. So, local values shared as synthesis to understand how
to produce more efficient and effective that going sustainable growth and have long
term revenue. This locality values understanding will make unique character in
economy progress that happened more fair and prosperous for all stakeholder desire.
Understanding ethics business in locality cultural values will make business stand
powerfull in human touch and productivity that impact physical and spiritual welfare
comprehending urgency interest in business.

Keywords: values of global business, understanding values, cultural values, basic

growth, productivity

1. Introduction
Business serve to fulfill interests and needs that covered values also impacted
from cultural as locality remains. Business will produce goods and services based
understanding values in perspective locality of economy, social and culture still
remain that growth bigger and bigger till now. Business will also make impact more
positive in life. Doing business like this reduce problem in future trending. (Rudito
Bambang dan Famiola Mella, 2013).

181
 Doing business in positive and good manner must understand interest remain
all. Doing business must be oriented positive impact and sustainable profit. So,
business present intentions to serve all interest, here ethics business stay and present
give higher values, that progress making business serve more productivity impacting
values responsiveness to social.
System in economy attending here is liberal and capitalism that acting as
globally. As this system all activity in business keep interest produce more and more
values that make company produce more and more efficient that can give goods and
services superior. So this business in act globally produce superior in quality and
quantity. In clear, this system in economy will make company take manner in best
serving goods and services to its stakeholder. Competition in this system can not
hindern that push management doing competitiveness serve them. Company charged
delivering output in long term that have to understand best values in culture and
environment that accepted.
In liberal capitalism system, company may entry bigger and bigger class. The
key factor concern delivering values accepted stakeholder as accordingly urgency
interest. This event easy to get company will growth conglomeration that can
produce bigger and bigger that dominate in market. So this tendency clearly need
quality in good manner to manage rasionality how to plan and deliver all return in
highest impact.
Modern management influence how to use resources in delivering maximum
return and minimize effort. This manifestation change how to manage resources to
take return in highest compared investment before. Doing this actually business
make trend in deviation from concept before. Management trend to focus in short
term profit orientation account in financial only.
Business is matter about essence of system. Doing system mean delivering
value that impact wealth and welfare. This system submit locality that need and
deliver meaning in cultural area. This paper deliver that business ethics must
understand values accepted locally that produce long term and sustainable company
accepted by community that understand urgency that needed by stakeholder.

182
2. Concept and theory
2.1. Understanding system economy
System economy deliver all elements connected and support each others that
make and maintain productivity and revenue. It contents all of thoughts, concepts,
theories, asumtions, fundamental of policies, all infrastructure, institution, element
of law support social activity, including government, country, people as unity in its
system. (Agoes, Sukrisno dan Ardana, I Cenik, 2014). Clear to understand that
strong business has interrelated each element that present goods and services and
distributions remain well.
To understand element chain in system, john locke present right of
ownership. The first motivation to make ownership is life, freedom, property.
(Agoes, Sukrisno dan Ardana, I prosperous mean ownership. Rights in life and free
are property himself in area body, power and attempt. That mean man invest labor
as ownself and sequence attempt legitimacy belonging. Man invest effort can pict
property as long as its effort. Example: woods in forest is free but if collected must
be ownership of someone.
Ownership shape development social interaction, relationship and standard
social boundaries. Dinamic in social creat strata social and behavior in individual
which manifestation system of value expected status prosperity social individu.

2.2 Understanding Values

Ethics is regulation and obligation about good and bad in moral statement
and values. Ethics have understood values in requesting applying reality in behavior.

Values as central knowledge of social perspective explain as basic attitude

and behavior. Understanding value will know what is important things in life. Every
man own tendency in life depent in his value. Here value compass man life. So value
have six characteristic in detail :
1. Values are beliefs linked inextricably to affect. When values are activated,
they become infused with feeling. People for whom independence is an
important value become aroused if their independence is threatened, despair
when they are helpless to protect it and are happy when they can enjoy it.
2. Values refer to desireable goals that motivate action.

183
3. Values transcend specific actions and situations. This feature distinguishes
values from norms and attitudes that usually refer to specific actions, objects
or situations
4. Value serve as standards or criteria. Values guide the selection or evaluation
of actions, policies, people and events.
5. Values are ordered by importance relative to one another. Peoples value
form an ordered system of priorities that characterize them as individuals.
6. The relative importance of multiple values guides action. Any attitude or
behavior typically has implications for more than one values
Values attend goal and or motivate action. All actions related important
value that progress in urgency value.
Individual actually dinamic. Individual go to development and maturity.
Individual is active seek important values. Environtment affect individual to
compass for mature and immature. (Ryan, Richard M dan Deci, Edward L, 2000).
Environtment protect values but also remove motivation.

2.2. Stakeholder theory

Here is presented liberalization and capitalism as accepted system in
indonesia that still debated before system of pancasila. This system allow company
doing business deliver best values. With understanding to consumtion, company
deliver its consumen with higher values than consumer expected. Doing this
condition mached, company will deliver efforts that making activities with highest
return and using lowest resources. This result wrong impact after understanding
values of stakeholder theory.
Stakeholder theory delivere understanding all company activity must
understand all values that needed stakeholder. Here are all consist of stakeholder :
employee, owner, government, environtment activity, supplier, banker, media massa,
environtment. Respect all need of stakeholder, company must focus deliver highest
values matching needed. Doing this will make superiority company that welcomed
locality values respected.
Doing this all, company will deliver values that accepted and understood all
member which highest values in locality comunity progress and working life.

184
Because interests all member in stakeholder will provide highest values
understanding to do business well. Because all member in stakeholder influence
continuity and progress of company, that management must fullfil all interest and
need.

3. Problem and Discussion

Social interaction influent progress and limitation continuing life values in all
member stakeholder , that it will show fail or pass about ideas that needed
occasionally. This is the first problem here. This comunity react and produce this
module of the condition needed well being interest growth and mature or but also
make them each all values contrast that stalling one of them to grow and mature.
Who will dominate one from other will be happened. This condition show who is
winner and losser.
Business interest and social interest become aspect with two dimention and
two tendency, that is business will separate each another or they will continue grow
and mature together. Management will produce policy that covering surface all
activity only and delivering goods and services with residual impact that will
promote problems after using it. Here will propel problem that can not solved in
comunity.
Underline business produce goods and services that satisfy all need and
interest in stakeholder firstly, so still in tract to understand if problem occur in
society reflect how each can solve problem with delivering values of cultural aspect
reflect locality dimentions.
Secondly, in comunity respect fundamental culture and values. All member
know that. The problem here, many condition not respect and reflect againt. What is
wrong this? Here the problem all focusing about locality dimention must be
understood and revive againt that sustainable dimention impact regain.

4. Solution and Discussion

The first problem is attend here that to understand all member in stakeholder
have portion each about balance interest and need to be fullfiled by management by
understanding urgency here. All problem present and accept as material useful. In

185
deed, the problem solving and all decision here reflect culture to deal problem, that
revive value how to attend rightenous, justice, honor something. Here cultural and
locality important. Each area in indonesia governed different importance and
urgency depend on values of locality. Social interaction must be understood as strata
social depend how need and interest will deliver each of stakeholder portion.
In social science acknowledge values accepted to understand why people
tendency happend in condition and special situation. Why company have profit but
the other side low growth. This is cultural dimension must deal better that impact in
social revival.
Stakeholder theory must deal ethics problem here. All management must
understand sustainable reward and growth. Keeping dimension social aspect, respect
stakeholder interest and need will produce dimension of new paradigm that build
new cultural interaction that revive fundamental and importance of value.
Second problem must need higest urgency power in social, in this case
government and world organization, understant deeply that any natural mechanism
that produce problem and reduce problem. This aspect respect to values kept in some
society as cultural wisdom that consist of religionship member and locality
government that actively utilizing fundamental structure in tradisional comunity that
maintain sustainable cultural life and dinamic of life. This sustainable interaction
with regard to grow and maturity society that will reflect in high profit and
sustainable productivity all member comunity.

REFERENCES

Agoes, Sukrisno dan Ardana, I Cenik Etika Bisnis dan Profesi, 2014, Penerbit
Salemba Empat.
Bertens, K Pengantar Etika Bisnis, 2000, Penerbit Kanisius.
Rohman, Wajibur, 2010. The Effect of Islamic Work Ethics on Work Outcomes.
Electronic Journal of Business Ethics and Organization Studies: Vol 15
No.1 (2010)
Rudito, Bambang dan Famiola, Melia, 2013. CSR (corporate Social Responsibility).
Penerbit: Rekayasa Sains, Bandung
Sweet, William, Approaches to metaphysics, 2005, Kluwer Academic Publishers,
Dordrecht
Schwarts, Theory of Basis Values, 2011, Produced by The Berkeley Electronic
Press.

186
Woodbine, Gordon F dan Liu, Joanne, 2010. Leadership Styles and the Moral
Choice of Internal Auditors. Electronic Journal of Business Ethics and
Organization Studies: Vol 15 No.1 (2010).

187
ENT-07

BUILDING SOCIAL CAPITAL

TOWARDS GROWTH OF SMES:
A CASE OF TAPAI CASSAVA SMES

Lailatul Maghfiroh, NG. Krishnabudi

University of Jember
Email: mlmfiroh@gmail.com

ABSTRACT
SMEs had big contribution of the national incomethrough renderingabout 61.9
percent of gross domestic product (GDP) through the taxes payment.SMEs in
Indonesia are micro-enterprises in the informal sector and usually using local raw
materials in the local market. It didnt affect directly to the global crisis. Although
SMEs said has been able to withstand the global crisis but in fact the problems faced
by was so many and heavier. The social capital is one that has not been applied by
SMEs fermented cassava. In fact, social capital can be used as an alternative to solve
problems in fulfilling the production of needs factors and market fluctuations.This
paper aims to investigate patterns of social capital can effect towards growth of tapai
cassava SMEs in JawaTimur Province. To do this we used descriptive qualitative
method based on questionnaire and interview data in Jember, Banyuwangi, and
Bondowoso Regency. The result shows tapai cassava SMEs have not possessed
social capital to implement its business because tapai cassava SMEs only in
corporation with the suppliers and consumers. Thus there is tight competition among
SMEs and encourage SMEs to continue developing their business. Whereas stocks
of raw materials tapai cassava has decreased due to farmers and the area planted
cassava. When tapai cassava SMEs able to corporate among SMEs then SMEs can
collaborate fulfilling the raw of materials and demand of market.

Keywords: Social Capital, Growth, SMEs.

1. Introduction
The empowering of Small and Medium Enterprises (SMEs) in the midst of
globalization and height of competition makes SMEs must be able toencounter
global challenges, such as improving product and service innovation, human
resource development and technology, as well as the expansion of the marketing
area. It has to be done in order to increase SMEs value, mainly in order to compete
with foreign products that are increasingly drawing the industrial and manufacturing
centers in Indonesia, considering that SMEsare the economic sectors that can create
jobs in Indonesia. In 2011, SMEs SMEs had big contribution of the national income
through rendering about 61.9 percent of gross domestic product (GDP) through the

188
taxes payment, which is described as follows: micro business sector contributed
36.28 percent of GDP, 10.9 percent of the small business sector, and medium-sized
business sector 14.7 per cent through tax payments. Meanwhile, the big business
sector contributed only 38.1 percent of GDP through tax payments (CBS, 2011).The
vast majority (nearly 99 percent), SMEs in Indonesia are micro-enterprises in the
informal sector and usually using local raw materials in the local market. It didnt
affect directly to the global crisis. Report from The World Economic Forum (WEF)
2010 puts the Indonesian market in the15th. This shows that Indonesia as a potential
market for other countries.This potential has not used maximally.
The development of SMEs in Indonesia still have various problems causing
lack of competitiveness against imported products. The main problem faced by
SMEs are the lack of infrastructure and access to government related to the licensing
and bureaucracy and high levels of charges. With all the problems exist, that great
potential of SMEs has beenresisted (Wimba, et. al., 2015). Although SMEs has been
able to withstand the global crisis but in fact the problems faced by was so many and
heavier. That's because beside of the affected by the global crisis indirectly, SMEs
also have to face the domestic problems which are such an unresolved problem like
labor costs, labor and extortion, corruption, etc.
The problem of domestic SMEs tapai cassava in East Java Province more
likely on the actual internal problem is the classic problem that cannot be
resolved.SMEs employment system that still apply individualistic understands seems
would provide free movement in exploring business. However, SMEs space
increasingly narrowed and the business needs cannot be met appropriately according
to the the standards of quality (Rodrigues and Child, 2012). The strong reluctance to
be more open is being the one reason for the difficulty of the social capital
formation. Therefore, this study sought to obtain a projected picture of the social
capital pattern that has been formed by SMEs tapai cassava in the province of East
Java.

2. Literatur Review
Social capital is not a single entity, but the compound entity containsof two
elements: (i) social capital includes some aspects of the social structure; and (ii)
social capital facilitate certain actions of actors (actor) both individuals and
companies within the structure (within the structure). From this perspective, as well
as the other capital, social capital is also productive, which makes the achievement

189
of certain goals that may not be achieved if its existence does not exist (Raiser,
1997). Furthermore, Baker defines social capital as the resource that is achieved by
the perpetrator through specific social structures and then used to pursue their
interests; social capital created through changes in the relationship between the
actors. While Schiff defines social capital as the set of social structures elements that
affect human relations and also an input or an argument for the function of
production and/or benefits (utility).
Coleman stated there are at least three forms of social capital. First, the structure
of liabilities (obligations), expectations, and beliefs. In this context, forms of social
capital depends on two key elements: the trust of the social environment and the
obligations actual expansion have been fulfilled (obligation held). Second,the
network information (information channels). The information is important as a basis
for acting. Third, norms and effective sanctions (norms and effective
sanctions).Norms in a community that supports individuals to obtain achievement
(achievement) of course could be classed as a form of very important social capital
(Westlund, 2003). Three main elements in social capital are the trust(confidence),
reciprocal(mutual), and social interaction.
1. Trust (Trust); encourage someone to cooperate with others to bring together
the productive activities or actions. Trust is a product of very important
social norms coperation thenturns up into the social capital.

2. Reciprocal (Mutual Relations); can be found in the form of giving, mutual

acceptance and help that can emerge from social interaction. Further
element of the social interaction. Wide-spreaded interaction would be a kind
of more possible social network to ever-expanding scope of the trust and
mutual relations.
3. Social interaction; the dynamic social relations regarding the relationship
between people, human groups, as well as those groups of men.

3. Research Method
This study used a qualitative approach to provide new reference related to the
pattern ofTapai SMEs social capitaldevelopment in highly complex. This research
was conducted in East Java, while the object determination research using multi-

190
stage cluster sampling of tapai production centers, such as Banyuwangi, Jember and
Bondowoso. The analysisunit of this research is at an individual level (micro) and
society (macro). Related to these two selected respondents is representative of
cassava farmers, tapai manufacturers,Tapai distributors, agift shop up to consumers
in each selected district.
The data used in this study are primary data required as input obtained from
the research participants (actors) in the SMEstapai cassava. It comes from a field
survey of the respondents based on interviews with SMEs tapai cassava from cassava
farmers, tapai manufacturers, Tapai distributors, and a gift shop to consumers. This
study departs from the facts found in the field in many cases to get the 'outline' for a
variety of conditions that share similar characteristics gradually. After that the
researchers probed the social capital patterns of SMEs tapai cassava from upstream
to downstream, followed by determination of the development strategy.
The data wereanalyzed descriptively qualitative through the concept of the
various aspects of community economyapproach, as well as adapted to the physical,
economic, and government policies.This study was taken purposively (purposive
sampling), adjusted for the researchpurpose. In this purposive technique, samples
(informants) were taken more selective, the researchers went upon a used of
theoretical grounding connection, the faced characteristics of empirical, and so
forth. These samples are not used in an attempt to make statistical generalizations or
simply represent the population, but more directed at theoretical
generalizations. Sources of data used rather to represent the information. Therefore,
the number of samples in this study is not really the priority, but emphasized to the
samples that support for analysis purposes. In short, a resource in this study are
individuals who play an important role in social and economic activities of SMEs
tapai cassava in East Java.

4. Result and Discussion

SMEs of tapai cassavaare not separated from the cassava farmer productivity
and market demand. Institutional social farming is the institution where there is
social interaction between farmers and SMEs tapai cassava. Their community or
group in the SME tapai cassava contributed positively to the tapai cassava

191
industry.Contribution of farmers' groups, among others, cansolve the needs of SMEs
tapaicassava production factor problems. Social capital that has been buildtamong
SMEs and cassava farmers.
Based on the results of interviews with seven respondents obtained
information that some 70% of respondents were reluctant to actively participate tapai
cassava of SMEs community that is in the business location while the remaining
30% are willing to participate. Respondents who stated it is SMEs tapai cassava that
already have a bargaining position and have big capital. While the SMEs are willing
to participate in the community willing fermented cassava only 30%
areconsideratingthat their business will be able to develop quickly for their support
material or immaterial.
Figure 1.
SMEs participation in CommunityWillingness

30%
Setuju
70% Tidak Setuju

Source: Primary Data, processed.

The concept of the institution or institutions understanding focused on the

organization, both formal organizations and informal organizations which the the
unripe concept are directly received by SMEs so that the majority of SMEs tapai
cassava averse to be bound by the institutional rules. Another reason of SMEstapai
cassava to participate in the community isthe strong capital of the ownership and
insufficient for the production needs. If onlySMEs still require funding, SMEs will
use its assets as collateral for loans in financial institutions. In addition SMEs also
felt already have their respective markets so that SMEs do not have to participate
actively in the community which does not provide benefitcertainty.

192
 Figure 2.
Bargaining Position of SMEs in Tapai Cassava Market

14%
29%
Kuat
Sedang
57% Lemah

Source: Primary Data, processed.

The data above shows that the SMEs majoritywhich have the power position is
still averse to participate actively in community. Not just related about the course
material, but the provided time and energy to SMEs active in the community as the
consideration. The number of community activities that force SMEs to delay
production activities will have an impact on the productivity levels when the market
demand cannot be postponed. Moreover, when the holiday season arrives then tapai
cassava demand will increase, when the community is only impose his desire to hold
at that time, SMEs do not need to be concerned with consideration of production
activities.

5. Conclusion
The research overview on SMEs fermented cassava in East Java province
which represented by Jember, Banyuwangi and Bondowoso can be concluded that
they are reluctant to form the social capital in order to attend the
competition. Competition is divided on the market strength of SMEs tapai cassava
that trigger the disparities. Besides social capital is difficult to implement because
SMEs tapai cassava has a different pattern of commercial and non-transparent.
Thus, it can be recommended for local authorities to provide socialization
about the importance of social capital to build partnerships. Furthermore, local

193
governments are expected to provide the media facilitation and mediation among
SMEs tapai cassava to mediate the disparities that occur on market forces.

REFERENCES

Neira, Isabel; Portela, Marta; Cancelo, Maite; Calvo, Nuria. 2013. Social and Human
Capital as Determining Factors of Entrepeneurship in The Spanish Regions.
InvestigacionesRegionales, 26 (2013) Pages 115 to 139.
National Strategy of Small and Medium Entrepeneurship Development. Review of
the International Best Practice in SME State Support.
Raiser, Martin. 1997. Informal Institutions, Social Capital and Economic Transition:
Reflection on a Neglected Dimension. Working Paper N 25.
Westlund, Hans. 2003. Implications of Social Capital for Business in the Knowledge
Economy: Theoretical Consideration. Swedish Institute.
Wimba, I G Ayu; Budhi, I M Kembar Sri; Yasa, I G Murjana; Saskara, Ida A N.
2015. Effect of Social Capital on Entepreneurial Orientation and
Transaction Cost to Improve Firm Performance in Wooden Craft SMEs in
Bali Province-Indonesia. International Journal of Economics, Commerce
and Management.
Rodrigues, Suzana Braga and Child, John. 2012. Building Social Capital for
Internationalization. RAC, Rio de Janeiro, v. 16, n. 1, art. 2, pp. 23-38,
Jan./Fev. 2012.
Dzunic, Marija. 2010. Small Firms, Social Networks and Economic Performanc.
FactaUniversitas Series Economics and Organization Vol 7. N 1, 2010,
pp.137-150.
Kaasa, Anneli; Kaldaru, Helje; Parts, Eve. 2007. Social Capital and Institutional
Quality as Factors of Innovation: Evidence From Europe. University of
Tartu.
Egeland, Jesper and Birkeland, Johann P. 2012. Social Capital as a Source for
Innovation. Copenhagen Business School, Master Thesis.
Coffe, Hilde and Geys, Benny. 2005. Institutional Performance and Social Capital:
An Application to The Local Government Level Journal of Urban Affairs.
Volume 27, Number 5, Pages 485-501.
Kiprotich, Evans. 2014. The Influence of Social Capital on The Growth of SMEs in
Nairobi County, Kenya. University of Nairobi.
Du, Jun; Guariglia, Alessandra; Newman, Alexander. Does Social Capital Influence
The Financing of Chinese Private Small and Medium-Sized Enterprises?.
Ningbo, China.
Worku, EshetuBekele. 2008. Efficiency and Social Capital in Micro, Small and
Medium Enterprises: The Case of Ethiopia. University of Western Cape.
Jafri, Syed Khurram Ali; Ismail, Kamariah; Khurram, Wafa; Soehod, Khairiahbte.
2014. Impact of Social Capital and Firms Innovative Capability on

194
 Sustainable Growth of Women Owned Technoprises (SMEs): A Study in
Malaysia. World Applied Sciences Journal 29 (10): 1282-1290, 2014.
Brata, AloysusDunadi. 2009. Innovation and Social Capital in the Small-Medium
Enterprises: a Case of Bamboo Handicraft in Indonesia. Murich Personal
RePEC Archive.

195
ENT-08

A VAR APPROACH TO EXAMINES THE ECONMICS

AND SOSIAL FACTORS TO THE ENTERPRENEUR IN
INDONESIA

Ariz Aprilia1, Panji Tirta N.P2,

Nofita Wulansari3, Achmad Fawaid Hasan4
University of Jember
Email: arizapril50@gmail.com

ABSTRACT

This study aims to investigates the influence of economics and social factors such as
Gross Domestic Product, total unemployment, and GINI Index to the number of
entrepreneurs in Indonesia The results with VAR approach shows that economic
factors is more influence than social factors to increasing the number of
entrepreneurs in Indonesia. The results indicates that economic factors are one of the
important factors that increase the encouragement to become an entrepreneurs.

Keywords: Economics Factors, Sosial Factors, VAR, Enterpreneur.

1. Introduction
Global economics climate became one of the external factors that affect a
country's economic progress (Aguiar and Gopinath, 2007; Bruno and Shin,
2014). The turmoil in the global economy both large and small will to the income
earned by a country. Meanwhile, there are many internal factors that affect the
economic progress of a country. These factors, among others, may be a factor of

1 Ariz Aprilia, student in Department of Economics and Development Studies, Faculty of

Economics and Business, Universitas Jember. Email: arizapril50@gmail.com
2 Panji Tirta N.P, student in Department of Economics and Development Studies, Faculty of
Economics and Business, Universitas Jember. Emai: panjitirta63@gmail.com
3 Nofita Wulansari, student in Department of Economics and Development Studies, Faculty of
Economics and Business. Universitas Jember. Email: nofita.wulansari.94@gmail.com
4 Achmad Fawaid Hasan, student in Department of Economics and Development Studies,
Faculty of Economics and Business, Universitas Jember. Email: fawaidunej@gmail.com
economic, social, cultural, legal and so forth (David, Elisabeth, and Mary,
2014). Therefore, each state have a policy related to controlling the stability of the
state of the economy.

196
 An issue that is widely discussed is the issue of the influence of entrepreneurs to
the economy (Kallas 2008; Afolabi, 2013; Opafunso and Adepoju, 2014; Ali, Rashid
Khan, 2014). Entrepreneur is defined as an individual or a group of people who own
their own business and employ other work in the business. Based on various studies,
the entrepreneur is getting help boost economic progress of a country. Research by
Bouazza (2015) produced findings that the indicators of developed countries is
characterized by the increasing number of entrepreneurs. These findings indirectly
have proved that the role of entrepreneurs is becoming increasingly important in
order to accelerate the economic progress of a country.
Indonesia is one country in Southeast Asia in its development is not inferior to
other countries in Southeast Asia. Categorized as a country with a low middle
income, Indonesia has a fairly high economic progress. The Ministry of MSME
(Micro, Small and Medium Enterprises) Indonesia provide great support to the ease
of licensing and financing of SMEs. The support is increasingly moving a conducive
economic climate in Indonesia.
As a country with a large population, Indonesia also have problems as social
problems such as poverty and unemployment. The problems are classical problem
that basically faced by all countries. Associated with the presence of entrepreneurs
who identified with the ease of licensing and financing of SMEs, Indonesia is
expected to be able to reduce the level of poverty and total unemployment.
This study first want to examine the effect of adding the number of
entrepreneurial proxied using the number of MSMEs (Micro, Small and Medium
Enterprises) to total revenues Indonesia which proxy to use GDP (Gross Dormestic
Product). Furthermore, using social factors such as unemployment and the GINI
index, we examine how the relationship between the amount of the increase in
unemployment and the number of SMEs to the GINI index in Indonesia.

2. Literature Review
The cornerstone of the theory used in this research relates to economic factors
and social factors that affect the amount of the increase in SMEs in Indonesia that
has impacted on the economic progress of a country. This shows that the

197
macroeconomic indicators and social needs untukdikaji to further prove the truth of
the theory and previous literature.
Many studies of entrepreneurs in both the developed and developing
countries. Among them, Easterly, Lisa and Miesing, Paul (no year) conducts
research on Social Venture Business Strategies For Reducing Poverty. Research
conducted in the United States proves that the growth of small and medium micro
enterprises to reduce poverty through employment. Small and medium micro
enterprise activities can produce goods and services which in turn creates jobs for the
community.
Furthermore, Idam., Egwu, Linus ,. Fnim. (2014) conducted a study in
Nigeria about the growth of entrepreneurship and the impact on poverty. He found a
positive relationship between the number of entrepreneurship by unemployment,
poverty and economic growth. At the time of the growth of micro, small increases
were followed by an increase in economic growth is positively related to the amount
of poverty.
Moses, Chinonye,. Et al (2015) also conducted an empirical study on the role
of entrepreneurship in the country to poverty. This study using analysis of structural
equation modeling (SEM) beginning in 2006-2013. He found that the growth of
small and medium micro enterprises may dampen or reduce the level of
poverty. Moses, Chinonye,. Et al (2015) emphasized the entrepreneurship training to
increase the knowledge, skill and mental attitude of all workers. He also stressed the
support of stakeholders to stimulate any small and medium micro enterprises.
Small and Medium Enterprises (SMEs) has proven to be a major intervention
tool in addressing the problem of poverty and unemployment in most developing
countries. This is evident from some of the results of the research findings from
various countries. Research Bouazza (2015) to evaluate the contribution of
companies to the development of job creation ekonomidan hail different show than
ever before. This study aims to analyze The effectiveness of the companies in terms
of employment in the creator of insight. Based on the research by Bouazza showed
that SMEs in Algeria is still fragile and do not effectively contribute
dalammenciptakan employment, where the unemployment rate is still high,
especially among teenagers.

198
 Ali et al. (2014) in his research focused on poverty in Pakistan by using
Ordinary Least Squares (OLS) showed that the Small and Medium Enterprises
(SMEs) strong is the most fundamental things needed for economic development and
poverty alleviation in Pakistan. Economic policy makers focused on the
establishment of formal financial markets to overcome the financial constraints faced
by the SME sector in Pakistan.
Research conducted by Opafunso and Adepoju (2014) shows that there are
positive and significant relationship between SMEs and poverty reduction, job
creation and improved living standards for people in Ekiti. Access to capital funding
by the decline in interest rates on loans offered by banking institutions can improve
the performance of SMEs in Ekiti and Nigeria in general.

3. Research Method
VAR analysis is used to see the effects of GDP, poverty, and GINI reindexs to
Micro, Small and Medium Enterprise (MSME) in Indonesia on 2007-2015. VAR
model of equation is formed from research conducted by David, Elizabeth, and Mary
(2014), specifically:

MSME = + 1 GDP t + 2 + 3 Ins t Cf t + t (1)

Where:
MSME = Micro, Small, and Medium Enterprise
GDP = Gross Domestic Product
ins = Institution
Cf = Cultural Factors
= Error Term
Then, with some adjustments based on the conditions and the scope of the
study, the models of this study is:
MSME t = + 1 Log_GDP t-1 + 2 Log_UNMP t-1 + 3 GI t-1 + e (2)
Where:
MSME = Micro, Small, and Medium Enterprise
GDP = Gross Domestic Product
UNMP = Unemployment
GI = GINI Index

199
 = Error Term
For this paper, databases such as the Central Bureau of Statistics (BPS) and
the Ministry of Cooperatives and SMEs are used. Data used in this research was
secondary data on the form of quarterly time series with the range of time from 2007
Q1-2015 Q4.

3. Result and Discussion

There are Several stages to the which estimates the VAR models include a unit
root test, co integration test, Impulse Response Function (IRF) and Variance
Decomposition (VD).

4.1 Unit Root Test

Table 1.
The Result of Unit Root Test

Level Prob. MSME Prob. Log_GDP Prob. Log_UNMP Prob. GINI

Level 0.8914 0.2532 0.1506 0.0740

1 st Difference 0.1820 0.0000 0.0000 0.1753

2 nd difference 0.0000 0.0000 0.0000 0.0010

Table 1 describes that the data is used in this study Generally stationary at
2 nd difference. The unit root test for MSME, GDP, UNMP, and GINI are not
stationary at levels and reflected the level of probability value is greater than the
value of (5%) or 0:05. All variables are tested on 1 st and 2 nd difference and the
results show that the four variables have a probability of 5% on value. Reviews
These results indicate that the four Data is stationary at 2 nd difference.

200
4.2 Cointegration Test

Table 2.
The result of Johansen Cointegration Test

critical Value Trace Statistic Cointegration

1% 54 681 60 384 cointegrated
5% 47 856 60 384 cointegrated
10% 44 493 60 384 cointegrated

Table 2 describes that there are Cointegration in our models. Proven with
critical value 1%, 5% and 10% are smaller than the value of the trace
statistic. Therefore, it can be said that there are a long-term relationship between the
MSME, GDP, UNMP, and GINI. Based on the unit roots tests that have been done
before, we concluded that not all of the variables have the data at a stationary level
difference and 1 st, 2 nd difference but in all variables were stationary. Meanwhile, in
case a combination of variables that are not stationary and generate residual
stationary then the variables are said to be cointegrated or have a long-term
relationship between the variables in the VAR system and not on the VECM
system. In the cased for Indonesia, Malaysia, and Thailand then fixed to a VAR
system used Because all the data is variables are not stationary in levels and
1 st difference, but stationary after being Unloaded at the level of the 2nddifference

4.3 Impulse response functions (IRF)

IRF will in this study describes the mutual relations between the MSME,
GDP, UNMP, and GINI variables.

201
 Figure 1.
The Result of IRF

Response to Cholesky One S.D. Innov ations 2 S.E.

Response of MSME to MSME Response of MSME to LOG_GDP Response of MSME to LOG_UNMP Response of MSME to GINI
00,000 6,000,000 6,000,000 6,000,000

00,000 4,000,000 4,000,000 4,000,000

00,000 2,000,000 2,000,000 2,000,000

0 0 0 0

00,000 -2,000,000 -2,000,000 -2,000,000

00,000 -4,000,000 -4,000,000 -4,000,000

00,000 -6,000,000 -6,000,000 -6,000,000

2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24

Response of LOG_GDP to MSME Response of LOG_GDP to LOG_GDP Response of LOG_GDP to LOG_UNMP Response of LOG_GDP to GINI
Figure 1 shows the response of an increasing number of SMEs in Indonesia
6 6 6 6

4
against
4
some of the variables used
4
in the study of GDP, UNMP,
4
and GINI. The first

2
shock2 that occurred in GDP responded
2
to the growing tendency
2
by increasing the
0 number
0 of SMEs in Indonesia. It 0 shows that the greater the influence
0 of the growing
-2 number
-2 of SMEs in Indonesia -2 to GDP received by Indonesia.
-2 Furthermore, the
-4 increase
-4 in SMEs also responds -4to the unemployment and -4poverty rates. Responses
-6 -6
that occur are almost in line with-6 the response of an increasing
-6 number of SMEs to
2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24
GDP, but with a relatively small degree of inclination. The condition indicates that
Response of LOG_UNMP to MSME the effectResponse
of an of LOG_UNMP to LOG_GDP
increase Response
in the number ofof SMEs
LOG_UNMP to proved
LOG_UNMP to have the
Response of LOG_UNMPinfluence
greatest to GINI
.8 .8 .8 .8
on the amount of GDP.
.4 .4 .4 .4
4.4 Variance decomposition (VD)
.0 .0 .0 .0
VD will reflect the proportion or contribution of endogenous variables (in

-.4 the form

-.4 of a percentage) on the
-.4 VAR models to shocks -.4(Reinhart and Reinhart,

2009; Pasricha, 2012;).

-.8 -.8 -.8 -.8
2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24
Table 3.
The Result of Variance Decomposition
Response of GINI to MSME Response of GINI to LOG_GDP Response of GINI to LOG_UNMP Response of GINI to GINI
.08 .08 .08 .08
period SE MSME LOG_GDP LOG_UNMP GINI
.04 .041 83517.73 1,000,000
.04 0.000000 0.000000
.04 0.000000

.00
2
.00
147558.8 9459315
.00
0.006042 5390711
.00
0.010093

-.04 -.04 -.04 -.04

202
-.08 -.08 -.08 -.08
2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24 2 4 6 8 10 12 14 16 18 20 22 24
 3 214410.1 8482699 2218299 1248839 0.466317
4 280645.9 7519283 5271221 1791427 1621676
5 349105.2 6.53574 9386042 2.19194 3337153
6 418979.5 5648303 1352529 2483381 5157862
7 489883.7 4886514 1735805 2696103 6815781
8 560165.6 4265197 2061077 2.85577 8179562
9 628307.9 3770957 2326029 2.97932 9236941
10 692899.9 3383226 2536091 3078147 1002536

From Table 1, can be Analyzed that the magnitude of the shock of GDP is
provide a greater influence on the MSME in Indonesia if Compared with the other
two variables. GDP is influence with value 9.38% in period 5, UNMP just provide
5.39% in period 2, and the last GINI is provide 9.23% in period 9.

4. Conclusions
This study found empirical evidence that economic indicators such as GDP
become interrelated factors affect the increase in the number of SMEs in
Indonesia. GDP to intensive variables positively to an increase in the number of
SMEs. Next, to social factors using variables UNMP and GINI produced findings
that have a relationship keterpengaruhan smaller when compared to GDP.

The results of this analysis automatically congruent with previous research

and literature that states that the size of the number of entrepreneurs, which is owned
by a country will further accelerate the process of economic progress of a
country. The presence of entrepreneurs will be the driving wheels of the economy as
entrepreneurs created a good chance for the proper functioning units of human
resources and natural resources so that more optimal and produce great work
productivity.

203
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(SMEs) Financing in Nigeria. Journal of African Macroeconomic
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Aguiar, Mark and Gopinath, Gita. 2007. Emerging Market Business Cycles Is the
Trens. Journal of Political Economy, Vol. N0.1 115 (69-102).
Ali, Sharafat; Rashid, Humayun; Khan, Muhammad Amir. 2014. The Role of Small
and Medium Enterprises and Poverty in Pakistan: An Empirical
Analysis. Theoretical and applie Economics. Volume XXI (2014), No. 4
(593), pp. 67-80.
Bouazza, Asthma Benzazoua. 2015. Small And Medium Enterprises as an Effective
Sector for Economic Development And Employment Creation in
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0386.
Bruno, Valentina and Shin, Hyun Song. 2014 Capital Flows and the Risk-Taking
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David, Urbano Pulldo; Elisabeth, Ferri Jimenez; and Maria, I Noguera
Noguera. 2014. Female Social Entrepreneurship and Socio-Cultural
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Easterly, Lisa and Miesing, Paul (nd): Social Venture Business Strategies For
Reducing Poverty. UAlbany, State University of New York.
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PP 01-07.
Kallas, Kadri and Acs, Zoltan J. 2008. State of Literature on Small-to Medium-Sized
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Impact Analysis of Covenant University Graduate between 2006- 2013.
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Opafunso, Zacheus, O and Adepoju, Omoseni, O. 2014. The Impact of Small and
Medium Scale Enterprises on Economic Development of Ekiti State,
Nigeria. Journal of Economics and Sustainable Development. Vol. 5,
No. 16, 2014. ISSN 2222-1700 (Paper) ISSN 2222-3855 (Online).
Pasricha, Gurnain Kaur. 2012. Recent Trends in Measures to Manage Capital Flows
in Emeging Economies. North American Journal of Economics and
Finance 23 (286-309).
Reinhart, Carmen M. and Reinhart, Vincent R. 2008. Capital Flow Bonanzas: An
Encompassing View of the Past and Present. Working Paper 14321.

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ENT-09

SOCIAL CAPITAL ROLES IN CREATING TOURISM

ENTREPRENUER THROUGH PRESERVING
CULTURE IN THE VILLAGE OF PADANG TEGAL,
DISTRICT OF UBUD, GIANYAR, BALI)
Sebastiana Viphindrartin, Zainuri,
Indriani R Ningrum, Silvi Asna
University of Jember
Email : silviasna.unej@gmail.com

ABSTRACT

Tourism world is in its developing in every country in the world.Because, tourism

itself give significant impacts for society.Bali island, is an island in Indonesia which
has abundantb beautiful landscape and culture. Those potentials are the tourism
booster to sustain the tourism sector.The largest administration area in Balli province
is Tabanan regency that has 10 subdistrics. But, the Gianyar regency has became a
tourist attraction in Gianyar regency. Gianyar regency is one of area in Bali which
has fanatic society to their own culture. On the other hand, actually globalization era
can not be avoided and it is improving time by time. So, the authors would like to
describe and explain social capital functions in preserving the culture and exploring
the tourism potentials. This research is using experience approach by qualitative
method. The research results are: first, globalization era has no any impact for
Gianyar society. In case, Ubud (one of area in Gianyar) is a center of tourism but in
Padang Tegal village has society who always obey to religion. Second,the society in
Gianyar is not only obey to their local norm but also they help their regency to
explore their own tourism by preserving their culture. Third, by preserving their
culture through social capital,they can create new entrepreneur who concern to
tourism as their advantage.So, can be concluded that social capital has high role in
creating entrepreneur through preserving the culture and exploring the tourism.

Keywords: Social Capital, Culture, Entrepreneur

1. Introduction
Theft or claimed cultural heritage is not a new thing anymore. Deputy
Minister of Education and Cultural Affairs Culture is Wiendu Nuryanti outlines that
the claiming of Indonesian culture by the Malaysia- began in November 2007 against
reog Ponorogo, in 2008 claimed the song Rasa Sayange of Maluku and in January
2009 there is a claim on batik (Marboen, 2012). Moreover values began to disappear

205
in society, among other things: say excuse me, kissing the hands of parents, and
work together (Zahra, 2013).
The relationship among the public due to the need to obtain benefits or
advantages lead to an attitude of individualism. Social capital does not grow
naturally as a result of social relations but rather to mutual advantage. It is
undeniable that good relations are created in the community or according to
Bourdieu is beneficial friendly relations, so the network that is created is not a
natural thing, but the network is formed for profit (in Yustika, 2010: 180).
The role of the social capital are not only at the level of social life, but also
has a role in economic development. According Caporaso and Levine (1992: 87-97)
in the flow of the neoclassical market does not have the ability to provide public
goods, resolve property rights issues, monopolies and externalities..
The increasing number of international visitors who come to Bali is the
impact of the development of the tourist sector, it is so intersect with local value
there.Number of Foreign Tourists Who Came Directly to Bali per Month Year 2008-
2012 illustrates that foreign tourists who come to Bali has increased despite it
decline in the beginning of 2009 amounted to 1,422 tourist continued in the month of
February also decreased, but on March and so on increased.
Various speculations have sprung up with the number of foreign tourists who
coming to Bali. It did not happen today, but since the first time Dewata Island opens
its lines for tourism. Some people think that Bali will not have a long time to
withstand the swift currents of globalization even Bali just be a memory in the eyes
of the world as a lost paradise. According Durtain (1956: 21) in Picard (2006: 144)
"over time, the Hindu soul who was born in Bali ten centuries ago is increasingly
difficult to survive, and began losing its character due to the influence of Modern
Indonesia that will be destroyed".

2. Theorical Framework
2.1 Community Empowerment Improve Public Welfare
The background of empowerment by Sitepu (2005: 186) came from events
that occurred as a result of the concepts that made the developed countries and then
applied to developing countries (poor) which causes misery in the country. The

206
effects left by the construction of, among others, people are increasingly poor,
corruption, and dependence on developed countries.
Welfare has a close connection with the community empowerment, because
welfare is one of the objectives to be achieved in community empowerment. Welfare
is an achievement that gains access to both material and non-material as set forth in
Law No. 6 of 1974 on the basic provisions of social welfare, Article 2 (1) of the
notion of social welfare.
social welfare is an order of life and livelihood of social material and
spiritual benefits which overwhelmed by a sense of safety and peace of the inner
and outer, which makes it possible for every citizen to convene an attempt to
fulfill the needs of which physical, spiritual, and social as well as possible for
themselves, their families as well as the society by upholding the rights and
obligations of the people according to Pancasila.
According to Midgley (2000: xi) under Suharto (2006: 2) humans have a
good situation when human life secure and happy for the basic needs of nutrition,
health, education, housing, and income can be fulfilled and when humans get
protection from the risks that life threatening.

2.2 Role Of Social Capital In Public Life

Social capital is an asset that is built every individual which is the result of
good community relations. Social capital theory was first found in the writings of
Pierre Bourdieu published in the late 1970s entitled "Le Capital Social: Notes
Provisoires". However, because the article was published in French, so as not to
attract attention by other scientists, especially social and economic scientists. In 1993
Coleman to review the same thing and raised the same topic on social capital in the
English language, that "Social Capital in the Creation of Human Capital".
According to Coleman (1988: 102-105) in Yustika (2010: 182), there are
three forms of social capital, namely: (1) structure of liabilities, expectations, and
beliefs .; (2) Information Network; and (3) norms and sanctions.

207
2.3 Cultural Preservation as Supporter of Tourism Sector
Culture is a whole system of ideas, actions and human's work in the context
of social life which made man belonged to learn. Culture according Koentjaraningrat
(1979: 186-187) in Oktinaldi (2012: 21) There are three forms, namely: (i) ideas,
ideas, values, or norms; (Ii) the activity or a pattern of action in the community; (Iii)
the object or work.
According Yoeti (1996: 12) is often regarded as a frame of tourism economy,
but it is a series of economic power, environmental, socio-cultural global nature.
Benefits than the preservation of the tourism sector, among others: (i) the
preservation of the culture and customs; (Ii) an increase in the intelligence
community; (Iii) the improvement of health and freshness; (Iv) the preservation of
natural resources and sustainable environment; (V) maintenance of ancient relics and
heritage; etc

3. Research Method
3.1 Reseacrh Approach
In a study titled the role of social capital in creating tourims entrepreneur
through preserving culture in Ubud, Gianyar, Bali using social capital as the unit of
analysis. Then the appropriate research methods are qualitative methods in
accordance with the naturalistic research methods were included in the qualitative
research that researchers in collecting data is emic, which is based on the data source
view is not the view of researchers (Sugiyono, 2008: 6).
According to Strauss and Corbin (2013: 5) Qualitative methods used to
uncover and understand something of a phenomenon that has not been revealed.
Qualitative methods can provide details about the complex phenomenon that is
difficult to disclose using quantitative methods.

3.2 Data Collection Technique

In the field data collection, this study used two kinds of data, namely primary
and secondary to complement and comparison rather than phenomena.

208
3.3 Reseach Location
In accordance with the theme and a title that has been the location will be
used as an area of research is in the village of Padang Tegal, Ubud Village, District
of Ubud, Gianyar, A large number of art and cultural performances which presented
in Ubud on a regular basis is a tourist attraction in the cultural field. Cultural tourism
become the primary icon that is commonly called cultural tourism.

3.4 Data Analysis Technique

In qualitative research data analysis was done at the time of data collection took
place and after the collection of data within a certain period.

3.5 Data Test Validity

Data validity test is necessary to do in order to convince researchers to the
conformity of the data obtained in the field. Sugiyono (2008: 270) reveals that the
credibility test data against data from qualitative research among others the extension
of observation, improved persistence, triangulation, discussions with colleagues,
negative case analysis, and membercheck. In a study to test the validity of the data
using triangulation. Sugiyono (2008: 274) states that triangulation is to check the
data have been obtained from several different sources. So from different sources
can be answered phenomena that occur in the field.
Triangulation Models sources considered in accordance with the study
because informants were selected in this study was composed of several groups of
people who contributed associated with the development of the tourism sector. To
get the validity test is obtained from the concluding statements of different
informants. Expected from multiple interviews with several sources, to get answers
on the phenomena that occur in the field.

4. Discussion
4.1 Awig-Awig As Community Life Guidelines
In the village of Padang Tegal, values and norms made in writing contained
in legislation the Pekraman traditional village called Awig-awig . Its function is to
guide the life of society that must be complied with by local villagers also by

209
newcomers who arrive in the area. The people themselves who make and approve
these laws, the public is also required to be run according to the agreement. The
function of the Pekraman traditional village and Awig-awig must be obeyed by
communities to ward off the adverse effects of the many culture that entered. Diverse
cultures brought by tourists who come is not be a problem for local residents. Instead
it has become a source of knowledge and inspiration to add a major tourist attraction
in the area. Applicability of moral sanction that is part of Awig-awig be a control to
not do arbitrarily. The impact of the strong relationship that exists kinship or group
can pose negative implications, ie difficult access for individuals or groups outside
individual to enter. This is due to access restrictions outside parties to obtain the
same opportunities (Yustika, 2010: 195).

4.2 Creating Trust To Get Trust

Padang Tegal community believe karmaphala so they are more cautious in

taking action, including in socializing too trusting. Mutual assistance is one of the
preserved culture Padang Tegal community because the community work together in
social activities. Not only as a culture that wants to always be preserved, but also to
increase public confidence to be able to cooperate. Mutual assistance for the people
of Padang Tegal is mandatory.

4.3 Build Cooperation through Extensive Network

Networks can help a person in the field of work, social capital is an important
point in addition to the trust in order to obtain financial benefits. The more extensive
the network of a person to minimize the transaction cost.the amount of tourism
entrepreneurs in Padang Tegal is the impact of the network. If at first the people of
Padang Tegal majority are farmers and artisans, tourism entrepreneurs are now also
increase more and more. The organizations involved are organizations or actors that
participate in the network. Wide network capable of providing a beneficial effect
even during unexpected or during an emergency, that is the function rather than the
network itself.

210
4.4 Ease of Accessing Information In A Network
Aspiration as information is submitted to meet the needs of the public can
now be delivered more easily. Empowerment effort required the active participation
of the community. it is expected to create an independent society that is able to walk
without government assistance. So the task of the government agency in this case
only provide motivation to the community and complete the necessary
administration after the information of a given society.
Although the flow of information between government and society become
easier, but not all of informing get a direct response. One of the constraints
experienced in establishing the foundation Pak Dewa Pancadatu with three dance
studio in it, namely, studio Pancadatu, Windu Lestari, and Tunable Kumala is also
experiencing the problem due to licensing.

4.5 Tri Hita Karana As A Platform Of Social Capital In Globalization Era

Tri Hita Karana as Supporter of Social Capital in the Era of Globalization.
Tri Hita Karana is not only implicated in social life, but also in the building or even
household management also use this princip p eople.
When a person to do good it will grow and get yourself a favor, and vice
versa. So as to capitalize the belief that people are trying to have a harmonious social
relations. In addition to his own desire Padang Tegal community to help each other,
there are also government efforts to assist the community in maintaining social
relationships.

4.6 Role of Social Capital in Creating Tourism Entrepreneur Through Cultural

Preservation
Cultural tourism is an icon of tourism in the village of Padang Tegal, Ubud is
the impact of cultural preservation that have been made public of Padang Tegal. The
impact of social capital in creating tourism entrepreneur through cultural
preservation is the emergence of the tourism sector of both nature and culture can be
a land for the people to benefit materially.
Arrival of tourists into the spirit of the villagers of Padang Tegal to always
innovate and be creative. In addition to fulfilling the desire for an artist in the work,

211
the growth of the tourism sector can become a means of showing the work, can also
be media trained and ordering themselves to hone their talents.

4.7 Culture Traffic Become Innovation and Development of Tourism Sector

Although the people of Padang Tegal direct contact with foreign cultures
brought by tourists, but people still keep its own culture. It is the influence of
religion, because the culture So when running this religious culture to survive. Not
that by maintaining the culture Padang Tegal not accept the technology, nor the
product of the times, but because it has strong principles, which is considered a bad
influence becomes faded.
Now tourism entrepreneurs began to collaborate with artists to develop their
business. As business cafe that serves Balinese art and cultural attractions. This is in
order to attract the number of visitors. Not only are employers increasingly creative,
that sort of thing also encourages artists to get creative to present the appearance that
attract. Near the village of Padang Tegal in Ubud, is not the main object of nature. Its
main attraction is cultural tourism. Tourists can see art performances almost every
day, practice dancing and gamelan, and will encounter a culture that is preserved
there.
Tourists who come to the village of Padang Tegal increase in line with the
growing recognition of cultural tourism there. Despite some decline in tourist
arrivals as a result of the first Bali bomb blasts, but now slowly began to increase the
number of visits. The incidence of bomb blasts have been a disaster even though the
incident did not occur in Ubud, but the impact is felt even spread to Ubud.

4.8 Role of Social Capital to the Welfare Improvement

Welfare is not only judged based on whether or not a lot of material that a
person has. Spiritual welfare can be obtained when a person reaches his goal,
finishing his work, have health, and so that is not a material one. But the material
well-being that when a person is able to meet their basic daily needs.

212
5. CONCLUSION AND RECOMMENDATIONS
5.1 Conclusions
Based on the results of the analysis, the conclusions and recommendations
can be expressed in this study are as follows:
1. Preserving culture is a form of worship to God for the people of Padang
Their traditional rules( culture and religion) through strong social capital
has positive impact in increasing the tourism entrepreneur in Padang Tegal
2. Negative impact of any one part of the impact of social capital, namely: the
difficulty for outsiders to get the same rights as the original inhabitants of
Padang Tegal.
3. Tri Hita Karana into other forms of social capital for the people of Padang
Tegal
4. Welfare has two properties, namely physical and spiritual.

5.2 Recommendations
1. The community empowerment should be done jointly by the government and
society.
2. The existence of a special platform for old artists such as art galleries or
special elderly community to jointly create..
3. The existence of official rates applied to standard in the tourism business in
Padang Tegal, from each business and a classification that may be classified,
such as hotels, and tour and travel services.

REFERENCES

_____, Undang-Undang Republik Indonesia Nomor 6 Tahun 1974 tentang

Ketentuan-ketentuan Pokok Kesejahteraan Sosial
A, Yoeti, Oka. Edisi Revisi 1996, Pengantar Ilmu Pariwisata, Bandung: Penerbit
Angkasa. Badan Pemberdayaan Masyarakat Desa Kabupaten Gianyar.
2013. Renstra SKPD Tahun Anggaran 2013-2018
Badan Pusat Statistik. 2013. Berita Resmi Statistik. No. 10/02/Th. XVI, 1 Februari
2013
Badan Pusat Statistik. 2014. Berita Resmi Statistik. No. 12/02/Th. XVII, 3 Februari
2014

213
Coleman, James S. 2008. Dasar-dasar Teori Sosial Referensi Bagi Reformasi,
Restorasi, dan Revolusi. Bandung: Penerbit Nusa Media
Corbin, Juliet dan Staruss, Anslem. 2013. Dasar-Dasar Penelitian Kualitatif.
Yogyakarta: Pustaka Pelajar
Farhan, Afif. 2013. Ini Alasan Ubud Sangat Menyenangkan untuk Turis,
www.detiktravel.com. 27 November 2013
Mawardi, M. 2007. Peranan Social Capita dalam Pemberdayaan Masyarakat. Vol. 3,
no. 2, Juni 2007
Kementerian Keuangan Republik Indonesia. 2012. Deskripsi dan Analisis APBD
2012. www.djpk.kemenkeu.go.id
Marboen, Ade. 2012. 2007-2012 Malaysia Klaim Tujuh Budaya Indonesia.
www.antaranews.com. 19 Juni 2012
Moleong, J Lexy. 2004. Metodologi Penelitian Kualitatif. Bandung: Remaja Rosda
Karya
Picard, Michel. 2006. Bali: Pariwisata Budaya dan Budaya Pariwisata. Jakarta
Selatan: KPG (Kepustakaan Populer Gramedia)
Sitepu, Abdi Zulkarnain. 2005. Pemberdayaan Masyarakat Islam Melalui
Pemberdayaan Ekonomi Ummat. Volume 1, Nomor 2, Juni 2005
Sugiyono. 2008. Metode Penelitian Kuanitatif Kualitatif dan R&D. Bandung:
Alfabeta
Suharto, Edi. 2006. Kebijakan Perlindungan Sosial Bagi Kelompok Rentan Kurang
Beruntung.
Suharto, Edi. 2006. Petadan Dinamika Welfare State di Beberapa Negara.
Widarti, Peni. 2010. Kemegahan Ngaben Raja Ubud Bali. www.vivanews.com. 3
november 2010
Yustika, Ahmad Erani. 2010. Ekonomi Kelembagaan Definisi, Teori, dan Strategi.
Jatim: Bayumedia Publishing.
Zahra, Tsurayya. 2013. 4 Budaya Indonesia yang Hampir Luntur. www. Actual.co.
25 Desember 2013

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ENT-10

THE IMPACT OF MACROECONOMICS ON SME`S

PROFITABILITY IN INDONESIA: EVIDENCE
VECTOR AUTO REGRESSION

Badara Shofi Dana, Ati Musaiyaroh,

Fitri Rusdianasari, Ida Alqurnia
University of Jember
E-mail: badara.dana@gmail.com,

ABSTRACT

Macro economi may impact the profitability of SMEs through income due to
changes in prices, GDP percapita and decision making SMEs with their taxes. Based
hasl, this study has tujaun to see the relationship between macroeconomic variables
influencing the profitability of SMEs in Indonesia. The use of analytical tools
Autoregression Vector (VAR) memberikah results ences between macroeconomic
variables correlation with profitability of SMEs in both the short term and long term.
Keywords: Macro economi, SMEs, VAR

1. Introduction
SMEs (Small Medium Enterprises) have an important role in the rate of the
economy in a country, especially in developing countries. SMEs own contribution
amounting to 45 percent of total employment and 33 per cent of national income in
developing countries (Overviw World Bank, 2015). This condition makes the SMEs
as a new strategy to boost economic growth.
Performance of SMEs can be seen from the profitability of SMEs itself
which in this case is an important factor. Profitability of SMEs affected by
macroeconomic conditions (Bekeris, 2012). This is in line with research conducted
by Obigbemi (2010) states the price becomes a determining factor in the decision
mnegambil. While on Dujowich-Plehn,(2012) provide an explanation for
memengeruhi GDP has a role in the performance of SMEs. It is equal to the increase
in GDP percapita can improve pendapadatan SMEs will indirectly affect the
profitability of SMEs themselves (Bakaris, 2012). Meanwhile, SME revenue is
inseparable from their taxes that give effect to its own SME strategy (Cullen and

215
Gordon, 2007). Thus, there is a correlation between the profitability of SMEs with
macroeconomic variables.
Based on that, this study aims to analyze the profitability of SMEs are
affected sectors on the country's macroeconomic Indonesia. Indonesia became the
object of research is caused by a berkmebang country with economic growth
strategies meningkankan SMEs. Therefore, to see the influence of influencing
macroeconomic rofitabiltas SMEs can use VAR analysis tools.

2. Literature Review
2. 1.Entrepreneur
Schumpeter explained his views on entrepreneurship explains that
entrepreneurship has integration in the economic development of a country
(Landsroom, 2005: 31).Exposure Schumpeter on kewirausaan contribution to
economic growth based on their innovations found so that it can expand the network
of market and product diversification.Entrepreneur is an individual effort in
organizing production factors include capital, labor, land and technology and
underwriting risks to the work done (Department of Finance Dublin 2 Ireland,
2015). In general, entrepreneurship (entrepreneur) is an individual effort in managing
an organization responsible for all hazards

2. 2.Tax
Tax is one component of fiscal policy who coined a large role in the economy
of a country. Taxes as monetary costs imposed by the government in person, entity,
or property transactions to generate public revenue then the cost of re-used for the
benefit of society (Uganda Revenue Authority, 2011). Tax state revenues collected
from the community is then used for the benefit of society.

2. 3. Inflation
In general, inflation is the increase in average prices in general and
continuously over a specific time period. Inflation began to emerge when the market
economy among the public (Samuelson, 2001: 311). The dynamics of inflation
caused by several things, including the amount of money in circulation is too high,

216
causing the nominal value of the currency declines, it affects the condition of goods
prices rose despite high nominal prices inflation as a threat so that a reduction in
total output as it increases the uncertainty of the future economy and hamper the
decision for the consumption and production of goods (Schiller, 2008: 140).

2.4 Previous research

The study discusses the tax on the amount of business conducted by several
researchers, among others conducted by Henrecson and Sanandaji (2009) explained
that the dynamics of the tax will affect the dynamics pengahasilan and conversely,
what happens to dinamikapenghaslan will affect the dynamics of wages. then
research conducted by Lutz and Garello (2011) describes the effect of a progressive
tax on the company's development in the countries of Europe. The results of the
analysis that signify the high progressive tax has a negative effect on the
development of pioneering kwirausahaan activities.

3. Research Method
The use of the data in this study using in 2010 to 2015 with the manifold
forms of monthly data time series. While the variables used in the data are SMEs
(SMEs) that are affected by pahak (TX), price (CPI), the GDP per capita
(GDP). yanhg analsisi tool used in this research is Autoregression Vector (VAR),
which makes the estimation method of dynamic caused by not based on theoretical
concept, but based on the basic assumptions of economic theory (Smith,
1980). Specification of the model used in this study from research modifying
Bekeris, (2012). Thus digukanakan model in this study to be as follows
= + 1 1 + 2 1 + 3 1 + (1)
Equation (1) is a model specification of this research are adopting from previous
studies.

4. Results and Discussion

To obtain results in accordance with the conditions and the current
phenomenon, then the model is used mainly in this paper is a model VAR. A models

217
built based on current conditions and minimize the use teroi so the model is really
able to describe the condition or phenomena that occur. There some of the principal
stages in the estimation of the VAR model, among others, the cointegration
test, Impulse Response Function (IRF) and Variance Decomposition (VD).

4.1 Cointegration Test.

Cointegration test in VAR method to use to look at the long-term
relationship between each variable, by comparing the results of the test and trace
critical value statstik.This is shown by a comparison of the value of the trace statistic
and critical value. If the value is greater than the value kitis trce statistic then there is
no cointegration and vice versa.
Table 3.1
Cointegration Test Results Revenue Growth of SMEs Against Taxes, GDP per
capita, and the Consumer Price In Indonesia

Level Critical value Trace Statistic Cointegration

1% 47.85613 71.81754 Cointegrated

5% 54.68150 71.81754 Cointegrated

10 % 44.49359 71.81754 Cointegrated

Based on Table 3.1 shows that there is a long-term relationship between

variables digunakn variable number of SMEs, Taxes, DGP per capita, and also
CPI (Current Price Index)

4.2 Test Impulse Response Function (IRF) and Variance Decomposition (VD).

The main stages in the VAR method is test IRF and VD, which indicates the
magnitude of the shocks given by variebel independent and dependent variable and
magnitude of shocks given. In the paper ni IRF and VD test will indicate the
magnitude of the shocks given by taxes, GDP per capita, the current price of these
diproxy with variable CPI to a growing number of SMEs in Indonesia.

218
 0 2,000,000 0 2,000,000 0

1,000,000 1,000,000
-500 -500 -500
0 0

-1,000 -1,000 -1,000

5 10 15 20 25 -1,000,000
30 5 10 15 20 25 -1,000,000
30 5 10
5 10 15 20 25 30 5 10 15

Response to Chol esky One S.D. Innovations

Response of TX to UMKM
2 S.E.
Response of TX to TX Res
Response of GDP to UMKM Response of GDP
Response of UMKM to UMKM 4,000,000 Response of UMKM to TX 4,000,000 Response of UMKM to GDP 4,000,000 Response of
80 80
1,000 1,000 1,000 1,000
3,000,000 3,000,000
60 60 3,000,000

500 500 500 500

2,000,000 40
2,000,000 40 2,000,000

0 Figure: 3.1
1,000,000 0
20
1,000,0000
20
0
1,000,000
0 0
-500 Impulse Response Function Test Results Growth of
0
-500
-20
0
-500
-20
-500
0

-1,000
SMEs Against Income Taxes In Indonesia.
-1,000,000
-1,000 5 10 15 20 25 30
-1,000,000
-40 -1,000
5 10 15 20 25
-40
-1,000,000
30 -1,000 5 10
5 10 15 20 25 30 5 10 15 20 25 30 5 510 15
10 1520 2025 2530 30 5 5 10 10 15 15

Response of GDP to UMKM Response of GDP to TX Resp

Response of TX to UMKM Response of TX to TX ResponseResponse
of CPI toofUMKM
TX to GDP Response of CPIo
Response
80 80 80
4,000,000 4,000,000 6004,000,000 600
4,000,000
60 60 60
3,000,000 3,000,000 4003,000,000 400
3,000,000
40 40 40
2,000,000 2,000,000 2002,000,000 200
2,000,000
20 20 20

1,000,000 1,000,000
0 01,000,000
0 0
1,000,000 0

0 -20 0 -200 -200 -200 0 -20

-1,000,000 -40
-1,000,000 -40
-1,000,000 -1,000,000 -40
-400 -400
5 10 15 20 25 30 5 5 10 10 15 15 20 20 25 25 3030 5
510 10
10 15
1520 202520 253025 30 30 5 10 510 10
15
5 15 5 15

Response of GDP to UMKM Response of CPIoftoGDP

Response UMKM
to TX Response
Response of CPI
of GDP to TX
to GDP Resp
Response of
80 IRF test results shown in Figure 3.1 shows that the change in the variable tax
600 80 600
80 80 600

60 400 60 60
400 60 400
would give a shock to the number of SMEs in Indonesia at the beginning of the
40 40 40 40
200 200 200
20 20 20 20
period and were able to achieve a balance point back in the period to 6. In contrast to
0
0
0
0
0 0
0

-20 -200 -20 -200

-20 -20 -200
the two other variables are variables GDP per capita and CPI continue giving shocks
-40 -400 -40 -40
-400 -40 -400
5 10 15 20 25 30 5 5 10 10 15 15 20 20 25 25 3030 55 10
10 1515 20 20 25 25 30 30 5 510 15
10
to the number of SMEs in Indonesia for 30 periods. The shock given by the two
Response of CPI to UMKM Response of CPI to TX Response of CPI to GDP Response of
variable starts at the beginning of the period and classified in a big shocks, this can
600 600 600 600

400 400 400 400

be seen on the VD test results.

200 200 200 200

0 0 0 0

-200 Table 3.2 -200 -200 -200

Variant Decomposotion Growth of SMEs Against Income Taxes, GDP per capita,
-400
5 10 15 20 25 30
-400
5 10 15 20 25 30
-400
5 10 15 20 25 30
-400
5 10 15
and the Consumer Price In Indonesia

Period S.E UMKM TX GDP CPI

1 203.5672 100.0000 0.000000 0.00000 0.00000
2 303.5407 95.73289 0.142349 0.034816 4.089941
3 396.5144 89.05947 0.085232 0.076424 10.77887
4 489.3979 81.87447 0.081249 0.095604 17.94867
5 583.2376 75.15881 0.121397 0.092018 24.62777
21 1911.919 35.49938 0.129549 1.538975 62.83209
22 1978.396 34.66574 0.138647 1.750920 63.44470
23 2043.131 33.89471 0.152116 1.969327 63.98385
24 2106.192 33.17933 0.169 703 2.192821 64.45814
25 2167.643 32.51368 0.191110 2.420125 64.87509

VD results in Table 3.2 show that shocks dberikan by the tax variable has a
small volatility, with the magnitude of the shocks that are low ranging from
0.000000 to 0.243300. In contrast to the shock given by the variable GPD per capita,
in Table 3.2 shows that the volatility of shocks given still relatively low but the
magnitude of the shocks is high. It can dilihak the VD test results in table 3.2 which

219
has gunacangan range between 0.00000 to 2.420125. The last variable that provides
shock yait CPI amounted to 64.87509 0.00000.

5. Conclusion
Based on test results and interpretation in section 3 of the discussion can be
concluded that the growth in the number of SMEs in Indonesia depengaruhi by the
amount of taxes received by the government, percapita GDP and CPI, but these three
variables have different magnitudes in memngaruhi growth in the number of SMEs
in Indonesia.

REFERENCES

A Guide Taxation in Uganda. 2011. Taxation Handbook. Uganda Revenue

Authority.
Bekeris, Rokas. 2012. The Impact of Macroeconomic Indicators Upon SME`S
Profitability. Ekonomika, 91(3).
Cullen, Julie Berry and Gordon, Roger H. 2007. Taxes and Entrepreneurial Risk-
taking: Theory and Evidence for the U. S. Journal of Public Economics
Landsroom, Hands. 2005. Piioneres in Entrepreneurship and Small Business
Research. Institute of Economic Research, Lund University School of
Economics, Lund, Sweden. Springer.
Obigbemi, Imoleayo Foyeke. 2010. The Impact of Product Price Changes on the
Turnover of Small and Medium Enterprises in Nigeria. Broad Reserach in
Accounting, Negotiation, and Distribution, 1(1).
Plehn-Dujowich, Jose M.2012. The Dynamic Relationship Between
Entrepreneurship, Unemployment and Growth: Evidence from U.S.
Industries. U.S. Small Business Adminitrasi No. 394.
Tax and Entrepreneurship Review. 2015. Tax Policy Division Department of
Finance Government Buildings, Upper Merrion Street, Dublin 2 Ireland.
Samuelson, Paul A & Nordhaus, William. D. 2001. Ekonomi Makro. Jakarta:
Erlangga
Schiller, R. Bradley. 2008. The Macroeconomy Today. New York : McGraw-Hill
Henrekson, Magnus and Sanandaji, Tino. 2011. Entrepreneurship and the theory of
taxation. Springer Science+Business Media
Lutz, Mina Baliamoune dan Garello, Pierre. 2011. Tax Structure And
Entrepreneurship. Intitute fo Research in Economic and Fiscal Issues.

220
ENT-11

FINANCIAL STATEMENT ANALYSIS BASED ON

SMES STANDARD

Wike Pratiwi
Univercity of Jember
Pwike72@yahoo.com

ABSTRACT

In this study describes the application of the financial statements of the

perpetrators SMEs. In industry, especially small and micro businesses are not
familiar with the functions of the financial.DSAK Accounting Standards Board
issued as ETAB as a standard GAAP financial reporting. Of the many studies of
complex and elusive in implication, DSAK issued new IFRSs for SMEs are SAK-
EMKM. ED SAK EMKM structured to encourage and facilitate micro, small
Framework report ED GAAP financial reporting entity EMKM assist in making the
transition from financial reporting by cash to accrual.

Keywords : Financial Reporting,SAK-ETAB,SAK-EMKM

1. Introduction
Indonesia is a developing country which has an economic growth.The growth
is influenced by the amount of revenue the state. This includes the following three
aspects :
Chart 1
Country Income of Indonesia

Country Income
0%

15%
Pajak
10.2 % Kepabeanan Cukai
Pajak PNBP
74,6%

Source: Ministry of Finance of the Republic of Indonesia, 2016

221
 From the three aspect can be Seen 15% Income derived from non-tax
revenues (Non Tax Revenue) Where one of the aspect is affects the amount of non-
tax revenues is industrial MSMEs (Micro, Small and Medium Enterprises) are built
based on the activities of goverment makes big effect for economic of Indonesia
According to Law No. 20 of Article 1 of 2008 defines SMEs as the type of
business that is divided into three criteria: 1) Micro is a kind of productive activities
of people or individuals and / or entities individuals who meet the criteria of micro
enterprises as stipulated in the law. 2) Small businesses are productive economic
activities that stand alone, carried out by an individual or business entity that is not a
subsidiary owned, controlled, or be a part either directly or indirectly from medium
or large businesses that meet the criteria of small businesses as referred to in the
law.3) Medium enterprises is a productive economic activities that stand alone,
carried out by an individual or business entity that is not a subsidiary owned,
controlled, or be a part either directly or indirectly with a small business or large
business with total net assets or annual sales revenue as stipulated by law.
As stated in Law No. 20 of 2008 article 1, paragraph 8 where empowerment
is an attempt by the government, local governments, businesses and communities in
synergy to the growth and development of enterprises in the industry of micro, small
and medium enterprises so that they can grow and developed into a strong and
independent businesses.
Proven in 1998 at this year's global economic crisis in which the inflation rate
currencies to be very high, causing many industries are not able to sustain it
industrinya.Pada year we can see also that the SME industry is the only industry that
can survive amid economic downturn For that the government gave a high
appreciation of the industry umkm.Dengan establishment of GDP (Gross Domestic
Product).
Proven in 1998 at this year's global economic crisis in which the inflation rate
currencies to be very high, causing many industries are not able to sustain in
industrinya.We can see also that the SME industry is the only industry that can
survive amid economic downturn For that the government gave a high appreciation
of the industry umkm.With the establishment of GDP (Gross Domestic Product).

222
 Their GDP serves as a measure of growth in gross domestic product
ekonom.There are four components that are useful as a measure of household
consumption, investment, government consumption and import-export .From these
four components when there is an increase in the movement it will affect the amount
of GDP it can be interpreted that if there is an increase in GDP of a country, it shows
that the country suffered economic pertubuhan excellent.
From year to year there is a significant increase in height to GDP growth in
2015 GDP Indonesia.In Indonesia amounted to 57.84% increase in 2016 became
60.34% .Industry SMEs creates jobs and is able to absorb a lot of energy.The current
industry SMEs can 97.22% of the workforce. We can see how the contribution of
SMEs has a great influence on the economy in which the perpetrators engage the
community and contribute to the welfare of society.
The majority of SMEs engaged in the field of agriculture, plantation and
fishery by 49% . In trade, hotels and restaurants by 29% and in the creative sector by
22% (PDB 2015) Creative sector are the sectors that exploit the potential of human
resources ( human resources) by maximizing natural resources (natural resources)
owned by a negara.Mengembangkan creativity and unique ideas poured creates a
different innovation to be accepted by society luas.Until production of the creative
economy can be marketed both at home and abroad so as to increase foreign
exchange.
There are three criteria for SME stated in article 6 of Law No. 20 of 2008 on
the criteria for SMEs based on the amount of income and the value of assets
such.Criteria can change depending on economic developments in Indonesia.

223
 Chart 2.
Chriteria

Turnover per
year Medium
Enterprises RP
2.5 M s / d 50
M with assets
of 500 jt s / d
10 M

Small business The turnover /

year to Rp 300 jt s / d 2.5 M
with assets of 50 jt s / d 500 jt

Micro business The turnover / year s / d 300 jt with assets amounting

to 50M

The amount of revenue is not followed by the quality of financial reporting

good.This it's unfortunate in some quarters and become the focus of attention
pemerintah.Berbagai conducted research on the industry SMEs on the importance of
financial reporting and the results are almost 80% of the SMEs in Indonesia did not
make a report keuangan.Laporan is a financial report containing financial
information a entitas.Menurut Suwardjono (2009: 65) states the financial statements
is a medium of communication and accountability between the company and its
owner or other party report regarding pisisi structured finance and transactions
undertaken by a reporting entity. the purpose of financial reporting is to provide
information that is useful for decision-making and to demonstrate accountability
reporting entity for the resources entrusted to 1.Paragraf kepadanya.Menurut SFAS
No. 7 (Revised 2009) "financial statements are a structured representation of the
financial position and performance of a entitas.Tujuan financial reporting is to
provide information that is useful as decision-making and to demonstrate
accountability reporting entity for the resources entrusted to it.
According to Regulation 71 of 2010 characteristics of financial statements
that both must meet the quality 1) Relevant said to be irrelevant if the information

224
contained therein can affect decisions users by helping them evaluate the events of
the past or the present and predict the future and confirms / corrects the results of
their evaluations in the past .2) said Andal reliable means of information in the
financial statements are free from the notion of misleading and material errors,
presenting any facts in an honest and can diverifikasi.3) to be compared is said to be
comparable means that the information contained in the financial statements would
be more useful if it can be compared with prior period financial statements or other
reporting entities on umumnya.4) can be said to be understood understood to mean
the information presented in the financial statements can be understood by users and
expressed in terms that are tailored to limit the understanding of its users.
Most SMEs still use the traditional way in the preparation of the report of
financial.Linitations knowledge and the complexity of the accounting process as the
main reason why the perpetrators of SMEs have not been able to prepare financial
statements based on the standard. Associated with the condition DSAK (Financial
Accounting Standards Board) has adopted a standard akuntansi.Menurut Suwardjono
in his book accounting theory states "is a concept Standart accounting principles,
methods, techniques and more sengajah selected on the basis of a conceptual
framework by standard constituent bodies to be applied in an environment or state
and forth in the form of official documents in order to achieve the objective of
financial statements of the country.
In 2009 the government passed SAK-ETAP as a standard report.SAK-ETAP
is an entity with no public accountability that have meaning and understanding as
"an entity that does not have a significant public accountability and publish general
purpose financial statements but only for internal users Any "
The SMEs have not realized the importance of making financial reporting
based standart.For that the industry SMEs often faced difficulty in getting funding
because of lack of financial transparency Banks hesitant and can not lend more than
the limit of financing KUR (Kredit Usaha Rakyat) already determined pemerintah.
The important of a financial statements not only as data to see the profit or
loss.Businesses with their financial reports are clear and can be used as a standards-
based decision pengembilan for shareholdernya and analyze the performance of the
company.

225
 For that the government together with the financial entity focused again make
SAK EMKM ED (Exposure Draft Accounting Standards Entities Without Public
Accountability), which appeared in May 2016 for the business person UMKM.ED
SAK EMKM passed by DSAK have structures that are more relevant and easier to
understand than Reviewed -ETAP IFRSs that have been issued.For the application
itself ED SAK SMEs will begin in January 2018 to the financial institution holding
the government aggressively socialization and the workings of ED SAK SMEs
ini.With purpose of providing convenience for users and gives every level of
accountability and transparency high for the entity's financial statements.

1.1 Formulation of The Problem

Based on the above background uraiana can be drawn formulation of the
problem as follows:
1. What will the implementation of existing financial statements on SMEs?
2. What is the difference SAK- ETAB with IFRSs EMKM?

2. Metodhology
This study is a qualitative research where data are obtained based on
observation, interview and literature.This study was conducted in the district of
Jember, East Java .Which activity was first done is 1) Conducting observations on
the industry of micro, small and medium differentiate based on size of business
premises , the amount of production, income received and the number pekerja.2)
Conducting the interview by asking the finance department or business owners about
the form of transaction records that are in the industry and what is the function of
recording tersebut.3) Based on observations and interviews, the researchers further
conducted a study of literature by comparing and analyzing financial statements
standard created by DSAK.

226
3. Results
3.1 What will the implementation of existing financial statements on SMEs?
From the formulation of the problem researchers conducted observations on
the implementation of the financial statements based on the criteria of the type of
micro, small and medium.finding the facts as follows:
Element Micro Small Medium
Type of business Traders and other Batik artisans Clove Factory,
groceries, Catering, Cigarette Factory
pharmacy, Record and tobacco
crackers, Shrimp factory
Paste puger,Travel
Farmers
The number of 4 5 people 5 20 people 20 99 people
workers

Application of 1. Using the 1. Use a computer 1. Using a

Financial traditional way. system to facilitate computer system
Statements (The result that is operational review 2. Have some
obtained - amounts of Financial workers and their
were spent) Statements accounting
2.Doesnt have 2. Have the auditors
workers in workers accounting 3. Already
accounting Verifying applying the
3.Doesnt know checklists 3.Dont accounting
applying the know accounting standards
accounting standards 4 Get to know the
standards 4. Only the functions and
4. Didnt accounting officer components of
understand understood about financial
components and Components and statements.
functions of functions Financial Financial
financial statement. Statements. 5.Financial
5.Financial 5. Financial Report Reporting is used
Reporting only is used for internal by shareholder and
used for internal review and external stakeholder
purposes only interests

From the above data we can see differences in industrial micro, small and
medium.For government and government financial institutions should pay more
attention to the SMEs in the implementation of their financial reports .With standard
for the manufacture of its financial statements expected the government could make

227
socialization about how making financial reports based on the type of business that
all industrial SMEs can make financial reports standard.
Low human capital makes micro entrepreneurs lazy to do the application of
the accounting reporting standard.For the basic especially result of interviews they
did not need a financial report.Because they are still in the scale of small
industrial.Government provide ease in helping to make the micro industry SKU
(Certificate of Business) which serves as a SKU ownership certificate .With SKU
ownership may make it easier for SMEs especially in obtaining loans in bank.Utilize
KUR (Kredit Usaha Rakyat) micro perpetrators can continue to maintain their
business.
At the level of small industry where their income above mikro.Their
businesses using the computer system in the implementation of the report.Use
technology to simplify the way SMEs work in making the report.The survey results
as part of their guidance and socialization techniques such reporting of office koprasi
and SMEs.Small businesses that still use the way traditional.In small industry with
traditional reporting in the recording they simply use the contents of a book revenues
and expenditures as well as their store-memorandum ,memorandum of their
transactions.
At the level of medium-sized businesses in terms of revenue and the level of
reporting is already more sophisticated and far from small- and medium-sized
enterprises.In financial reporting system using a computer system.They also employs
the employees came from accounting faculty to help facilitate in making financial
reports. in medium-sized businesses highly functioning of financial statements for
them, not only as a tool to look at the profit and loss, but rather look at the
performance of the company as well as making financial statement. The secondary
industry not only enjoyed insider . But there are some stakeholders who invest they
are in secondary industries. They are not included in the exchange affect.All the
stakeholders always see the condition of their businesses every years.They also hold
other industrial cooperation in order to join efforts to build a bigger again.

228
3.2 What is the difference SAK- ETAB with IFRSs ED EMKM?
SAK-ETAB began to be published in January 2011.Reporting SAK-ETAB
finance is still considered among the most difficult application by SMEs because
every industrial SMEs have business types different.Therefore DSAK (Accounting
Standards Board) review the SAK-ETAP and issued a new standard for SMEs,
published in May 2016 will be explained the difference .Here standard on the
financial statements.
Table 1.
Standart on The Financial Statements

Elemen SAK-ETAB SAK EMKM

Scope Give a definition of the scope Same
of entities micro, small and
medium enterprises

Concepts and Pervasive Consisting of reporting Consists of three basic

Principles characteristics, Assumption assumptions are:
accrual basis, the concept of Assumption accrual
business continuity and basis, business
business entities. continuity and business
entity concept

Presentation of Complete financial statements Complete financial

Financial Statements consist of: the Balance Sheet, statements consist of:
Income Statement, Statement the Balance Sheet,
of changes in equity, cash flow Income Statement and
statement, Notes to the Notes to Financial
Financial Statements. Statements.

Statement of Financial The information presented: Informasi yang

Position / Balance Sheet Cash and cash equivalents, disajikan : Cash and
Accounts receivable, cash equivalents,
inventories, investment accounts receivable,
property, fixed assets, inventory, fixed assets,
intangible assets, Accounts Accounts payable, bank
payable, Assets and Liabilities, debt, equity
Equity

Income statement The information presented: The information

Income, Financial Expense , presented: Income,
gains or losses on the Financial Expense and
relevance of using the equity Income Tax Expense.
method, Income Tax Expense,
Net Profit or Loss

229
Notes to Financial Provide information about the Same
Statements structure, accounting policies
and supporting information
outposts financial statements.
Policies and Accounting Contains Selection and Policy, Same
Estimates and Errors Consistent, Change,
Application, Disclosure,
Correction of Accounting.
Assets and Financial Provide information principles Same
Liabilities of recognition, measurement,
measurement termination,
assets and financial liabilities.
Stock Setting the principles of Same
recognition, measurement,
presentation and derecognition
of financial liabilities.
Investments in Joint Measuring and presenting Same
Ventures investment in venture
Fixed assets Setting the principles of Same
recognition and presentation of
assets
Intangible Assets Setting the principles of Same
recognition, measurement,
recognition and presentation
assets oenghentian unfulfilled
Revenues and Expenses Adjusting prinsi-principle Same
measurement, presentation and
load
Income tax The recognition and Sama
measurement of tax
Transactions in Foreign Adjusting pengukuan in Same
Currencies foreign currency

Transaction Conditions The recognition and Same

measurement of transactions in
foreign currencies.

In standard SAK-ETAP and SAK-EMKM have aplenty in the form

reporting.Only on SAK-ETAP in financial reporting are complex. Reviews on SAK-
EMKM denser and easy.And also some components that are not written in standart
SAK-EMKM but it is in standard SMEs and PSAK.Like the entity's financial
statements include the "balance sheet, income statement, statement of changes in
capital, cash flow statement and notes that financial. Report raises questions for

230
researchers importance of cash flow in view transactions -transactions experienced
by company.But it could be missed with their balance sheet.Balance sheet is the
component most complete in a financial report.Their balance sheet we can see
incoming cash, cash-out, etc.
Therefore the importance of the financial statements actually make it easier
for SMEs to maintain. With their financial statements we can see the accountability
and transparency of the financial standard . Reporting make the workings to be more
understandable and easily.Easy our efforts on the lending institution So that can
create prosperity of SMEs themselves and increase foreign exchange.

4. Conclusion
15% of state income comes from non-tax revenues which one source is is a
type of SMEs SMEs managed business community but had a major impact in the
economy.All SMEs that have not applied the appropriate accounting reporting
standart.For it DSAK as accounting standards board making his first IFRSs for
SMEs are SAK -ETAB in 2011 began the publication of this SAK.
Of the many studies of SAK-ETAB, DSAK issued new IFRSs for SMEs are
SAK-SAK-ETAB EMKM.Where considered too complex in its application while
the perpetrators of human resources do not allow it.For that the government issued
new IFRSs as seen from the younger characteristics applied and easy to
understand.ED SAK EMKM structured to encourage and facilitate micro, small and
medium preparing financial.Framework report ED GAAP financial reporting entity
EMKM assist in making the transition from financial reporting by cash to accrual.

REFERENCES

IAI 2015 Standart Akuntansi Keuangan Entitas Tanpa Akuntabilitas Publik

Wilantara Rio F 2016Strategi dan Kebijakan Pengembangan UMKMPT Refika
Adhitama
Ikatan Akuntan Indonesia, 2009, Standar Akuntansi Keuangan Entitas Tanpa
Akuntabilitas Publik, Penerbit Salemba Empat, Jakarta.
Kieso, Weygant, 2002, Intermediate Edisi 10 Jilid 1, Penerbit Erlangga Jakarta..
Nazir Moch, 2005, Metode Penelitian, Penerbit Ghalia Indonesia, Jakarta.

231
Niswoger Warren Reve Fees, 1999, Prinsip Prinsip Akuntansi Edisi 19,Erlangga
Jakarta
Rifqi Adi Jaya, L, Much, Faktor-Faktor Yang Mempengaruhi Persepsi Penggunaan
Informasi Akuntansi Pada Usaha Kecil Dan Menengah (Studi Kasus Sentra
Industri Kecil Patung batu di Desa Jati Pasar Kecamatan Trowulan,
Kabupaten Mojokerto), Skripsi, Fakultas
Ekonomi UPN Veteran Jawa Timur.
Rizki Abrory, Agnesti, 2010, Faktor Faktor Yang Mempengaruhi
KebutuhanStandar Akuntansi Keuangan (SAK) bagi Usaha Kecil dan
Menengah(UKM) (Studi Kasus pada Sentra Industri Marmer Onix yang
tersebar di wilayah Desa Gamping Kec. Campurdarat Kab.
Tulungagung,Skripsi, Fakultas Ekonomi UPN Veteran Jawa Timur.

Sastrohadiwiryo, B Siswanto, 2003, Manajemen Tenaga Kerja Indonesia,

www.Dinkop.ac.id
www.bi.go.id

232
ENT-12

CREATION EXCELLENCE SMALL AND MEDIUM

ENTERPRISES TO COMPETE IN NATIONAL AND
INTERNATIONAL MARKETS

Diana Sulianti K. Tobing

University of Jember
E-mail: dskltse@yahoo.com

ABSTRACT

The role of entrepreneurship to the increase in national income means that the
emergence of new products both in the form of goods and services can contribute to
the increase in national income. Until now recognized that a foreign power products
of SMEs in the global market are very low. This is caused mainly by difficult access
to financing, dependence on SMEs products to the domestic market, which is less
reliable human resources, productivity and product quality is low, poor access to
technology resources, as well as the low mastery of the technology. SMEs export
excellence is still a comparative advantage, which depends on natural resources and
labor, have not managed optimally into a competitive advantage (competitive
advantage).
Keywords: entrepreneurship, SMEs, competitive advantage, productivity

1. BACKGROUND
The economy of a country is one indicator of the ratings if the country is said
to go forward or not. Priming like that make each country vying to develop its
economy. More and more countries are trying to develop its economy will require
rules that are not detrimental to other countries however, still gives freedom for
countries that are seeking the welfare of his people. Conditions such as these must be
supervised as well to keep it out of the rules that have been made, so we need
cooperation between countries in order to bring economic prosperity.
Based on this, the enacted free market is a concept of international trade. The
free market is a concept that offers the freedom for the parties concerned in it to take
economic decisions, such as pricing, goods, and services with no force and approved
by the seller or buyer. Moreover, government intervention on price regulation is
minimized even almost abolished. This concept has been applied in many countries

233
and reap success, some of which is the European Union that involves the countries of
Europe and NAFTA for the countries in North America.
The success achieved on the implementation of the free market to make it
come to be seen by many countries, one of which states that joined in Southeast Asia
or commonly referred to as ASEAN. The desire to achieve the same success makes
countries in Southeast Asia agreed on the establishment of the Asean Economic
Community (AEC), or can be called by the Asean Economic Community (AEC) by
applying also the concept of the free market.
Once the importance of the role of entrepreneurship in economic growth in
Indonesia statistical news in March 2015 reported that energy can be absorbed from
the SME sector amounted to 79.39 million for the year 2014 and amounted to 79.07
million for 2015. The complete data can be seen in Table 1 below :

Table 1.
Total Business Unit and Labor Absorption for Small, Medium and Large Enterprises
Period 2014-2015
Scale of Amount of Enterprises Amount of Labor
Enterprises (million of unit) (million of people)
2014 2015 2014 2015
Small 42,48 43,42 71,09 70,92
Enterprisess
Medium Business 0.05 0,06 8,30 8,15
Large Business 2,17 2,25 0,42 0,40
Source: Berita Statistik, Maret 2015
Table 1 shows that the number of small business units amounted to 43.22
million units for 2015 is greater compared with the large number of business units
that only a total of 2.25 million units and small business sector is the largest provider
of employment in Indonesia.

2. Theoritical Framework
2.1 Entrepreneurship
Drucker (1985) defines entrepreneurship as the spirit, skills, attitudes and
behaviors of individuals in handling the business (activity) that leads to the search
for, create, implement ways of working, technologies, and new products to improve
efficiency in order to provide better services and or obtain greater profits.

234
 Hisrich and Brush (in Winardi, 2003) states that entrepreneurship is the
process of creating something different in value to the sacrifice of time and effort
required to bear the financial risk, psychological and social activities and receive
results in the form of monetary rewards and personal satisfaction as a result of
activities the.
Kao (1997) defines entrepreneurship as a process of creating something new
(creation) and / or to make something different (innovation), whose goal is to
achieve well-being of individuals and the value added to the community.
Similar delivered by Schumpeter (in Winardi, 2003) by stating that
entrepreneurship is a process and the entrepreneur is an innovator who take
advantage of the process.
Leibenstein Harvey (1968, 1979), suggests, entrepreneurial-kegiatann includes
activities required to create or implement the company during all the market yet or
have not been clearly identified, or the components of the production function is not
completely known.
Penrose (1963) states that the entrepreneurial activities include identifying
opportunities within the economic system. Managerial capacity or ability is different
from entrepreneurial capacities.
Frank Knight (1921) states that entrepreneurs try to predict and respond to
market changes. This definition emphasizes the role of entrepreneurs in the face of
uncertainty on the market dynamics. An entrepreneur is required to carry out the
basic managerial functions such as direction and control.
Based on some of the above definition, it can be concluded that
entrepreneurship is a passion, capabilities and behavior of individuals who dare to
risk, whether it is financial risk, psychological, and social in conducting a process of
creating something new (new creation) and create something different from existing
(innovation) to receive the results in the form of monetary rewards and personal
satisfaction.
According to M. Scarborough and Thomas W. Zimmmerer (Suryana, 2001: 8-
9) suggests eight characteristics:
1. Desire for responsibility, that has a sense of responsibility for those businesses
that do. Someone who has a sense of responsibility will always be introspective.

235
2. Preference for moderate risk, that prefer moderate risk, meaning that he always
avoids the risks are low and avoid high risiki
3. Confidence in their ability to success, which is believed to be her ability to
succeed
4. Desire for immediate feedback, which always requires immediate feedback
5. High level of energy, that has passion and hard work to fulfill his desire for the
sake of a better future
6. Future orientation, which is oriented to the future, perspectives, and far-sighted
7. Value of achievement over money, that have skills in organizing resources to
create added value
8. Skill at organizing, which have skills in organizing resources to create added
value
According to Kathleen L. Hawkins & Peter A. Turla (in Suryana, 2001: 25-26)
entrepreneurial behavior patterns reflected in the behavior and capabilities as
follows:
1. Personality, this aspect can be observed in terms of creativity, self-discipline, self-
confidence, the courage to risk, have the drive, and a strong will
2. Ability relations, operations can be seen from the indicators of communication and
inter-personal relationships, leadership, and management
3. Marketing, includes the ability to determine the products and pricing, advertising
and promotion
4. Expertise in managing, operating realized in the form of goal setting, planning and
scheduling, as well as personal settings
5. Financial, the indicator is the attitude toward money and how to manage money
(Drucker, 1985).

2.2 SMEs (Small adn Medium Enterprises)

According Rudjito (2003) Small and Medium Enterprises (SMEs) in
Indonesia, which has an important role in the Indonesian economy, both in terms of
number of businesses and in terms of job creation. The definition of SMEs given by
several institutions, namely:

236
 In Article 1, paragraph 1 of Law No. 20 of 2008 on Micro, Small and Medium
Enterprises that are meant Micro state that Micro is a productive enterprise
belonging to individuals and / or entities that meet the individual businesses of
Micro, as stipulated in this Law.
In Article 1, paragraph 2 of Law No. 20 of 2008 on Micro, Small and Medium
Enterprises that is Small Business state that small business is an economic enterprise
productive stand-alone, conducted by an individual or business entity that is not a
subsidiary or not branches of companies owned, controlled or become part either
directly or indirectly from medium or large businesses that meet the criteria of
business tiny referred to in this law.
According to Eugene and Morce (1965), the type of government policy
greatly determines the growth of SMEs. There are four options:
a. Policies do nothing policy: governments are aware whatever reason do
not need to do anything and let SMEs granted.
b. Policy protection (protection policy) to SMEs: this policy is to protect
SMEs in the competition and even subsidized.
c. Policies based on the ideology of development (developmentalist): this
policy choose industry pontesial, (picking the winner) but not subsidized.
d. The policy is becoming more popular is the so-called market friendly
policy with an emphasis on selection of brood based, without subsidies
and competition.

2.2 AEC
ASEAN Economic Community (AEC) in 2015 (ASEAN Economic
Community (AEC)) is an ASEAN economic integration in the face of free trade
between countries of ASEAN countries. All ASEAN countries have agreed this
agreement. MEA is designed to realize the ASEAN Insight 2020.
ASEAN Economic Community is formed with a mission to make economies
in ASEAN to become better and be able to compete with countries whose economies
are more advanced than the current condition of the ASEAN countries. In addition,
by the realization of the ASEAN Community that is where there are AEC, can make
the position of ASEAN to be more strategic in the international arena, we expect the

237
realization of community ASEAN economic community is able to open the eyes of
all parties, so that there is a dialogue between the sectors where the latter also
complementarity among stakeholders in the state sector of the economy of ASEAN
countries is very important. Still according to Tambunan (2000), noted that in
Indonesia, in view of the number of business units are very much present in all
sectors of the economy and contributes significantly to employment and income,
especially in rural areas and for low-income families, can not be denied the
importance of SMEs to national economic development.

3. Discussion
3.1 Role of Entrepreneurship in Business Competition Against AEC
The involvement of all parties in all member countries ASEAN absolutely
necessary in order to realize the ASEAN as a competitive region for investment and
free trade, which in turn can benefit all ASEAN countries. For Indonesia, the number
of population, area and geographic location as well as the GDP of the largest in the
ASEAN should be an asset that Indonesia could be a big advantage in the 2015
ASEAN.
Strategy and preparation had been done by the stakeholders, especially
entrepreneurs in Indonesia in order to face liberalization systems applied by ASEAN,
especially in terms of economic integration which was felt still less than optimal. But
it is indeed grounded in domestic issues that require more intensive treatment. In
addition, over the years, Indonesia with its abundant potential resources to bring the
movement to a more forward again.
The entrepreneurs in the country are expected to welcome the plan to
implement the ASEAN economic community. The action is considered as an
opportunity to expand the market and increase production, given the very big
ASEAN market. Expected 2015 AEC to make Indonesia as a major player in its
implementation.

3.2 Entrepreneurial Spirit and Attitude

Creative and innovative process is only done by those who have the
personality of a creative and innovative, that is, those who have a soul, attitude and

238
entrepreneurial behavior, with traits: confident, the indicator is full of confidence,
optimistic, committed, disciplined, responsible, initiative, the indicator is full of
energy, deft in acting and active, have the achievement motive, the indicator consists
of a results orientation and insight into the future, to have a spirit of leadership, the
indicator dared to be different, trustworthy, and resilient in the act and dare to take
risks with calculating (hence love a challenge)
While Scarborough and Zimmerer (1993) expressed as follows:
1. Desire for responsibility: having a sense of responsibility for those businesses that
do.
2. Preference for moderate risk: has a moderate risk (not high or low).
3. Confidence in their ability to success: have the confidence to succeed.
4. Desire for immediate feedback: always wanted immediate feedback.
5. Hight level of energy: having a passion and hard work to realize the desire for the
sake of a better future.
6. Future oriented: oriented and have a perspective and insight to the future.
7. Skill organizing: having skills in organizing resources to create added value.
8. Value of achievement over money
More appreciated achievement than money. AEC 2015 will inevitably be faced by
SMEs where it leads SMEs fall into a state of "emergency", which require
immediate action in order to be able to enter the 2015 AEC. In marketing the
product, SMEs are faced with the classic problem of both internal and external.
The weakness in business management, SMEs in general is a business that
has a Human Resources (HR) with the level of education and low skills. Low
mastery of the technology because of the lack of opportunity to participate in
education and training, consequently business run experiencing difficulties in
integrating and compete with other businesses, who have the skills and knowledge of
a more modern management.
1) The weakness of market access, product / services produced by a limited
number of SMEs, have generally poor quality and continuity is often
questionable. SMEs have very little information about the market and the lack
of knowledge about marketing. As a result of product marketing, especially
abroad of products / services SMEs have not been optimal.

239
2) The negative effect of globalization, free trade cause SMEs also have to face
global competition coming from various forms of business. SMEs actually face
the dual pressures (double squeezes), namely: the problem of the internal
(domestic) in the form of high transaction costs that must be paid as well as the
lag in increasing productivity, efficiency and innovation. Intense competition
problem is coming from the external environment (globalization).
Based on a survey that has been conducted there were other issues related to
the problems being faced by SMEs as follows.
a. A weak link in the development and strengthening of business.
b. Limited access to sources of finance from formal financial institutions.
c. Problems relating to the Entrepreneurial Citra.
d. Lack of government programs related to SMEs.
e. The trouble opening a new business.
f. Lack of purchasing power.
g. Tax matters.
h. Poor regional government support.
i. The lack of coordination of the institutions that houses SMEs.
j. The lack of supportive government policies.
k. Poor quality products.
l. The low quality of human resources and low levels of education.
m. Lack of market information for SMEs.
n. Lack of marketing ability.
o. Lack of training in order to increase foreign.

3.3 SMEs Problem Solution

Given the internal and external problems facing SMEs at this time can not be
completely resolved, then the solution necessary steps strategy of SMEs and
cooperatives in the face COMUNITY ASEAN FREE TRADE AGREEMENT
(ACFTA), through a process that develops and systematic.
1) Increase Competitive Advantage
SMEs are scattered throughout the region have the potential diversity. Various
goods production of small industry and households have the potential to be

240
 developed and marketed got the chance to go abroad. Until now recognized that
a foreign power MSME products in the global market are very low.
2) Increase Using of Technology
In order for SME products can compete in the face ACFTA is necessary to
enhance the ability of technological mastery. The production system in
accordance with international standards, price, quality, and quantity of reliable,
meet standards for export and import countries reference is an absolute
requirement for export.
3) Strengthening the Competitiveness To improve competitiveness, it is necessary
handling of domestic issues include: governance of land and industrial areas,
improvement of infrastructure and energy, providing incentives (taxes and other
non-tax), establish Special Economic Zones (SEZ); expansion of access to
financing and a reduction in interest costs Kredit Usaha Rakyat / KUR, Credit
Food and Energy, venture capital, Islamic financial, factoring, export financing
institutions Indonesia etc, improvement of logistics systems, improving public
services (NSW, OSS / SPIPISE etc.), regulatory simplification and increased
labor capacity).
4) Security Domestic Market Increased domestic market potential needs to be
done through:
a. Supervision border with increased surveillance provisions of the import and
export in the implementation of the FTA, applying the Early Warning
System for monitoring early response to the possibility of a surge of imports,
tightening supervision over the use of Certificate of Origin (SKA) from
partner countries FTA, surveillance initial adherence SNI, label , ingredients,
expiration, health, environment, security etc; the application of trade
instruments permitted by the WTO to the industry which suffered serious
losses due to the pressure of imports and the application of instruments of
anti-dumping and countervailing duties on importansi are unfair
b. Circulation of goods in the local market include the task force monitoring
the circulation of goods which are not in accordance with the provisions of
consumer protection and industry, and the obligation to use labels and
manuals in Indonesian language; and

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 c. Promotion of the use of domestic products with overseeing the effectiveness
of the promotion of the use of domestic products (Instruction No. 2 of 2009)
including KLDI reinforce and clarify the obligations of maximizing use of
local products revision of Presidential Decree Number 80 Year 2003
concerning Procurement of Goods / Services by the government.
5) Strengthening Export export growth is done by strengthening the role of the
foreign missions, the development of a trading house, promotion of tourism,
trade and investment, overcoming the problem of market access and export
case, monitoring the use of SKA Indonesia, increasing the role of LPEI in
supporting export financing and optimization of trade financing.
a. Guidance on Sustainable
Continuous guidance necessary so that SMEs can implement stock
management more adaptive to market and market differentiation that allows
the cross-subsidies.
b. Need Assessment study is needed on an ongoing basis on the condition
SMEs greater detail the kinds and variations productproducts agriculture
and small industries that have a large market opportunity and to do
specifically in the various regions.
c. Provision of Role Larger To Trading House should be given a greater role
to the trading house (BLU / LLP) to penetrate the products KUKM in
various ASEAN countries and China are carried out periodically, (eg during
one month in each of each country).
d. Coordination and Synergy central and regional authorities should be
coordination and synergy with central and local authorities in managing the
products that can be manufactured SMEs and promote the use of domestic
production.

3.4 Efforts SMEs Compete with AEC Product

In addition to meeting the needs of capital and partnerships, SME
development efforts can also be done as follows.

242
1) Increase cooperation between SMEs to strengthen the network in the face of
competition from large employers, including the quota of goods (number of
orders).
2) Improving product quality and more stringent quality control.
3) Innovate to create a design and product variations that follow market needs or
desires.
4) Increased use of appropriate technology to improve product quality standards
(ISO 9000, ISO 9001).
5) Improving entrepreneurial skills and take advantage of business opportunities
such as trade fairs, business meetings, trade exchanges, workshops and skill-
building.
6) The government is preparing a program to improve market opportunities for
SMEs to institutional development of product promotion and development of
market access, and access business information using computer technology,
telecommunications and the like
7) The government provides special tax rate on SMEs
8) Obtain ISO certification
9) Establish a training or a business incubator that will educate the
entrepreneurs of SMEs, where the educational program is not only evaluate
the business has been running, but also analyzes strenght and weakness of
SMEs seek a strategy for its development (Hadi Kurniawan, 2009).
10) Provide training to SMEs intended to cultivate the entrepreneurial spirit and
enhance the entrepreneurial skills especially for their ability to improve
business productivity, improve effectiveness and efficiency, ability to find
and enter the market (market entry) as well as the ability to provide products
that match the preferences will market (consumer).
It is expected from these efforts will have an impact on the increase in
bargaining power and the creation of competitive advantage (competitive
advantage) of SMEs that will ultimately have an impact on the development
of Micro Finance Institutions.

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4. Conclusion
Entrepreneurship is a passion, capabilities and behavior of individuals who
dare to risk, whether it is financial risk, psychological, and social in conducting a
process of creating something new (new creation) and create something different
from existing (innovation) to receive the results in the form of monetary rewards and
personal satisfaction. Establish a training or a business incubator that will educate
the entrepreneurs of SMEs, where the educational program is not only evaluate the
business has been running, but also analyzes strenght and weakness of SMEs seek a
strategy for its development

REFERENCES
Drucker (1985). Pengantar Entrepreneurship, Jakarta: PT. Gramedia Widiasarana
Indonesia
Hisrich dan Brush dalam (Winardi, 2003). Karakteristik 22 Pengusaha Wanita di
Bandung. Tesis. Magister Program Studi Teknik dan Manajemen Industri.
Institut Teknologi Bandung,
Kao (1997). Kewirausahaan. (edisi revisi). Jakarta. Rajagrafindo Persada.
Priyono dan Soerata (2005). Strategi Penciptaan Wirausaha (Pengusaha) Kecil
Menengah Yang Tangguh. Bogor : Falsafah Sain IPB.
Tambunan (2002). Manajemen UKM Profesional di Era Globalisasi Melalui
Pemberdayaan Manajemen Industri. Orasi Ilmiah. Institut Pertanian
Bogor.

Website :
http://ejournal.hi.fisip-unmul.ac.id/site/wp-
content/uploads/2013/08/(PDF)%20eJOURNAL%20SHOLEH%20(0
8-01- 13-02-34-14).pdf (diakses 16-06-16)
http://repository.uksw.edu/bitstream/123456789/5889/2/PROS_Iin%20Indarti,%20A
nton_Tantangan%20Usaha%20Mikro%20Kecil_fulltext.pdf
(diakses16-06- 16)
http://jurnal.smaeda.com/index.php/infokop/article/view/171/168 (diakses 16-06-16)
http://journal.unnes.ac.id/sju/index.php/edaj/article/view/1395/1362 (diakses 17-06-
16)
http://repository.wima.ac.id/982/1/ETR005%20-
%20Budianto%20Tedjasuksmana.pdf (diakses 17-06-16)
http://repository.uksw.edu/bitstream/123456789/5889/2/PROS_Iin%20Indarti,%20A
nton_Tantangan%20Usaha%20Mikro%20Kecil_fulltext.pdf (diakses
17-06- 16)
http://erurenggapatra.blogspot.co.id/2015/06/jurnal-peluang-dan-dan-tantangan-
ukm.html (diakses 17-06-16)

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http://repository.upnyk.ac.id/2437/1/sri_susilo082011juli.pdf (diakses 17-06-16)
http://www.bsn.go.id/uploads/download/Peranan_Pengusaha_Daerah_dlm_MEA_Ed
dy_kuntadi1.pdf (diakses 17-06-16)
Pemberdayaan usaha mikro kecil, menengah (UMKM) dan lembaga keuangan
mikro (LKM). Jurnal Ekonomi.

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FAA-01

REVIEW OF THE IMPLEMENTATION OF

UNDERSTANDING THE ACTORS SMEs FINANCIAL
ACCOUNTING STANDARDS ENTITIES WITHOUT
PUBLIC ACCOUNTABILITY (FASE WPA) IN THE
PROCESS OF PREPARATION OF FINANCIAL
STATEMENTS
(CASE STUDY ON SMES PERFORMERS DISTRICT OF
BATAM CITY)
Cahyo Budi Santoso
University of Riau Island
Email: cafana07@gmail.com

ABSTRACT

This research aims to determine the level of understanding of the performers of

Micro, Small and Medium Enterprises (MSMEs) in the implementation of FASE
WPA in the process of preparation of financial statements by conducting a case
study on MSMEs in the district of Batam City. This research uses descriptive
qualitative research. Sampling technique used is purposive sampling. Data collection
techniques used is literature study, questionnaires, observation, interviews and
documentation. Data analysis technique used is descriptive statistics. The results
showed that the level of understanding of MSMEs in the district of Batam City in
applying FASE WPA is still low because as much as 76.15% performers of MSMEs
do not understand about the application of FASE WPA . The financial statements
were prepared by the MSMEs are not in accordance with FASE WPA , it is because
of the internal reasons as 23.85% performers of MSMEs have the notion (mindset)
that the financial statements according to the standard it is complicated and has not
been required, 13.76% performers of MSMEs educational background in addition to
accounting that did not understand accounting, 5.50% performers of MSMEs still
lack knowledge of science and technology development, with 3.68% performers of
MSMEs do not have a professional accounting employees, and external reasons that
consists of 29.36% lack of socialization of the authorities deliver FASE WPA .

Keywords: Level of understanding of performers of MSMEs, FASE WPA

1. Introduction
SMEs grow and develop rapidly in Indonesia. SMEs have an important role
in the national economy. SMEs play a role in the expansion of jobs and provide
economic services to the wider community as well as play a role in realizing national

246
stability. Abdul Kadir Damanik (ministerial expert staff cooperative and SMEs field
of application of the basic values of cooperatives revealed) that in Indonesia there
are about 57.9 million SMEs with a contribution to GDP amounted to 58.92 per cent
and contribution in employment amounted to 97.30 percent.
Indonesia is a country with the largest number of SMEs compared with other
countries. This is an advantage for the Indonesian state. Moreover, Indonesia is
currently undergoing AEC (Asean Economic Community) which applied in 2015
ago. The SMEs in the country must be ready for it because AEC provides an
opportunity to enter new markets, and provide a challenge for SME products in the
country to improve the quality of product quality to compete in the world market.
Unfortunately however, it turns out the perpetrators of SMEs still face
obstacles in developing their business. One of them is the problem of funds or
capital. Although there are currently PBC (People's Business Credit), but the
complaint often heard difficulty borrowed capital. The Bank is also not willing to
take a big risk by providing loans to SMEs. Usually, the Bank provides the
requirements that must be met by SMEs. One of them is the availability of financial
statements. But there are still many SMEs who do not understand the financial
statements. The report was made still far from the standards that the Bank lacks
confidence in lending.
Based on IAI (2009) Financial Accounting Standards for Entities Without
Public Accountability (FASE WPA) is intended to be used entities without public
accountability. Entities without public accountability are an entity that does not have
a significant public accountability and publish general purpose financial statements
(general purpose financial statement) for external users. Examples of external users
are owners who are not directly involved in business management, creditors, and
credit rating agencies.
Although FASE WPA is in force since 2011, does not guarantee that SMEs
actually implement it properly. Yet, the SMEs do not understand about the making
of financial statements, in accordance with GAAP WPA. It can be seen from the
research Arri Alfitri (2014), which revealed that the furniture craftsman
understanding of Financial Accounting Standards Entities Without any Public
Accountability (FASE WPA) is still low. Similarly, the results of research Neng

247
Salmiah, Indarti and Inova Fitri Siregar (2015) which revealed that 83% of
respondents did not understand the contents of FASE WPA . This happens because
of lack of knowledge, understanding and awareness of the importance of the
application of accounting is complete and in accordance with GAAP WPA for
SMEs, especially in the process of preparing the financial statements in order to
obtain information about business activities during the period.
Batam is one of the cities in Indonesia which also has many SMEs. Batam
city consists of twelve districts and each district has established various types of
SMEs. Based on the data from the PMP-SMEs department, the number of SMEs
which are most numerous in the district of Batam City. Batam Kota sub-district,
better known as Batam Center. In District administrative center is located in Batam.
Its strategic location in the middle of making the District Batam Island City
developed rapidly into industries and businesses as well as a bustling settlement.
Along with the increasing number of SMEs in the district of Batam City and
with their strategic position is of interest to examine how much the author's level of
understanding SMEs in applying FASE WPA and whether they have applied FASE
WPA well or not at all.
Based on this background, it may be possible formulation of the problem as
follows: What level of understanding of SMEs in the implementation of Financial
Accounting Standards Entities Without Public Accountability (FASE WPA) in the
process of preparation of financial statements in District Batam City?

2. Literia Review
2.1 Definition of SMEs
Based on Law No. 20 In 2008, the definition of SMEs can be distinguished based
criteria are: Micro have the following criteria:
1. It has a maximum net worth Rp50,000,000.00 (fifty million rupiahs), excluding
land and buildings; or
2. It has annual sales of at most Rp300,000,000.00 (three hundred million rupiah).

248
Small businesses have the following criteria:
1. Having a net worth of more than Rp50,000,000.00 (fifty million rupiah) up to at
most 500,000,000.00 (five hundred million rupiah) not including land and
buildings; or
2. Have an annual sales turnover of more than Rp300,000,000.00 (three hundred
million rupiah) up to at most Rp2.500.000.000,00 (two billion five hundred
million rupiah).
Medium Enterprises have the following criteria:
1. Having a net worth of more than Rp 500,000,000.00 (five hundred million
rupiah) up to at most 10,000,000,000.00 (ten billion rupiahs), excluding land and
buildings; or
2. Have an annual sales turnover of more than Rp2.500.000.000,00 (two billion five
hundred million rupiah) up to at most Rp50.000.000.000,00 (fifty billion rupiah).
Those criteria nominal value can be changed in accordance with the
economic development that is governed by a presidential decree.
Meanwhile, according to the Central Statistics Agency (CSA), SMEs are
defined by the quantity of labor. Micro-enterprise is a business that has a workforce
of 1 to 4 people, small business is a business which has a workforce of 5 to 19
people, while the medium-sized business is a business which has a workforce of 20
to 99 people.

2.2 Understanding of the Meaning

According to Anas Sudijono (2012: 50), the understanding is the ability to
understand or comprehend something after something that is known and
remembered. In other words, understanding is knowing about something and be able
to see it from different angles. Understanding is the level of thinking skills that
higher level of recall and memorization.
Categories understand the cognitive processes that include seven interpret,
give examples, classify, summarize, draw inferences, compare, and explain
(Rustaman 2003 in Fidiana, 2011). FASE WPA then understanding a person's ability
to measure, classify (differentiate) and summarizes the presentation of the elements
of financial statements in accordance with the applicable provisions of FASE WPA.

249
2.3 Definition of SAK ETAP
Based on IAI (2009) Financial Accounting Standards for Entities Without
Public Accountability (FASE WPA) is intended to be used entities without public
accountability. Entities without any public accountability is an entity that does not
have a significant public accountability and publish general purpose financial
statements (general purpose financial statement) for external users. Examples of
external users are owners who are not directly involved in business management,
creditors, and credit rating agencies.

2.4 Definition of Financial Statements

According to Kashmir (2012: 7), the financial report is a report that shows
the company's financial condition at the moment or in a given period. Based on IAI
(2009), the objective of financial statements is to provide information financial
position, financial performance, and cash flows of an entity that is useful to a large
number of users in making economic decisions by anyone who is not in a position to
ask for financial statements to meet the information needs of specific.

2.5 Financial Position

The financial position of an entity comprised of the assets, liabilities, and
equity at a certain time. These elements are defined as follows:
a. Asset is a resource controlled by the entity as a result of past events and from
which future economic benefits expected to be obtained by the entity.
b. The obligation is a present obligation entity arising from past events, the
settlement is expected to result in an outflow from the entity of resources
containing economic benefits.
c. Equity is the residual interest in the assets of an entity after deducting all
liabilities.

2.6 Financial Performance

The financial performance is the relationship between income and expenses
of the entity during an accounting period. The financial performance is presented in

250
the income statement. The elements of financial statements that are directly related
to the measurement of profit are income and expenses. The following definitions:
a. Income is increases in economic benefits during the reporting period in the
form of inflows or increases in assets or decreases of liabilities that result in
increases in equity that is not derived from the contribution of investors.
b. Expenses are decreases in economic benefits during a reporting period in the
form of an outflow or decrease in the assets, or the occurrence of liabilities
that result in decreases in equity that are not related to distributions to
investors.

2.7 The elements Recognition of Financial Statements

Recognition of elements of financial statements is the process of establishing
an item in the balance sheet or income statement that meets the definition of an
element and meets the criteria, it is likely that the economic benefits associated with
the post will flow from or to the entity and the post has a value or costs that can be
measured reliably.
Henforth, recognition of the financial statements that include:
a. Assets are recognized in the balance sheet if the possibility of future economic
benefits will flow to the entity and the asset has a value or costs can be measured
reliably.
b. Liabilities are recognized in the balance sheet to the extent that the expenditure
of resources containing economic benefits will be made to settle a present
obligation and the amount that should be done can be measured reliably.
c. Income is recognized in the income statement if the increase in future economic
benefits related to an increase in assets or decrease in liabilities has occurred and
can be measured reliably.
d. Expenses are recognized in the income statement when a decrease in futures
economic benefits related to a decrease in assets or an increase in liabilities has
occurred and can be measured reliably.

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2.8 The elements of the Measurement of of the Financial Report
The measurement is the process in determining of the amount of money that
is used to measure the entity's assets, liabilities, income and expenses in the financial
statements. This process includes the selection of a particular basis of measurement.
General basic measurements are historical cost and common value
.
2.9 Presentation of the Financial Report
Entity presents the common financial position, financial performance, and
cash flows of the entity. Entity presents the complete financial statements (including
comparative information) at least once a year.

2.10Complete Financial Report.

Detailed financial statement of FASE WPA includes:
1. Balance.
Balance sheet presents the assets, liabilities, and equity of an entity on a
specific date until the end of the reporting period.
2. Income Statement.
An income statement presents the income and expenses of entities for a
period.
3. Statement of Changes in Equity.
Statements of changes in equity presents the income or loss of the entity for a
period, income and expense recognized directly in equity for the period, the
effect of changes in accounting policies and corrections of errors recognized
in the period, and (depending on the format of the statement of changes in
equity chosen by entities) the amount of investments by, and dividends and
other distributions to equity owners during the period.
4. Report of the Cash Flows.
The cash flow statement provides information on the historical changes in
cash and cash equivalents of entities, indicating separately the changes that
occurred during the period from operating, investing, and financing activities.

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 5. Notes to the Financial Statements.
Notes to the financial statements contain additional information as the
information presented in the financial statements.

3. Research Of Methodology
This research was conducted in the city of Batam, on UMKM- SMEs located
in the district of Batam City. The population in this study is SMEs in the sub Batam
City numbering as many as 150 SMEs active (source data from the Department
PMP-SMEs). Determination of the number of samples using the formula Slovin
using fault tolerance limit of 5% so that the sample size of 109 SMEs. Sampling
technique used is purposive sampling, ie sampling technique with a certain
considerations.
The types of data in this study are primary data and secondary data. This
research is a qualitative descriptive study. Data collection method used is literature
study, questionnaire, observations, interviews, and documentation. Data analysis
technique used is descriptive statistics. To determine the level of understanding of
SMEs, made the interpretation criteria score of the level of understanding as follows:

Table 1
Criteria Score Interpretation Comprehension Level

Criteria The Average

Interval Score
Really do not 0% - 20%
Understand
Do not 21% - 40%
Understand
Savvy Enough 41% - 60%
Understand 61% - 80%
Very Famliar 81% - 100%
Source: Riduwan and Sunarto (2012:23)

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4. Results And Discussion
4.1 Identity of the Respondents and Description of the Business

Here is the identity of respondents who have been processed and summarized as
follows:
Table 2
Group Respondents by Gender

Gender Frequency Percentage

Male 49 44,95%
Female 60 55,05%
Amount 109 100%
Source: Primary Data Processed

Based on table it can be seen that out of 109 respondents, female gender more in
the amount of 55.05% compared to the male gender that only amounted to 44.95%.
This shows that SMEs in the District Batam City is dominated by the female sex.

Table 3
Respondents by Age Group

Age Frequency Percentage

<25 Years 12 11,01%
26 45 Years 82 75,23%
>45 Years 15 13,76%
Amount 109 100%
Source: Primary Data Processed

Based on table it can be seen that out of 109 respondents, most are aged 26-45
years of age amounted to 75.23%. Respondents were aged> 45 years amounted to
13.76% and the respondents were aged <25 years at 11.01%. This shows that SMEs
in the District Batam City is dominated by the age of 26-45 years are still part of a
productive age and still be more creativity in developing their business.

254
 Table 4
Group Respondents by Type of Business

Type of Frekuensi Persentase

Business
Service 22 20,18%
Trade 50 45,87%
Manufacture 37 33,95%
Amount 109 100%
Source: Primary Data Processed

Based on table it can be seen that out of 109 respondents, most types of
businesses run by the respondent is a trading business that is equal to 45.87%. While
the manufacturing business amounted to 33.95% and 20.18% of business services.
This shows that SMEs in the District of the Batam City doing more trade than the
business activities of manufacturing enterprises and business services.

Table 5
Group Respondents by Number of Employees

Number of
Employees Frequency Percentage
Employee
1 4 People 97 88,99%
5 19 People 11 10,09%
20 99 People 1 0,92%
Amount 109 100%
Source: Primary Data Processed

Based on table it can be seen that out of 109 respondents, amounting to

88.99% of respondents had a number of employees of between 1-4 people. While
respondents to the number of employees amounted to 10.09% of 5-19 people and
respondents with 20-99 the number of employees amounted to only 0.92%. This
shows that in the district of Kota Batam efforts of respondents classified as micro-
enterprises. In accordance with the definition of SMEs according to the Central

255
Statistics Agency (CSA) that SMEs are defined by the quantity of labor. Micro-
enterprise is a business that has a workforce of 1 to 4 people, small business is a
business which has a workforce of 5 to 19 people, while the medium-sized business
is a business which has a workforce of 20 to 99 people.

Table 6
Sales Group Respondents by turnover Annually

Turnover/Year Frequency Percentage

<Rp300 juta 96 88,07%
Rp300 juta- 13 11,93%
Rp2,5 M
>Rp2,5 M 0 0
Amount 109 100%
Source: Primary Data Processed

Based on table it can be seen that out of 109 respondents, amounting to

88.07% of respondents have annual sales turnover of <USD 300 million. While
respondents had annual sales turnover of Rp 300 million to Rp 2.5 billion is only
11.93% and no respondents with turnover reaching> USD 2.5 billion. This shows
that SMEs in the district of Batam City are classified as SMEs are micro enterprises.
This is in accordance with the criteria of micro enterprises, according to Law No. 20
of 2008 which states that micro businesses have annual sales of at most
Rp300,000,000.00 (three hundred million rupiah).

Table 7
Group of Respondents Based on Latest Education and Educational Background
Latest Educational Background Frequency Percentag
Education Economy/Acounting More e
Primary School-Junior - 16 16 14,68%
High School
Senior High 7 72 79 72,48%
School/Equivalent
College 5 9 14 12,84%

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 Amount 109 100%
Source: Primary Data Processed

Based on table it can be seen that out of 109 respondents, education past
high school / equivalent to have a high percentage that is equal to 72.48%. For the
last primary and junior education amounted to 14.68% and the last college education
was 12.84%. Meanwhile, if viewed from the educational background, the
educational background such as educational background Science, Engineering,
secretary and so more of 87.10% compared with the educational background of
economic / accounting.

In the table , it appears that as many as 79 respondents who have an

education past high school / equivalent with an educational background economic /
accounting by 7 respondents and high school / equivalent with other educational
backgrounds as much as 72 respondents. While respondents who have a college
education last a total of 14 respondents with a background in economics / accounting
as much as 5 respondents and other background as much as 9 respondents. While
primary and secondary education do not have the educational background and have
not got education majors. This shows that SMEs in Batam Kota subdistrict is
dominated by respondents with education past high school / equivalent background
in more or other than the economic / accounting.

Table 8
Group Respondents by Business Old Stand

Long Effort Frequency Percentage

4 Years 42 38,53%
5 10 Years 44 40,37%
>10 Years 23 21,10%
Amount 109 100%
Source: Primary Data Processed

Based on Table 8 it can be seen that out of 109 respondents, there amounted to
38.53% of respondents are established businesses for <4 years. While respondents
are established businesses for 5-10 year and as much as 40.37% of respondents

257
whose business has been established for> 10 years as much as 21.10%. This shows
that SMEs in the District Batam City already has experience in running and
maintaining the efforts to date.

Table 9
Respondents by Source Capital Group

Capital Frequency Percentage

Resources
Owners 103 94,50%
Equity
Bank 6 5,50%
Loans
More 0 0
Amount 109 100%
Source: Primary Data Processed
Based on table 9 it can be seen that out of 109 respondents, amounting to 94.50%
of respondents use their own capital to run their business. While using the loan
capital of banks amounted to 5.50% and no one uses capital from other sources. This
shows that SMEs in the District Batam city was still able to use their own capital to
run their business so they do not apply for a loan to a bank or lending to other capital
sources.
Table 10
Group Respondents by Making Notes Accounting / Financial Statements Using
Accounting Software

Financial Acounting Frequency Percentage

Statements Software
Yes No
Yes 12 54 66 60,55%
No - 43 43 39,45%
Amount 109 100%
Source: Primary Data Processed
Based on the table it can be seen that 10 of the 109 respondents, amounting to
60.55% of respondents making accounting records / financial statements in their

258
business activities. However, SMEs which make financial statements using
accounting software, only 12 respondents and 54 other respondents do not use
accounting software. While SMEs that do not make the accounting records /
financial statements as much as 39, 45%.
This suggests that as much as 81.82% SMEs in the district of Batam City still
keeps the accounting records and financial statements manually without the help of
accounting software. While SMEs which makes the accounting records and financial
statements with the help of an application using MYOB accounting software,
Microsoft Excel and other applications to help financial reporting efforts.
Table 11
Respondents by Group of Information and Dissemination FASE WPA

Info & Frequency Percentage

Socialization
FASE WPA
Ever 5 4,59%
Never 104 95,41%
Amount 109 100%
Source: Primary Data Processed

Based on the table it can be seen that 11 of the 109 respondents, amounting to
4.59% of respondents obtained information and socialization of FASE WPA and
amounted to 95.41% of respondents never get information and dissemination about
FASE WPA. This shows that SMEs in the District Batam City are still very many
never get information and dissemination. Yet in this age of information technology
has advanced and can be accessed from a variety of media. But in reality, they do not
know about FASE WPA. This is due to the lack of dissemination of relevant parties
so that they do not know and do not seek information about FASE WPA.

4.2 Level of Understanding Perpetrators of SMEs in Applying FASE WPA

To determine the level of understanding of SMEs in applying FASE WPA,
the authors used a questionnaire as an instrument in this study. Here are the scores of
respondents who had been though the author and are summarized in the following
table:

259
260
 Table 12
Respondents Comprehension Scores Results Interpretation
Criteria Interval Frequency Percentage
Aver
age Score
Very not 0% - 20% 8 7,34%
Understand
Do not 21% - 40% 75 68,81%
Understand
Savvy 41% - 60% 20 18,35%
enough
Understand 61% - 80% 6 5,50%
Very 81% - 100% 0 0
Failiar
Total 109 100%
Source: Primary Data Processed

Results of research on the level of understanding of SMEs in applying FASE

WPA can also be seen in the following graph:

Picture 1
Graph Comprehension Level Actors SMEs

Do not
understan
d

So do not Do not Sufficien Underst Most

understand underst tly and underst
and underst and
ood

Source: Primary Data Processed

Based on 12 tables and graphs, it can be seen that as many as 8 respondents
met the criteria so do not understand. This means that as much as 7.34% SMEs in
Batam Kota sub-district is not very well-informed about FASE WPA when seen
from scores of respondents that can only be answered about 0% - 20% of questions
correctly. A total of 75 respondents met the criteria do not understand. This means

261
that as much as 68.81% SMEs in the district of Batam City do not understand about
FASE WPA when seen from scores of respondents were only able to answer about
21% - 40% of questions correctly. While as many as 20 respondents had fulfilled the
criteria sufficiently understood. This means that 18.35% SMEs in the District Batam
City already has a pretty good understanding about FASE WPA because respondents
were able to answer about 41% - 60% of questions correctly.
Of tables and graphs, as many as six respondents already meets understood.
This means that only 5.50% of SMEs in the District Batam city that already know
about FASE WPA when seen from scores of respondents who answered about 61% -
80% of questions correctly. Meanwhile, of the 109 respondents, no respondents who
meet the criteria very familiar. This means no SMEs in Batam Kota subdistrict is
quite aware of the FASE WPA because no respondents were able to answer about
81% - 100% questions correctly.
Based on these results, it can be seen that the level of understanding of SMEs
in the district of Batam City is still low because the views of tables and charts, the
criteria do not understand has a high percentage compared to other criteria that is
equal to 68.81% of 100% of total SMEs. This means that the respondent does not
understand and still lack the ability to measure, classify (differentiate) and
summarizes the presentation of the elements of financial statements in accordance
with the applicable provisions of FASE WPA.

4.3 Financial Report SMEs and Compliance with IFRSs WPA

SMEs can make FASE WPA as a reference standard in preparing the
financial statements so that the financial statements may provide information that is
easy to understand, relevant and accurate and can be used by parties interested in the
financial statements. Financial statements in accordance with GAAP WPA
consisting of balance sheet, income statement, cash flow statement, statement of
changes in equity and notes to financial statements.
a. Balance
Balance sheet is a financial statement that presents information about the
assets, liabilities, and equity of an entity on a specific date until the end of the
reporting period. SMEs that use accounting software, create a balance with shapes

262
and formats according to their business needs. While SMEs which register manually
and do not use accounting software does not create balance. They do the
bookkeeping ledgers that already exist format debit, credit and cash balances. Of the
bookkeeping, they've been able to determine how much wealth, liabilities and capital
owned without having to compile them into a financial statement balance.
It is certainly not in accordance with GAAP WPA because SMEs do not
arrange the books into the balance sheet format. SMEs did not specify how many
assets, liabilities and capital they have that information obtained from bookkeeping
SMEs are not accurate.

b. Income report
An income statement is a financial statement which presents the entity's
income and expenses for a period. The statements of income include all postal
income and expense recognized in a period. SMEs in the district of Kota Batam
actually already understand about profit and loss. Only those actors that do not apply
in the financial statements of the business.
SMEs that use accounting software or computer applications make the
income statement in the form and format appropriate to the needs of its business.
While SMEs that do not use accounting software does not make a profit or loss. To
determine the profit or loss of business, SME actors guided by the evidence of the
transaction and record-keeping. By calculating the proof of the transaction, it is
known that their business income. In addition, SMEs can also find out the
performance of their business by viewing the recording made in the cash book is to
calculate the amount of income earned and reduced expenditures and didapatlah
profit or loss efforts.
It is certainly not in accordance with GAAP WPA, because SMEs do not
prepare a report detailing the income and transactions in the group revenue and
burdens. The information obtained is also inaccurate and incomplete and could have
been an error in the calculation so that the decision becomes inaccurate.

263
 c. Cash flow Report
The cash flow report is a financial statement which presents information on
the historical changes in cash and cash equivalents of entities, indicating separately
the changes that occurred during the period from operating, investing, and financing
activities. SMEs in the district of Batam City made a cash flow statement. Both are
using software that does not use an accounting and accounting software. However,
cash flow statements made are still not in accordance with accounting standards.
Performers only make records of income and expenditure of cash in the cash book.
From bookkeeping can already known how the cash inflows and outflows from its
business activities.
This is not in accordance with GAAP WPA because SMEs do not categorize
transactions Performers cash into operating, investing and financing activities.
Although they consider the books as a cash flow statement, but the report is still not
in accordance with the standards of FASE WPA.
d. Statement of changes in capital
Statement of changes in capital are financial statements that present the
entity's profit or loss for the period, income and expense recognized directly in
equity for the period and the effect of changes in accounting policies and corrections
of errors recognized in the period. SMEs that use accounting software does not make
a statement of changes in capital. The reason for that is, software that they use has
the disadvantage that the unavailability of complete financial reports and the lack of
the financial statements so that the statement of changes in capital is not created.
While SMEs who make financial reports manually does not make a statement
of changes in equity as the financial statements of the business. SMEs do not take
into account how much capital at the end of each period. Performers only consider
whether the business run experiencing capital back or not because the capital will be
replayed for the continuation of its business.
This is not in accordance with GAAP WPA. SMEs supposed to make
statements of changes in capital in order to know how much capital received after the
end of their profit or loss and of course a personal decision should also be taken into
account. So with that SMEs can make informed decisions regarding their capital.

264
 e. Notes to Financial Statements
Notes to the financial statements are financial statements that contain
information in addition to the information presented in the financial statements.
SMEs in District Batam city also did not make the notes to the financial statements.
SMEs admitted to not understand in making notes to financial statements.
Traffickers do not know what it must be made in the notes to the financial statements
and assume it is not important so it does not need to be made.
This is not in accordance with GAAP WPA as should the SMEs also need to
make a note to the financial statements so that information about its business and the
accounting policies can be seen clearly.
From the research, it should be well known that SMEs in the District Batam
City that does not keep records and preparation of financial statements amounted to
39.45%. SMEs have only to collect evidence of the transaction as financial
documents, with no registration or bookkeeping. Evidence collected in a single
transaction or a file folder is then calculated so that can know the information about
its business performance. It is not effective for SMEs only based on the transaction
receipt. SMEs should at least make a recording to avoid mistakes and errors in
business activities.
Based the research that the writer obtained, it can be concluded that SMEs in
the district of Batam City FASE WPA does not apply in the preparation of financial
statements of the business. SMEs only make records of transactions that take place
and refer to it as the financial statements. It is caused by unfamiliarity SMEs in
preparing financial statements, so that SMEs simply making notes and simple
accounting in accordance with their understanding. Whereas financial statements
useful to know the financial position and financial performance of the business so it
is useful in making economic decisions.

4.4 The reason incomprehension Perpetrators of SMEs in Applying FASE WPA

From the research, it is known that as much as 76.15% SMEs in the district of
Batam City do not understand about FASE WPA so it does not apply in the register
and the preparation of financial statements. This is due to several reasons that the
authors grouped into two reasons, namely:

265
1. Reason Internal
a. The assumption (mindset) SMEs that the financial statements according to the
standard is complicated and not yet needed.
Based on the results of research that writers get, amounting to 23.85% SMEs
consider that the financial statements in accordance accounting standards is
complicated. If the work of the accounting cycle, it will take time to make it.
Because of these thoughts, then the SMEs was not yet in need of financial
statements. They also think that the business carried on still classified as micro
enterprises, which have annual sales turnover of less than three hundred million and
capital employed is a private capital so that SMEs only make records and
bookkeeping ledgers that is easier and simpler in accordance with the understanding.
SMEs also assumes that the financial statements need to be made if you want to
borrow capital to the bank because it is a requirement to borrow capital to the bank.
While they are still able to use their own capital so that they do not require financial
statements in accordance with FASE WPA and does not add to its understanding of
the FASE WPA.
b. Educational background.
Educational background is also a reason incomprehension SMEs in applying
FASE WPA with the acquisition of the percentage as much as 13.76%. Based on the
results in Table 7 that 88.99% of SMEs in the district of Kota Batam come from an
educational background in addition to the economic / accounting so they do not get
the basics of accounting education. As a result, SMEs do not understand how to
make the appropriate financial reporting accounting standards. The financial
statements are prepared in accordance with the understanding and knowledge that
they have.
c. Lack of knowledge of the development of Science and Technology.
A total of 5.50% SMEs stating the reason of their ignorance in applying S
FASE WPA is due to the lack of knowledge of science and technology development.
In this modern era already, many technologies are evolving and increasingly easy to
access information from a variety of media. For example, by looking for information
about FASE WPA or the making of financial statements in accordance accounting
standards. SMEs can also take advantage of computer technology such as the use of

266
accounting software or other computer applications to assist in the preparation of
financial statements.
However, SMEs do not take advantage of these technological developments
to improve the understanding about the appropriate financial reporting standards on
the grounds will add more cost and SMEs still less proficient in using technology.
d. No professional accounting staff
Based on the results of the study, respondents who give reasons not have
accounting professional employees as much as 3.68%. From the research table 5 it
can be seen that SMEs in the district of Batam City are micro enterprises with the
number of employees not more than four people and respondents who have
employees numbering 1-4 people have the highest percentage of 88.99% compared
with respondents who have employees 5- 19 and 20-99 people. Employees are more
focused on helping business activities.
SMEs admitted to not having specialized employees to keep records and
preparation of financial statements in accordance with accounting standards. SMEs
actually want to recruit employees of accounting professionals in order to help the
preparation of financial statements in accordance with accounting standards
businesses and that SMEs can learn about accounting. However, it was not done
because if SMEs employ specialized employees to create records and preparation of
financial statements in accordance accounting standards, then there will be additional
costs to pay the employees' salaries. So that SMEs are not hiring accounting
professionals and SMEs actors themselves who prepare financial statements in
accordance comprehension owned.

2. Reasons External
a. Lack of socialization of the authorities expressed FASE WPA.
A total of 29.36% SMEs provide about FASE WPA ketidakpahamannya
reason for the lack of socialization of the authorities expressed FASE WPA. This is
consistent with the results in Table 11 which states that as many as 95.41% SMEs in
the district of Batam City never got the socialization of FASE WPA. This is the
reason SMEs do not understand and do not apply the preparation of financial
statements in accordance with FASE WPA.

267
 SMEs admitted more often get the socialization and training on business and
entrepreneurship rather than on accounting and financial reporting. The socialization
of accounting and financial reporting is rarely given to SMEs developing their own
financial statements in accordance with capabilities.

The reasons given by the SMEs actors when created table, it will look like the
following:

Table 13
Reasons incomprehension Perpetrators of SMEs in Applying FASE WPA

No. Reason Frequency Percentage

1. The assumption SMEs that the financial 26 23,85%
statements according to the standard is
complicated and not yet needed.
2. Educational background. 15 13,76%
3. Lack of knowledge of science and 6 5,50%
technology development..
4. Do not have a professional accounting 4 3,68%
employees.
5. Lack of socialization of the authorities 32 29,36%
expressed FASE WPA.
Amount 83 76,15%
Source: Primary Data Processed

The reasons given by SMEs, the authors grouped the reason for internal and
external reasons, as seen in the following graph:

268
 Picture 2
Graph reason incomprehension
Perpetrators of Incomprehension Reason Offender SMEs in Applying
SMES in Implementing FASE WPA
FASE WPA

29,36%
Internal
46,79% Eksternal

source: Primary Data Processed

Based on the table and the graph, it appears that the more internal reasons
amounted to 46.79% as compared to external reasons that only amounted to 29.36%.
This means that penyebabketidakpahaman SMEs in applying FASE WPA dominated
by internal reasons originating from within the SME. While external reasons which
come from outside SMEs amounted to only 29.36% to the cause of incomprehension
SMEs in applying FASE WPA.

5. Conclusion
Based on the research that has been conducted on the level of understanding
of SMEs in Batam Kota subdistrict in applying FASE WPA, it can be concluded that
the level of understanding of SMEs in the district of Batam City is still low because
as much as 76.15% SMEs do not understand about the application of FASE WPA.
SMEs do not understand in applying FASE WPA as the standard for the preparation
of its financial statements, so that the financial statements are made simple and in
accordance with the understanding possessed. This is due to internal reasons such as
23.85% SMEs have the notion (mindset) that the financial statements according to
the standard it is complicated and has not been required, 13.76% SMEs than
accounting education background so it does not understand accounting, 5.50% SMEs
still less knowledge of science and technology development, with 3.68% perpetrators
of SMEs do not have a professional accounting employees, and external reasons that
consists of 29.36% lack of socialization of the authorities expressed FASE WPA.

269
270
6. Suggestion
As for suggestions to the author to convey, namely:
1. The perpetrator SMEs should further enhance its understanding of the FASE
WPA by utilizing science and technology that exist today and attend trainings on
accounting and financial reporting.
2. Actors SMEs should change the mindset and dispel the concern that the financial
statements are complex and not necessary. Because the real financial statements
it is necessary to know the financial position and business performance. If SMEs
want to learn and gain knowledge will be the financial statements, the SMEs will
understand and will be easier to generate financial reports.
3. For further research, in order to develop this research to increase the population
and the sample in order to study more perfect and better.
4. For students of lower tiers or successors, so this study serve as motivation and
challenges in creating an information technology-based innovation to overcome
the difficulties of SMEs in financial reporting. For example, by making an
application or software that is easy to understand, simple and can help SMEs in
financial reporting.
5. For the authorities expressed FASE WPA, in order to be more active in
providing socialization of FASE WPA or of accounting and financial reporting in
order to understanding the SMEs better and can apply the appropriate financial
reporting standards.

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With Financial Accounting Standards Entities Without Public
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FAA-02

POTENTIAL FRAUD IN CAPITATION FUNDS

MANAGEMENT
OF NATIONAL SOCIAL HEALTH INSURANCE
SCHEME
Fitri Indah Sari
University of Jember, Indonesia
Email : fitri.indahsari3@gmail.com

ABSTRACT
National Social Health Insurance Scheme (JKN) is a government program towards
Universal Health Coverage at 2019. The government's Universal Health Care
(UHC) were launched since January 2014 up to 2019, to all residents of Indonesia
protected with JKN.The implementation of the JKN capitation fund management
primary level health facilities in both government-owned health centers and hospitals
that have not implemented the Regional Public Service Board (non BLUD) have
constraints in terms of regulation, financing, procedures and oversight of resources
as well as potentially fraud .The aim of this study was to identify and analyze
potential fraud and preventive measures in the financial management of capitation
funds JKN. The method used in this research is descriptive literature study uses datas
from previous researchs, articles, journals and the internet. Results of this study
stated that the preventive measures for fraud is improved regulation, socialization,
mentoring, and training for capitation fund manager, the utilization of P-Care
applications, and monitoring and evaluation.
Keywords: National Health Insurance, Fraud, Fraud Prevention

1. Introduction
As stipulated by the Act of 1945 Article 34 paragraph (2) that "The State shall
develop a system of social security for all citizens and empower the weak and not
able to match the dignity of humanity", the government issued Law No. 40 of 2004
about National Social Security System (SJSN) and Law No. 24 of 2011 concerning
National Institution of Social Security (BPJS). This Act aims to provide a foundation
for the implementation of social security programs to meet basic life needs for every
citizen (DJSN, 2012).
Implementation of the National Social Health Insurance Scheme (JKN) held by
BPJS believed would bring major changes in the health service in Indonesia. In line
with the government program that Universal Health Care (UHC) prevailing in

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January 2014 - 2019, namely health insurance for all residents of Indonesia
(www.jkn.kemkes.go.id).
The management of the mandatory health insurance funds must be efficiently
and professionally as well as to meet the principles of risk management primarily
related to the balance of assets and liabilities management. One change that is most
highlighted is the mechanism of the claims by the Public Health Center (PHC),
Clinics and Hospital Type D (DJSN, 2012). Procedures that have not implemented
the principles of Regional Public Service Board (non BLUD) makes its own
problems for primary level health facilities , one of which government-owned is
PHC and Public Hospitals.
As the research results Kulo, et al (2014) on the management and utilization of
funds generated by JKN in Datoe Binangkang Bolaang Mongondow hospital states
that (1) understanding the implementation of the program of JKN in this case
payment system proceeds hospital claims by BPJS Health still lacking ; (2)
Management of the results of health insurance claims should follow the financial
rules that are difficult for hospitals to implement accountability and utilization, so
the effect on health services to participants JKN in hospital; (3) Knowledge and
understanding of the provisions governing the management of funds derived from
the hospital claims to BPJS Health according to the regional financial rules is still
sorely lacking from all the relevant agencies.
Research results of Kulo et al (2014), shows that the capitation funds
management are still experiencing problems that will ultimately affect to overall
financial accountability of both internal institutions and a greater scope is local
government. As stated in Presidential Decree No. 32 of 2014 that the ordinance
ranging from budgeting, administration and reporting comply with the provisions of
legislation in the field of financial management.
Another study conducted Setiaji (2015) stating that the potential fraud that
triggered PHC of capitation funds because of the programs that are new , regulations
are still not confirmed in detail about the use of PHC capitation funds and issues of
human resources at PHC.
Based the explanation above, the problems encountered is what are the
potential fraud in the management of JKN capitation funds and how to prevent it.

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2. Literature Review
2. 1 Definition Of Fraud
Definition of fraud consists of various forms and ways. The definition of fraud
according Tuanakotta (2013: 28) are:
Any illegal act characterized by deceit, concealment or violation of trust. these acts
are not dependent upon the application of threats of violence or physical force. Fraud
are perpetrated by individuals, and organization to obtain money, property or
service; to avoid payment or loss of services; or to secure personal business
advantage.
The statement explained that fraud is any illegal acts characterized by deceit,
concealment or violation of trust . Fraud committed by individuals and organizations
to obtain money, property or services; to avoid payment or loss of services; or to
secure personal business profits.

2.2. Theories Of The Causes Of The Occurrence Of Fraud

Fraud Triangle according Priantara (2013: 44-47) consists of three conditions
generally present when fraud occurs (1) incentive or pressure to commit fraud .
Pressures can be divided into four types: (a) the financial problems; (b) involved in
the perpetration of crimes or do not fit the norm; (c) pressures associated with the
job; (d) other pressures; (2) Opportunity to commit fraud. Opportunities consists of
(a.) Weak internal control systems; (b) poor corporate governance; (3) Pretext to
justify acts of fraud (rationalization). Rationalization occurred because someone is
looking for justification for activities that contain fraud.

2.3 Overview Of National Social Health Insurance Scheme ( Jkn )

Implementation of Universal Health Coverage was officially launched in
Indonesia since January 1st , 2014 by BPJS in the form of JKN. The aims is to
provide health insurance to residents of all 250 billion people within five years is on
2019. Four main actors of JKN namely participants,BPJS Health, health facilities
and government. Participants JKN is that everyone, including foreigners working in
Indonesia at least 6 (six) months in Indonesia. To retain their health insurance, JKN
participants must pay dues regularly and continuously until death (Asih, 2014).

276
 BPJS Health build a network of health facilities by working with government
health facilities or private to organize health services for JKN participants and their
families. Health facility network is divided into three main groups, namely (1)
Primary health facilities rate health service delivery non-specialist, (2) Secondary
health facilities advanced level of health service delivery specialist and subspecialist
and (3) Tersier health facilities (Asih, 2014). Based on data as of September 2016,
BPJS Health states that three providers that serve the largest JKN participants are as
many as 8.217 PHC that spread throughout Indonesia. The second order is an
individual physician practices as much as 4.521 while the third is pratama clinic as
many as 3.478. The amount of participation per June 10, 2016 is as much as
166.858.548 (www. BPJS.go.id).
The payment system by BPJS Health is in the form of capitation is the amount
of monthly payment upfront for the health facilities of primary level health facilities
based on the number of participants enrolled without taking into account the type
and amount of health care provided as stipulated in Presidential Regulation Number
32 of 2014, Article 1 point (6).

2.4. Capitation Fund Management Of Jkn At Primary Level Health Facilities Non
Blud
Based on Presidential Decree Number 32 of 2014 and the Minister of Home
Affairs No. 900/2280 / SJ as part of financial management, management of JKN
capitation funds follow each stage ranging from budgeting to the liability. As
stipulated in the Regulation of the Minister of Health of the Republic Indonesia
Number 21 of 2016 about the use of capitation funds the JKN on health services and
support operational cost at primary level health facilities local government-owned
article 3, paragraph 1 states that capitation funds received primary level health
facilities by BPJS Health used entirely for the payment of health care services and
support operational cost of health care.

3. Research Methods
The method used in this research is descriptive method by describing the facts
and then followed by analysis (Ratna, 2013: 53).This method is using secondary data

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in the form of research data, essays, theses and journals or data from the internet
about the program in BPJS Health, capitation fund management JKN on primary
level health facilities non BLUD, constraints in its management and remedial
measures that can be taken to overcome the existing problems.

4. Results and Discussions

4.1 Fraud Prevention in Capitation Fund Management Of Jkn
Based on research conducted by Kulo, et al (2014), Setiaji (2015) and
Wulandari (2015) raised the issue of the management of capitation funds JKN and
expressed some obstacles while according to the Corruption Eradication
Commission (KPK) 2014 covers the regulatory aspects, financing, procedures and
resource and monitoring (Nugraha, 2014).

4.2 Regulatory Aspects

The rules of the division of medical services and operating costs could
potentially lead to moral hazard and irrationalities. Results of research by Wulandari
(2015), namely the perception of health personnel to the distribution system services
patients JKN in PHC at Bangli Regency stated that there is a gap points are quite far
in the division of services between medical and non medical, necessitating the
addition of variable regions in the division services in accordance with local
conditions in Bangli regency.
Existing regulations do not set the mechanism of remaining capitation funds.
Research Kulo, et al (2014) stated that the existing problems in the Datoe
Binangkang Bolaang Mongondow Public Hospital, the total claims up to September
2014 is Rp.9.274.768.800 while a new paid Rp.1.617.238.971. The remaining funds
amounting to Rp. 7.657.629.829 still in the hospital account and can not be
absorbed. This is because all payment claims must be signed to regional cash to be
recognized as income (for those who have not applied regional public service board /
non BLUD).
Capitation mechanism causes an increase in funds that accepted most of the
PHC and exceed the needs of PHC every year. The amount of funds received and the
realization of the budget is slow, potentially causing surplus at the end of the fiscal

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year. Stacking surplus funds will be huge in the PHC only. Rules of use of capitation
funds less accommodate the needs of the PHC. Appropriation of capitation funds
have been able to be funded from state budget as current expenditures.
(www.hukumonline.com).
Results of research by Wulandari (2015) suggested that the addition of variable
regions in the distribution of services in accordance with each local conditions as in
the Ministry of Health Regulations Number 28 of 2014 on guidelines for the
implementation of JKN elucidation management and utilization of funds section (e)
the mentions is that in the division of services, local governments can add the
variable regions include performance, employment status and years of service in
accordance with local conditions stipulated by the Head of Department of Health . It
is expected there will be no gap points lead to dissatisfaction of health workers in the
distribution of services.
Mechanisms for the management of the remaining funds over the capitation
funds require regulation, as revealed by the Advocacy Coordinator BPJS Health
Watch, Timboel Siregar (2015) that the existence of such funds become the arena for
corruption by various reasons such as physical improvements to the PHC.
Regulation in question is the existence of laws that reinforce the use of the remaining
funds capitation is not absorbed in the current year. Latest regulations by Ministry of
Health Regulations No. 21 of 2016 Section V Articles 7 and 8 has arranged the use
of the rest of the capitation funds mentioned that the income of the capitation funds
are not used entirely in the budget year in respect of, the rest of the capitation funds
used for the next fiscal year. The designation adjusted with a portion of the activities
in the form of services and support operational costs.

4.3 The Financing Aspects.

Corruption Eradication Commission (KPK) discovered the existence of a
potential fraud on the permissibility of displacement participants Recipient
Contribution (PBI) from PHC to private primary level health facilities. Service to
patients is not good for various reasons, but instead was directed to his private
primary level health facilities or affiliated with (Nugraha,2014). According to Head
of public relations BPJS Health , Irfan Humaidi stated that BPJS Health always

279
doing random cross check, in order to to determine the suitainability claims
submitted networking facilities health clinics (www.hukumonline.com).

4.4 Procedures and Resources Aspects.

Fraud potential on technical assessment of the procedures and resources,
among others ; a weak understanding and competence of health workers in public
health centers in implementing regulations; the process of verification of eligibility
of participation in primary level health facilities not gone well; implementation of a
tiered referral mechanisms have not been running well; potential officers primary
level health facilities become perpetrators of irregularities (fraud) the greater; PHC
workers are vulnerable to blackmail various parties; and the distribution of health
workers is uneven (Nugraha, 2014).
The results research of the Kulo, dkk (2015) and Setiaji (2015) reveals the
same thing that the unfamiliarity of capitation funds management by the human
resources manager and related institutions become obstacles in the implementation
of this program. Competence and understanding of health workers in the area of
managing capitation funds should also be improved to minimize the deviation, so the
use of capitation funds can be effective and efficient.
Corruption Eradication Commission (KPK) implement a pilot project in the
implementation of capitation funds procedures. The series of KPK activities include
socialization and accompaniment on three (3) cities designated Bandung,
Yogyakarta and Kupang. Explanation of Research and Assessment Systems
Specialist, Erlangga Dwi Saputra said that Yogyakarta was chosen as a
representation of the city's of dynamic and adaptive accept new things, including
this capitation funds management. The hope that Yogyakarta could be a measure of
success managing JKN clean and free of fraud. The implementation of this project is
expected to give an example to other regions of the capitation fund management as
expected that is clean and free of Fraud (www.jogjakota .go.id).
Research by Kulo, et al (2014) suggested to follow the socialization about
conducting of JKN and maximizing existing resources. It is also revealed by Head of
public relations BPJS Health, Irfan Humaidi to improve the competence of medical

280
personel in the service of the participant, BPJS Health, conduct socialization about
the service.

4.4 Supervision Aspects

Less of monitoring because of there is no budget oversight on capitation funds
at local goverment. It is also exacerbated by the lack of supervision and control tool
capitation funds by BPJS Health. The initial step is to conduct monitoring and
evaluation, especially against capitation funds at PHC . Regulatory overhaul is
expected to simultaneously improve both the control and the local government
primary level health facilities (www.hukumonline.com).
Monitoring for the management of capitation funds on primary level health
facilities which government-owned and BPJS health themselves as stipulated in Act
No. 28 of 2011. Monitoring of BPJS Health conducted internally and externally.
There are two organs in the organization BPJS Health surveillance, the supervisory
board (Dewan Pengawas) and the internal audit unit (Satuan Pengawas Internal).
External monitoring conducted by the National Social Security Council (Dewan
Jaminan Sosial Nasional) and watchdog agencies, namely the Financial Services
Authority (OJK). Audit Board (BPK) may investigate BPJS Health (Asih, 2014).
According to Irfan Humaidi, Head of public relations BPJS Health some
supervision conducted by the BPJS Health against primary level health facilities
application using one of P-Care as a function of supervision of the BPJS Health
against primary level health facilities. The application of P-Care can keep tabs on the
number of participants who paid a visit to primary level health facilities. If there is a
buildup of participants, it will be transferred to another primary level health facilities
with the aim to optimize the service ( www.hukumonline.com).
The government regulates the prevention of fraud in the implementation of the
Health Insurance embodied in Presidential Decree Number 19 of 2016 on Second
Amendment of Presidential Regulation Number 12 of 2013 Chapter XI A Article
46A. Fraud prevention system must be structured and systemic, comprehensive of all
the parties concerned, among others, of the BPJS Health, health facilities, health
services district or city as well as other stakeholders.

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5. Conclusion
Government Program named Universal Health Care (UHC) is implemented
since January 2014 in its management in state-owned primary level health facilities
both PHC and hospitals have constraints in terms of regulation, financing,
procedures and resources as well as the supervision of potentially Fraud. Fraud
prevention measures for the management of capitation funds is the existence of
regulations aimed at improved regulation, conduct random check against the visit of
participants in primary level health facilities , held socialization; accompaniment;
and training, as well as the monitoring and evaluation as a series of supervision and
control by both internal and external supervisors of the JKN capitation funds
management .

REFERENCES

Asih Eka Putri,2014. Paham Jaminan Kesehatan Nasional. Friedrich-Ebert-Stiftung,

Representative office of Indonesia, Jakarta
DJSN ,2012. Peta Jalan Menuju Jaminan Kesehatan Nasional 2012-2019,
Jakarta:Dewan Jaminan Sosial Nasional (DJSN).
Nugraha,Priharsa,2014. http://kpk.go.id, Empat Kelemahan Pengelolaan Dana
Kapitasi
Kulo Debby, R. G. A. Massie dan G. D. Kandou, 2015, Pengelolaan dan
Pemanfaatan Dana Yang Berasal Dari Program Jaminan Kesehatan
Nasional di RSUD Datoe Binangkang Kabupaten Bolaang Mongondow,
JIKMU Vol 4, Nomor 4 Oktober 2014, Sam Ratulangi University
Priantara, Diaz.2013, Fraud Auditing & Investigation. Mitra Wacana Media,Jakarta
Peraturan Presiden Nomor 19 Tahun 2016 tentang Perubahan kedua Peraturan
Presiden Nomor 12 Tahun 2013 tentang Jaminan Kesehatan.
Peraturan Presiden Nomor 28 Tahun 2016 tentang Perubahan ketiga Peraturan
Presiden Nomor 12 Tahun 2013 tentang Jaminan Kesehatan
Peraturan Presiden Republik Indonesia Nomor 32 Tahun 2014 tentang Pengelolaan
dan Pemanfaatan Dana Kapitasi Jaminan Kesehatan Nasional pada Fasilitas
Kesehatan Tingkat Pertama Milik Pemerintah Daerah
Peraturan Menteri Kesehatan Republik Indonesia Nomor 21 Tahun 2016 tentang
Penggunaan Dana Kapitasi Kesehatan Nasional untuk Jasa Pelayanan
Kesehatan dan Dukungan Biaya Operasional pada Fasilitas Kesehatan
Tingkat Pertama Milik Pemerintah.
Peraturan Menteri Kesehatan Republik Indonesia Nomor 28 Tahun 2014 tentang
Pedoman Program Jaminan Kesehatan.

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Ratna, Nyoman Kutha. 2010. Metodologi Penelitian: Kajian Budaya dan Ilmu Sosial
Humaniora Pada Umumnya. Pustaka Pelajar: Yogyakarta
Setiaji,Tomi Konstantia,2015. Analisis faktor internal dan eksternal sebagai bahan
penyusun strategi pencegahan fraud dana kapitasi Puskesmas di Kota
Semarang. Jurnal Ilmu Kesehatan Masyarakat (e-journal) Vol.3 Nomor 3,
April 2015 (ISSN:2356-3346). http://ejournal-s1.undip.ac.id/index.php/jkm,
Universitas Diponegoro. Semarang
Surat Edaran Menteri Dalam Negeri Republik Indonesia Nomor 900/2280/SJ tentang
Petunjuk Teknis Pengganggaran,pelaksanaan dan Penatausahaan,serta
Pertanggung jawaban Dana Kapitasi Jaminan Kesehatan Nasional pada
Fasilitas Kesehatan Tingkat Pertama Milik Pemerintah Daerah.
Tuanakotta,Theodorus.M. 2013, Mendeteksi Manipulasi Laporan Keuangan.
Salemba Empat,Jakarta.
Undang- Undang Negara Republik Indonesia Tahun 1945 Pasal 34
Undang - Undang Nomor 40 Tahun 2004 tentang Sistem Jaminan Sosial Nasional
Undang-Undang Nomor 24 Tahun 2011 tentang Badan Penyelenggara Jaminan
Sosial
Wulandari, Ni Putu Ari.2015, Persepsi Tenaga Kesehatan Terhadap Sistem
Pembagian Jasa Pelayanan Pasien Jaminan Kesehatan Nasional di
Puskesmas se-Kabupaten Bangli Tahun 2015, Thesis, Udayana University,
Bali
Website: https://bpjs-kesehatan.go.id/bpjs/
http://www.hukumonline.com/berita/baca/cegah-korupsi--dana-kapitasi-bpjs perlu-
dibenahi
http://www.jkn.kemenkes.go.id.2014, Menkes sampaikan perkembangan kepesertaan
JKN kepada Menko Perekonomian.
http://www.jogjakota.go.id/news/Kota-Jogja-Jadi-Percontohan-Pengelolaan-Dana-
Kapitasi-JKN

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FAA-03

ACCOUNTING INTERPRET AS NGUDI

KASAMPURNAN (THOUGHT CONCEPTS JAVA
CULTURE: ABDULLAH CIPTOPRAWIRO/ 1986)

Dwiayu Pangesti Mulyono

Airlangga University
Email : reshadwiayu@gmail.com

ABSTRACT

This article is an opinion, arising after reviewing the literature of philosophy of

science, this paper describes the meaning of accounting abaout philosophy of Java
by reading the literature to support this article. The purpose of writing this article is
to illustrate that accounting can be interpreted as Ngudi kasampurnan in accounting
for the perfection of life that accounting statements can accountable to God, fellow
human beings and nature. Implementation of this can be seen from the application of
professional ethics of accountants in doing his job according to the perspective of
Javanese culture. Research Methodology was qualitative and interpretive
approaches. And result from this study is accounting can be defined as the
philosophy of Javanese culture. The limitations of this study are only seeing a
culture that is in Indonesia.
Keywords: Java Philosophy, Accounting Profession, Ngudi kasampurnan

1. Background
Talk about Java philosophy, our country can never be separated from
it. Many predictions of the Kinasih which became a reality in the present era. Of the
many predictions that are the subject of discussion, either by the student or the
intelligentsia. Government land was never separated from the philosophy of Java.
Democracy is one of the heritage of our ancestors who might know what will happen
with the state in the present. Currently Javanese culture, especially Javanese
philosophy almost disappeared from public life. Searang people's lives tend to be on
the "western" and ignore the philosophies of Java. Whereas in philosophies Java
contains the teachings of "valuable" is very useful to people's lives.
Javanese philosophy is essentially universal. So the philosophy of Java is not
only reserved for the Java community, but also for anyone who wants to learn and
there are many doctrines in the philosophy of Java. Philosophy is a process which in

284
this case means in the form of philosophy is in the process of solving a problem
using a certain means and methods in accordance with the object of the problem. All
normal human beings are always characterized by activities that thinking activity.
Javanese philosophy in a broad sense in Javanese culture means Ngudi
kasampurnan. Humans devote entire existence, both body and spirit to achieve this
goal. In metaphysics, the philosophy of all-time Java conclude that God is Sangkan
Paraning dumadi and manungsa. In epistemology, philosophy of Java, there is a
similar way to the stages of use of copyright taste-intention, through the levels of
consciousness:
a. Awareness of the five senses
b. Awareness of silence
c. Personal awareness
d. Divine consciousness
And axiology, the philosophy of Java can be viewed from two angles,
namely, aesthetics and ethics. Aesthetics is beauty.
a. Javanese-Hindu: Beauty is always regarded as the embodiment of absolute.
Then all the beauty is one.
b. Java - Moeslem: the book Suluk covered 20 properties and 99 beautiful
names (Names of God in Islam) Allah to 4, in which the beauty included in:
- Great
- Elegant
- Wisesa
- Perfect
Ciptoprawiro (1986: 12) states that there are differences between the systems
in Western philosophy with phrases Java philosophical reflections that are often
fragmentary and less visible clear relationship. Javanese philosophy, science
(philosophy) always only a means to achieve perfection, it can be formulated that in
Java, philosophy means love of perfection (the love of perfection). In the Java
language, Java philosophy is ngudikasampurnan (seek perfection), while Western
philosophy is ngudi kawicaksanan (seek wisdom).
Javanese philosophy can not be separated from moral philosophy Java, which
has been investigated by Magnis Suseno (1983: 108-110), among others concluded

285
Java ethical norms valid only in relative terms, the norms were indeed valid, but not
absolute. None of the moral norms of Java may be held desperately, not the norm
can give people the right to involve himself one hundred percent. Java community
developed the connective power of moral norms in order to find the limit on the
principle of harmony. Based on norms such as fairness engage emotionally with
others that exceed the limits prescribed by the code of ethics of the situation himself,
someone pursuing something less tasty. The man was trying to go beyond its own
limits.
Java moral norms are in relativity, such as accuracy, moral courage,
inclination to think clearly with moral independence. Java moral philosophy contain
moral virtues are reflected in the attitude of selfless, crowded ing gawe, namely a
willingness to break away. These attitudes are patience, a willingness to accept
everything to release what is owned. Relativity good and bad no longer absolutely
contradict one another, evil, that the wills are not following the norms of morality,
can not be condemned for granted, but must be regarded as an inevitable result of a
spiritual development is still lacking, and in addition it should be considered quiet,
considering the fact that after all everyone to follow the path already determined for
him.
In the development of the business world, accountants actually need to make
ethics a vital necessity to refrain from actions that deviate from the law. In this case
public accountant should be able to demonstrate that the services given audit quality
and trustworthy, because the public accounting profession has an important role to
provide financial information and non financial reliable, trustworthy, and meet the
needs of users of public accounting firm in the business world that will increasingly
competitive (Nuryasin, 2012: 2).
Recognizing unethical things that can be done by a public accountant, the
Indonesian Institute of Accountants (IAI) published a code of ethics IAI. According
to IAI, "Code of Ethics of Indonesian Accountants are intended as guidelines and
rules for all members, whether practicing as a public accountant, worked in the
corporate world, in government agencies, as well as in the world of education in
fulfilling the responsibilities of his professional" (Financial Accounting Standards,
2001 ).

286
 In the Code of Ethics of Indonesian Accountants according to IAI, there are
ethical principles accountants, accountants ethical rules, and interpretations of ethical
rules accountants. The principle of the ethics of accountants are principles that must
be adhered to by all members of IAI, ethical rules accountants only binding member
compartment that certifies ethical rules, the interpretation of the rules of ethics of the
accountant is the interpretation issued by the board compartment to respond to the
members and the parties concerned, without limiting the scope and applicability
(Financial Accounting Standards, 2015).
While it has created a code of ethics by IAI, the fact that the field there are
still many irregularities committed by accountants. Deviations made by accountants
and various other professions in the field of accounting will not happen if every
accountant has the knowledge, understanding, and a willingness to apply the moral
values and ethics in the execution of his professional work. This certainly can not be
separated from the many factors that can influence the behavior of unethical
accountant. Within the framework of unethical behavior accountant, several factors
that can affect, among others, religiosity, education, organizational, emotional
literacy, and family environment (Ludigdo, 2004).
According Suseno (2003: 38) in his study of ethics Ethics mentions Java Java
community who hold fast to the principles of harmony and respect. In principle pillar
has a noble goal to maintain harmonious relationships between individuals.
Unfortunately, anything that could lead to conflicts must be prevented, so that the
people here are required to willingly subordinated, even if necessary to remove the
personal interests of the collective agreement. Examples are often seen from these
two principles in society is the consensus and cooperation. These characters when
viewed from the standpoint of society can be said to be ethical, but when entering the
world of work, in particular the accounting profession that in any work required to
uphold professionalism, and then apply the behavioral characteristics of the
exclusion of personal interest to a common understanding (shy) may not necessarily
be considered unethical in accordance with the Code of Ethics of Professional
Accountants IAI.
In practice, of course many things contrary to the nature accountant should
always prioritize professionalism in working with Javanese culture demanded must

287
always respect the individual one and other. Javanese culture that has existed within
the accountant, is something that has been ingrained and difficult to separate from
ourselves accountant Java.

2. Literature Review
2.1 Java Philosophy
Javanese philosophy according Kusbandriyo (2007: 13) in his Principles of
Javanese philosophy, understood as a philosophy which emphasizes the importance
of the fullness of life. Human thinking and contemplating himself in order to find the
integrity of himself in relation to God. This dimension is the dominant characteristic
and can not be released Java dengankecenderungan human life. Thoughts Java is an
attempt to achieve the perfection of life, therefore, intuition plays an important role.
Humans devote entire existence, both physical maupunrohani to achieve that goal.
That effort is unity, unanimity.
Javanism give a general idea of nature as a comprehensive body of
knowledge that is used to interpret life as it is and as it seems (Mulder, 1996). Java
community with kejawennya strongly believe that life is governed by an established
system that is the cosmic law (Hukum Pinesthi) is getting high point in the center
that includes everything that is "the Most Single" (Hyang Suksma) or "Life" (urip).
From this then comes an understanding of where to live and where to return.
Kejawen not a religious category, but points to an ethics and lifestyle inspired by the
way of thinking Javanism.

2.2 Java Ethics

According Endraswara (2003), Javanese ethnic group is the largest tribe in
Indonesia and have the values and culture of its own that made the difference with
other tribes in Indonesia. Java Ethics outlines submitted in two ways. The first is
through pituduh (advice, recommendation) whose contents give advice in the form of
a recommendation. Both through pepali (wewaler), which means the prohibition to
stay away from bad deeds.
In the ethics of Java, there are two basic rules that until now is still a role
model for people of Java, namely the principles of harmony and respect. The

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principle pillar aims to always keep the relationship between individuals in order to
remain in harmony to avoid disputes and conflicts. Behavior pillars of the most
striking is the deliberation and mutual cooperation. While aiming to respect the
principle of respect between individuals based on the degree and position (Suseno,
2003).

2.3 Understanding of Ethics

2.3.1 Definition of Ethics
The word ethics comes from the Greek word ethikos, adjective of ethos
(behavior). Definition of ethics is often confused with the notion of ethics. While the
moral itself comes from the Latin moralia, said the nature of the mos (customs) and
mores (behavior). According Ludigdo (2012), the moral sense is not really different
from the sense of ethics, namely the values and ethical norms prevailing in society.
Moral is a system of values about how people should live as a human being based on
religion and culture that has been hereditary embraced by the people.
Most people define unethical behavior as an act different to what they
consider to be appropriate in certain situations. There are two main reasons why
someone acted unethically, that someone different ethical standards with ethical
standards prevailing in society as a whole, or people choose to act selfish. Often, the
reason it appear together (Arens 2008: 98).

2.3.2 Ethics And The Accounting Profession

Business and Professional Ethics of Business is one of the daily activities that
a man in the economic field. In ancient Greece, the business activities once used as a
dishonorable profession. Therefor there is the impact of the buying and selling
activities. As many occurred in the past century, has caused damage in areas of life
(Ludigdo, 2012). Business ethics is necessary in order to raise awareness about the
activities of the business we're all good. Business is not a field of activity and when
we're about to enter it, we first need to abandon all ethical and act without trying to
know things that are considered to be both ethically. Business ethics inspire us that
our businesses continue to act and behave as human beings who have an attitude of
ethical (Keraf & Imam: 1991).

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 In a business, there are of course running the business conduct such activities.
One of them is a person whose job is to record every transaction. These professions
are accountants. According Keraf and Imam (Ludigdo: 2004) the nature and
characteristics professions consist of: (1) their specialized knowledge, (2) their
principles and high moral standards, (3) dedication to the public interest, (4) the
existence of a special permit to carry a profession, (5) the existence of a professional
organization.

3. Research Methodology
According to Bogdan and Taylor (1975), quoted by Moleong (2007: 4)
argues that qualitative methodology as a research procedure that produces
descriptive data in the form of words written or spoken of people and behaviors that
can be observed. Further illustrated by David Williams (1995) as quoted Moleong
(2007:5) argues that qualitative research is collecting data on a natural background,
using natural methods, and conducted by a person or researchers who are interested
in nature.
Qualitative research aims to obtain a full picture about something humanly
studied. The qualitative research related to ideas, perceptions, opinions, or beliefs of
the study and all of which can not be measured with numbers. In this paper, using a
qualitative approach and interpretation of which only give an opinion accounting
meaning in the concept of philosophical thinking Javanese culture.
This study use the interpretive approach is derived from German philosophy
focuses on the role of language, interpretation and understanding in the social
sciences. This approach focuses on the subjective nature of the social world and
trying to understand it from frame of the object being studied. So the focus on
individual meaning and perception man on reality rather than an independent reality
which is beyond them (Ghozali and Chariri, 2007). Humans constantly create their
social reality in order interact with others (Schutz, 1967 in Ghozali and Chariri,
2007). Objective approach interpretive none other than to analyze this kind of social
reality and how social realities that formed (Ghozali and Chariri, 2007).

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4. Result and Discussion
Redefining Accountability Implementation According to the Accounting
Profession Java Cultural Perspective. Implementation of the accountability of the
accounting profession is divided by three dimensions: the relationship between man
and man, man and nature, and the last is the human relationship with the Creator:
a) Accountant Accountability in Human Relations with Human Dimension
According Java Cultural Perspective In human activity with accountability
relationship can be divided into duakelompok, are direct stakeholders and
indirect stakeholders. Slamet (2011) in the Son (2013) defines
directstakeholder are parties secaralangsung contributed padaperusahaan
either in the form of non-financial kontribusimaupun. While
indirectstakeholder is the same party kepadaperusahaan sekalitidak
contributing both financial and nonfinancial, but sharia they are entitled to
well being of the company.
Accountability Accountant of the Company / Organization According Java
Cultural Perspective
Accountants working in KAP is a public accountant. Public accountant does
not work with preparing financial reports KAP her, but acts as the truth and
perfect report independent who examine a company's financial their by
issuing opinions as the company's financial condition
Accountability of public accountants to which he devoted dilakukandengan
abide by the rules of the firm, including maintaining the good name of the
firm. This can be done by accountants Java with do duties as accountant
public who uphold the code of conduct akuntandalam every execution of
their duties.
In addition, public accountants Javanese cultural backgrounds also continues
to maintain its quality in providing audit services to client .It does between
the firm and the client has kerjasamaprofesionalisme good relationship with
each other andcan make that relationship menjadikerja long-term cooperation
in the future.
Accountability Accountant against External parties According to Java
Cultural Perspective Accountability of public accountants must be

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 demonstrated by sikap independen of public accountants and maintain client
confidentiality. Both attitudes are absolutely valid from the first moment of
public accountants willing to sign a contract until forever. Even when the
contract ends any independent stance and confidentiality between client and
public accountants are still valid. Unless there are urgent circumstances based
on legal decisions which requires public accountant to share information
about their clients.
Other forms of public accountants Java is terbukaterhadap anyone who would
be calonkliennya. Jawabertanggungjawab public accountants not to limit
danmembeda distinguishing prospective clients, as long calonklien who meet
deemed qualified audit engagement acceptance criteria.
Accountability to Public Accountant According Java Cultural Perspective
Community in question is concerned as pembuatkeputusan users who use
base to make economic decision, the investor or potential investors in the
capital markets, shareholders, creditors and potential creditors, government,
management and public generally. Accountability is evidenced by the
creation of an accountant who has audited financial reporting transparent and
accountable.
b) Accountant Accountability in Human Relations with Natural Dimensions
According Java Cultural Perspective
The concept of accountability very closely with the company, especially the
actions of Corporate Social repsonsibility (CSR). Java accountant as an
accountant who uphold the values and principles of Javanese culture is no
stranger to the concept that humans should be can align themselves with the
universe. Actions align themselves with this nature can mean for
senantiasamenjaganya and does not apply arbitrarily. Dimensional
relationship between humans and the natural environment can be bridged
through responsibility corporate social responsibility (CSR).
Accounting as media reporting of CSR has a function as a unit activity
obstacles to business.The accountability an accountant to participate support
the activities of nature demonstrated through CSR shelter. Additionally, the
accountant role in the preparation and reporting of this sustainable business.

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 With its competence, the accountant can measure the impact of sustainable
strategies on economic performance, social and environmental company from
year to year.
c) Java Accountant Dimension Accountability in Human Relations with God
According Java Cultural Perspective
Man's relationship with God is a relationship that is inevitable. Each person
who has the confidence to believe that there are powerful forces that govern
the entire universe in order to run properly. In the relationship between man
and God, there is something that was promised when the life of this world
come to an end, namely the eternal world that must be pursued with all sorts
of conditions and commands of God. Honesty in the accounting profession
was also a manifestation of the belief in the Almighty. In effect everyday
maybe no one can see what someone is doing, but for those who believe in
the existence of God would be ashamed to dishonesty because he believed
God would watch movements in the good and bad deeds of people. This is
evidenced by a statement regarding the provision of tariff costliness will not
give blessing signifies that the Javanese still remember very nature as human
beings. Replacing high rates equates to squeeze, making money available is
unlawful, and that's not allowed in Islamic law. Each of the bad things will
make a boomerang for doing so. This also applies in the teachings of any
belief.

5. Conclusion
A culture is essentially inevitable, as a part of human life. Culture is the rules,
norms, customs, and values that govern a person's life. The shape of the culture is
not written, but conveyed verbally to one generation to the next, with the hope of a
way of life in everyday life. The influence of culture in human life, regardless of
one's status, including in terms of profession, status or level of education.
Javanese culture was associated with prioritizing balance, harmony, and
respect. All the elements of life must be in harmony, side by side, essentially all
must conform. Everything that cause incompatibility to be avoided, if there are
things that can disturb the harmony should be discussed to correct quickly to get

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back in harmony and fit again. So in this case according to the philosophy of Java as
well, Human devote entire existence, both body and spirit to achieve goals in life.
One of the principles of accounting is that it can create a report that is
transparent and accountable, then the accounting interpreted in the light of the
philosophy of Java is "Ngudi kasampurnan" accounting which is believed to report
financial accountability not only for the benefit of stakeholders (human), but
accounting is applied is now a reports that can be accounted for God the Creator and
accounting for the environment (nature) in order for the survival of the business
world (going concern).
Javanese philosophy is not only reserved for the Java community, but also for
anyone who wants to learn and there are many teachings in the philosophy of Java.
Philosophy is a process which in this case means in the form of philosophy is in the
process of solving a problem using a certain means and methods in accordance with
the object of the problem. All normal human beings are always characterized by
activities that thinking activity.
Also included as a man who worked in the accounting field, they should
begin to think that accounting is not just a matter of, tenik record and make financial
reports to investors and creditors. From now to anyone who studied accounting
mainly working as an accountant profession should interpret that accounting was
present to be able to create an accountability report for God, fellow human beings
and the natural order of metaphysics and spiritual capabilities closer to them and
improve the ethical stance in the act. Then this should be interpreted properly
remedy everything is not only the accounting profession background Javanese
culture.

REFERENCES

Arens, Alvin A. James L. Loebbecke, (2008). Auditing Pendekatan Terpadu,

Terjemahan oleh Amir Abadi Yusuf Buku Dua. Jakarta :Edisi Indonesia
Salemba Empat.
Chariri dan Ghozali, Achmad (2007) Teori Akuntansi. Yogyakarta : Penerbit Andi.
Ciptoprawiro, A. (1986). Filsafat Jawa (Vol. 3176). Balai Pustaka.
Endraswara, Suwardi. (2003). Budi Pekerti dalam Budaya Jawa. Yogyakarta: PT.
Hanindita Graha Widya

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Ikatan Akuntan Indonesia. (2015). Standar Akuntansi Keuangan. Jakarta: Salemba
Empat
Keraf, A. Sonny. (2001). Etika Bisnis: Tuntutan dan Relevansinya. Yogyakarta:
Kanisius
Kusbandriyo, B. (2007). Pokokpokok Filsafat Jawa dalam Menggali Filsafat dan
Budaya Jawa.
Ludigdo, Unti. (2004). Bahan Ajar Etika Bisnis. Malang: Universitas Brawijaya
Press Ludigdo, U. (2012). Memaknai Etika Profesi Akuntan Indonesia
dengan Pancasila.
Inaguration Speech of Professor in Business and Profession Ethics. Magnis-Suseno,
F., & Reksosusilo, S. (1983). Etika Jawa Dalam Tantangan Sebuah Bunga
Rampai.
Moleong, Lexy J. (2007). Metologi Penelitian Kualitatif. Bandung : remaja Rosda
Karya
Mulder, Niels. (1996). Pribadi Dan Masyarakat Di Jawa. Jakarta : Sinar Harapan.
Nuryasin, Deby. (2012). Penerapan Kode Etik Profesi Akuntan Publik di
Kota Malang. Malang: Fakultas Ekonomi dan Bisnis Universitas Brawijaya
Suseno, Franz Magniz. (2003). Sebuah Analisa Falsafi Tentang Kebijaksanaan
Hidup Jawa. Jakarta: PT. Gramedia Pustaka Utama

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FAA-04

COMPARISON CONVENTIONAL AUDIT WITH

PERSPECTIVE SHARIAH AUDIT

Hendrik Tri Oktaviansyah

University of Jember
Email: Oktahendrik64@yahoo.co.id

ABSTRACT
Development of the banking industry is growing rapidly in developing its
business and carry out business activities. Purpose of this study was to determine the
comparative conventional audit to the audit of sharia banking. Conventional real
audit in practice lead to the limitation looking for cheating in the company of the call
with fraud. Sharia audit conducted by the Auditor should be done by someone who
has sufficient knowledge and ketrerampilan related to the functions of sharia. the
application must be done seriously, especially honest and in accordance with Islamic
Shari'a audit mechanism in taking care must be coherent and appropriate audit
procedures for the future will be accounted by God.

Keywords: Conventional Audit, Sharia Audit, Banking.

1. Introduction
A healthy banking system in need of quality banking financial statements are
able to provide transparency regarding the provision of information required by the
banks. Banking financial statements should be presented transparency, accurate and
can be believed about the various activities in the banking business. UU no. 3 of
2004 on Indonesian bank regulations require every bank announced financial reports
that have been set by Bank Indonesia. So banks need in the audit related to its
financial statements as well as to take action against advance and minimize cheating
on purpose and fallacies against intenal company on Banking.
Banking in Indonesia include conventional banking and Islamic banking.
The financial statements on conventional banking is addressed to the company's
internal and external decision making (Kieso and Weygandt, 2010). While the
financial statements on Islamic banking is intended to comply with Islamic
principles in their business activities to stakeholders whether the financial statements

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of Islamic banks has been running its operations based on the principles of sharia or
not. Therefore, it has yet to be accommodated by conventional bank audit relating to
the linkage of financial statements of Islamic banks their compliance with the
principles of sharia in the business activities of financial statements of Islamic
Banking (Juliana and Aloysia Yanti Ardiati, 2004).
Problems that occur in this time that is still new shariah auditing so that there
is no proper opinion on the audit report of sharia only provide a fairness opinion on
the audit report, only it is different from the conventional audit which has long been
developing an opinion that has been set in accordance with PSAK. While the need
for sharia audit is needed. Muslim intellectuals formulating Sharia audit by a
conventional audit. When in fact the result of a scientific process of a conventional
audit is not entirely true if measured according to the norms and principles of sharia.
the difference is the level of philosophy or even the concept of the level of the
system and its outputs.
Therefore it is necessary to research and theories newly associated with the
audit of sharia in accordance with the values of Islam. So there is a provision to audit
provisions of sharia in accordance with the norms and standards of Islam. The
approach in formulating the auditing of Islam is in line with the approach AAOIFI in
formulating standards of accounting and auditing for financial institutions of Islam
with the aim based on those principles of Islam and its teachings that makes the
destination for consideration by associating them with the thought that current
(Harahap, 2002: 29, as well as the Inspire Maulana Fiqi, 2013: 4).
Conventional audit in the audit practice will be focused to assess the fairness
(fairness) opinion in the form of management in running its operations as well as
assurances that the business has been run correctly (Run Properly). Conventional real
audit in practice lead to the limitation looking for cheating in the company of the call
with fraud. More directed to provide information without their spirit as well as the
responsibility (or if he just is not a Horizontal) Horizontal and Vertical.
Sharia audit conducted by the Auditor should be done by someone who has
sufficient knowledge and ketrerampilan related to the functions of sharia. Business
operations are based on Islamic principles and apply Islamic values consistently.
Tasks that may include preparation of financial statements, preparation of accounting

297
reports to management, Conducting internal audit to detect fraud in the company.
However, the application must be done seriously, especially honest and in
accordance with Islamic Shari'a audit mechanism in taking care must be coherent
and appropriate audit procedures for the future will be accounted by God.
The study conducted by mina Sakina, 2014 regarding the comparison
between the conventional audit and audit of sharia in the results of the study
researchers conclude that there is to the difference between the audit procedures
between Islamic banks with conventional banks. In auditing Islamic banks have an
additional procedure is to test and check for compliance with Islamic principles that
have been qualified and Islamic principles or not. Whereas in conventional bank
audit the auditor simply just check the fairness of financial statements while in
Islamic banking auditors examine the fairness of the financial statements also check
the fulfillment of sharia principles.
Research conducted by Hayashi (1989) in his dissertation on the International
Of Japan On Conventional Syariah Concept In conjunction with the audited
accounting In the study suggests that the fundamental difference between
conventional in auditing with Sharia Islamic perspective. Audit In the perspective of
Islam has metarule that is guided by Islamic law which is described by the Quran
and Hadith Whereas in conventional audit is not based on such things only check the
reasonableness of the financial reporting of companies.
Furthermore Azharsyah Ibrahim 2009 regarding the audit of conventional
versus Sharia audit: Islamization Basic Concepts of Accounting. Researchers found
the basic concepts of a conventional audit can be used as a fundamental base.
Difference sharia accounting with conventional accounting lies in aspects of the
provision of information, especially on the objective way of measuring and reporting
and appraisal communication. Another difference is that the purpose of audit reports
in which the audit was based on sharia law shariah integrated in the life of the
Muslim community. Sharia Audit has a form with the values of justice, truth and
accountability.
From the point of view that has been pointed out above and related research
studies in Islamic audit conventional audit concluded that it can only assess the

298
fairness of a conventional audit its financial statements only while the shariah audit
check the fairness of financial statements in accordance with Islamic principles.

2. Literature Review
2.1 Understanding Audit
Auditing is the collection and evaluation of evidence about information to
determine and report the degree of correspondence between the information and the
criteria established, in conducting the audit should be performed by a competent and
independent (Alvin A. Arens et al, 2010: 4). In doing an auditor should pay attention
and perform the audit planning, audit execution, until the issuance of audit reports. In
conducting the audit process that need to be known so that the auditors can perform
its functions in accordance with the applicable rules so that he can protect
themselves from the possibility of a fatal error such as errors that can cause a risk
auditor audit (Harahap, 2002: 122)
(Harahap, 2002: 122) Explaining that the process in conducting the audit are
as follows :
1. Get the information to understand the companys situation.
2. The value factors affecting risk levels are acceptable from an audit to be
carried out.
3. The value of the factors that affect the likelihood of an error.
4. Combine the test results and conclusions about the risk of all levels of
testing.
5. Remove the audit report.

2.2 Conventional audit

Conventional Audit based on a system that is free of moral values and do not
take into consideration ethical values set by Islam. The conventional approach to
audit has given little attention to the social context and auditing organization
(Handoyo Sigit, Head & Sanusi, 2013). Conventional audit carried out by the steps
by an auditor from the audit plan, execution, until the issuance of the auditor's report.
Conventional audit process needs to know so that the auditors can carry out its

299
functions in accordance with the applicable rules so that he can protect themselves
from fatal errors that can cause a risk audit (Harahap, 2002: 121).
Basic model of a conventional audit depends on the company models of
secular ethics is reflected in conventional accounting or auditing generally proposed
a system of ethics to not uncertainty. Capitalistic approach is not suitable for the
economic system of Islam on the other hand put the values of high moral, justice and
Benefit the People (for the benefit of the Muslim community) as one of its
principles. According Haneef because of differences in the economic vision of Islam
to the people of the western economies, coupled with the epistemological and
methodological framework in Islamic scholarship development of Islamic economic
thought. He then pointed out that the Islamic economy, including banking financial
or accounting should be evaluated.

2.3 Sharia Audit

Audit sharia is used as a check or provide fairness (truth) a report presented
by the management so that it could be believed by management that are used in
making decisions in accordance with Islamic Shari'a. Islam accountants country is
divided into seven functions. Six functions related to accounting work. While one
function in kususkan to correct bookkeeping. Correcting bookkeeping function is of
particular importance this is similar to what we call muraja'atul hisabat (correcting
accounting or auditing). Or tadqiqul hisabat (accuracy bookkeeping) and arriqabatul
kharijiyyah (external supervision) (Maramis Nia Romadaniati, 2013 and Harahap,
Sofyan S, 2002: 15).
Truth and justice in measure (measure) is, also regarding the measurement of
wealth, debt, capital income, expenses, and profits of companies that an auditor shall
measure the wealth properly and fairly. An auditor will present a financial report
compiled from the evidence there is of an organization that is run by a management
appointed or designated in advance.
Truth and justice in measure (measure) is, also regarding the measurement of
wealth, debt, capital income, expenses, and profits of companies that an auditor shall
measure the wealth properly and fairly. An auditor will present a financial report

300
compiled from the evidence there is of an organization that is run by a management
appointed or designated in advance.

3. Research methods
This study uses research methods literature with comparative descriptive
explanation. data used by researchers is the secondary data is data derived from
documents, financial reports, journals, seminar, and website. The purpose of this
study was to determine the comparative conventional audit to audit the sharia
perspective and gives an overview difference between conventional and Shariah
audit in banks.

4. Discussion
4.1 Standards Islamic Accounting and Conventional Accounting
Islamic and conventional accounting standards used to regulate accounting
practices of banks. The standard used to uniform accounting practices of banks so
that the bank's financial statements easier to provide information about the financial
situation appropriately. Therefore, the published results of cooperation between the
bank Indonesia (BI) and accounting bonding Indonesia (IAI) in accordance with the
standards for conventional banks and Islamic banks (PABK, 2003: 8)
Sharia Conventional
a. Statement of Financial a. Statement of Financial Accounting
Accounting Standards (PSAK) No. Standards (PSAK) no.31 (Received
59, "Accounting for Islamic 2000)
Banking", PSAK 101 "financial b.Guidelines for Financial
statements" PSAK 102, Accounting Standard 31.
"Accounting for Murabahah", c. Indonesian Banking Accounting
PSAK 104, "Accounting Istishna", Guidelines (PAPI) Revised 2001
PSAK 105, "Accounting for issued by the Indonesian Institute
Mudharabah" PSAK No. 106, of Accountants (IAI)
"Accounting Musharaka", PSAK d.Accounting Guidelines with
No. 107, "Accounting for Ijarah" financial accounting standards for
b.Accounting for Islamic Banking entities without public

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 and implementation guidelines accountability (SAK ETAP)
(accounting guidelines Indonesian
Islamic banking
Source: mina Sakina, 2014.

4.2 Conventional Role and Process Audit

Conventional audit in general in his report can definiisikan as reports of
independent auditors' opinion regarding the appropriateness or accuracy of client
statements that present the report keuangnnya in accordance with accounting
principles generally accepted, which is applied consistently with the previous year.
In a conventional audit audit report referring to the four standard paelaporan
contained in SFAS standard. In a conventional audit reporting required uniformity
untu avoid confusion. Conventional Audit guided by professional standards that have
been formulated and detailing the various types of audit reports should be included
in the financial statements (Handoyo sigit, Kasim & Sanusi, 2013).
There are several types of the opinion that it provides accountants with respect to a
general inspection, namely:
1. Unqualified Opinion.
2. Unqualified Opinion Explanatory Language.
3. Qualified Opinion
4. Adverse Opinion
5. Unqualified Opinion

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 Figure 1.
Process Audit In Conventional Banks

The information you need to know:

includes:
1.Bank business fields include the type of
products and services, capital structure and 1. about the Company
Talks With
characteristics of the location of its
Conventional 2.Explaining the function of audit
operations
Banks / auditor liability limits
2. Accounting system
3. Set the time of the audit, the
Relevant documents such as: For audit planning banks need to know:
audit
3.internal control systems and review of risk
1. management
Legislation relating to bank 1. Audit
time audit
4. fees
4. knowledge of with
2.communication the bank's business
(BI), the capitalthrough
market 2. Sign
readiness bank contracts
5. employment
watchdog and the tax office.
discussions with the auditor's previous
discussions with the Islamic bank personnel 3. scale bank
3. The results of bank examinations Indonesia
and review of relevant documents Planning
Auditing 4. Bank Interest
4. the financial statements of the previous year
arranged in 5. type and bank risk factors and review
5.minutes of meetings of the board of
commissioners issues, council, board of auditing (review) for risk management
directors, credit committee and other. program
6. bank's internal control
6.Risk management strategies and reports such as
interest rates, asset quality and liquidity of bank 7.enterprise information processing
statements. system
Implementation
7. The organizational structure
Which isofconducted
the bank : auditing 8. parties that have relations preferential
conformance Assessed:
8.bank operations including
- physicalstrategic policy in
examination 9. the use of specialist work
testing
managing liquidity loan asset / liability
- existence
- confirmation Testing the 10.processing of transactions by service
9. Periodic financial reports
truth of the organizations
- completeness
- inspection evidence
10. internal reports and financial information used See steps rudimentary
11.consideration of the possibility of a
Supervision - rights and obligations
- search
11.The work plan (Business Plan) and its realization material misstatement
of audit
opinion accountant
- assessment and collection
- recalculation results 12. development of the overall audit
Formulation of
The contents of the - Unqualified Opini
- presentation
plan and
the audit
-auditor's
scanningreport
report disclosure
- Unqualified Opinion
Waiting for a 13. consideration of the internal audit
question and answer
- requirements accountant - guidelines
Explanatoryto influence
Language
response from function
the future audit
observation the user - Qualified Opinion
- financial statements 14. adherence to laws and regulations
Source: Sofyan s. Harahap (2002)
- the analyticalofprocess
explanation financial -
15. consideration of the bank's ability to
statements survive
- use of the work
4.3 Role- financial
of Sharia Audit Process
statement 16.reviewing adherence to the minimum
-analysis
computer assisted audit - tidak wajar dengan
Audit in the eyes of
techniques
Islam In the Qur'an mentioned that
capital we should measure
requirement
kualifikasi
the fair,- appendices
do not overbid and should not be reduced. We are forbidden
17. analytical proceduresto demand

- data tambahan

303
justice for our size and scale, while for others we do any less. Truth and justice in
measure (measure) that also involves the measurement of wealth, debt, capital
income, expenses, and profits of the company, so that a measure of wealth
Accountant must be true and fair (Harahap, Sofyan S, 2002).
An accountant will present a financial report compiled from the evidence
that exists in an organization that is run by a management appointed or designated in
advance. Management can do anything in the present report in accordance with the
motivation and interests, so logically feared he would ride his interests. It required
the Independent Accountant who perform checks on the report and the evidence
(Kariyoto,2013).
The legal basis of the Audit Islam derived from the Koran, the Sunna
Nabwiyyah, ijma (consensus of the ulama), Qiyas (similarity of a particular event,
and 'Uruf (customs) are not contrary to Islamic Shariah. The rules of Islamic
Accounting, has special characteristics which differentiates it from conventional
accounting rules. the rules of Islamic Accounting in accordance with the norms of
Islamic society, and include social science disciplines that serve as public servants in
place of the accounting application (Harahap, Sofyan Syafri, 2008).
Islamic economic system has begun to put into practice in the field and not
just a matter of discussion the experts. Initially the system is applied in the banking
sector, and then also spilled over into other financial sectors such as insurance and
capital markets. Very rapid growth, today no less than 200 Islamic financial
institutions have operated implement Islamic economic system is contained in
various parts of the world not only Islamic country but also in non-Muslim
Countries.
With the advent of such a system would not want this institution certainly
has differences with conventional institutions, because it is operated by using a value
system based on the sharia of God's sovereignty is not sovereignty ratio of God's
creation is limited. Thus, the system is related to the existence of these institutions
also need to implement Islamic values if we want to implement Islamic values
consistently. So this is where the relevance of the need for Islamic auditing systems
in performing the audit function of the institution that is run Islami (Harahap, 2008).

304
 Figure 2.
Syariah Audit Process In Syariah
The information you need to know: includes:

1.Islamic bank business fields include the 1. about the Company

type of products and services, capital
Talks With
structure and characteristics of the Islamic Bank 2. Explain the functions of audit
location of its operations.
3. Set the time of the audit, the
2. Accounting system audit
Relevant documents such as:
3.internal control systems and review of risk For
4. audit
Audit planning
fees banks need to know:
managementof the MUI fatwa, rules,
1.Legislation
guidelines issued by the regulator for 1.5.An
Sign
understanding
employment ofcontracts
the basic principles of
4. sharia
Knowledge of documents
and other Islamic bank business
issued by the sharia Islamic bank business
through discussions
regulator for sharia. with the previous
auditor, discussion with bank personnel Planning 2. An assessment of the inherent risk
and review of documents
2.communication with (BI), the capital (inherent risk) and risk control (control
Auditing
market watchdog and the tax office, sharia risk)
arranged in
supervisory board, and the board of
national sharia
auditing 3. The timing and process audit to be carried
program out
3. The results of bank examinations
4.consideration of issues concern assumption
Indonesia
(going concern)
4. the financial statements of the previous Implementation 5. Risks in Islamic banking
year auditing
Shariah
Compliance 6.Assessed:
review of the risk management
5. minutes of meetings
Which is of the board
conducted : of
commissioners issues, council, board of Testing - existence
conformanc 7. detection of errors and fraud
- completeness
directors, credit -committee
physical examination
and others.
e testing - rights and obligations
Testing the 8. evaluation and disclosure of the contingent
6. Risk management - confirmation
strategies and reports - Assessment and
truth of the liabilities
such as interest rates, asset quality and See steps
collection
- inspection evidence
liquidity of bank statements. 9.-rudimentary
Presentationofand
consideration the continuity of the entity
Supervision of disclosure
- search audit results 10. internal control
7.The organizational structure of Islamic opinion accountant
banks
- recalculation 11.information systems technology
Formulatio - Unqualified Opini
The contents of the
8.operating systems and procedures of n of the
-auditor's
scanningreport 12. analyticalOpinion
procedures
Islamic banks. - Unqualified
- Requirements accountant audit report -Explanatory Language
guidelines to
- questionstatements
and answer Waiting for
13. communication with the supervisory
10.The work plan- financial
(Business Plan) and its a response
influence the audit
- Explanation of financial - Qualified
board Opinion
and
in the the board of national Islamic
future
realization - observations
statements from the sharia
- The analytical process
- Analysis of financial user -
- Use of the work 14. consideration of the possibility of material
Source : Sofyan
statementss. Harahap (2002)
- Computer assisted misstatement
-audit
Appendices
techniques
4.4 Accounting And
- Additional dataAuditing Standards For Islamic Financial
15.ketaatan againstInstitution
Islamic principles,
(AAOFI) laws and regulations

Initially the organization was called the Financial Accounting Organization

305
 for Islamic Banks and Financial Institution was established on 1 Safar 1410 H
or 26 February 1990 in Aljiria. AAOIFI Audit General Principles:
1. Auditor Islamic financial institutions must comply with the code of conduct
issued by the accounting profession AAOIFI and the International
Federation of Accountants is not against the rules and principles of Islam.
2. The auditor should conduct the audit in accordance with standards issued by
the Auditing Standards for Islamic Financial Institutions (Asifi).
3. The auditor should plan and perform the audit with professional
competence, careful and aware of all the circumstances that may exist that
cause the financial statements misstated.
The approach in the formulation of this system is as proposed by the
Accounting and Auditing Standards for Islamic Financial Institution (AAOIFI),
namely:
1. Set goals based on Islamic principles and teachings then make these goals
for consideration by associating them with the thought that the current
accounting.
2. Starting from the objectives set by the capitalist accounting theory and then
test it according to sharia law, accept things that are consistent with sharia
law and rejects things that are contrary to sharia.

4.5 Code of Islam Accounting Profession

4.5.1 Integrity
Islam put integrity as the highest value that guides the entire behavior. Islam
also assess the need for skills, competence and specific qualifications to perform an
obligation.

4.5.2 Sincerity
This premise means that accountants have to seek the pleasure of God to do
the job instead of looking for the name, pretending, hypocritical and as other forms
of falsehood. Being sincere means that accountants do not need to be subject to
influence or external pressure but should be based on the commitment to religion,

306
worship in carrying out the functions of his profession. The task of the profession
must be converted to a duty of worship.

4.5.3 Piety
Piety is an attitude of fear to God, both in a state of covert and overt as one
way to protect a person from the negative consequences of conduct contrary of
Shari'ah, especially in terms of the berkitan with behavior towards the use of wealth
or transactions that tend to the injustice and the things that are not in accordance with
the shari'a.

4.5.4 Truth And Work Perfectly

Accountants do not have to limit himself only do the work and his profession
but also had to struggle to find and establish the truth and perfection of professional
duties by carrying out all the tasks assigned to them in the best good and as perfect
as possible. This will not be realized except through academic qualifications,
practical experience, and understanding and religious experience is mixed in the
discharge of his profession.

4.5.5 Fear Of God In Every Thing

A Muslim believes that God is always looking and seeing all behavior
servants and always be aware of and consider any behavior that is not pleasing to
Allah. This means that a lady accountant / auditor must behave fear Allah without
having to wait and consider whether another person or his superiors agree or disliked
it. This attitude is self-censorship so that they can survive continuously from the
temptation that comes from work profession.

4.5.6 Humans Are Responsible Before God

Accountant Muslim must believe that God is always watching all of his
behavior and he will answer to all of his behavior to God later in the hereafter good
behavior amupun great small. Therefore accountant / auditor must always remember
that he will be accountable for all their work before God and also to the public,
profession, employer and himself.

307
5. Conclusion

In today's era of industrial development in Indonesia is growing rapidly in

developing its business and conduct business activities are diverse. In the
development of its business did not escape the role of audit to crack lanjutin and
minimize cheating on purpose and fallacies perbankan.Masalah happened today is
auditing sharia is still new so there is no proper opinion on the audit report of sharia
only provide a fairness opinion on the audit report, only it this is different from the
conventional audit which has long been developing an opinion that has been set in
accordance with PSAK. While the need for sharia audit is needed. Muslim
intellectuals formulating Sharia audit by a conventional audit. When in fact the result
of a scientific process of a conventional audit is not entirely true if measured
according to the norms and principles of sharia. the difference is the level of
philosophy or even the concept of the level of the system and its outputs.
The right solution to solve the problem by way of necessary research and
new theories associated with sharia audit in accordance with Islamic values. So there
is a provision to audit provisions of sharia in accordance with the norms and
standards of Islam. The approach in formulating the auditing of Islam is in line with
the approach in formulating AAOIFI accounting and auditing standards for Islamic
financial institutions with the aim of Islam and its teachings based on those
principles which make the destination for consideration by associating them with
current thinking.
Conventional real audit in practice lead to the limitation looking for cheating
in the company regarding the fairness of the financial statements of the company.
Audit sharia in practice based on the principles of Islam and applying Islamic values
consistently. Accountable for all his work before God and also to the public,
profession, employer and himself.

6. Limitation and Suggestion

Comparative study with conventional audit in perspective sharia audit data

obtained limited. Comparative study with conventional audit in the audit shariah
perspective needs to be done further research in order to better research results.

308
 REFERENCES

Alvin A. Arens et al,2010. Auditing An Integrated Approach, Prentice Hall

International. Jakarta Salemba empat.
Azharsyah Ibrahim,2009.Audit Konvensional VS Audit Syariah : Islamisasi Konsep-
Konsep Dasar Akuntansi.Jurnal Ekonomi Dan Keuangan Islam Vol.1 No.1
Daridin,2015. Auditing dalam perspektif islam. Badan Pengawasan Keuangan Dan
Pembangunan.
Handoyo sigit,Kasim &Sanusi,2013. Assesing The Current Practice Of Auditing In
Islamic Financial Institutions In Malaysia And Indonesia.International
Journal Of Trade, Economics And Finance. Vol.4 No.6
Harahap, Sofyan S,2002. Auditing Dalam Perspektif Islam. Jakarta: Pustaka
Quantum cetakan 1.
Harahap, Sofyan Syafri. Auditing dalam Perspektif Islam, Jakarta: Pustaka Quantum,
Cetakan II, 2008, hlm. 86.
Ilhami Maulana Fiqi,2013. Faktor-Faktor yang mempengaruhi Audit Report Lag
Pada Perusahaan Manufaktur Yang Terdaftar Di Daftar Efek Syariah
Tahun 2008-2011.Skripsi. fakultas syariah dan hukum.Universitas Islam
Negeri Sunan Kalijaga.Yogyakarta.
Kariyoto,2013. Akuntansi Dalam Perspektif Islam. Jurnal JIBEKA Volume 7 No 2
Agustus 2013.
Mina sakina. 2014. Perbedaan Prosedur Audit Bank Syariah Dan Bank
Konvensional Study Kasus Pada Bank Pembiayaan Rakyat (BPRS) Dan
Bank Persreditan Rakyat (BPR). Thesis. UIN Sunan kalijaga yogyakarta.
Yuliana and Aloysia Yanti Ardiati, 2004. Faktor-faktor yang mempengaruhi Audit
Delay Di Indonesia. Jurnal akuntansi. Vol.16. No.2.

309
FAA-05

THE MAKING OF SOSIAL ASSISTANCE

BUDGETING PERFORMANCE BASED

Farah Azmi
Raden Andi Sularso
Purnamie Titisari
University of Jember, Indonesia
Email: farahazmi1977 @gmail.com

ABSTRACT

Based on regulation no. 14 year 2016 social assistance is providing assistance in the
form of cash / goods from local governments to individuals, families, groups and / or
people that are not continuously and selectively aimed to protect from the possibility
of social risk. social assistance is part of the local government budget.
implementation of social aid often creates problems because of the absence of
special guidelines on social assistance. the absence of specific guidelines has resulted
in different perceptions on each institution to determine what types of expenditure
included in the social assistance. determining the type of expenditure improperly will
cause problems in the budget formulation. the performance-based budgeting will be
applied to avoid problems in the preparation of the social assistance budget. the
purpose application of performance-based budgeting is to show the relationship
between funding and performance to be achieved, increase efficiency and
transparency in budgeting, improving flexibility and accountability units in
implementing the tasks and budget management
Keywords : Budget, Spending for Social Aid, performance-based budgets

1. Introduction
Constitution of the Republic of Indonesia Year 1945 mandates the state to
protect all the people of Indonesia and promote general welfare in order to achieve
social justice for all Indonesian people. To achieve the purpose of the state, as
mandated in the Preamble to the Constitution of 1945, annually compiled APBN /
APBD to plan activities that will be implemented by the government. Described in
the budget that programs and activities will be held every year specified by types and
functions, where social aid expenditure in the budget is a kind of expenditure. The
allocation of social aid expenditure into the budget of the Government of Regency /
City in Indonesia is a form of implementation of social development in the area.
According to Technical Bulletin No. 10, Accounting for Social assistance

310
expenditure, classification issues often appear in budgeting, and as a consequence
there will be some problems during the implementation and accountability.
In order to achieve a rational regional financial performance, the performance
of SKPD verifier has a very important role. Do members community groups worthy
to receive social assistance from the local government is determined from the results
of the Regional Work Units (SKPD) verifiers.
Based on the results of Febrina research (2016), which aims to test the effect
of performance-based budgeting to the performance of local government officials in
the Social Regional office of West Java Province, found that performance-based
budgeting has a strong positive relationship and unidirectional, meaning that if the
performance-based budgeting is applied the effectiveness control will be increased,
otherwise if performance-based budget is not implemented properly, the
effectiveness of the controls will not run properly (weak).
Meanwhile, According to research Pradnya Made Astari Dewi and Niluh
Supadmi (2015) the accuracy of the budget and managerial control of the public
sector shows significant positive effect on the results of performance
accountability. This proves that the better the accuracy of the budget and managerial
control of the public sector, the better accountability of local government
performance. However, the results of Muh Latif research (2014) budget planning
social assistance on budget revenue and expenditure in Bantul has not fully reflect a
strategic planning, in which planning documents which form Medium Term
Development Plan (RPJMD) and Development Plan (RKPD) in Bantul do not
contain a clear and fundamental as social assistance expenditure planning
documents.
This article will discuss how the preparation of social assistance expenditure
budgeting based on performance, hoping that social assistance will be useful and
right on target
.
2. Literature Review
2.1 Understanding The Budget
Understanding the Budget according Munandar (2001: 11) definition of the
budget is a plan drawn up systematically covering all activities of the company,

311
which is expressed in monetary units or entity that applies for a period of time to
come. Budgets can also be interpreted as a term plan for controlling overall profit
can be defined broadly as a systematic and formal budget for the planning,
coordination and control of management responsibilities (Welsch, 2000: 5).
Based on Regulation No. 31 Year 2016, Regional Budget Revenue and
Expenditure (APBD) is the annual financial plan of local government are discussed
and agreed upon by the local government and parliament, and are set by the Regional
Regulation (Perda). Guidelines for the preparation of the budget is policy issues as
the instructions and directions of local government in the preparation, discussion and
determination of APBD

2.2 Definition of Social Assistance

Based on Regulation No. 14 Year 2016, Social Assistance is providing
assistance in the form of cash / goods from local governments to individuals,
families, groups and / or people that are not continuously and selectively aimed to
protect from the possibility of social risk. Social risk is an event or events that may
cause potential social vulnerability borne by individuals, families, groups and / or
communities as a result of social crisis, economic crisis, political crisis, natural
phenomena and natural disasters if not given social assistance will be more collapsed
and can not live in a fair condition

2.3 Planning Budget Social Assistance

Planning budgeting social assistance by Regulation No. 14 of 2016 is member
/community groups submit written proposals to the head region. The regional head
appoint SKPD verifiers to evaluate the proposal. Head SKPD verifier submit the
evaluation results in the form of recommendations to the head of the region through
the Local Government Budget Team (TAPD). TAPD give due consideration to the
recommendation in accordance with the priorities and fiscal capacity. The
recommendations of head SKPD and consideration of TAPD will be the basic of the
inclusion of the social assistance budget allocation in the draft budget Public Policy
(KUA) and Priority Provisional Budget (PPAS).

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2.4 Definition of Performance
Associated with the concept of performance, Rummler and Brache in
Sudarmanto (2009; 7) suggests there are three levels of performance, namely:
1. Performance of the organization; the achievement of results (outcomes) at the
level or unit organizational analysis. Performance at the organizational level is
linked with the purpose of organization, organizational design, and management
of the organization.
2. Process of performance; a performance on stage in the process of
generating product or service. Performance in this process is influenced by the
purpose of the process, process design, and process management
3. Individual performance / work; an achievement or effectiveness of the employee
or employment levels.Performance at this level is influenced by the purpose of
employment, job design and job management as well as individual characteristics

2.5 Performance of measurement

There are five indicators to measure the performance of individual employees,
namely (Robbins, 2006: 260)
1. Quality. Quality of work is measured from the employees' perception of the
quality of work produced and the perfection of duty to the skills and abilities of
employees
2. Quantity. Quantity is the amount produced and expressed in terms such as the
number of units, number of cycles completed activity
3. Timeliness. Activity level is completed at the beginning of the stated time, from
the point of coordination with the output results and maximize the time available
for other activities
4. Effectiveness. Effectiveness is the level of use of organizational resources
(manpower, money, technology, raw materials) to maximize the intention of
raising the results of each unit in the use of resources
5. Independence. A level of an employee who will be able to carry out its function
of work commitments. Is is a level where employees have the commitment to
work with the agency and the employee's responsibilities to the office.

313
 Armstrong in Sudarmanto (2009: 13) states that "performance measurement
is a very important thing to be able to improve the implementation of the work that
can be achieved". He said there are four types of performance measures, namely:
1. The size of the money, including income, expenses, and returns
2. Size efforts or impacts, which include achieving the objectives, the completion
of the project, the level of service, as well as the ability to influence the
behavior of co-workers and customers
3. The size of the reaction, the assessment shows co-workers, customers or other
job holder
4. The size of the time, which shows the implementation of performance compared
to the schedule, the final frontier, the speed, response, or the number of jobs
goal

2.6 Performance-based budgeting

According to Halim and Iqbal (2012: 173) performance-based budgeting is a
management budgeting methods to associate each funding that poured in activities
with outputs and expected results including the efficiency in achieving the results of
these outputs.
The principles of performance-based budgeting by Halim and Iqbal (2012: 174) are :
1. Budget transparency and accountability
Regional Budget Revenue and Expenditure (APBD) should be able to present
clear information about the objectives, goals, results, and benefits society of an
activity or project is budgeted. Members of the public have the same rights and
access to know the budget process for the aspirations and interests of the
community, especially the fulfillment of the needs of life. Society also has the
right to demand accountability for the implementation of the plan or the budget.
2. Budget Discipline
Revenues planned is an estimate that is measured in a rational way that can be
achieved for each source of revenue, while the budgeted expenditure on any
post/article is the upper limit of expenditure.

314
 Budgeting should be supported with the certainty of availability of reception in
sufficient quantities and not justified implement activities / projects that have
not budgets in the Regional Budget Revenue and Expenditure (APBD)
3. Justice Budget
The local government shall allocate a fair use of its budget that can be enjoyed
by all communities without discrimination in the provision of services, because
the local revenue was essentially obtained through community participation
4. The efficiency and effectiveness of budget
Budgeting should be done based on the principles of efficiency, appropriate,
timely implementation, and its use can be justified

3. Research Method
The research used in this article is a literature study method, which according to
Jonathan Sarwono (2006: 47) The aim of this method are :
1. Finding the variables to be studied
2. Distinguish things that have been done and determine the things that need to be
done;
3. Synthesising and gain a new perspective
4. Determine the meaning and relationship between variables
Research literature study is done by reading and studying the literature on the
problems associated with the object of research. in this article the social assistance
budget is the research object.

4. Result and Discussion

Muh Latif et al research results (2014) the implementation of performance-
based budgeting is a subsystem of strategic planning. The implementation of
performance-based budgeting in the budget formulation begins with formulating
strategic issues were addressed by the relevant programs. Scope of performance-
based budgeting, namely: Defining Vision and mission (which reflects the strategy
of the organization), aims, objectives and targets; Determining Performance
Indicators .; Evaluation and decision making of the election and program
priorities; Standard Cost Analysis (ASB).

315
4.1 Determining The Vision And Mission (Which Reflects The Strategy Of The
Organization), Goals, Objectives, And Targets)
Determination of the vision, mission, goals, objectives, and the target is the
first stage to be set an organization and the ultimate goal to be achieved so that any
performance indicators should be associated with the component. Therefore, the
determination of the components is determined not only by the government but also
to include the community in order to obtain information about the needs of the
public. This is consistent with the results of Abdul Latif research (2015) which
shows that together characteristics of the budget consists of budgetary participation,
budget goal clarity and budget evaluation significant effect on the performance of
local government officials Gorontalo district.

4.2 Determining Performance Indicators

Performance Indicator is a quantitative measure that describes a level of
achievement of goals or objectives that have been set. Therefore, the performance
indicators that will have to be a calculated and measured and used as a basic for
assessing the level of performance, the implementation stage and the stage after the
completion of activities and useful (functioning). Performance indicators include :
a. Input (Input) is a resource that is used in a process to produce output that has
been planned and determined before. Input indicators include funding, human
resources, facilities and infrastructure, data and other information needed
b. Output (Output) is something that happens as a result of a particular process by
using the input that has been set. Output indicators as a basis for assessing the
progress of an activity or benchmarks associated with targets well defined and
measurable.
c. Results (Outcome) is an output that can be directly used or the tangible results of
an output. Indicator result is a target program that has been set
d. Benefit is the added value of an outcome that will be visible after some time
later. Indicators show the benefits of the things that are expected to be achieved
if the output can be completed and functioning optimally

316
e. The impact or consequences caused by the benefits of an activity. Indicators of
impact is an accumulation of several benefits that occur, its impact is only visible
after some time later
Based of Elly Research (2015) showed that Setting up Indicators Budget
Performance Based on Control and Service Office of Customs and Excise of Gresik
used to demonstrate the clarity of the relationship between the budget allocation to
the output or result of the activity or program, and clarity responsible for the
achievement of performance in order to increase accountability, transparency, and
effectiveness of the use of the budget measurably.

4.3 Evaluation And Decision-Making On The Selection And Program Priorities

These activities include the preparation of alternative rankings and then take
decisions on programs / activities that are considered to be a priority. For members /
groups of people who have received social assistance in the previous year were
evaluated any progress after receiving social assistance. On Taufik Kurrohman
research (2013) suggest to add add financial ratios other than the concept of value for
money in order to the results of the evaluation becomes more accurate. While the
results of Agus Salim et al research (2013) states to plan a budget General Hospital
Anutapura of Palu must receive a proposal from the bottom (Buttom Up) and
involving stakeholders in budget planning must consider the Achievement and
Performance Hospital previous year.

4.4 Standard Cost Analysis (ASB)

ASB is the standard cost of a program / activity so that the budget allocation
becomes more rational. ASB done to minimize the agreement between the executive
and legislative to loosen budget allocation in each unit so that the budget is not
efficient. In preparing the ABK we need to pay attention to the principles of
budgeting, acquisition of data in making budget decisions, the local budget planning
cycle, the structure of the Regional Budget Revenue and Expenditure (APBD) the
National Budget Revenue and Expenditure (APBN)/, and the use of ASB. In
preparing the ABK the impotant thing is to obtain quantitative data and make
budgeting decisions. In accordance with the results of Teguh et al research (2016)
that the Department of Education in setting the standard cost is expected not focus

317
only on previous year's budget, but more adapted to the needs of fees in the current
year.

5. Conclusion
Steps to make budgeting performance-based social assistance :
1) Members / groups who is projected to receive social assistance will have better
life and they can live with reasonable way. Finally, they can achieve the vision
and mission of an area
2) Measurement of performance indicators for social assistance is to measure in
advance what will be achieved by the provision of social assistance to members /
community groups
3) Members / groups of people who have received social assistance in the previous
year were evaluated what they produce after receiving social assistance
4) Provision of social assistance are analyzed in advance how much they need in
carrying out its activities, so the amount of social assistance should be in
accordance with the standards applicable costs in a certain region.

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Evaluasi terhadap Kinerja Aparat Pemerintah Kabupaten Gorontalo,
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Buletin Teknis Nomor 10 tentang Akuntansi Belanja Bantuan Sosial
Elly Hesrini, 2015, Analisis Penyusunan Anggaran Berbasis Kinerja pada Kantor
Pengawasan dan Pelayanan Bea dan Cukai Gresik , Jurnal Ilmu
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Munandar, M. 2001. Budgeting. Perencanaan Kerja, Pengkoordinasian Kerja,
Pengawasan Kerja. Edisi 1. Cetakan 14. BPFE: Yogyakarta.
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FAA-06

STRATEGIC CSR, PRODUCTION PERFORMANCE,

AND BUSINESS EFFICIENCY IN SUGAR FACTORIES

Yosefa Sayekti
Taufik Kurrohman
Purnamie Titisari
Universitity of Jember
*e-mail: yosefa.sayekti@unej.ac.id

ABSTRACT

Nowadays, Corporate Social Responsibility (CSR) is considered as part of

companies business strategy, and not a companies obligation per se. The
Corporation Act No. 40/2007 and the Law No. 19/2003 concering State-Owned
Enterprise require companies to have CSR program, especially those companies
related to natural resources. This study is a qualitative study which aim to analyze
the production performance, business efficiency, and corporate social responsibility
of sugar factories located in ex Karesidenan Besuki, East Java, Indonesia, based on
strategic CSR concept. There are four sugar factories analyzed in this study. The
results of the study show that the production tends to increase during the period of
2009 to 2014, both for sugar production also for molasses. The CSR program of
the sugar factories is embedded in the Partnership Program and Community
Development program. The partnership program can be considered as strategic
CSR, while community development program is more on philanthropy or
nonstrategic CSR.

Keywords: corporate social responsibility, strategic corporate social responsibility,

sugar factories, partnership program and community development, business
efficiency.

1. Introduction
Regarding Corporate social responsibility (CSR) in Indonesia, it has been
regulated in the Corporation Act No. 40/2007 that companies with their business
activities related to natural resources have obligations to engage in CSR activities.
Furthermore, State-Owned Enterprise Act No. 19/2003 also requires state-owned
companies to have CSR program. Based on those two regulations, the sugar
factories located in ex Karesidenan Besuki, East Java have the obligation to engage
in CSR activities since their business related to natural resources and also because

320
they are part of a state-owned company. In a state-owned company this CSR
activities are embedded in a program called Program Kemitraan dan Bina
Lingkungan (PKBL) or Partnership Program and Community Development. Since
CSR is an obligation for the company, it is important to internalize this CSR
program into the companys strategy so then the CSR program would give benefits
not only to the recipients of the programs but also to the company itself in term of
not only financial performance, but also production performance, and business
efficieny. This concept in fact is the core of strategic CSR
This paper employs a qualitative study which aim to analyze production
performance, business efficiency, and corporate social responsibility of sugar
factories located in ex Karesidenan Besuki, East Java, Indonesia, based on strategic
CSR concept. There are four sugar factories analyzed in this study. However, this
study does not make any statistical analysis due to limitation of the data gathered.
The results of the study show that the production tends to increase during
the period of 2009 to 2014, both for sugar production also for molasses. Regarding
the CSR program, the Partnership Program can be considered as strategic CSR,
while Community Development program is more on philanthropy or nonstrategic
CSR.

2. Literature Review
According to Coporation Act No. 40/2007, social and environmental
responsibility means Companys commitment to taking part in sustainable
economic development in order to improve the quality of life and environment,
which will be beneficial for the Company itself, the local community and society in
general. More specifically, State-Owned Enterprise Act No. 19/2003 mentions
State-Owned Entities (BUMN) are expected to improve the quality service for the
public and also make contributions to the growth of national economy and enhance
the state revenues. Furthermore, Article 88 of the Law states a State-Owned
Entity (BUMN) may appropriate a part of its net profits for direction of small-scale
businesses/cooperatives and direction of the community living around the State-
Owned Entity (BUMN).

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 The concept of CSR in those two regulations is inline with the one shared by
Global Reporting Initiatives (GRI) (GRI, 2015). GRI also shares the concept of
triple bottom line (TBL), which consists of profit, people and planet (3Ps). This
concept argues that to be sustainable in the long run, a company must be able to
remain profitable while also incorporate social and environmental dimensions.
Freeman (1984, in Finch, 2005) defines stakeholders as a group or individu
that affect or affected by a company. This theory of stakeholders indicates that there
is an interrelation between company and its stakeholders. Furthermore, the theory
suggests that a company should not serve only the interest of shareholders and
debtholders, but also the interest of other stakeholders (Utama, 2007). The gap
between economic goals and social goals are becoming irrelevant under this
stakeholders concept since the main focus is the companys sustainability (Lee,
2007). Moreover, Lee (2007) argues that CSR should not be perceived as a
companys moral obligation per se, but more than that, CSR should considered as part
of companys business strategy to improve companys performance.
Baron (2001), Lantos (2001), and Porter et al. (2006) have been developed a
concept of strategic CSR which argue that companys CSR activities should provide
benefits not only to its stakeholders, but also to the company itself. Porter et al.
(2006) develop strategic CSR concept in a more practical way by providing a tool for
company to design its strategic CSR activities based on inside-out linkages and
outside-in linkages analysis (pp. 5-6). This analysis is basically constructed on the
interdependence and interconnected between company and its stakeholders. By doing
strategic CSR, it is expected that companys performance will be improved. An
empirical research by Sayekti (2011) shows the results supporting this proposition
that strategic CSR activities have a positive impact on companys financial
performance, while nonstrategic CSR have a neutral or negative impact.

3. Research Methodology
This paper employs a qualitative study, which aim to analyze production
performance, business efficiency, and corporate social responsibility of sugar
factories located in ex Karesidenan Besuki, East Java, Indonesia, based on strategic
CSR concept. The required data is collected from each sugar factory. There are

322
four sugar factories considered in this study. However, this study does not make
any statistical analysis due to limitation of the data gathered.
Production performance analysis comprises the capacity of milled sugar
cane, production trend, and milling capacity. Business efficiency is analyzed by
comparing input and output regarding production of sugar and molasses. In this
study employs four indicators to analyze business efficiency of each sugar factory,
i.e.:
1. Total ton of sugar cane milled produced per hectare area of sugar cane.
2. Total sugar cane production per sugar cane milled
3. Total molasses production per sugar cane milled

4. Results and Discussion

4.1. Production Performance
4.1.1. Capacity of milled sugar cane
The capacity of milled sugar cane analysis includes area of milled sugar
cane and sugar yield for the period of 2009 until 2014 for each sugar factories.
Tabel 1 provides the data of area sugar cane milled.
Table 1
Area of milled sugar cane
2009 - 2014

2009 2010 2011 2012 2013 2014

(ha) (ha) (ha) (ha) (ha) (ha)
Sugar Factory 1 1,133 1,616 1,284 989 1,014 3,041
Sugar Factory 2 9,040 7,930 9,641 11,161 12,561 14,390
Sugar Factory 3 1,585 1,861 1,745 1,561 1,746 1,939
Sugar Factory 4 9,830 9,491 10,564 9,929 11,170 12,520
Source: Sugar factories

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 Figure 1
Area of milled sugar cane
2009 2014
(in hectare)

16000
14000
12000
10000 Sugar factory 1

8000 Sugar factory 2

6000 Sugar factory 3

4000 Sugar factory 4

2000
0
2009 2010 2011 2012 2013 2014

Figure 1 depicts the trend of area of milled sugar cane based on Table 1.
Table 1 and Figure 1 shows that in average, the Sugar Factory 2 has the most
extensive area of milled sugar cane as compared to the other three eventhough
there is a slight decrease in 2010. The area of milled sugar cane of Sugar Factory 2
and 4 tend to increase from time to time. On the other hand, the Sugar Factory 1
has the smalles area of milled sugar cane for the period of 2009 until 2013, but then
in 2014 the number is increased more than twice.

Tabel 2 and Figure 2 shows the sugar yield for each sugar factory for the
period of 2009 until 2014.
Tabel 2
Sugar Yield
2009 - 2014

2009 2010 2011 2012 2013 2014

Sugar yield (%)
Sugar Factory 1 7,05 5,78 8,48 7,34 6,93 7,93
Sugar Factory 2 7,07 5,63 7,85 8,79 7,79 7,95
Sugar Factory 3 6,62 5,14 2,02 7,2 6,69 7,48
Sugar Factory 4 7,42 5,53 7,86 8,10 7,60 7,41
Source: Sugar factories

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 Figure 2
Sugar Yield
2009 2014
(in percentage)

10

8
Sugar Factory 1
6
Sugar Factory 2
4 Sugar Factory 3

2 Sugar Factory 4

0
2009 2010 2011 2012 2013 2014

As shown in Tabel 2 and Figure 2, Sugar Factory 2 and 4 has the highest
sugar yield and also relatively more stable as compared to the other two.

4.1.2. Production trend

The production trend analyzes the growth of production for each sugar factory for
the period of 2009 to 2014. This production trend consists of sugar and molasses
production. As shown in Table 3 and Figure 3, generally for all four sugar
factories, the trend of sugar production tend to increase, eventhough there is a
sharp decreased for Sugar Factory 2 (in 2010), and Sugar Factory 4 (in 2011).

Table 3
Trend of Sugar Production
2009 2014 (in ton)

2009 2010 2011 2012 2013 2014

Sugar Factory 1 6.033 6.536 7.692 6.620 8.965 12.857
Sugar Factory 2 52.038 39.774 44.510 69.841 67.903 75.331
Sugar Factory 3 7.909 8.907 10.888 11.938 11.298 13.156
Sugar Factory 4 70.095 58.805 50.013 69.918 68.932 69.389
Source: Sugar factories

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 Figure 3
Trend of Sugar Production
2009 2014 (in ton)
80,000
70,000
60,000
50,000 Sugar Factory 1

40,000 Sugar Factory 2

30,000 Sugar Factory 3
20,000 Sugar Factory 4
10,000
0
2009 2010 2011 2012 2013 2014

Table 4 and Figure 4 show the trend of molasses production for each sugar
factories for the period of 2009 to 2014. Both Table 4 and Figure 4 indicate that
consistent with sugar production trend, generally the trend of molasses production
tend to increase from 2009 to 2014.
Table 4
Trend of Molasses Production
2009 2014 (in ton)

2009 2010 2011 2012 2013 2014

Sugar Factory 1 4.521 4.521 5.425 3.846 3.745 8.239
Sugar Factory 2 33.172 34.396 29.535 38.613 42.719 72.681
Sugar Factory 3 6.832 8.370 7.569 7.829 8.170 8.496
Sugar Factory 4 41.181 39.351 29.614 39.464 42.933 43.610
Source: Sugar factories

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 Figure 4
Trend of Molasses Production
2009 2014 (in ton)
80,000
70,000
60,000
50,000 Sugar Factory 1

40,000 Sugar Factory 2

30,000 Sugar Factory 3

20,000 Sugar Factory 4

10,000
0
2009 2010 2011 2012 2013 2014

4.1.3 Milling capacity

The milling capacity is analyzed based on ton cane per day (TCD) for each
sugar factory for the period of 2009 to 2014. As shown in Table 5, overall there is
an increase in milling capacity for all of sugar factories from 2009 to 2014.

Table 5
Milling Capacity
2009 2014

2009 2010 2011 2012 2013 2014

Sugar Factory 1 6.049 5.563 5.563 6.510 6.500 6.520
Sugar Factory 2 n/a 889 1.003 1.099 1.200 1.202
Sugar Factory 3 815,2 764 907 836 913 957
Sugar Factory 4 5.270 5.258 5.726 5.308 5.762 6.089
Source: Sugar factories

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4.2. Business Efficiency
4.2.1. Total Ton Of Sugar Cane Milled Produced Per Hectare Area Of Sugar
Cane
The first ratio to measure business efficiency employed in this study is total
ton of sugar cane milled produced per hectare area of sugar cane. The higher the
ratio indicates better efficiency. Table 6 and Figure 5 provide information on total
ton of sugar cane milled produced per hectare area of sugar cane. Based on this
ratio, Sugar Factory 4 is the most efficient for 2009 and 2010, while Sugar Factory
3 is the most efficient for 2011, 2012, 2013, and 2014.

Table 6
Total ton of sugar cane milled produced per hectare area of sugar cane
2009 - 2014

2009 2010 2011 2012 2013 2014

Sugar Factory 1 78,87 72,43 88,55 93,62 94,93 57,76
Sugar Factory 2 87,05 94,08 67,59 77,74 78,21 70,12
Sugar Factory 3 89 100 89 101 97 90
Sugar Factory 4 101 113 66 88 86 77
Source: Sugar factories

Figure 5
Total ton of sugar cane milled produced per hectare area of sugar cane
2009 2014

120
100
80 Sugar Factory 1

60 Sugar Factory 2

40 Sugar Factory 3

20 Sugar Factory 4

0
2009 2010 2011 2012 2013 2014

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 Figure 6
Trend of Total ton of sugar cane milled produced per hectare area of sugar cane
2009 2014

120
100
Sugar Factory 1
80
60 Sugar Factory 2
40 Sugar Factory 3
20 Sugar Factory 4
0
2009 2010 2011 2012 2013 2014

Figure 6 depict the trend of total ton of sugar cane milled produced per
hectare area of sugar cane from 2009 to 2014 for each sugar factory. In general,
based on this ratio there is a decreasing trend in efficiency in all sugar factories.

4.2.2. Total Sugar Cane Production Per Sugar Cane Milled

The second measure of business efficiency employed in this study is total
sugar cane production per sugar cane milled. The higher the number indicates
better efficiency of a sugar factory. Table 7 and Figure 7 provide this ratio for each
sugar factories for period of 2009 2014. In general, the efficiency for all sugar
factories is about the same level. However, in 2013 Sugar Factory 1 has the
highest ratio as compared to the other three, while in 2014 Sugar Factory 3 has the
highest one.
Table 7
Total sugar cane production per sugar cane milled
2009 - 2014

2009 2010 2011 2012 2013 2014

Sugar Factory 1 0,07 0,06 0,07 0,07 0,09 0,07
Sugar Factory 2 0,07 0,05 0,07 0,08 0,07 0,07
Sugar Factory 3 0,06 0,05 0,07 0,08 0,07 0,08
Sugar Factory 4 0,07 0,05 0,07 0,08 0,07 0,07
Source: Sugar factories

329
 Figure 7
Total sugar cane production per sugar cane milled
2009 - 2014
0.1
0.09
0.08
0.07
Sugar Factory 1
0.06
0.05 Sugar Factory 2
0.04 Sugar Factory 3
0.03
Sugar Factory 4
0.02
0.01
0
2009 2010 2011 2012 2013 2014

4.2.3. Total molasses production per sugar cane milled

The third measure of business efficiency applied in this study is total
molasses production per sugar cane milled. The higher the ratio indicates that
sugar factory is more efficient. Table 8 and Figure 8 showing that Sugar Factory 2
has the highest ratio in 2014 as compared to others, while Sugar Factory 3
relatively has a stable ratio during 2009 to 2014.
Table 8
Total molasses production per sugar cane milled
2009 - 2014

2009 2010 2011 2012 2013 2014

Sugar Factory 1 0,05 0,05 0,05 0,04 0,04 0,05
Sugar Factory 2 0,04 0,05 0,05 0,04 0,04 0,07
Sugar Factory 3 0,05 0,04 0,05 0,05 0,05 0,05
Sugar Factory 4 0,04 0,04 0,04 0,04 0,04 0,05
Source: Sugar factories

330
 Figure 8
Total molasses production per sugar cane milled
2009 2014

0.08
0.07
0.06
0.05 Sugar Factory 1

0.04 Sugar Factory 2

0.03 Sugar Factory 3

0.02 Sugar Factory 4
0.01
0
2009 2010 2011 2012 2013 2014

4.3. Corporate Social Responsibility (CSR)

The CSR program in sugar factory of state-owned company is embedded in
the Partnership Program and Community Development (or Program Kemitraan dan
Bina Lingkungan, PKBL). This PKBL is considering as one of key success
factors of the company to be sustainable. The Partnership Program in the sugar
factory engages with sugar cane farmers as its partner, while Community
Development concerns on social environment (Annual Report PTPN XI, 2013).
The partnership program focuses on programs that would help sugar cane farmers,
cooperative, and micro/small businesses to improve their production techniques
and also their marketing technique. One example of Partnership Program is to
provide micro credit for sugar cane farmers to help then in growing sugar cane in
the beginning of planting season and the farmers could repay their debt when the
crop already sold. The partnership program is very tightly related to main business
of sugar factory that we can consider this program as a strategic CSR. Partnership
Program provides benefits for sugar cane farmers, and in turn this program will
give benefits to sugar factory itself especially more than 60% of the sugar cane
milled come from the farmers.
Another type of CSR program of the sugar factory is the community
development. As mentioned before, community development program focuses

331
more on social environment activities, such as providing grants for education and
training programs, improving public facilities and infrastructure, improving public
health, and also poverty alleviation (Annual Report PTPN XI, 2014). From the
point of view on strategic CSR concept, community development program cannot
yet be considered as strategic CSR activities since this type of CSR program is
more emphasized on philanthropic aspects. In the future, community development
program should also be developed and designed based on strategic CSR concept.
This study is not able to obtain the data regarding the amount of fund
dedicated for PKBL activities for each sugar factory. However, the study is able to
get the overall data of PTPN XI based on its annual report. Table 9 and Table10
present data of Partnership Program and Community Development for 2009 to
2014. As shown in Table 9, the fund allocated for partnership program tend to
increase from time to time. The fund allocated for community development; on the
other hand, tend to decrease as shown in Table 10 from Rp3.9 billions in 2009
dropped to Rp82 million in 2014 in term of available fund, and from Rp1.14
billions in 2009 to Rp266 million in 2014 in term of fund utilization. The increase
of partnership program fund along with the decrease of community development
might indicate that the Company more focuses on strategic CSR and lesser on
nonstrategic CSR.
Table 9
Partnership Program Fund of the Company
(in Rp000.000)

2009 2010 2011 2012 2013 2014

Available fund 14,215 24,290 33,791 39,904 65,402 75,033

Fund utilization 11,209 20,083 30,522 37,210 59,657 69,317

Fund balance 3,006 4,207 3,269 2,694 5,745 5,716

Trained partners (person) n/a n/a 2,067 921 1,078 n/a

Source: Annual reports PTPN XI 2014, Annual report PTPN XI, 2013, Annual Report
PTPN XI 2012.

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 Table 10
Community Development Fund of the Company
(in Rp000.000)

2009 2010 2011 2012 2013 2014

Available fund 3,900 4,150 2,455 1,150 558 82

Fund utilization 1,140 2,545 1,323 717 315 266

Fund balance 2,760 1,604 1,132 433 243 -

Source: Annual reports PTPN XI 2014, Annual report PTPN XI, 2013, Annual
Report PTPN XI 2012.

5. Conclusion

The results of the study show that the production performance measured by
capacity of milled sugar cane increase in term of the area of milled sugar cane in
each sugar factories analyzed for the period 2009 to 2014. However, this trend is
not followed by sugar yield, which is showing an unstable trend. Consistent with
the area of milled sugar cane, there is also an increase trend in production of sugar
and molasses in all sugar factories studied. Production performance in term of
milling capacity also showing that there is an increase trend for each sugar factory
from 2009 to 2014.
Business efficiency in this study measured by three indicators, i.e.: total ton
of sugar cane milled produced per hectare area of sugar cane, total sugar cane
production per sugar cane milled, and total molasses production per sugar cane
milled. In general, there is a slight decreasing in efficiency based on total ton of
sugar cane milled produced per hectare area of sugar cane for all sugar factories
analyzed for the period of 2009 2014. Furthermore, based on total sugar cane
production per sugar cane milled is about at the same level for all sugar factories.
Finally, business efficiency in term of total molasses production per sugar cane
milled indicates that there is an increasing trend in sugar factories efficiency from
2009 to 2014.
The sugar factories engaged in CSR activities through a program called
Partnership Program and Community Development (more well know as Program

333
Kemitraan dan Bina Lingkungan, PKBL). The partnership program basically
focuses more on sugar cane farmers while community development focuses more
on social environment. Based on strategic CSR concept, the partnership program
can be considered as strategic CSR, while community development more as
nonstrategic CSR. Based on fund allocated to partnership program and community
development from 2009 to 2014, it indicates that the Company more focuses on
partnership program, which indicate that the Company considered already
implementing strategic CSR.

REFERENCES

Baron, D.P. (2001), Private Politics, Corporate Social Responsibility, and Integrated
Strategy, Journal of Economics & Management Strategy, Vol. 10 (1),
Spring, pp. 7-45.
Finch, N. (2005), Sustainability Reporting Framework.
http://papers.ssrn.com/sol3.
Global Reporting Initiatives (2015), Reporting Principles and Standard Disclosures.
Lantos, G. P. (2001), The Boundaries of Strategic Corporate Social Responsibility,
The Journal of Consumer Marketing, Vol. 18(7) , pp. 595 649.
Lee, M-D.P (2007), A Review of the Theories of Corporate Social Responsibility:
Its Evolutionary Path and the Road Ahead, International Journal of
Management Review, Vol. 10 Issue 1, pp. 53- 73.
Porter, M.E., dan Kramer, M.R. (2006), Strategy and Society: The Link Between
Competitive Advantage and Corporate Social Responsibility, Harvard
Business Review, Dec., p. 1-15.
PT Perkebunan Nusantara XI (2013), Laporan Tahunan 2010.
PT Perkebunan Nusantara XI (2013), Laporan Tahunan 2013.
PT Perkebunan Nusantara XI (2013), Laporan Tahunan 2014.
Sayekti, Y. (2011), Strategic Corporate Social Responsibility (CSR): Slack
Resources, Kinerja Keuangan, dan Earning Response Coefficient,
Disertasi, Program Pascasarjana Ilmu Akuntansi, Fakultas Ekonomi,
Universitas Indonesia.
Undang-Undang Republik Indonesia Nomor 19 tahun 2003 tentang Badan Usaha
Milik Negara.
Undang-Undang Republik Indonesia Nomor 40 tahun 2007 tentang Badan Usaha
Milik Negara.
Utama, S. (2007), Evaluasi Infrastruktur Pendukung Pelaporan Tanggung Jawab
Sosial dan Lingkungan di Indonesia, Pidato pada Pengukuhan sebagai
GuruBesar Tetap dalam Bidang Akuntansi Fakultas Ekonomi
Universitas Indonesia, 14 Nov 2007.

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FAA-07

CHANGES IN WORLD OIL PRICES AND FISCAL

POLICY IN INDONESIA (DYNAMIC SYSTEMS
MODEL APPROACH)

Regina Niken Wilantari

University of Jember
Email: reginanikenw@gmail.com

Edy Santoso
University of Jember
Email: santoso_edy@yahoo.com

ABSTRACT

The liberalization of the oil price is an issue that is very important for Indonesia.
Like other oil exporting and importing countries, changes in oil prices will affect
macroeconomic conditions in Indonesia. Rising oil prices will increase government
revenue, but on the other hand it led to an increase in public expenditure. This
happens because Indonesia still subsidizes fuel oil.

The purpose of this study was to analyze the changes in world oil prices to changes
in fiscal policy in Indonesia using a model of a dynamic system. The simulation
results show that the time an oil price of US $ 89.58, with the ratio of fuel subsidies
amounting to 7% of government spending and National Income in the value of 1,491
Trillion then within a period of five years will change the national income in the
amount of 51 441 trillion rupiah and goverment expenditure amounting to 30 196
trillion. Meanwhile, when the ratio of subsidies to government expenditure fell by
5%, it has direct impact on the amount of government spending, which is followed
by the decline in national income. When the government expenditure projected for
five years, is 27 758 trillion, the national income into becomes 48 957 trillion

Keywords: oil prices, fiscal policy, models of dynamic systems

1. Introduction
The liberalization of the oil price is an issue that is very important for
Indonesia. At the time of the Asian economic crisis in 1998, appeared subsidies for
oil products. These subsidies significantly affect the state budget of about 5.5% of
GDP in 2000. In 2003, fuel subsidies gradually lowered to about 1% of GDP.
Subsidy reform and social impacts have led to a perception that the reduction in
subsidies will affect the poor people (Clement et al, 2003).

335
 Petroleum has a long history as well as having an important role in the Indonesian
economy. Besides as an input in the production process a petroleum is also as a
source of state revenue. This is reflected in the State Budget, where the price of oil is
used as one of the basic assumptions in determining the acceptance and expenditure
planning to be carried out by the government.
Bonanza of oil in 1974 indicated that oil provides a substantial contribution
to the goverment revenues. As an oil producing country, many parties viewed
Indonesia is able to meet domestic fuel needs. But in fact, Indonesia's crude oil
production dropped steadily in the last ten years while the consumption of oil
continues to rise. Data from BP Statistical Review of World Energy 2015 show that
beging in 2003, Indonesia's oil consumption was higher than production levels. In
2003, Indonesia's oil consumption amounted to 1,222 thousand barrels / day, while
production by 1,176 thousand barrels / day.
Indonesian society's dependence on fuel oil is one of cause of the high
consumption of oil. Based on statistics from the Directorate General of Oil and Gas
of petroleum, oil consumption for fuel oil consumption is higher than that used for
non-fuel. Increased oil consumption has impacted on the increase of Indonesia's oil
imports. This condition has caused since 2004 Indonesia is no longer a net oil
exporter but became a net oil importer.
Fiscal policy is one of the stabilization policy, which is needed to cope with
fluctuations in oil prices. In the oil exporting countries, government revenue is
highly dependent on the oil revenues. So that fiscal policy has very important
implications on economic growth performance. Prior to the 1990s, oil price increase
was regarded as a blessing for Indonesia, as the rising of world oil prices will
increase the state revenues. But after the 1990s, the current rise in oil prices actually
aggravated the condition of the state budget for the policy to provide fuel subsidies
and has caused enormous fiscal pressures. The faster increase of oil consumption
than oil production, has forced the government to slowly reduce fuel subsidies. The
increase in oil prices even more encouraged an increase in prices. Clement et al
(2003) showed that this subsidy reform and social impacts have led to a perception
that the reduction in subsidies will affect the poor. Reduction in fuel subsidies affects
the rising prices, this is regulated by the government (administered price) and play a

336
significant role in the high Indonesia inflation . Rising oil prices affect the increase
in fuel prices, which will directly affect the price increases because the fuel is part of
the input factors.
the magnitude of the effect of rising oil prices on Indonesia's macro economy,
this study aimed at considering examining the affect of the changes in world oil
prices on fiscal policy, especially the policy of government subsidies.

2. Literature review
2.1 Oil and Economic Growth
Solow growth model initially did not include the effect of the natural
resources in the model. But after Malthus (1798) put forward an argument about the
influence of natural resources in economic growth in the long term, the Solow
growth model was expanded to include the influence of natural resources in the long-
term economic growth (Romer, 2006: 37).
In this model, it is described how natural resource constraints will affect
economic growth in the long term. Ownership of natural resources has two
implications. First, the market focus on how the use of natural resources. For
example oil resource constraints would limit the ability of production in the future.
That would push up this oil prices in the future. The implication is that the owners of
oil resources will not sell its oil at a cheap price at this time. This will Push up oil
prices and consumers would have an incentive to do conservation.
The second implication is that the price of natural resources is an important
factor in the production process. oil has an obstacle in the production process in the
future, because the price is quite high at the moment, economists may use the current
price to take a conclusion that is best in overcoming the availability of the amount of
oil.
The Dutch Disease theory describes the phenomenon of immiserizing
hypothesis where increase export growth will depress the economy, if the terms of
trade worse significantly (Ruehle and Kurkani, 2011). This theory was stated by The
Economist (1977) which describing the decline of the manufacturing sector in the
Netherlands after natural gas exploration (Salisu, 2005). This theory explained the
increasing revenues from natural resource exports will lead to exchange rate

337
appreciation. It causes the manufacturing sector uncompetitive and result in lower
output in the sector.
The appreciation of the real exchange rate as a result of the increase in value
of exports of natural resources lead to non-commodity exports of natural resources is
almost impossible to happen (Humpreys, Sachs and Stiglitz, 2007). While the
foreign exchange earned from natural resources may be used to buy goods in
intiernational trade, this leads to the expense of many domestic manufacturing
sectors that produce these goods (spending effect). This will also affect the domestic
resources such as labor and material transferred to the natural resources sector
(resources pull effect). Consequently, the price of these resources is increasing in the
domestic market, thus increasing costs for producers in other sectors.
Globally this shift can cause an adverse effect on the economy through a
number of channels. Each shift has impact very costly on the economy, because
workers need to be re-educated and look for new jobs and capital needs to be
readjusted. But they can give different results if the manufacturing sector as a source
of long-term growth, for example through the introduction of new technology or the
improvement of human resources. increase exports of natural resource sector would
boost growth in the manufacturing sector in the long term.
Corden and Neary(1982) and Corden (1984) began this analysis by dividing
the economy into three sectors, two sectors of tradeable and non-tradeable sector .
The firstly is the sector that is booming, to simplify the model is a resource sector. In
the case of Dutch disease, resource sector resulted in the flow of foreign currency is
large enough. Secondly, the sector growth slowed marked, i.e other tradable sectors
such as the manufacturing sector. The sector is slowing dueto the deindustrialization
process. Thirdly, is the non-tradable sector, refers to goods and services produced in
the country and not exported. The assumption was the output produced by each
sector or specific factors of each sector and labor can move between the three
sectors.
There are two effects of the booming sector. The first effect is the spending
effect, If part of the additional income is spent, either directly by the workforce, and
indirectly by the government through additional revenue from taxes collected from

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the sectors that are booming. That caused positive income elasticity of demand, the
price relative to the price of tradeable goods should rise.
The second effect of the resource movement effect is the shift of labor from
sectors not booming sector that is booming. This effect causes the factors of
production shifted from sectors that are not booming in booming sector. Effects
resource movement explained that marginal product of labor in a sector that is
booming, with the constan wage will increase the demand for labor in the sector.
This effect consists of two parts, 1) movement of workers will lower output, the
condition can be referred as de-industrialization, 2) movement of workers will
encourage spending effect

2.2 Effect of Oil Prices Against Government Revenues and Expenditures

Oil is an important factor for the performance of the global economy. For net
oil-exporting countries, rising oil prices will directly increase the real national
income through increase of income export from activity. Rising oil prices leads to a
transfer of income from oil importing countries to oil exporting countries. The
magnitude of the direct impact of this price increase depends on the share of the cost
of oil in national income, the level of dependence on imported oil and the ability of
end users to reduce their consumption, and the switch from oil to another energy.
The higher oil prices and The longer it persists, the greater impact for
macroeconomic (IEA, 2004; Suryadi, 2006)
At the time of rising oil prices, there is a shift in the purchasing power of oil-
importing countries to oil exporting countries. Rising oil prices is similary viewed as
the taxes collected from oil importing countries by oil-producing countries. Rising
oil prices will reduce purchasing power and consumer demand in the importing
country. As for the exporting countries rising oil prices will increase the purchasing
power and demand for goods and services (Brown et al, 2003). Oil-producing
countries gained the benefits from the increased of oil price. Increased revenues
could be used for imports of goods and services or to increase in net foreign assets
(Barell and Pomerantz, 2004).
Government financing of the oil exporting countries is heavily dependent on the
oil sector receipts. Meanwhile fluctuation of government revenues from the oil

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sector tends to be very high due to oil price uncertainty. These characteristics make
fiscal management for some countries become very important implications for the
Performance of the growth of the country (El Anshasy, 2009).
Rising oil prices will cause inflation to rise temporarily, because the price of
other goods did not adjust quickly that will affect the bidding. It is because at the
same time the oil price shocks would increase the cost of production, so that
manufacturers have to make adjustments to the they production ,it then affects the
output produced and the amount of labor required (Labonte, 2004: 2).
Seeing the consequences of oil price fluctuations on the economy, it appears
the subsidy scheme is applied by some oil importing countries and oil-exporting
countries to protect domestic producers and consumers. Subsidies given not only
generate inefficiency but also fiscal costs, either directly or indirectly (Oganes et al,
2005).
The subsidy was essentially a fiscal instrument that aims to ensure the
implementation of the state's role in economic activities to improve the welfare of
society as fair and equitable. This scheme becomes important when the government
has reduced significantly its role in economic activity, so that it is beneficied for the
government as regulator to give subsidies. Therefore, subsidies as fiscal instruments
are also referred to as one of the schemes to reduce the impact of market failure.
Within this framework, the subsidy must have meant for the economic sector for
lives of many people (Yustika, 2008).
Countries that provide subsidies on oil products in order to protect domestic
producers and consumers from fluctuations in world oil prices will experience, fiscal
pressure will rising when oil prices rise. It happened because of rising world oil
prices will increase the burden of subsidies, causing an imbalance on the fiscal side
(IEA, 2004).
Oil is a highly volatile source of income . For oil-exporting countries, oil
price fluctuations will affect the uncertainty of government spending in the future.
Government revenue volatility affects the volatility of government spending, the
result is a increase in government expenditure when oil prices rise, and vice versa
when the price of oil drops then there is a sharp reduction in government spending
(boom-bust cycles) (Humphreys et al, 2007)

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3. Research Method
3.1 Dynamic Systems Approach
The systems approach, as proposed by Checkland (1981), is an approach that
does not directly reduce the contributed factors, but is more comprehensive
(holistic). More holistic approach focuses on the relationships between factors. The
approach uses a model system to study the behavior of the system under study,
which is used as the basis for improvement of the system performance. This study
uses a systems approach to investigate the response of the goverment expenditure to
the fluctuations in world oil prices .
In a system approach, the first step that must be done is to identify the
system. At this stage, understanding of the mechanisms involved in the system is
identified. Relating to the issues reviewed, the initial stage should identify the
system of macroeconomic Indonesia. At this stage, one of approach can use is draw
up diagrams circumference causal (causal loop diagram). Diagram circumference
causal describe the relationship between elements involved in a system being
studied. The diagram also illustrates the dynamic properties of an element.

341
 Chart 1
Diagram circumference causal

4.2 Interpersonal Element

The basic relationship in a model of the macro economy in a country is:
Y = C + I + G + (X -M) ..................................... ................... (4.1)
Where Y is the national income, C is consumption, I is investment, G is
government spending, and X-M is net exports, which is the difference between
exports with imports. In the picture circumference causal diagram above, we can see
how the causal connection between elements or variables.
National income in this model is described as stock, which is an
accumulation of the variable-variables that increase or decrease its nature (flow). The
value of the national income depends on the magnitude of the value of its variable
flow such as consumption, investment, government spending and how much the
value of exports and imports. For variable consumption, investment, government
spending and exports increase or nature is positively related to the amount of

342
national income, while the import variables have a negative relationship with the
national income.
Consumption, the amount of this variable is influenced by the amount of the
value of disposable income is disposable income and the amount of the value of
MPC (marginal propensity to Consume) or the desire to consume marginal,
additional consumption of each additional unit of income. While the magnitude of
the value of disposable income itself is influenced by national income are positively
related, tax-related negative, and the government subsidies that have a positive
relationship.
Investment, the value of the investment depends on the interest rate elasticity.
The relationship between investment and the interest rate is negative, which means
higher interest rates will reduce the value of investment and vice versa. an economy
rate itself is influenced by the level of inflation and oil price fluctuations.
Government spending amount is influenced by the amount of national
income itself and subsidy being incurred by the government, such as subsidies for
fuel and other subsidies (non-fuel). For exports, the size greatly is influenced by the
exchange rate and has a negative correlation. In addition to influencing the amount
of exports, The exchange rate will also affect the amount of imports and subsidies.

4. Result And Discussion

Results and Discussion
Scenario 1
Without Subsidy Reduction

Year National Income Government Expenditure BBM

s Subsidies
Ratio
1 3.028.043.300.000.000.00 1.777.461.417.100.000.00 0.07
2 6.147.533.507.660.000.00 3.608.602.168.996.420.00 0.07
3 12.480.722.527.251.332.00 7.326.184.123.496.531.00 0.07
4 25.338.362.874.825.656.00 14.873.619.007.522.660.00 0.07
5 51.441.944.308.471.040.00 30.196.421.309.072.500.00 0.07
6 104.437.435.335.057.920.00 61.304.774.541.679.000.00 0.07
7 212.028.881.217.234.590.00 124.460.953.274.516.700.00 0.07
8 430.461.034.647.229.630.00 252.680.627.337.923.810.00 0.07
9 873.921.992.540.805.630.00 512.992.209.621.452.930.00 0.07
10 1.774.236.429.256.343.600.00 1.041.476.783.973.473.700.00 0.07

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 Scenario 2
With Subsidy Reduction
BBM
Subsidies
Years National Income Government Expenditure Ratio
1 2.998.213.300.000.000.00 1.699.986.941.100.000.00 0.05
2 6.027.008.375.660.000.00 3.417.313.748.999.220.00 0.05
3 12.115.492.236.751.732.00 6.869.484.098.238.232.00 0.05
4 24.354.562.494.318.332.00 13.809.036.934.278.494.00 0.05
5 48.957.541.526.078.704.00 27.758.926.045.286.624.00 0.05
6 98.414.449.975.723.408.00 55.800.993.136.235.168.00 0.05
7 197.832.727.341.199.170.00 112.171.156.402.459.920.00 0.05
8 397.683.348.501.278.590.00 225.486.458.600.224.960.00 0.05
9 799.423.067.157.270.270.00 453.272.879.078.172.220.00 0.05
10 1.607.000.249.599.544.600.00 911.169.141.522.941.700.00 0.05

The simulation results using the price of oil at level US $ 89.58, with the first
scenario show, the ratio of fuel subsidies amounting to 7% of government spending,
then within a period of five years it will change the national income in the amount of
IDR 51, 441 trillion and government spending amounting to IDR 30,196 Trillion,
This condition occurs with the assumption that the initial value of National Revenue
on the value of IDR 1,491 Trillion and all the macroeconomic variables are
unchanged.
The second scenario is decreasing the ratio of subsidies to government
expenditure to 5%, with an initial value of National Revenue on the value of 1,491
Trillion and is assumed all the values of the macroeconomic variables are
unchanged. The simulation results showed that the decline in the ratio of subsidies
will reduce the amount of government spending, which is followed by a decrease in
the national income. The projected government spending for five years, being IDR
27.758 trillion, while the national income into IDR 48.957 trillion.
The condition shows that the reduction in fuel subsidies could reduce
government spending, but on the other hand it can reduce people's purchasing power.
The simulation results are consistent with the research Clement et al (2003) that this
subsidy reforms have social impact and have perception that the reduction in
subsidies will affect the poor. This was due to the reduction in fuel subsidies affects

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the rising prices as it is regulated by the government (administered price) and
contributed to an increase in inflation in Indonesia.

5. Conclusion and recommendation

5.1 Conclusion
1. At an oil price of US $ 89.58, with the ratio of fuel subsidies
amounting to 7% of government spending and National Income in the value
of IDR 1,491 Trillion then within a period of five years it will change the
national income to the amount of IDR 51,441 trillion rupiah when the
government spending is to IDR 30,196 trillion.
2. At an oil price of US $ 89.58, National Income at IDR 1,491 trillion
and the ratio of the value of the fuel subsidy to the government spending fell
to 5%, it will reduce the amount of government spending, which is followed
by a decrease in the national income. When the projected government
spending over five years, is IDR 27.758 trillion, the national income
becames IDR 48.957 trillion.
5.2 Recommendation
1. In reducing the burden of government spending, a reduction in fuel
subsidies must be done, considering the amount of subsidies for the
largest share in the state budget. But the necessary prudence in taking the
government subsidy reduction policies, because fuel prices impact on
inflation.
2. The transfer of subsidy funds should be targeted, mainly used for the
improvement of transport facilities and infrastructure which in turn can
reduce transport costs, so the increase in fuel prices was not overly
burden of production costs and ultimately prices have remained stable.

REFERENCES

Barrel, Ray dan Olga Pomerantz, 2004, Oil Price and The World Economy
Bank Indonesia. 2007. Laporan Perekonomian Indonesia Tahun 2006. Jakarta: Bank
Indonesia
Bank Indonesia. 2008. Laporan Perekonomian Indonesia Tahun 2007. Jakarta: Bank
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Bank Indonesia. 2010. Laporan Perekonomian Indonesia Tahun 2009. Jakarta: Bank
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Bank Indonesia. 2011. Laporan Perekonomian Indonesia Tahun 2010. Jakarta: Bank
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Bank Indonesia. 2013. Laporan Perekonomian Indonesia Tahun 2012. Jakarta: Bank
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Bank Indonesia. 2014. Laporan Perekonomian Indonesia Tahun 2013. Jakarta: Bank
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Bank Indonesia. 2015. Laporan Perekonomian Indonesia Tahun 2014. Jakarta: Bank
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Bank Indonesia. 2016. Laporan Perekonomian Indonesia Tahun 2015. Jakarta: Bank
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Checkland.P.1981. System Thinking: Sytem Practice. Chichester.John Wiley and
Sons. England
Clements Benedict, Hong-Sang Jung dan Sanjeev Gupta, 2003, Real and Distributive
Effect of Petroleum Price Liberalization : The Case of Indonesia, IMF
Working Paper
Cologni, Alessandro dan Matteo Manera, 2005, Oil Price, Inflation And Interest Rate
In Structural Cointegrated VAR Model For G-7 Countries, Fondazione Eni
Enrico Mattei, www.feem.it
Corden, M.W, 1982, Booming Sector and Ducth Disease Economic : A, Survey,
Working Paper in Economic and Econometrics, No 079, Australian
national University
Corden, M.W dan Neary, J.P,1982, Booming Sector and De-Industrialisation in a
Small Open Economy, The Economic Journal, Vol. 92, No 368
Humphreys, Macartan, Jeffrey D.Sachs dan Joseph Stiglitz, 2007, Apakah Problem
Kekayaan Sumberdaya Alam?, dalam Macartan Humphreys, Jeffrey
D.Sachs dan Joseph Stiglitz (penyunting), Berkelit dari Kutukan
Sumberdaya Alam, Terjemahan Surya Kusuma, B.Gunawan., Samdana
Institut, Bogor
Labonte, Marc, 2004, The Effect of Oil Shocks on the Economy: A Review of the
Empirical Evidence, CRS Report for Congress
Romer, David ,2006, Advance Macroeconomics, 3rd ed, McGraw Hill
Salisu, Afess Adebare, 2005, natural Resources, Governance and Growth in Africa :
Theory and Practice,
Suryadi, A.J, 2006, Masalah Dampak Tingginya Harga Minyak Terhadap
Perekonomian , CSIS, Jakarta
Yustika, Ahmad Erani, 2008, Refleksi Subsidi Dalam Perekonomian Indonesia,
Bisnis dan Ekonomi Politik Volume 9(3), INDEF, Jakarta, www.indef.or.id

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Website
www.alde.es/encuentros/anteriories/xiieea/trabajos/pdf/005.pdf

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FAA-08

THE MEANING OF ASSETS, ASSET SOURCES, AND

REPORTING FORM IN AL - IMAM ISLAMIC
BOARDING HOUSE

Rina Rahayuningsih
University of Jember
rinarahayun25@gmail.com

ABSTRACT

AL IMAM Islamic boarding house Kalisat Jember is a islamic boarding house

located in the village area Gambiran Kalisat District of Jember. Islamic boarding
house manages Formal school consists of MTS,SMK, vocational and non-formal
education landfill, sewing, beauty treatments, automotive training, as well as shops
selling school needs and the needs of the household day. This study aims to
determine how the meaning of assets, the assets acquired, as well as management in
preparing the financial statements islamic boarding school based accounting
standards. Sources of data obtained directly from the object a AL - IMAM islamic
boardinghouse through interviews to the board of trustees, as well as documentation
in the form of documentation of financial statements in boarding school environment
AL - IMAM. The results obtained show that: 1) The entity boarding AL - IMAM
meaning of assets in two meanings, namely asset in terms extrinsic and spiritual
assets 2) Source of assets outward boarding AL - IMAM derived from endowments,
banyuan government, and help carers of students and student Guardian. 3 AL -
IMAM Islamic boardinghouse media accounting that is used as a form of
accountability in asset management reports only the shape of cash receipts and
disbursements alone
Keywords: assets, forms of accounting reports

1. Preliminary
In the Al Quran gives instructions for running the life of mankind which
serve as guidelines or handle living beings in the world. Al - Quran and al-Hadith
also be used as guidance in accounting Shariah because of things related to finance it
is a very important thing in the economy. as well as the accounting of the system of
financial records in order to create truth, certainty, fairness and transparency of the
financial statements of the parties - the parties concerned in it.

348
 According Triyuwono (2000), and Adnan (1997), argues that the purpose of
accounting Shari'ah was very spacious, but the emphasis is on efforts to realize the
establishment of Syri'ah in economic activity in human life. Syahatah (2001: 4)
argues that accounting Shari'ah has a goal to ensure the preservation of money which
is the written evidence in the form of registration in case of a dispute, as the basis of
decision-making, and can be used as a benchmark in determining the amount of
revenue required to Zakat.AL - IMAM islamic Boarding house is a branch of
boarding AL - IMAM located in Grujukan Bondowoso in the village Gambiran
districts Kalisat Jember have the formal education MTS, and vocational, non-formal
education landfill, sewing, beauty treatments, automotive training, as well as manage
stores that sell school needs and the needs of the household days. AL IMAM
islamic Boardinghouse is one of the organizations that are categorized as non-profit
institutions in the founding purpose is not for profit. All activities at the boarding
school in AL - IMAM be it religious, formal and informal education as well as the
financial management of the boarding school always involve students or alumni of
students therein. System of mutual assistance in facing life and raise the boarding
school instilled in AL - IMAM boardinghouse both for administrators, students, and
parents of students.
By seeing the organization's development foundation is a nonprofit
organization, where the foundation is a large organization that continues to grow in
the community is in need of substantial funds in its operations. In the Statement of
Financial Accounting Standards (PSAK) No. 45 concerning financial reporting non-
profit organization that aims to regulate the financial statements on a non-profit
organization which is expected to have relevance, and accountable. PSAK 45
regulates the statement of financial position, statement of activities and cash flows as
well as a note to the financial statements.
In days in AL - IMAM islamic boarding faced with the accounting system or
the recording of cash inflows, cash out, and the value of assets that cannot be known
with certainty, so that there is no planning in the use of funds. Seen from the fact that
researchers directly, the problems appear to be observed, namely: (1) How is the
meaning of an asset to the islamic AL - IMAM organizers?, (2) which are the source

349
of the existing assets in the AL - IMAM boarding? (3) How is the management and
financial reporting in the boarding AL -IMAM?
In the study - previous research to do by Widati (2010) who did research on
the meaning of assets in the community Aisyiyah with the results of research that
Aisyiyah interpret asset accounting in three forms, namely the economic assets, asset
spiritual, and asset mental, which are considered as assets sharia accounting with the
aim of creating a civilization that rahmatan lil alamin.
Research conducted by Ikhsan Budi (2014), which examines the financial
accountability boarding Nazhatut Thullab with the results of research that boarding
Nazhatut Thullab not present financial statements in accordance with PSAK 45 on
nonprofit entities, sources of funds raised foundation of students, governments,
communities, and only use media financial liability cash flows in and out.
Research Zainal Arifin (2014) resulted in the boarding house that the entity
has not used the Thullab Nazhatut Foundation Financial Statements in accordance
with PSAK no. 45. Research conducted by Sri Luayyi (2012) at the boarding school
of the Salaf produce that asset in view of boarding schools are classified into two:
the outward and inward.
In this study only discusses and examines the meaning of assets for the
foundation managers AL - IMAM boarding, the source of assets received, and their
financial statements in accordance with PSAK 45.

2. Theoretical review
2.1 Assets of Viewpoint Islamic Boardinghouse
Boarding interprets the meaning of different assets with meanings set
according to conventional accounting. According Suwardjono (2005) in
conventional accounting assets represents economic benefits in the future, simply,
must be obtained and controlled by the entity as a manifestation of past transactions.
For entities boarding school, the asset is an item or mandate valuable a surrogate of
Allah the almighty everything at any time can be taken up by God in His own way,
then the property should be managed on the path of Allah, maintained and cared for,
and should be accounted for its use to God. Sri Luayya (2012)

350
 Because assets are a gift from the Creator, then in the boarding school was a
testament to the assets that must be managed and utilized in Allah, and clean. In the
teachings of Islam that has been embedded in a boarding school, by way of alms or
zakat according to nisab then the property has been purified and shape fortunately to
the Given. So, its own assets in a boarding house is defined as property that is owned
boarding house that obtained with street fair with the pleasure and the permission of
Allah, which must be managed, exploited the path of Allah in order to get a blessing
from God and be accountable to gain the pleasure of Allah SWT.

2.2 Source Asset Boarding House

Within the entity boarding house there are sources of assets come from
donations or endowments obtained from donors or the person who grants or
endowments that are used for the sake of the boarding house that will bring goodness
and sheer eye only for Allah without expecting profits or remuneration on the
administration.

2.3 Entity Asset Management in Boarding House

In the boarding school asset management entity must be managed in the way
of God in order to get the blessing / blessing of God so that assets owned boarding
house can meet all the needs in the boarding house. Assets in a boarding house to be
well managed, and staffed by people - people who are responsible solely just looking
for a blessing of God, usually in the cottage boarding assets are managed by a board
of trustees / boarding house or the students who have been trusted by Kyai, which in
its management the party they did only because Allah Lillahita'alah without
expecting reward the material provided by the board boarding or Kyai them.
Although the management of assets or wealth boarding house managed by the board
or the students are given the confidence, but still on the decision makers or the
founding Chairman Kyai, the asset manager accountable for all use of such funds or
assets to Kyai within a certain agreed.

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2.4 Financial Accounting Standards
In financial accounting standards gives the concepts of standards and
methods expressed as guidance in accounting practices within the entity or particular
environment. In the Financial Accounting Standards set an outline of: 1) meansuring
on the financial statements are disclosed in the balance sheet or profit and loss. Posts
that meet the definition of an element is recognized when: a) There is a possibility
that the economic benefits associated with the post in the company b) The posts have
value or cost that can be measured reliably. 2) Definition of elements and financial
post 3) measurement of the financial statements which is the process of determining
the amount of money to find any financial statements on the balance sheet and
financial statements of income. 4) Disclosure of financial information in the financial
statements.

2.5 Nonprofit Entities Financial Reporting PSAK 45

Financial Accounting Standard No. 45 set of specific standards for
institutions / non-profit organizations as well as the boarding school. Organizations
boarding house which is a nonprofit organization that is very different from business
organizations, one of the fundamental differences is the way these entities in
obtaining resources for its activities, where the business entity expects earnings in its
activities, while the nonprofit entity does not expect profit / loss in the activity of its
activities, so that non-profit entities, especially boarding transaction raises donations
from donors in cash receipts.
According to the Financial Accounting Standards No. 45 (IAI 2012)
nonprofit financial statements include the following: First, the statement of financial
position that provides information on assets, net assets, liabilities, as well as
information about the relationship between these elements at any given time.
Secondly, activity reports, which this report provide number of changes in net assets
tied to permanent, temporary bound and not bound in a single period. Third, note
that financial statements are an integral part of financial from report earlier, which
aims to provide additional information more forecast details stated in the financial
statements.

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2.6 Research Purposes
With the background of the problems noted earlier, the purpose of this research
is:
1. Finding information about the meaning of assets by managers of boarding house ?
2. Digging information about the source of the assets in a boarding house ?
3. Find the form of statements of assets boarding to its conformity to the PSAK.

3. Research methods
3.1 Approach and Methodology Research
This research is a qualitative case study approach. According Arikunto
(2005), a case study is a strategy that describes the subject of the overall research of
behavior and things - things that surrounds, relationship behavior with the onset of
behavioral history itself, and the relationship between behavior with things other.
have the purpose of this case study is to obtain describe typical, detail, and
characteristics to achieve the objectives of the research.
Phenomenology method applied in this study because basically sharia
accounting relating to the human dimension, so that the study can be done where the
boarding house as an object that has the potential and special characters and units to
be researched.

3.2 Data Collection Technique

3.2.1 Data source
There are two sources of data in this study are: 1) The primary data of the
data obtained by researchers directly from the source by interviewing 2) Secondary
data are data that by of the research object such as the financial statements of the
boarding school, and literature - literature relating to the theoretical concept ,

3.2.2 Data analysis

Reviewing secondary data derived from the literature - literature that is
relevant in the elucidation of assets or symbols - symbols in accounting.
Furthermore, researchers in making primary data in phenomenology to suspension or
presumptions against any claim of phenomenology to be studied or disclosed, then

353
conduct interviews with relevant parties at which this object parties concerned,
namely trustees, Kyai, as well as some of the students, and see circumstances and
events directly related to the Islamic boardinghouse research focus, process data, and
draw conclusions.

3.3 Research focus

In this study, researchers focused on the meaning of an asset from the
standpoint of the boarding school, the source of the assets, as well as reporting in the
AL - IMAM islamic boardinghouse Kalisat Jember.

2. Discussion
2.1 Meaning an entity Construction In AL - IMAM Islamic BoardingHouse
Boarding interpret meaning different from the meaning assets asset by
conventional accounting. In AL - IMAM Islamic BoardingHouse interpret the
meaning of the assets into two groups: Visible assets and assets Inner. Visible Assets
is an asset or property that can be seen and can produce the material and can be used
for the continuity of the boarding house as well as people - people inside. According
to one researcher interviews with managers of AL - IMAM Islamic BoardingHouse
namely H. Kyai Ahmad Zuhri, S.Ag which is the foundation's president and
caregivers,
"In my opinion, the assets outward in the form of cash and valuable property
which can be owned by a foundation and can be used the results to the smooth
operation of the boarding school in upholding the teachings of Islam, as well as
improve the welfare of people - people inside as teachers who teach in schools
owned by a foundation, for example assets belong to AL - IMAM boarding
that is visible fields, schools, gardens, shops, ....... nah all of the assets
managed by the foundation and the results for the mutual benefit of the
foundations and of course for school activities and uphold the religious
teachings ".
In addition to Visible assets that can be seen, AL - IMAM Islamic
BoardingHouse organizers defines assets in terms of inward is assets that exist
within the individual all managers, and students in AL - IMAM boarding. This inner
assets must be invested in each individual boarding house environment, namely the
nature of the mandate and form sincere in carrying out daily activities - day just to

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get the pleasure of his Creator. According Caregiver, AL-IMAM Islamic
BoardingHouse Kyai claimed in interviews with investigators, namely:

"If the inner assets of all individuals who are members of this Islamic
BoardingHouse should have this asset, namely sincerity, trust, patience,
compassion, and is responsible for Allah, all have a heart, had a mind to, ..... so
all had assets of inner well right ... for example, the administrators and students
have the knowledge that they can apply and apply later and perhaps if only
science that they could resume practicing alone in addition to reward from God
Almighty can also matter, right, ... .asset patient, sincere, who perform daily
activities - day just is hoping blessing and solely only because Allah is also an
asset, ...."

This, the inner asset is an asset or property that is invisible to the eye, but the
form of a treasure to be owned by each individual in the teachings of Islam, which is
purely just expect the blessing of God Almighty. Statement Kyai "If we do all of the
activities with sincerity and sheer - eye only because of God, surely the job so light
feels no burden, for example, just kid - friendly students if given the voluntary
cooperate work cleaning the yard cottage, mosques, schools, all according
enterprising spirit as they work with a sincere heart and sheer - eye to seek blessing
from God. Try dah if they do not have a sense of sincerity, trust, certainly lazy
ordered community service better Islamic BoardingHouse sleep, right, ....that is why
the residents of the cottage Islamic boardinghouse here must have assets outwardly,
.... "

4.2 Source Asset AL - IMAM Islamic BoardingHouse

Within the entity boarding house there are sources of assets come from
donations or endowments obtained from donors or providing grants from individuals
and government, or endowments, as well as cash donations infaq and in kind of
guardian of students and parents who are used to the benefit of activities boarding
house that will bring goodness and sheer - eye only for Allah without expecting
profits or remuneration for such administration.
Sources assets AL - IMAM islamic boardinghouse derived from
endowments, such as land used to build schools and cottage, fields obtained from
given Alm. Kyai elderly, and some other donations such as infaq of guardians of

355
students and parents, government assistance used in islamic boardinghouse activities.
Information obtained from Kyai stated,
"Thank God needs boarding enough of donations - donations that we can from
the guardians of students, government, and they did just expect blessing from
God, we even had a shop selling daily needs - today, jointly managed by some
of the students".

4.3 Asset Management and Accountability AL IMAM Islamic Boarding House

Entities AL - IMAM Islamic Boarding house that researchers get no
difference in the reporting of assets and asset management at boarding school with a
conventional entity. At the AL - IMAM islamic boardinghouse asset reporting is
very simple. For fixed assets such as land, saah, and building obtained from grants
and endowments reporting only a letter from the district and or notary. Grants from
government assistance reported to the appropriate government in accordance with
the form of reports which been determined by relevant side. Donation of goods from
the guardians of students are never included in the statement of assets, because these
items directly utilized. As Kyai statement:

"Assets here if such goods are given by guardians of students a lot, eg

microphone at mosque, Yasin book, books of other religions, or other items no
note here, it's used together, and which contribute Lilahitaala, used for the
benefit of a positive, if note continue what to do, because here in Islamic
boardinghouse Insallah all the trust in using it is not possible corrupted or
missing goods ".
In Law No. 16 of 2001 regulating the foundation, where the foundation in
Indonesia must have a reference and can set the foundation clearly on its staff, the
procedures for establishing, as well as statutes. The foundation is a nonprofit entity
where the activities are not for profit.
Organizer accountability for financial assets such as cash at AL - IMAM
Islamic boarding as media accountability to stakeholders is generated in the form of
financial statements of cash receipts and disbursement. Aid in the form of cash
donations from students and parents guardians recorded only in the form of monthly
cash book made by each treasurer. In addition to donations, AL - IMAM islamic
boarding also has stores as a source of revenue, which is jointly managed by Mrs.
Nyai elderly, and Ning along with some of the students trust. Information received
from Kyai:

356
 "To store every day guarded alternately with the students that we have chosen,
every days after closing, childrens who watch calculate the amount of money
raised and sent to Mrs. Nyai, Just a note book any amount of income received
and note expenses issued as an kulak if the content store, if there are students
who owe stores were never recorded, they will remember the same debts and
one day they will pay well, I cultivate the nature of honesty and trust them
because we only fear Allah."
From these statements indicate that the AL-IMAM islamic boardinghouse
media accounting that is used as a form of accountability in the management of
assets only form of reporting cash receipts and disbursements course there is no
record of debt the students as receivables foundation, this does not correspond to the
headings of Financial Accounting Standards apply, and should take a few
adjustments to the financial statements prepared by AL IMAM Islamic
boardinghouse the financial statements in PSAK No. 45 in chapter 2 is about the
statement of financial position, statement of activities, statement of cash flows and
notes to the financial statements. In accordance with the statement Kyai:
"This form of reporting here whether it's financial reporting from educational
institutions, stores, and reports made by the trustee of the only reports of
receipts and expenditures, we do not understand and adopt the financial
statements in accordance with PSAK No. 45".
Based on the above statement shows that AL-IMAM boardinghouse the
process arranging not aware of the financial statements Statement of Financial
Accounting Standards No. 45 and does not apply in the entity boarding schools.

3. Conclusions and Limitations

3.1 Conclusion
From the research that has been conducted by researchers about the meaning
of assets, the assets, and the form of reporting entities AL - IMAM boarding, the
investigator can conclude that: 1) The entity AL - IMAM boarding meaning of assets
in two meanings, namely asset in terms extrinsic is assets or property that can be
seen and can produce the material and can be used for the continuity of the boarding
house as well as people - people inside, and asset spiritual an asset or property that is
invisible to the eye, but the form of property should be owned by every individual in
the teachings of Islam, which is solely eyes only expect a blessing from Allah. 2)
Source of assets AL - IMAM boarding derived from endowments, such as land used

357
to build schools and cottage, fields obtained from given Alm. Kyai elderly, and some
other donations such as infaq of guardians of students and parents, government
assistance used in Islamic boardinghouse activities. 3) at Al-Imam Islamic
boardinghouse media accounting that is used as a form of accountability in the
management of assets only form of reporting cash receipts and disbursements course
there is no record of debt the students as receivables foundation, this does not
correspond to the headings of the Financial Accounting Standards applicable, and
should take some adjustment of financial statements prepared by AL - IMAM
islamic boarding the financial statements in PSAK No. 45 as the manager of the
lodge do not know and understand about the PSAK No. 45.
5.2 Suggestion
According to the research, the authors give advice to the manager of the al-
imam islamic boarding make finances report accordance with PSAK No. 45 on the
financial statements of non-profit entities that statement of financial position, Belief
activity, cash flow statement and notes to the financial statements.

REFERENCES

Al-Qur;an S.Albaqarah
Adnan, Muhammad Akhyar.1997. The Syariah, Islamic Bank and Accounting
Concept. Jurnal Akuntansi dan Auditing Indonesia (JAAI),Vol.1 No.1 Mei
hal 47-80,Yogyakarta:UI
Arifin, Zainal.2014. Pertanggungjawaban Keuangan Pondok Pesantren. Jurnal
Akuntansi dan Auditing Indonesia (JAAI),Vol.3 No.11. Surabaya.
STIESIA
Arikunto,A.2010.ManajemenPenelitian.Cetakan Ketujuh.PT RinekaCipta.Jakarta.
Ikatan Akuntansi Indonesia.2012. Pelaporan Keuangan Organisasi Nirlaba.
Pernyataan Standar Akuntansi Keuangan Nomor 45.
Ikhsan Budi Luayyi, Sri.2012.Aset dan bentuk pelaporan pondok pesantren.
Tesis,Malang: UB
Syahatah, Husein.2001. Usul al-Fikr al-Muhasab al-Islami. Terjemahan. Akbar
Media Sarana. Jakarta
Suwardjono.2005. Teori Akuntansi : Perekayasaan Laporan Keuangan. Edisi
Ketiga.BPFE.Yogyakarta.
Triyuwono, Iwan.2000a. Organisasi dan Akuntansi Syariah. LKIS. Yogyakarta.
Undang Undang Republik Indonesia No. 16 tahun 2001. Tentang Yayasan. Jakarta

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FAA-09

FINANCIAL ACCOUNTABILITY IN THE

MANAGEMENT
OF VILLAGE FUND ALLOCATION

Dinna Tri Yulihantini

Siti Maria Wardayati
University of Jember
dinna.triyuli@gmail.com

ABSTRACT

The allocations of village fund are grants from the central government to village
government. The purpose of giving the village fund allocation is to finance the
implementation of governance and development, social development and
empowerment of rural communities. These funds are managed based on the
principles of transparent, accountable, participatory, in orderly and disciplined
budget. Financial accountability will determine the quality reports village fund
allocation program. In the implementation of the Village Fund Allocation has some
constraints, e.g : unclear regulatory, the low competence of human resources and the
lack of coordination and supervision. The purpose of this study is to provide an
overview phenomena and to solve the problems so the implementation of village
fund allocation is in accordance with the rules and recommendations of previous
studies. The method of this research uses literature study, it is using secondary data
are from of books and articles. The results of the study provide solutions to problems
that occur. So it is realize the financial accountability of the allocation village fund
program. Recommendations are given, among others, to make regulations and
technical guidelines are clear and socializing the program and the benefits of the
village fund allocation. Conducting technical guidance for human resources and
provide mentoring and good supervision.

Keywords: village fund allocation, financial accountability

1. Introduction
Application of the Law No. 33 of 2004 on Financial Balance between the
Central Government and Local Government brought great changes for financial
management. Application of revenue sharing between the central government and
local governments is reflected in governance and public services which are based on
the principle of decentralization. Decentralization is a division of power and
authority from the central government to local governments which is always
followed by financial decentralization (fiscal). Fiscal decentralization is

359
decentralizing revenue raising of money to a local goverment to discover their own
financial resources. Fiscal decentralization policies brings consequences of financial
management should be based on healthy management.
Financial management is reflected in the Regional Goverment Budget
(APBD) which shows the regional authority to finance the construction. Likewise,
the village finances is reflected in the Budget of the Village (APBDes). One of the
balance funds allocation for the village administration is the village Fund Allocation
(ADD). Based on Government Regulation No. 22 of 2015 on Village Fund resources
from the State Budget explained that part of the central and regional equalization
funds which received by District / City to the village, at least 10% proportional
distribution for each village. The purpose of giving ADD is to fund the goverment
implementation of development, social development and empowerment of rural
communities. These are managed based on the principles of transparent, accountable,
participatory it done in orderly and disciplined budget. ADD sourced from the state
budget so that the management system of ADD are also set according to the
country's financial regulations. ADD funds put into APBDes so the financial
accountability ADD can be guaranteed in accordance with the financial management
of the state.
Village financial management accountability is necessary for public trust in
the village government will be maintained. Transparency of village financial
management is very important information bond between the government and
society. Good financial management is expected to support the village program so
the goal of increasing prosperity and equitable rural development can be achieved as
well as the participation of rural communities can be improved.
Several studies on the implementation of ADD has been done. They put
several obstacles in the implementation of ADD. According Fastari (2012) the
calculation of giving ADD ignores the principle of fair so sparked envy among
regions. Thomas (2013) found barriers in the management of ADD because of low of
human resources and lack of coordination between the village government and local
government so the accountability in the management of ADD is less than optimal.
Setyoko (2011) in his research found that beside the ability of financial
administration, the villagers are less concerned about the ADD program. Financial

360
management accountability ADD less optimal can make a space of financial abuse
thereby increasing the potential for corruption. It evidenced by the corruption cases
by six village headmen in the eastern part of Seram, Maluku (www.kompas.com,
May 12, 2016) and corruption officers village head in Wonogiri, Central Java that
cost the state Rp. 416 million (www.okezone.com, June 8, 2016). Abidin (2015) in
his research added that supervision and transparency issues are less in the
administration of the village administration.
This article tries to give an idea of how to realize the financial accountability
in the management of the Village Fund Allocation program, the problems occurred
and corrective measures that can be done to overcome the problems that occur.

2. Literature Review
2.1 Fiscal Decentralization
According Kurniasih (2013) Fiscal decentralization is a process of budget
distribution from higher levels of government to lower government to support
government functions in the public service. It is important to note that the basic
principles of implementation is the money follow functions that followed by a
government delegation of authority delegated funding as a consequence of the
financing necessary to exercise these powers (PKP2A III LAN 2008).
The purpose of fiscal decentralization by Sidik (2004) are :
a. Improve national allocation and operational efficiency of local government;
b. Fulfill the aspirations of the region, improving the overall fiscal structure, and
mobilize regional and then national income;
c. Improve accountability, transparency, and developing constituent participation
in decision making at the local level;
d. Reducing fiscal disparities among local governments, ensure the implementation
of basic public services throughout Indonesia, and promote government
efficiency targets; and
e. Improve the social welfare of the Indonesian people.

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2.2 Financial Accountability
According Ihyanul Ulum (2004: 40) Accountability is the embodiment of the
obligation to account for the success or failure of the organization's mission
implementation in achieving the goals and objectives that have been established
through a periodic media accountability. There are two types of accountability:
financial accountability and performance accountability. Financial accountability is
accountability regarding financial integrity, disclosure, compliance with the
legislation. The goal of this responsibility is the financial statements and the
legislation in force which includes the reception, storage, and expenditure of money
by government agencies.
Implementation of financial accountability reflected in the financial
statements is a form of accountability. Financial integrity, disclosure and compliance
with laws and regulations can be an indicator of financial accountability. Financial
accountability of public sector is expected to improve the quality of the performance
of government agencies become more transparent government that put the priority
of the public interest.

2.3 The Village Fund Allocation

Based on the Regulation No. 113 of 2014 concerning Financial Management
of Rural Village Allocation Fund, referred as ADD is an equalization funds received
by the district / city in the Budget of districts / cities after decreased by the special
allocation fund. According to Regulation No. 37 of 2007 on guidelines for the
financial management of the village of article 18 stated that "the Village Fund
Allocation derived from APBD Regency / City sourced from the financial balance of
central and local governments receive District / City to the village at least 10%. The
provision of Village Allocation Fund is a manifestation of the fulfillment the village
rights to organize village autonomy to thrive following the growth of the village
itself based on diversity, participation and empowerment of rural communities.
Management of village fund allocation (ADD) is based on the following principles:
a. All of the activities carried out in a transparent / opened and known by the
public.

362
 b. The community plays an active role to begin the process of planning,
implementation, monitoring and maintenance.
c. All activities can be accounted for by administrative, technical and legal.
d. Enabling the role of community institutions in accordance to the duties and
functions.
e. The results of the activities can be measured and assessed by level of success.
f. Results of the activities can be preserved and developed in a sustainable
manner with maintenance efforts through community participation.
According to Regulation No. 37 Year 2007 Article 20 of the Village Fund
Allocation management adheres to the principles:
a. The principle of equitable that the magnitude of the Village Fund Allocation
section are the same for each village, called the Village Fund Allocation
Minimal (ADDM);
b. The principle of justice is the large part of the Village Fund Allocation by
Weight Value Village (BDX) calculated using the formula and specific
variables, (eg poverty, affordability, basic education, health, etc) which called
the Village Fund Allocation Proportional (ADDP). The amount of the
percentage ratio between the principle of fair and equal as referred to in
paragraph (2) above is the amount of ADDM is 60% (sixty percent) of the
ADD and ADDP amount is 40% (forty percent) of the ADD.

3. Research Methods
This research is a literature study the research to find relevant theory
references with cases or the problems found. The data source from secondary data
are the form of books and articles about public sector financial accountability, as
well as the village fund allocation program phenomena.

4. Discussion
Implementation of rural fund allocation program is very large role in helping
to improve the welfare and empowerment of rural communities. ADD helped to
create a national program that is equitable regional economy. In implementation
many obstacles encountered in the various area such as low competence of human

363
resources in managing ADD, the lack of coordination between local and village
government in implementing the ADD program and some society views that ADD
program will increase the potential of corruption in government area. Various issues
raised in the research conducted Setyoko (2011), fastari (2012) and Thomas (2013)
and Abidin (2015) needs improvement in various aspects wich has directly or
indirectly impact on financial accountability ADD program.
Regulatory aspects become the reference of ADD implementation. The local
government should make clear regulations and technical guidelines. The local
goverment do socialization for the ADD program implementation can be run
accordance to the planning that has been made. Village government's ability can do
the financial management according to the regulations will increasing the quality,
accountability and transparency of financial statements. These ability appropriate
with the recommendations provided by study of Abidin (2015).
ADD needs for every village adapted to the village weight value calculated
by formula and specific variables. To create the fair and equitable principle, ADD
sharing formula should be implemented based on the valid government regulations,
Regulation number 37 of 2007 about the guidelines of village financial management.
This expectation appropriate with then recommended study of Fastari (2012) and
Abidin (2015). Likewise, from the aspect of governance, accountability in financial
management of ADD should be in accordance with applicable regulations. Setyoko
(2011) and Thomas (2013) gives advice when human resource capability is less need
to hold technical guidance regarding the systems and mechanisms ranging from
planning, implementation to financial accountability ADD. With good skills will
create financial administration order ADD and reduce the risk of misuse in the
management of ADD.
The local goverment should assistance the village governments to coordinate
ADD activities needed so for the smooth implementation of ADD. Besides, it
continues to provide socialization on the distribution of the benefits of ADD for rural
communities will increase the awareness of rural communities and foster
participation in the development of rural communities. This is in accordance with the
recommendation of Thomas (2013) and Setyoko (2011). The role of the regional
inspectorate to supervise the management of ADD greatly help the realization of the

364
ADD program management accountability and to reduce the risk of misuse of the
ADD program.

5. Conclusions
The allocations of village fund has an important role in driving the village
economy . Therefore this program should be run in accordance with its objectives. In
order the implementation of the village fund can run well , need a good financial
accountability also to ensure that there are no obstacles anymore. This study has a
limitation simply using literature study that researchers do not go directly into the
field to identify and assess existing problems.
Based on the results of this research it can be recommended:
1. The local government should make clear regulations and technical guidelines
and continues with giving socialization for the ADD program.
2. To create the fair and equitable principle, ADD sharing formula should be
implemented based on the valid government regulations.
3. For the lack of human resource capability ,technical guidance regarding the
systems and mechanisms are needed.
4. The local goverment should assistance the village governments to coordinate
ADD activities for the smooth of ADD implementation.
5. The role of the regional inspectorate to supervise the management of ADD
greatly help the realization of the ADD program management accountability
and to reduce the risk of misuse of the ADD program.

REFERENCES

Abidin, Muhammad Z. 2015. Study of Implementation of Village Finance to Support

Fund Village Policy. Jakarta : Kementrian Keuangan.
Fastari, Agisma D. 2012. Village Fund Allocation in Policy Formulation of Local
Budget of Jember Regency of Year 2012. E-sospol unej no1 vol 1 page 1-
9
Kurniasih, Dewi. 2013. Penyelenggaraan Desentralisasi fiskal di Kabupaten
Bandung. Jurnal Agregasi Prodi IP Unikom Vol 1 no.1, 17-30. ISSN
2337-5299.
Peraturan Menteri dalam Negeri Nomor 37 tahun 2007. Pedoman Pengelolaan
Keuangan Desa. Jakarta.

365
Peraturan Menteri Dalam Negeri Nomor 113 tahun 2014. Pengelolaan Keuangan
Dana Desa. Jakarta.
Peraturan Pemerintah Nomor 22 tahun 2015. Dana Desa. Jakarta.
PKP2A III LAN, Tim. 2008. Pengaruh Kebijakan Desentralisasi Fiskal terhadap
Kapasitas Kinerja Otonomi Daerah di Wilayah Kalimantan. Jurnal Borneo
Administrator, Lembaga Administrasi Negara-Pusat Kajian dan
Pendidikan dan Pelatihan Aperatur III, 4(2),1.222-1.247.
Setyoko, Paulus Israwan. 2011. Accountability of the financial administration of
rural fund allocation program. Jurnal Ilmu Administrasi Negara 11(1), 14-
24.
Sidik, Mahfud, 2004. Prinsip dan Pelaksanaan Desentralisasi Fiskal di Berbagai
Negara dalam Bunga Rampai Desentralisasi Fiskal Jakarta. Dirjen
PKPD.
Thomas. 2013. Allocation Fund Management in Rural Development Efforts to
Increase In The Village Sebawang Tana Tidung. eJournal Pemerintahan
Integratif, 2013, 1 (1): 51-64
Ulum, Ilyaul. 2009. Audit Sektor Publik: Sebuah Pengantar. Jakarta : Bumi Aksara.
Undang-undang Nomor 32 Tahun 2004. Perimbangan Keuangan anata Pemerintah
Pusat dan Pemerintah daerah. Jakarta.

www.okezone.com.
www.kompas.com.

366
FAA-10

THE ANALYSIS RELATIONSHIP BETWEEN

PROFESSIONALISM AND ETHICS OF THE QUALITY
OF AUDIT

Ludfa Febriana
University of Jember, Indonesia
Email: ludfafebriana@gmail.com

ABSTRACT

Organization can achieve the goals and increase the effectiveness applying a
good internal control. Elder et, al. (2011) said that the management usually design
internal control one of them is the reliability of financial report. So, in need the
reliable quality of audit to inform on the principals business to make decision. Some
factor the quality of audit is professional and ethics the auditors. Hence the purpose
research to propose evidence that professional and ethics influenced the quality of
audit. This research is literature study of several research before many prove that the
quality of audit is strongly influenced by professional and ethics .As research
researched by Lesmana (2015), Nugrahini (2015), Kusuma (2012), and Alfiyah
(2015).

1. Introduction
Organization can achieve the goals and increase the effectiveness appling a
good internal control. But many problems faced by most countries in the world
regarding the unsatisfied results, this is because internal controls are not good.
Because that, the Indonesian government trying to realize an internal control system
in practice of good governance are set in the Government Regulation No. 60 of 2008.
This regulation was made because most companies in Indonesia experienced
problems in their operations, their problem is a serious problem, especially in
internal control. Elder et. al. (2011) said that the management has three for designing
internal controls, namely the reliability of financial reporting, efficiency and
effectiveness of operations and compliance with laws and regulations. The focus of
the auditor in auditing the financial statements and the audit lies in the audit
objectives. Due to the auditor's findings are good news for stakeholders
(stakeholders).
As well as the auditor to understanding the importance of internal control.
Elder et. al. (2011) said that the auditor should obtain a good understanding of the

367
entity and its environment, including internal controls. To assess the risks of material
misstatement and the financial statements, whether caused by error or fraud and to
design the nature, timing and breadth of further audit procedures. Task management
is not only to set up internal controls in general terms, but gave the motivation to the
individual auditors to implement a good code of ethics and professionalism. In
addition to the motivation of the manager of an educational organization is also very
supportive as the accounting profession. This is due to the influence the ability of
auditors to audit quality.
Cases such as that experienced global company engaged in the field of
energy that is Enron, Companies merger between Internorth (distributor of natural
gas through pipelines) with Houston Natural Gas in 1985, seventh largest company,
from five hundred companies prominent in the United States. Companies that went
bankrupt almost amounted to US $ 31.2 billion in 2001 revealed the implications for
the capital markets in the world. This is because the occurrence of such moral
behavior is to manipulate financial statements to record a profit of US $ 600 million,
whereas the company suffered losses. This makes Andersen always receive the
negative consequences of Enron like losing clients to the blacklist. In the Enron issue
in contrast to the code of ethics that the accounting profession must be owned by an
auditor, where the auditor must fulfill its responsibilities with the highest standards
of professionalism and the highest levels of performance with an orientation to the
public interest. This is supported research by Friska (2012) in his study entitled
"Effect of Auditor Professionalism, experience Auditor Professional Ethics and
against Considerations Materiality level". said that the professionalism of auditors,
professional ethics and experience together has a significant effect on the level of
consideration.
Based on the idea of the importance of professionalism and ethics to audit
quality. Thus, this study aimed to analyze the relationship perofesionalisme and
ethics on audit quality by using the methodology of the study of literature

368
2. Literature Review
2.1 Auditing
Audit is a process of collecting and evaluating evidence and the information
that can be measured on an economic entity which made a competent and
independent to be able to determine and report information conformity with the
criteria that have been set. (Arens and Loebbecke, 2003). Mulyadi (2008) review the
terms of the audit from the point of view of the public accounting profession who
explained that the audit was an examiner (examination) objectively on the financial
statements of a company or other organization with the aim to determine whether the
financial report of the present fairly, in all material respects, financial position and
business hasio company or organization.

2.2 Implementation of Virtue Theory on the Quality Audit

Virtue Theory is based by Aristotle, but had sunk, but now this theory
regained momentum. Bernes (in Agoes 2014: 51) said "In contrast to the theory of
teleology and deontology are both equally highlights morality and set of an action,
whereas this virtue theory, start from human beings themselves. This virtue theory
departs from or character traits one should have to be referred to as the virtue human,
Agoes and Ardna (2014: 51). So, the virtue theory defines the nature or the virtue
character as a disposition inherent nature or character or owned by someone and
allowing people to always behave morally considered good. The auditor also as a
human being, but the auditor is required to have the properties to be the virtue man.
Therefore, the implementation of this virtue theory is as the basis of the auditor who
has properties or characters attached to him as the auditor responsible for the output
or financial statements.

2.3 Implementation Agency Theory and Virtue Theory on the Quality Auditor
Agency theory was first expressed by Jesen and Meckling (1976). Theories
that explain and principal-agent relationship, where the agent is the management of a
company and principal is shareholders. Financial reporting practices in an
organization is based on the agency theory and theory virtue. Management as an
agent which presents useful information should also have a virtue character that
management should have good morality.

369
2.4 Internal Control
The purpose of internal control, according to Elder et. al. (2011) to create the
reliability of financial statements, the efficiency and effectiveness of operations and
compliance with laws and regulations. In addition there are responsibilities in
internal control, one of which is the responsibility of the auditor. In Elder et. al.
(2013) states that the auditor's responsibility is to examine the internal control over
financial reporting. Auditors also focused on auditing the financial statements plus
some control over operations and compliance with laws and regulations that could
have a significant impact on the financial statements. Auditor not only to discharge
its responsibilities to audit financial statements, but the auditor must also have the
ability to create financial reports that are reliable and trustworthy. Therefore, the
auditor should have the nature of professionalism and ethics. Not quite to the nature
of professionalism and ethics, but the results of the audit should be supported jga of
adequate educational background. Due to the financial statements the auditor's
examination is as a source of information for stakeholders.
The linkage of professionalism and ethics of an auditor can affect the results
of the audit. This is because the company's survival depends on the support of
stakeholders and the support should be sought so that the company's activities will
become even better. (Gray, et. Al. 1995) said that social disclosure is considered as
part of a dialogue between the company and its stakeholders. The Company is not
the only entity that operates for its own account, and to get the support of the
stakeholders of the company should provide benefits to its stakeholders one of which
is to create a good financial report. This is to support the theory developed by
Freeman (1984), which defines stakeholders as a group that can affect or be affected
by the company's success in achieving its goals.

3. Discussion
3.1 The relationship between professionalism with Quality Audit
An auditor should have the nature of professionalism, where these properties
are properties that must be possessed by the auditor include dalah ability and
credibility. According to Arens et. al. (2008) the sense of professionalism that is:

370
 Profesionalisme means a responsibility for conduct that extends beyond
satisfying individual responsibilities and beyond the requirements of our society
law and regulation
In general, the professionalism of auditors is an obligation of duty with
seriousness and carefuly which should avoid omission and dishonesty. But not only
that as a professional auditor, the auditor should be responsible to society, clients,
and colleagues. Therefore, the auditor's professionalism greatly affects the quality of
the audit. The results of some previous researchers have proved that there was a
relationship of professionalism auditor to audit quality produced. Lesmana et.al.
(2015) proved that professionalism has a positive impact on audit quality, because
the higher the levels of professionalism, the more quality audit results. This research
is evidenced by the results of the coefficients for the professionalism of 0.314, with
a significance level of 0.000 which indicates under 0.05. This means that the variable
professionalism individually significant effect on audit quality.
So also research by Nugrahini (2015) which shows that there is a positive
influence and significant professionalism of auditors on audit quality. This is
because the attitude and behavior of auditors in carrying out their profession should
be with seriousness and responsibility, in order to achieve the performance of its
duties as set forth by professional organizations, including dedication, social
obligations, self-reliance, confidence and professional relationships with colleagues.
Increasingly aware of the internal auditor professional responsibilities, the quality of
the audit will be assured and protected from manipulation and professionalism
possessed the higher the internal auditor, the higher the quality of the audit.

3.2 The Relationship between Ethics with Quality Audit

The word "ethics" comes from the Yunani means it is ethos, which means
shelter, meadows, stables, habits, customs, character, feeling, way of thinking. The
plurality is ta ethical means customs (Agoes and Ardana 2014: 26). Ethics is a
systematic approach to moral judgment based on reasoning, analysis, and reflective
sintesis (David P. Baron (2005). according to Lawrence, Weber and Post (2005)
ethics is a conception of right and wrong conduct.

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 Agoes (2014: 205) explains that the purpose of the code of conduct IIA
(Institute of Internal Audit) is to introduce an ethical culture in the profession of
internal auditing. Agoes (2014: 205) also explains that the auditor is expected to
implement and enforce the principle - the principle as follows:
1. Integrity
Integrity is the quality, nature or circumstances indicate a unified whole that
has the potential and ability that emit obligations and honesty.
2. Objectivity
The auditor should have the nature of professional objectivity to acquire,
evaluate and communicate the information about the activity or process being
tested. In addition, the auditor must conduct a balanced assessment of all
relevant factors and is not influenced by personal interests or other parties to
make decisions.
3. Secrecy
Confidentiality is a trait that can be trusted to respect the ownership of the
information received, and does not disclose such information without lawful
authority, unless there are provisions perundah law and required by law or
profession
4. Competence
Competence is the ability or characteristic that should be owned by the
auditor to apply the knowledge, skills and experience required in providing
audit services
So in this case, in order to avoid unfair competition, IAPI (Institut Akuntan
Publik Indonesia) also has set a code of professional conduct in the hope auditor
accountant can uphold the ethics of the accounting profession. In Indonesia, the
ethics of accountants has become a very interesting conversation, because without
ethics, the accounting profession there is no function as a provider of information to
make decision by the business. Therefore, by upholding the ethics of the profession
is expected that no cheating among auditors, so the quality of their audit to be better,
and can provide the audited opinion correct - correctly in accordance with the state
of the financial statements presented by the company.

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 As research conducted by Kusuma (2012), ethics have a significant influence,
where his research is evidenced by the questionnaire method showed 52.08% agree
with the ethics of the profession and 48.58% strongly agree. This means that in
general the respondents agreed that the accounting profession must have good ethics.
This research was also supported by Alfiyah (2015) the results showed that the ethics
significant effect on audit quality. This means that the better ethical owned auditors
will be able to increase professionalism.

4. Conclusion

The relationship between professionalism and ethics to audit quality, this

statement is supported by studies of Susilawati (2014). Where the professionalism of
auditors is is based on the ethics of individual auditors. This means that the ethical
factor measured by the integrity, objectivity, confidentiality and competence is
decisive factor professionalism by Alfiyah (2015). The results are consistent with the
theory of virtue that theory departing or character traits one should have to be
referred to as a virtue human professional and ethical. And to achieve high-quality
audit the auditor should have the virtue characteristics, it is also the basis for the
auditor as the agent responsible for the output or financial statements. So as to
provide quality information for the principal of the results of the audit.
Through this article auditor is expected to continue to improve the
professionalism and ethics on himself, so it is more focused in achieving quality
audit. And in their duties of an auditor should be in accordance with the code of
ethics established by professional organizations, so that the auditor not works in
accordance with its own rules. Contributions can be given by the author is at least
their professionalism and ethics are embedded in the auditor can minimize the risk of
error or in internal control.

4.1 Limitation
In a study in this literature uses only two variables, namely professionalism
and ethics, so it can not lead to the conclusion that a thorough audit quality.

373
 REFERENCES

Agoes, Sukrisno. 2014. Auditing. Salemba Empat : Jakarta

Agoes, Sukrisno dan Ardana Cenik. 2014. Etika Bisnis dan Profesi. Salemba Empat
: Jakarta
Alfiyah, Nurul (2015), Pengaruh Etika, Pendidikan dan Pengalaman terhadap
Kualitas Audit Dengan Profesionalisme Sebagai Variabel Intervening.
Universitas Jember
Donaldson, Thomas. 1995. The Stakeholder Theory of the Corporation: Concepts,
Evidence, and Implications. The Academy of Management Review, Vol.
20, No. 1. (Jan., 1995), pp. 65-91.
Elder, Randel J. Beasley, Mark S. Jusuf, Amir Abadi. 2013. Jasa Audit dan
Asurance. Salemba Empat : Jakarta
Friska, Novanda. 2012. Pengaruh Profesionalisme Auditor, Etika Profesi dan
Pengalaman Auditor terhadap Pertimbangan Tingkat Materialitas. Jurusan
pendidikan akuntansifakultas ekonomiuniversitas negeri yogyakarta
Herawati, Tuti. 2014. Pengaruh Sistem Pengendalian Intern Terhadap Kualitas
Laporan Keuangan (Survei Pada Organisasi Perangkat Daerah Pemda
Cianju Journal Bandung Business School. ISSN: 1693-4482 Vol XI, No. 1
2014
Hogan, Chirs. 2014. Auditing and Assurance Service. Pearson : England
Lee, Paul, Min-Dong. 2008. A review of the theories of corporate social
responsibility: Its evolutionary path and the road ahead. International
Journal of Management Reviews (2008) doi: 10.1111/j.1468-
2370.2007.00226.x
Munilla, Linda. 2005. The Corporate Social Responsibility Continuum as a
Component of Stakeholder Theory. Business and Society Review, Vol
110:4. Pp 371387
Nugrahini, Putri (2015). Pengaruh Kompetensi dan Profesionalisme Auditor Internal
terhadap Kualitas Audit (Studi Empiris pada Bumn dan Bumd di Kota
Yogyakarta. Journal Ekonomi Universitas Negeri Yogyakarta
Susilawati dan Atmawinata, Maya R. (2014). Pengaruh Profesionalisme dan
Independensi Auditor Internal terhadap Kualitas Audit: Studi pada
Inspektorat Propinsi Jawa Barat. Journal Etikonomi Vol. 13 No. 2
Lesmana, Rudi dan Machdar, Nera Marinda. (2015). Pengaruh Profesionalisme,
Kompetensi, dan Independensi Auditor Terhadap Kualitas Audit. Journal
Akuntansi, Fakultas Ekonomi Institut Teknologi dan Bisnis Kalbis. ISSN
2356 4385. Kalbisocio,Volume 2 No.1 Februari 2015
Wardayati, Siti Maria. (2016). The Effects of Accountability, Objectivity, Integrity,
Working Experience, Competence, Independence and Motivation of the
Examiner toward the Quality of Inspection Results at the Inspectorate of
Lumajang Regency. Journal Economics, Jember University. Pertanika J.
Soc. Sci. & Hum. 24 (S): 169 - 174 (2016)
Mulyadi. 2008. Auditing. Salemba Empat : Jakarta

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FAA-15

RATIO ANALYSIS TO MEASURE ACCOUNTING

PERFORMANCE IN MINERAL WATER TERRITORY
COMPANY (PDAM) OF PROBOLINGGO

Titin Krisnawati
University of Jember
kris.na84@yahoo.com

ABSTRACT

This research is done in Mineral Water Territory Company (PDAM) of Probolinggo

in order to know the Accounting performances in 2011-2014. The method is
quantitative method through analysis ratio form based on BUMN Cabinet Ministry
No. 100/MBU/2002. The variable of this research is PDAM Probolinggo balance in
2011-2014 and the profit or lose out reports. The methods of data collection through
interview and documentation will be gotten like the profit or lose out report and
balance of company in 2011-2014. The analysis methods used hypothesis for the
problems above, that is quantitative analysis used ratio analysis form based on
BUMN Cabinet Ministry No. 100/MBU/2002, and qualitative method like making
decision through compare the number of data reports based on the data or
information that will be gotten from the analysis. Based on the analysis above, the
conclusion is the accounting performances company is 39,5 scores in 2011 is quite
healthy category with B predicate, the weight 30<TB<=40. In 2012 is 29 scores
categories not quite healthy with CCC predicate, the weight 20<TB<=30. In 2013 26
scores categories not quite healthy with CCC predicate, the weight 20<TB<=3 while
in 2014 the scores is 35,5 with B predicate not quite healthy. The criterion above
shows that the accounting performance PDAM of Probolinggo is getting down in
2011 to 2013, while it shows increasing with 35,5 scores in 2014.
Keywords: Ratio Analysis, Accounting Performances, Accounting Report

1. Introduction
The appropriate planning is the key for a manger to get succeed. One of the
analyses to get it is controlling the accounting and making appropriate planning,
such as accounting the ratio. Accounting ratio is one of the information forms that
are significant in assessing of company performance.
Theoretically, accounting analysis report consist of two words, they are
analysis and accounting report. It shows that analysis accounting report is one of the
process that takes full of considerations to evaluate the accounting position and result

375
of company operation in the past and now, through the main aim is to decide the
prediction and estimation that will be touched the performance and condition of the
company in the future.
Based on the Standard of Accounting Accountancy Statement (PSAK) No.1
state that the aim accounting report is to prepare the information about the
accounting position, performance and the position changing of the company in order
to make decision. The aim of the analysis is to identify every weaknesses of
accounting condition that can make challenge/problem in the future, and decide the
effort to be used. In other hand, this analysis will be useful for other side company to
decide the creditability or invest potential level (Mohamad Muslich, 2000:44).
While, there are deviation in the field in managing the accounting data, which
is many mistake or the genuine is low in the accounting report. It will be happened in
Mineral Water Territory Company (PDAM) of Probolinggo so it will effect for
determining the management measure in the future. To assess the Mineral Water
Territory Company (PDAM) of Probolinggo performances, it is needed the
information about the accounting report that analyze for making decision. Based on
that, the researcher want to know the healthy Mineral Water Territory Company
(PDAM) of Probolinggo performance used accounting analysis ratio.

2. Theoritical Review
According APB statement no. 4(1970) under title BasicConcepts and
Accounting Principles Underlying Financial Statement of Business Enterprises, the
particularly aim of accounting report is prepare the accounting report position,
output, and the other changing accounting positions based on GAAP (General
Accepted Accounting Principle). The general aim of accounting report a) give
information about the company, b) give factual information about the properties that
are from profit, c) can predict the potential of the company in giving profit, d) give
information about the changing of properties and duties, e) can dig up the relevant
information that are needed for others.
SAK ETAP explain that the entities of accounting report is 1) balance, 2)
report of profit or lose out, 3) changing Equities report, 4) cash report, 5) script of

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accounting report which consists of accountancy policy and other explanation
informations.

2.1 Ratio Analyze based on BUMN CABINET MINSTRY Statement No.

100/MBU/2002
This research will measure the accounting company performances based on
BUMN CABINET MINSTRY Statement No. 100/MBU/2002 through ratio as
below:
1. Return On Equity (ROE)
Earning After Tax x 100%
Owner Equity
2. Return On Investment (ROI)
EBIT + Depreciation x 100%
Capital Employed
3. Cash Rasio
Cash+Bank+Investment
Current Liabilities x 100%
4. Current Ratio
Current Asset x 100%
Current Liabillities
5. Collection Periods (CP)
Total Account Receivable x 100%
Total Income
6. Perputaran Persediaan (PP)
Total Inventory x 100%
Total Income
7. Total Asset Turn Over (TATO)
Total Revenue x 100%
Capital Employed
8. Ratio Total Equity to Total Asset
Total Owner Equity x 100%
Total Asset

377
3. Methodology
3.1 Types and Variable
This research is descriptive quantitative where the researcher try to solve the
problems based on the data, analyzing data and interpret (Cholid Narbuko dan Abu
Achmad, 2003:44). The variable is balance report of Mineral Water Territory
Company (PDAM) of Probolinggo 2011-2014 and R/L PDAM 2011-2014.

3.2 Sample and Population

The population is all of accounting data around 1975-2014 PDAM of
Probolinggo, and the sample is taken from the balance and profit and lose out report
for Fourth years 20011-2014.

3.3 Data Source and Data Collection

The data source of this research is seconded data like accounting report
through interview method and documentation.

3.4 Analysis Method

The analysis data used qualitative and quantitative analysis, through
accounting performance assess below:
a. The maximum total for accounting performance assess are 50
b. The indicator assess and weight of BUMN Cabinet Ministry Statement No.
100/MBU/2002.
c. The assess method through the score below:

(ROE) (ROI) Cash Ratio Current Ratio

15 <ROE : 15 18 <ROI : 10 x > = 35 :3 125 < = x :3
13 <ROE<= 15 : 13,5 15 < ROI<= 15 : 9 25 < = x < 35 : 2,5 110 < = x < 125 : 2,5
11 <ROE<= 13 : 12 13 <ROI<= 13 : 8 15 < = x < 25 : 2 100 < = x < 110 : 2
9 <ROE<= 11 : 10,5 12 <ROI<= 11 : 7 10 < = x < 15 : 1,5 95 < = x < 100 : 1,5
7,9 <ROE <= 9 : 9 10,5 <ROI<= 9 : 6 0<=x< 5:0 90 < = x < 95 :1
6,6 <ROE<= 7,9 : 7,5 9 <ROI <= 7,9 : 5 x < 90 :0
5,3 <ROE<= 6,6 : 6 7 <ROI<= 6,6 : 4
4 <ROE<= 5,3 : 5 5 <ROI<= 5,3 : 3,5
2,5 < ROE <= 4 :4 3 <ROI <= 4 3 : 3
1 <ROE<= 2,5 : 3 1 <ROI<= 2,5 : 2,5
0 <ROE <= 1 : 1,5 0 <ROI <= 1 :2

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 ROE< 0 :1 ROI < 0 :0

Total Asset Turn Ratio Total Equity to Total

Collection Period Inventory Turn Over
Over Asset
120< x , 20< x :
x <= 60 , x > 35 : 4 x <= 60 , x > 35 : 4 4 x<0 : 0
60<x<= 90 , 30< x<=35 : 60<x<= 90 , 30< x<=35 105<x<=120 , 15<x<=20
3,5 : 3,5 : 3,5 0 < = x < 10 :2
90<x<= 120 , 25< x<=30 : 90<x<= 120 , 25< x<=30 90 <x<= 105 , 10 < x
3 :3 <=15 : 3 10 < = x < 20 : 3
120<x<=150 , 20<x<=25 : 120<x<=150 , 20<x<=25 75< x <= 90 , 5 < x <=10
2,5 : 2,5 : 2,5 20 < = x < 30 : 4
150<x<= 180 , 15< x<=20 150<x<= 180 , 15< 60 < x <= 75 , 0 < x <= 5
:2 x<=20 : 2 :2 30 < = x < 40 : 6
180<x<=210 , 10<x<=15 : 180<x<=210 , 10<x<=15 40 < x <= 60 , x <=0 :
1,6 : 1,6 1,5 40 < = x < 50 : 5,5
210<x<= 240 , 6 < x =10 : 210<x<= 240 , 6 < x =10 :
1,2 1,2 20 < x <= 40 , x < 0 : 1 50 < = x < 60 : 5
240<x<= 270 , 3 < x<= 6 : 240<x<= 270 , 3 < x<= 6
0,8 : 0,8 x <= 20 , x < 0 : 0,5 60 < = x < 70 : 4,5
270<x<= 300 , 1 < x<= 3 : 270<x<= 300 , 1 < x<= 3
0.4 : 0.4 70 < = x < 80 : 4,25
300<x , 0 < x<=1 : 300<x , 0 < x<=1 :
0 0 80 < = x < 90 : 4
90 = x <100 :
3,5
Source : BUMN CABINET MINSTRY Statement No. 100/MBU/2002

4. Result and Discussion

4.1 Return On Equity (ROE)
Years/ Direct Operational Indirect Income Before Earning After
Comparative Revenue Cost Operational Cost Tax Income Tax Tax ROE
2010 10.238.248.570,00 4.151.731.264,44 827.684,09 1.729.620.047,72 367.751.841,91 1.366.898.114,45
2011 11.084.382.850,00 4.288.273.840,47 711.292,62 1.550.933.996,72 303.682.715,61 1.247.251.281,11
More/less 846.134.280,00 136.542.576,03 (116.391,47) (178.686.051,00) (64.069.126,30) (119.646.833,34)
12%
% 0,08 0,03 -0,14 -0,10 -0,17 -0,09
2011 11.084.382.850,00 4.288.273.840,47 711.292,62 1.550.933.996,72 303.682.715,61 1.247.251.281,11
2012 12.008.976.899,41 11.118.504.060,41 5.426.401,23 885.046.437,77 177.042.366,86 708.004.070,91
4%
More/less 924.594.049,41 6.830.230.219,94 4.715.108,61 (665.887.558,95) (126.640.348,75) (539.247.210,20)
% 0,08 1,6 6,63 -0,43 -0,42 -0,43
2012 12.008.976.899,41 11.118.504.060,41 5.426.401,23 885.046.437,77 177.042.366,86 708.004.070,91
2013 12.416.244.730,82 11.898.175.949,88 3.512.333,80 514.556.447,14 159.000.000,00 355.556.447,14
More/less 407.267.831,41 779.671.889,47 (1.914.067,43) (370.489.990,63) (18.042.366,86) (352.447.623,77)
2%
% 0,03 0,07 -0,35 -0,42 -0,10 -0,50
2013 12.416.244.730,82 11.898.175.949,88 3.512.333,80 514.556.447,14 159.000.000,00 355.556.447,14
2014 15.763.375.669,29 14.128.189.111,97 2.752.349.94 1.632.434.207,38 330.716.008,82 1.301.718.198,56
More/less 3.347.130.938,18 2.230.013.162.09 (759.983,86) 1.117.877.760.24 171.716.008,82 946.161.751,42
6,9%
% 0,27 0,19 -0,22 0,23 1,08 2,66
Source : Data processed
The data above in 2011 ROE is getting up12%, in 2012 ROE is 8% and
ROE in 2013 2%. This deviation is because there is improvement in directly cost and
cost non effort years before. In 2013 is getting down again 2%. While, ROE in 2014
is getting up until 4,9% become 6,9%.

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4.2 Return On Investment (ROI)
Years/Comparati Earning Before Asset in
ve Tax Depreciation Total Asset Process CapitalEemploye ROI
1.729.620.047,7 16.531.001.723,4 16.531.001.723,4
2010
2 - 0 0,00 0
1.550.933.996,7 20.376.674.200,8 20.376.674.200,8
2011
2 112.139.282,00 9 0,00 9 13%
(178.686.051,00
More/less
) - 3.845.672.477,49 0,00 3.845.672.477,49
% -0,10 - 0,23 0 0,23
1.550.933.996,7 20.376.674.200,8 20.376.674.200,8
2011
2 112.139.282,00 9 0,00 9
1.352.127.575,0 20.368.589.141,8 20.156.730.141,8
2012
885.046.437,77 0 6 211.859.000,00 6 11%
(665.887.558,95 1.239.988.293,0
More/less
) 0 (8.085.059,03) 211.859.000,00 (219.944.059,03)
% -0,43 11,06 -0,0004 - -0,01
1.352.127.575,0 20.368.589.141,8 20.156.730.141,8
2012
885.046.437,77 0 6 211.859.000,00 6
1.230.916.171,0 21.903.707.542,6 21.691.848.542,6
2013
514.556.447,14 0 8 211.859.000,00 8 8%
(370.489.990,63 (121.211.404,00
More/less
) ) 1.535.118.400,82 0,00 1.535.118.400,82
% -0,42 -0,09 0,075 0 0,08
1.230.916.171,0 21.903.707.542,6 21.691.848.542,6
2013
514.556.447,14 0 8 211.859.000,00 8
1.632.434.207,3 1.365.028.912,6 20.411.821.905,7 20.411.821.905,7
2014
8 0 9 0,00 9 14,7%
1.117.877.760,2 (1.491.885.636,8 (211.859.000,0 (1.280.026.636,8
More/less
4 134.112.741,6 9) 0) 9)
% 2,17 0,11 -0,07 0 -0,06
Source : Data processed

Based on the table above, in 2011 ROI reach 13%, in 2012 11%. While in
2013 getting down until 3%. This reduction is happened for three years period
because there is reduction profit before the tax. But in 2014 ROI performance getting
up until 14,7%.

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4.3 Cash Ratio

Cash + Bank Current Liabilities Cash Ratio

Years/Comparative
2010 471.788.814,00 803.367.064,04
2011 2.098.944.096,52 806.051.148,65
260%
More/less 1.627.155.282,52 2.684.084,61
% 3,45 0,003
2011 2.098.944.096,52 806.051.148,65
2012 1.238.030.631,24 485.680.414,19
255%
More/less -860.913.465,28 -320.370.734,46
% -0,41 -0,4
2012 1.238.030.631,24 485.680.414,19
2013 915.347.639,10 269.252.452,00
340%
More/less -322.682.992,14 -216.427.962,19
% -0,26 -0,45
2013 915.347.639,10 269.252.452,00
2014 1.674.760.487,61 387.805.947,82
431,85
More/less 759.412.848,51 118.553.495,82
% 0,83 0,45
Source : Data processed
Based on the table above in 2011 cash ratio getting up 260%, 2012 getting
down until 5%, and 2013 getting up 85%, and 2014 getting up until 431,85%. This
improvement of Cash Ratio because of there is improvement that the companys
abilities can full the duties for the short time.

4.4 Current Ratio

Years/Comparative Current Asset Current Liabilities Current Ratio
2010 1.919.730.602,80 803.367.064,04
2011 3.475.113.673,82 806.051.148,65
More/less 1.555.383.071,02 2.684.084,61
431%
% 0,81 0,003
2011 3.475.113.673,82 806.051.148,65
2012 7.851.394.505,52 485.680.414,19
1623%
More/less 4.376.280.831,70 -320.370.734,46
% 1,26 -0,40
2012 7.851.394.505,52 485.680.414,19
2013 8.137.951.507,88 269.252.452,00
More/less 286.557.002,36 -216.427.962,19
3022%
% 0,04 -0,45
2013 8.137.951.507,88 269.252.452,00
2014 6.325.585.065.15 387.805.947,00
More/less (1.812.366.442,73) 118.553.495
1.641%
% 0,04 0,45
Source : Data processed

Based on the table above can be known that in 2011 current ratio is 431%,
2012 is getting up until 1192%. While, in 2013 getting up until 1399%. In 2014 the

381
score of current ratio is 1.641%. The improvement of current ratio is because there is
getting down of current liabilities and current asset improvement for three periods.

4.5 Collection Period

Account Other Allowance Account Nett Account Collection
Pendapatan Usaha
Years/Comparative Receivable Receivable Receivable Receivable Period
2010 1.477.044.949,00 88.762.212,00 -233.631.090,50 1.332.176.070,50 10.238.248.570,00
2011 1.408.070.594,00 95.411.384,00 -189.237.064,00 1.314.244.914,00 11.071.406.577,01
44 day
More/less -68.974.355,00 6.649.172,00 44.394.026,50 -17.931.156,50 833.158.007,01
% -0,05 0,07 -0,19 -0,01 0,08
2011 1.408.070.594,00 95.411.384,00 -189.237.064,00 1.314.244.914,00 11.071.406.577,01
2012 1.477.195.134,00 100.706.704,00 -117.821.358,00 1.460.080.480,00 11.940.255.145,06
44 day
More/less 69.124.540,00 5.295.320,00 71.415.706,00 145.835.566,00 868.848.568,05
% 0,05 0,06 -0,38 0,11 0,08
2012 1.477.195.134,00 100.706.704,00 -117.821.358,00 1.460.080.480,00 11.940.255.145,06
2013 1.626.048.975,00 32.724.820,00 -85.572.040,50 1.573.201.754,50 12.377.164.859,00
47 day
More/less 148.853.841,00 -67.981.884,00 32.249.317,50 113.121.274,50 436.909.713,94
% 0,1 -0,68 -0,27 0,08 0,04
2013 1.626.048.975,00 32.724.820,00 -85.572.040,50 1.573.201.754,50 12.377.164.859,00
2014 2.176.474.960,00 28.407.400,00 96.537.726,00 2.108.344.634,00 14.133.434.207,38
54 day
More/less 550.425.985 (4.317.420) 10.965.685,5 535.142.879,5 1.756.269.348.38
% 0,34 -0,13 -0,13 0,34 0,14
Source : Data processed
Based on the table above can be known that the abilities of fund rotation on
credit from 2011-2012 constant, that is 44 days. In 2013 getting up for three days
and 2014 is 54 days. In the Collection period for currently four years can be said that
is sufficient because of less than 60 days.

4.6 Inventory Turn Over

Inventory Revenue Inventory Turn Over
Years/Comparative
2010 57.478.745,00 10.238.248.570,00
2011 54.921.745,00 11.071.406.577,01
2 day
More/less -2.557.000,00 833.158.007,01
% -0,04 0,08
2011 54.921.745,00 11.071.406.577,01
2012 164.765.234,96 11.940.255.145,06
22 day
More/less 109.843.489,96 868.848.568,05
% 2 0,08
2012 164.765.234,96 11.940.255.145,06
2013 656.503.943,73 12.377.164.859,00
11 day
More/less 491.738.708,77 436.909.713.94
% 2,98 0,04
2013 656.503.943,73 12.377.164.859,00
2014 1.553.420.637,00 14.133.434.207,38
10 day
More/less 896.916.693,63 1.756.269.348,38
% 1,37 0,14
Source : Data processed
Based on the data above in 2011 Inventory Turn Over just take two days and
2012 is getting up until 20 days, 2013 is eleven days and 2014 is 10 days.

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4.7 Total Asset Turn Over (TATO)
Based on the table above the TATO scores is 54 % in 2011, in 2012 is 60%,
in 2013 is 57% and in 2014 is getting up until 77%. The increasing in 2014 shows
that there is efficiency in that company.

Revenue Total Asset Asset in Process Capital Employe TATO

Years/Comparative
2010 10.258.570.940,48 16.531.001.723,40 0 16.531.001.723,40
2011 11.084.382.850,14 20.376.674.200,89 0 20.376.674.200,89
More/less 825.811.909,66 3.845.672.477,49 0 3.845.672.477,49
54%
% 0,08 0,23 0 0,23
2011 11.084.382.850,14 20.376.674.200,89 0 20.376.674.200,89
2012 12.008.976.899,41 20.368.589.141,86 211.859.000,00 20.156.730.141,86
More/less 924.594.049,27 -8.085.059,03 211.859.000,00 -219.944.059,03
60%
% 0,08 -0,0004 - -0,01
2012 12.008.976.899,41 20.368.589.141,86 211.859.000,00 20.156.730.141,86
2013 12.416.244.730,82 21.903.707.542,68 211.859.000,00 21.691.848.542,68
More/less 407.267.831,41 1.535.118.400,82 0 1.535.118.400,82
57%
% 0,03 0,08 0 0,08
2013 12.416.244.730,82 21.903.707.542,68 211.859.000,00 21.691.848.542,68
2014 15.763.375.669,29 20.411.821.905,79 0 20.411.821.905,79
More/less 3.347.130.938,47 (1.491.885.636.89) (211.859.000,00) 1.280.026.636,89
77%
% 0,27 -0,07 0 -0,06

4.8 Ratio Total Equity to Total Asset

Owner Equity Asset Total Equity to Total Asset
Years/Comparative
2010 7.343.334.256,36 20.439.289.016,09
2011 10.176.772.349,24 20.376.674.200,89
More/less 2.833.438.092,88 -62.614.815,20 50%
% 0,39 -0,003
2011 7.343.334.256,36 20.376.674.200,89
2012 19.882.908.727,67 20.368.589.141,86
More/less 12.539.574.471,31 -8.085.059,03 98%
% 1,71 -0,0004
2012 19.882.908.727,67 20.368.589.141,86
2013 20.049.396.228,68 21.903.707.542,68
More/less 166.487.501,01 1.535.118.400,82 92%
% 0,008 0,08
2013 20.049.396.228,68 21.903.707.542,68
2014 18.998.926.784,97 20.411.821.905,79
More/less -1.050.469.443.71 -1.491.885.636.89 93%
% -0,05 -0,07
Source : Data processed
Based on the table above in 2011 the Equity to Total Asset is getting up until
50% and in 2012 is getting up until 98%, 92% in 2013 and 93% in 2014. The score
of TMS to TA is estimated 100 numbers, shows that the company is able to give
operational fund through used own fund, does not depend to others.
Based on the total ratio analysis above, to assess the performance of PDAM
Probolinggo, the researcher will show table of the assessments score of PDAM
Probolinggo performances in 2011 to 2014.

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 Tabel
Result of Ratio Accounting Scores

Ratio Accounting 2011 2012 2013 2014

ROE (%) 12% 4% 2% 6,90%

Score 12 4 3 7,5
ROI (%) 13% 11% 8% 14,70%
Score 7 6 4 8
Cash Ratio (%) 260% 255% 340% 431,85%
Score 3 3 3 3
Current Ratio (%) 431% 1623% 3022% 1641%
Score 3 3 3 3
Collection Period (hari) 44 day 44 day 47 day 54 day
Score 4 4 4 4
Inventory Turn Over (hari) 2 day 22 day 11 day 10 hari
Score 4 4 4 4
Total Asset Turn Over (%) 54% 60% 57% 77%
Score 1,5 1,5 1,5 2,5
Equity To Total Asset (%) 50% 98% 92% 93%
Score 5 3,5 3,5 3,5
Total Score 39,5 29 26 35,5

5. Conclusion
Based on the BUMN Cabinet Ministry Statement No. 100/MBU/2002 about
the performance scores of BUMN company, the ratio is used to assess the accounting
performance, that are Return On Equity, Return On Invesment, Cash Ratio, Current
Ratio, Collecting Period, Inventory Turn Over, Total Asset Turn Over, and Equity To
Total Aset.
Based on the ratio analysis scores according to Cabinet Ministry Statement
No. 100/MBU/2002 statements about the accounting performances of Mineral
Water territory Company (PDAM) Probolinggo start from 2011 39,5 scores is quite
healthy category with B predicate, the weight 30<TB<=40. In 2012 is 29 categories
not quite healthy with CCC predicate, the weight 20<TB<=30 while for 2014, the
score is 35, 5 with B predicate, the weight is 30<TB<=40.

REFERENCES

Atmaja, Lukas Setia. 2001. Manajemen Keuangan, Edisi Revisi. Yogyakarta: Andi
Offset
Fahmi, Irham. 2012. Analisis Laporan Keuangan. Bandung: Alfabeta
Kasmir. 2010. Pengantar Manajemen Keuangan. Jakarta: Kencana

384
Keputusan Menteri Badan Usaha Milik Negara Nomor : KEP-100/MBU/2002
Mardalis. 2003. Metode Penelitian: SuatuPendekatan Proposal. Jakarta: Bumi
Aksara
Moeljadi. 2006. Manajemen Keuangan: Pendekatan Kuantitatif dan Kualitatif.
Malang: Bayumedia Publishing
Mukhtar. 2009. Bimbingan Skripsi, Tesis dan Artikel Ilmiah: Panduan Berbasis
Penelitian Kualitatif Lapangan dan Perpustakaan. Jakarta: Gaung Persada
Press
Munawir. 2010. Analisis Laporan Keuangan. Yogyakarta: Liberty Yogyakarta
Muslich, Mohamad. 2000. Manajemen Keuangan Modern: Analisis, Perencanaa,
dan Kebijaksanaan. Jakarta: PT. Bumi Aksara
Narbuko, Cholid dan Abu Achmadi. 2003. Metodologi Penelitian. Jakarta: Bumi
Aksara
Standar Akuntansi Keuangan Ekuitas Tanpa Akuntabilitas Publik
Skousen, K. Fred, W. Steve Alberch dkk. 2001. Akuntansi Keuangan: Konsep dan
Aplikasi. Jakarta: Salemba Empat.

385
FAA-16

FACTORY OVERHEAD COSTS (FOH) ACCURACY

ANALYSIS WITH USING ACTIVITY BASED COSTING
METHOD TO DETERMINED COST OF GOODS
MANUFACTURED IN THE CV. AGNIEH PRINTING
LUMAJANG
(Case Study: Invitation Memorandum and CV. Agnieh Lumajang)

Elok Dwi Vidiyastutik.

University of Panca Marga Probolinggo, Indonesia
email: elokdwividiyastutik@gmail.com

ABSTRACT

CV. AGNIEH which is a company engaged in the field of manufactures specially

produce various kinds of products such as notes, blank, invitations, stickers,
calendars, brochures, business cards, banners, banner. This company experiencing
difficulties in tracing overhead, so the impact on the determination of the Cost Of
Goods Manufactured in production, From the above condition There formulation of
the problem is: How do the analysis accuracy Overhead Costs Factory (BOP) using
activity based costing (ABC) todetermine the cost of goods manufactured in the CV.
AGNIEH Lumajang? This type of research is descriptive research a quantitative
independent variables, activity based costing method (ABC) and the dependent
variable overhead costs (BOP) and the cost of goods manufactured in the CV.
Agnieh Lumajang. The results showed that the calculation of Cost Produksipada CV.
Agnieh Lumajang still using the Traditional System. Traditional system of putting
all the elements of production costs in the Cost Of Goods Manufactured (Cost of
Production). Traditional System Factory Overhead charge using a single rate based
on the number of production units, ie a total of Factory Overhead Costs divided by
the number of production units. The results of calculations Cost Of Goods
Manufactured (Cost of Production) per unit in 2014 using the results obtained
Traditional System Cost Of Goods Manufactured (Cost of Production) for products
memorandum of Rp. 19706.05 while for products invitation Rp. 30872.81.

Keywords: manufacturing overhead cost, Activity based costing, cost of goods

manufactured

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1. Preliminary
Entering the era of globalization, the development of technology is growing,
the printing business in Indonesia which used the machines digital or offset
growing. Business printing is a type of business that began strong presence,
especially in recent years, the printing business is growing rapidly, judging from
the small-scale printing industry has recently emerged.
With the increase in the printing industry in the late-akhr is of course also
increase competition among companies. Not only compete for customers, they are
also competing to get the latest technology to provide greater production capacity,
better quality, and facilitate the performance of its employees.
Management accounting information is used to help managers carry out their
role in decision making. One important managerial decisions regarding the
efficiency of which involves the use of methods of cost of goods manufactured.
Several methods of determining the cost of goods manufactured is by
conventional methods and the method of Activity Based Costing.
Research on the application of Activity Based Costing (ABC) in determining
the Cost Of Goods Manufactured been done. However, the contribution of
research in this case is the level of accuracy of loading overhead through the
implementation of Activity Based Costing, as a proxy in determining the
calculation Cost Of Goods Manufactured.
By paying attention to these conditions, the authors are interested to conduct
research to determine the accuracy of Factory Overhead Costs (BOP) using
Activity Based Costing and the traditional method in calculating the cost of goods
manufactured at CV. Agnieh Lumajang.
The purpose of the research conducted by the authors was to determine the
accuracy of the determination of the method BOP activity based costing (ABC) in
the calculation of cost of goods manufactured in the CV. AGNIEH Lumajang.

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2. Literature Review
2.1 Costs
1. Definition Of Costs
According to Sofia and Septian (2014: 10) costs are resources sacrificed or
removed to achieve certain goals in the future.
2. Cost Object
According to Sofia and Septian (2014: 09) of an object of interest charges or
fees are defined as an item or activity where charges will be accumulated and
counted.
3. Classification of Costs
According Wiratna Sujarweni (2015: 10-15), the costs incurred in the
company needs to come from anywhere traced the fee. The figures referred to
as the cost can be classified as follows:
a. costs based on main functions within the company.
b. costs are grouped based on behavior
c. costs are classified by decision
d. costs are grouped based on something that is financed
4. Definition Cost Accounting
Accounting costs according Wiratna Sujarweni (2015: 02) is a part of
management accounting, cost accounting will be studied in the determination
and control of the costs incurred in the company that would eventually
produce the cost information will be used by management to make decisions.
5. The Purpose Of Cost Accounting
According Wiratna Sujarweni (2015: 03-04), the main goal in the study of
cost accounting is to obtain cost information will be used for:
a. Determination of Cost of Products
b. Cost Planning and Cost Control
c. Decision-making
6. The Role of Cost Accounting
According to Sofia and Septian (2014: 02), cost accounting is widely
regarded as a way of calculation of the inventory values reported in the

388
 balance sheet and the reported cost of goods sold are reported income. This
view limits the scope of the information required by management for
decision-making into a product cost data in order to meet external reporting
rules.

2.2 Cost Of Goods Manufactured

2.2.1 Understanding the Cost of Production (Cost Of Goods Manufactured)
According to Sofia and Septian (2015: 21) the cost of production is the
cost of goods purchased for processing to finish, both before and during the
current accounting period.

2.2.2 The Purpose Of Determining The Cost Of Production (Cost Of Goods

Manufactured)
Determining the cost of production aims to determine how the costs are
sacrificed in connection with the processing of raw materials into finished goods
that are ready for use and sale.

2.3 Factory Overhead Costs

1. Understanding of Factory Overhead Costs
According Wiratna Sujarweni (2015: 54-55), Factory Overhead Costs
(BOP) is all the production costs in addition to direct material costs and direct
labor costs.
2. Destination factory overhead costs
Interest Factory Overhead Costs (BOP) according Wiratna Sujarweni (2015: 55)
is as follows:
a. Can determine the use of more efficient and cost effective.
b. Can determine the cost of the product more precisely.
c. May determine the allocation of Factory Overhead Costs (BOP) according to
the department where a fee is charged.

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3. Characteristics of Factory Overhead Costs
Factory Overhead Costs (BOP) has two characteristics that require
consideration if the product wants to be charged with a reasonable amount of
these costs. Characteristics associated with the relationship between the factory
overhead product or production volume.
4. Classification of Factory Overhead Costs
According to Sofia and Septian (2015: 42-43), Factory Overhead Costs
(BOP) can be classified in three ways:
a. Classification Factory Overhead Costs by type.
b. Classification of Factory Overhead Costs (BOP) According Behavior in
Connection with Volume Change Event.
c. Classification of Factory Overhead Costs (BOP) According Behavior in
Connection with the Department.
5. Factory Overhead Rates
According Wiratna Sujarweni (2015: 57-58), rates Factory Overhead
Costs (BOP) is the amount of money that will be paid by the company to meet
overhead costs.
6. Assessment Of Factory Overhead Cost
Imposition of factory overhead costs (BOP) can be made directly to the product or
order can not be done directly.
7. The Steps Of Loading the factory overhead costs
According to Sofia and Septian (2014: 44-49), the steps of loading rates
overhead costs (BOP) is divided into three ways:
a. Develop manufacturing overhead budget (BOP).
b. Basic loading factory overhead costs (BOP).
c.Calculate the rate of factory overhead costs (BOP).

390
2.4 Conventional Accounting System
2.4.1 Conventional Cost Accounting Definition
Conventional cost accounting system is a system that provides information
about the collection and allocation of costs of cost objects, which costs traced to
every product because every part of the product consumes resources.

2.4.2 Limitations of Conventional Cost Accounting

1. Conventional charge system, the overall tariffs and tariff factory
department that is generally used by companies in some situations,
such rates are not
2. Works well and can cause distortion cost a great product.

2.5 Activity Based Costing System

1. Definition of Activity Based Costing
According Wiratna Sujarweni (2015: 122), Activity Based Costing (ABC)
is the accumulation system costs and charges to products using different cost
drivers, conducted by searching the cost of the activity and then discover the cost
of activities to products.
2. Objective Activity Based Costing
According to Sofia and Septian (2014: 62), the purpose of Activity Based
Costing (ABC) is allocated to the transaction costs of the activities carried out
within an organization and then allocate these costs appropriately to the products
according to usage activities of each product.
3. Benefits of Activity Based Costing
According to Sofia and Septian (2014: 62), the benefits of Activity Based
Costing (ABC) is to improve the quality of decision making, providing activity-
based costing information.
4. Classification Activity Based Costing
According Supriyono (2002) in the book Wiratna Sujarweni (2015: 125-
126) there are four categories of activity in activity based costing (ABC) system
which is as follows:

391
 a. Activity-level unit (unit-level activities)
b.Activities berlevel batch (batch-level activities)
c. Activities berlevel products
d.Activity level adjacent facilities
5. Cost Driver
According Supriyono (2002) in the book Wiratna Sujarweni (2015: 126),
cost driver is a factor that led to changes in the cost of the activity.
6. Stages of Activity Based Costing
According Supriyono (2002) in the book Wiratna Sujarweni (2015: 126-
128), the stage - the stage in the calculation of the cost of production with activity
based costing (ABC) is as follows:
a. Procedure First Stage the first stage to determine the cost of production based
Activity based costing (ABC) system consists of five (5) steps:
1) Classification of activities.
2)Pengasosiasikan various expenses with various activities.
3) Determine the appropriate cost driver.
4) Determination of groups of homogeneous charge (homogeneous Cost Pool).
5)Determination of group rates (Pool Rate)
b. Procedure Stage Two
The second phase to determine the cost of production is the cost for each
group of factory overhead costs are tracked into different types of products. This
is done by using group rates that are consumed by each product. This size is a
simplification of the quantity cost driver used by each product.
7. Comparison of Activity Based Costing to Cost Calculation System
Conventional
The difference between the Activity based costing (ABC) system with traditional
fee calculation system is:
a.That Activity based costing (ABC) system requires the use of factory overhead
shelters more than one but not all systems with shelter costs more than one is
Activity-based costing (ABC) system.

392
b. The number of shelters and basic manufacturing overhead allocations are
heavily skewed Activity based costing (ABC) system, but this was largely caused
by the many traditional cost accounting system using one shelter costs or the basic
allocation for all shelter costs.
c. Homogeneity of costs in a shelter costs
d. All Activity based costing (ABC) system is a system costing two stages while
traditional cost accounting system can be a cost accounting system in one or two
stages.

2.6 Previous Research

1. Riki Martusa and Siti Mariam entitled "Comparison with Conventional
Methods Based Activity Based Costing Overhead Determination Accuracy In
Calculation Cost Of Goods Manufactured PT. Multi Rezekitama "in 2012.
2. Novan Setya Adinagoro Suhadak Devi Farah Azizah entitled "Application of
Analysis Activity Based Costing System (ABC System) For Determining the
Cost of Production Accurately (Studies in PR. Fir Mas Sidoarjo)" in 2012.
3. Muh. Akbar titled "Analysis of Implementation Method Activity Based
Costing In Base Price Determination In Hotel Room Makassar Chocolate "in
2011.
4. Ratna Wijayanti with the title "Implementation of Activity Based Costing
System to Determine the Cost of Production at PT. Clothing industry
Nusantara Unit Patal Secang "in 2011.

3. Research Methods
3.1 Types and Variables Research
3.1.1 Types of research
a. Descriptive method is a method of research conducted by collecting
presenting, and analyzing corporate data based on actual facts or a method
that aims to describe the nature of things going on at the time the research
was done and examine the causes of a particular symptom.

393
b. Quantitative methods according Sugiyono (2010: 12) is a research method
that is based on the philosophy of positivism, is used to examine the
population or a particular sample, the sampling technique is generally done at
random, data collection using research instruments, data analysis is a
quantitative / statistical purposes for test the hypothesis that has been set.

3.1.2 Variable Penelitian

The research variables according Sugiyono (2010: 58) is everything that
shaped what is defined by the researchers to be studied in order to obtain
information about it, then drawn conclusions.
The variables used in this study are:
a. Independent variables are variables that are the cause or the onset of change in
the dependent variable. The variables in this study included the independent
variable is the method of activity-based costing (ABC).
b. The dependent variable or the dependent variable is the variable that is
affected or which become due for their independent variables. The variables
in this study included the dependent variable is the factory overhead costs
(BOP) and the cost of goods manufactured in the CV. Agnieh Lumajang.

3.2 Object Of Research

In this study, the research object is the application of Activity Based
Costing (ABC) in calculating the Cost of Goods Manufactured (Prices Principal
products) on the CV. Agnieh Lumajang.

3.3 Population and Sample

3.3.1 Population
In this study, the population used in this research is the cost of production
on the CV. Agnieh Lumajang in 2013 until 2014.

394
3.3.2 Sample
At this writing samples used in this study is the cost of production last
year, namely the period of 2014.

3.4 Data Source and Data Collection Methods

3.4.1 Data source
a. Primary data
Primary data were obtained from CV. Agnieh directly related to the issues
discussed in that the data of the consolidated company's production costs.
b. Secondary Data
Secondary data were obtained from CV. Agnieh is the company's history,
corporate organizations of data, documentation of data sources obtained from the
library literature, scientific journals dealing with issues that can be used as a guide
in the study.

3.4.2 Data Collection Methods

a. Studies Library (Library Research)
Methods of data collection is done by studying the literature that relate the
subject matter to understand the concepts and theories in writing of the results
of this report.
b. Field Study (Field Research)
The field study is a report that was done by direct observation of the object
under investigation is CV. Agnieh in order to obtain the data needed technique
used in field studies, among others by:
1) Method of interview (interview)
2) Observation (observation)
3) Documentation

395
4. Data Analysis Methods
1. Qualitative Analysis Method
The qualitative method is an analysis of the data that is based on theory as
well as the opinion of experts, so that it can be seen to what extent the
correctness of the data.
2. Quantitative Analysis Method
Quantitative analysis is a data analysis method scientifically backed by
quantitative data.The data analysis technique that is used to calculate Cost of
Goods Manufactured (Cost of Production) with Activity Based Costing
System (ABC) is as follows:
a. Documenting rates in the calculation of Cost of Goods Manufactured
(Cost of Production) with the Traditional System.
b. Calculating the Cost of Goods Manufactured (Cost of Production) using
Activity Based Costing System (ABC) with these steps:
1) The first stage
The first stage of determining the cost by activity was to explore the
cost of resources
a. Identify and classify activities into four activity levels.
b. Connecting the various costs with various activities.
c. Determine the Cost Driver appropriate for each activity.
d. Determination of groups of homogeneous charge (Homogeneous
Cost Pool).
e. Determination of group rates (Pool Rate).

FOH rates FOH classified certain activities

per activity =
group cost drivers

2) the second stage

Imposes a tariff unit based Cost Drivers are used to calculate the
Factory Overhead Costs charged. This is done by using group rates
that are consumed by each product and for the imposition of Factory

396
 Overhead is determined from each activity is calculated by the
following formula:

group unit cost

FOH charged = x
rates driver used

d. Develop calculation Cost of Goods

Manufactured (Cost of Production) according to the Activity Based
Costing System (ABC).
d. Comparing the results of the calculation of Cost of Goods
Manufactured (Cost of Production), which is calculated based on the
Traditional System with Cost of Goods Manufactured (Cost of
Production), which calculated based on the method of Activity Based
Costing System (ABC) and then calculate the difference.
e. Analyzing system is more precise in determining the Cost of Goods
Manufactured (Cost of Production) at CV. Agnieh Lumajang.

1. calculation of factory overhead cost

No Information Amount
1 auxiliary materials costs Rp 10.210.600,00
2 energy costs Rp 1.800.000,00
3 indirect labor costs Rp 12.855.000,00
4 costs of care and maintenance of machines Rp 2.349.000,00
5 the cost of depreciation of land and buildings Rp 12.500.000,00
6 machinery depreciation costs Rp 14.233.333,33
7 vehicle depreciation costs Rp 2.300.000,00
9 fuel costs Rp 4.320.000,00

2. Cost Of Goods Manufactured Calculation in the CV. Agni Lumajang

Informationn Memorandom Invitation

Raw Material Costs (BBB) Rp 15.769.700 Rp 15.769.700
Direct Labor Costs (BTKL) Rp 52.150.000 Rp 52.150.000
Indirect Labor Costs Rp 12.855.000 Rp 12.855.000
Factory Overhead Costs (BOP) Rp 58.152.933 Rp 58.152.933
Cost of Products Rp 138.927.633 Rp 138.927.633
Sales volume 7.050 unit 4.500 unit
cost of goods sold per unit Rp 19.706,05 Rp 30.872,81

397
3. Factory Overhead Cost Calculation Using Activity Based Costing
Methods

Level Of Cost Assisment

Memorandom Invitation amount
Activity Driver Process
Unit Rp 2.490,38 x 7.050 unit Rp 17.557.179,00
Rp 28.763.889,00
Product Rp 2.490,38 x 4.500 unit Rp 11.206.710,00
Unit
Rp 2.380,90 x 504 KWH Rp 1.199.998,80
KWH Rp 1.799.998,20
Rp 2.380,95 x 252 KWH Rp 599.999,40
Total activity level unit Rp 30.563.887,20

Batch working hours Rp 146,26 x 63.450 JKM Rp 9.280.197,00 Rp 15.203.727,00

machine Rp 146,26 x 40.500 JKM Rp 5.923.530,00
Total activity level batch Rp 15.203.727,00
Unit Rp 903,90 x 7.050 Rp 6.414.795,00
Product Rp 10.482.345,00
Product Rp 903,90 x 4.500 Rp 4.067.550,00
Total activity level Product Rp 10.482.345,00

Large area Rp 138.888,89 x 45m Rp 6.250.000,05 Rp 12.500.000,10

Rp 138.888,89 x 45m Rp 6.250.000,05
Fasilitas
product unit 199,13 x 7.050 unit Rp 1.403.866,50 Rp 2.299.951,50
199,13 x 4.500 unit Rp 896.085,00
Total activity level Product Rp 14.799.951,60

4. Cost Of Goods Manufactured Calculation Method Using Activity Based

Costing

Information Memorandum Invitation

raw material costs Rp 15.769.700,00 Rp 15.769.700,00
direct labor costs Rp 52.150.000,00 Rp 52.150.000,00
Factory Overhead Costs Rp 42.063.736,35 Rp 28.943.874,45
cost of goods sold Rp 109.983.436,35 Rp 96.863.574,45
sales volume 7050 unit 4.500 unit
cost of goods sold per unit Rp 15.600,59 Rp 21.525,24

5. Comparison with Traditional Methods Method Using Activity Based

Costing System

Cost of goods sold per unit Factory overhead cost per unit
Product Tipe Traditional difference Traditional difference
ABC System ABC System
System System
Memorandum Rp 19.706,05 Rp 15.600,49 Rp 4.105,56 Rp 10.072,05 Rp 5.966,49 Rp 4.105,56
Invitation Rp 30.872,81 Rp 21.525,24 Rp 9.347,57 Rp 15.779,54 Rp 6.431,97 Rp 9.347,57

Based on the calculation results of the cost of production by using the ABC
system, the results of the calculation of factory overhead costs on products Nota
differences

398
5. Conclusions and Recommendations
1. Conclusion
a. The results of calculations Cost Of Goods Manufactured (Cost of
Production) per unit in 2014 using traditional methods result Cost Of
Goods Manufactured (Cost of Production) for products memorandum
of Rp. 19706.05 while for products invitation Rp. 30872.81. The results
of calculations Cost Of Goods Manufactured (Cost of Production) per
unit in 2014 using Activity Based Costing System (ABC) obtained
results Cost Of Goods Manufactured (Cost of Production) for products
memorandum of Rp. 13150.53 while for products invitation Rp.
19075.28.
b. Factory Overhead calculation results per unit in 2014 using the
traditional method, ie Rp.10072.05 for the product and for your
invitation memorandum of Rp. 15779.54. Factory Overhead calculation
results per unit in 2014 with Activity Based Costing System (ABC) is
Rp. 5966.49 for products memorandum, whereas for products invitation
Rp. 6431.97.
c. Calculation of Cost Of Goods Manufactured (Cost of Production) and
Factory Overhead there is a difference between the traditional method
of Activity Based Costing System is Rp. 4105.56 for products
memorandum, whereas for an invitation product there are difference of
Rp. 9347.57.

2. Recomendation
a. Calculation of Cost Of Goods Manufactured (Cost of Products) right
refers to the calculation of the cost factory ovrehead right products as
well. It is therefore recommended to CV. Agnieh Lumajang to use the
ABC system on the Calculation Cost Of Goods Manufactured (Cost of
Production).

399
 b. If the method of Activity Based Costing System is implemented in the
company, the company should engage employees and provide training
specifically required for the attainment of corporate goals.
c. To improve the competitiveness of entrepreneurs circuitry printing and
offset the other, the company should use the method of Activity Based
Costing System is based on the analysis that has been done there is
significant difference between the Traditional Method with Method of
Activity Based Costing System is Rp. 6555.52 for the product and for
the product invitation memorandum of Rp. 11797.53.

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Akbar Muh. 2011. Analisis Penerapan Metode Activity Based Costing System
Dalam Penentuan Harga Pokok Kamar Hotel Pada Hotel Cokelat
Makassar. Makassar: Skripsi Fakultas Ekonomi Universitas Hasanuddin
Makassar 2011 .
Carter, K William. 2009. Akuntansi Biaya. Jakarta: Salemba Empat.
Farah Azizah, Devi. 2011. Penerapan Analisis Activity Based Costing System
Untuk Penetapan Harga Pokok Produksi Secara Akurat: Studi Kasus
pada PR. Cemara Mas Sidoarjo. Malang: Skripsi Fakultas Ilmu
Administrasi Universitas Brawijaya Malang 2011.
Fransisca Adie, Agnes. 2011. Peranan Activity Based Costing System Dalam
Perhitungan Harga Pokok Produksi Kain Yang Sebenarnya Untuk
Penetapan Harga Jual Pada PT. Panca Mitra Sandang: Studi Kasus
pada PT. Panca Mitra Indah. Bandung: Skripsi Fakultas Ekonomi
Universitas Kristen Maranatha Bandung 2011.
Hansen, Don R dan Mowen. 2009. Akuntansi Manajerial. Jakarta: Salemba
Empat.
Idus Muhammad. 2009. Metode Penelitian Ilmu Sosial: Pendekatan Kualitatif
dan Kuantitatif. Yogyakarta: Erlangga.
Ratna, Nyoman Kutha. 2010. Metode Penelitian. Yogyakarta: Pustaka Pelajar.
Sugiyono. 2010. Metode Penelitian Bisnis. Bandung: CV. Alfabeta.
Sujarweni, Wiratna. 2015. Akunatansi Biaya Teori dan Penerapannya.
Yogyakarta: Pustaka Baru Press.
Sofia, Septian Bayu Kristanto. 2014. Akuntansi Biaya, Edisi 2. Bogor: In Media.
Wijayanti, Ratna. 2011. Penerapan Activity Based Costing System Untuk
Menentukan Harga Pokok Produksi Pada PT. Industri Sandang Nusantara Unit
Patal Secang. Yogyakarta: Skripsi Fakultas Ilmu Sosial dan Ekonomi Universitas
Negeri Yogyakarta 2011.

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FAA-17

Determinant Of The Sustainable Growth Rate

Nining Ika Wahyuni
University of Jember
E-mail: nining.fe@unej.ac.id

Nova Victor Geral Dino

University of Jember
E-mail: novht.gdine@gmail.com

ABSTRACT

This study was conducted to analize the determinant factors of the sustainable
growth rate. Cash Adequacy, Intellectual Capital and Nonfinancial Distress based
on Alman Z-score are the three variables whice expected to be determinat of
Sustainable Growth Rate. The population used in this research are manufacturing
companies listed on the Indonesia Stock Exchange in 2012-2014. Using Purposive
sampling, 40 companies meet criteria and used as samples. The regression
analysis showed that Intellectual Capital and Dummy (NonFinancial Distress)
have significant effect on the Sustainable Growth Rate. While Cash Adequacy has
no significant effect on the Sustainable Growth Rate.

Keywords: Cash Adequacy; Intellectual Capital; Financial Non Distress;

Dummy; Sustainable Growth Rate.

1. Introduction
The company's financial growth prospects become very important role in
assessing company. There are a simply way using profit as the main instrument in
the investment decision. But, the use of earnings as financial decision makers is
considered very risky because many disadvantages. According Sambharakreshna
(2011), the accounting profit has several drawbacks, including: (1) Accounting
profit fails to recognize the unrealized increase in the value of assets held in a
given period with the application of historical cost and realization principles. (2)
The dependence of profit on the principle of historical cost accounting makes
comparisons difficult, (3) The principle of historical cost and conservatism may
produce data that are misleading and misunderstood or irrelevant data to the user.
Because weakness of profits as a basic of measurement, investors need
other instruments that can also be used to measure a company's financial

401
capability, which can then be used in considering company condition. The
instrument is intended sustained growth or Sustainable Growth Rate (SGR).
According to Lockwood and Prombutr (2010) Sustainable Growth Rate is a
metric multifaceted that can be divided into separate components that reflect the
retention policy of the company (retention rate), the ability of retaining fees (net
profit margin), the efficiency of the use of assets (asset turnover), and the
financing strategy ( financial leverage).
The main reason Sustainable Growth Rate is considered very useful
because it combines elements of the operation (profit margin and asset efficiency)
and an element of finance (capital structure and retention rates) into one
comprehensive measure (Amouzesh, et al., 2011). This concept was originally
developed by C. Higgins.
Giacomino and Mielke (1998) in Leonie Jooste (2004), explains that the
cash flow ratio can be used to assess the company's financial performance, which
in turn will lead to the Sustainable Growth Rate. It is also explained by Fonseka
(2012) which states that the Cash Adequacy (Cash Sufficiency Rate), which is one
part of the cash flow ratio analysis has a positive influence on the Sustainable
Growth Rate company.
Intellectual Capital (intellectual capital) is also indicated as variablea that
affect the Sustainable Growth Rate of the company. Intellectual Capital (IC) is
knowledge and information that can create efficiencies to generate wealth for the
company (Stewart, 1997) , Rodriguez (2004) found a positive relationship
between the components of Intellectual Capital as measured by VAIC on the
performance of hospitals. Tan (2007), which examines the relationship between
the IC with the financial performance of 150 companies listed on the Singapore
Exchange in 2000-2002 also in line with Rodriguez finding.
Another instruments that can be used to measure the sustainability of the
business is through the Altman Z-Score Model. This method uses specific ratios
in order to predict the risk of bankruptcy of a company. Bankruptcy or
Nonbankruptcy of the company itself has a direct relationship to the Sustainable
Growth Rate. Fonseka (2012) explains that the company whice is classified in

402
Non Distress category measured by Altman Z-Score model, has a positive
influence on the Sustainable Growth Rate.
Based on the previous studies, this research was conducted to analize the
determinant factors of the sustainable growth rate. Cash Adequacy, Intellectual Capital and
Nonfinancial Distress based on Alman Z-score are the three variables whice expected to be
determinat of Sustainable Growth Rate. Intellectual Capital measured use method of
VAIC, and Financial Non Distress use the Altman Z-Score Model as basic
measurement.Calculation of the Sustainable Growth Rate use Van Horne method.

2. Methods
2.1 Research design
Based on the background and the formulation of the problem, the
characteristics of the issues examined in this study can be classified as an
explanatory research or confirmatory research, the research describes the
relationship of causality and examined the association between multiple variables
through some hypothesis or research explanations (Singrimbun and Effendi,
1995). Researchers conducted a study to test the correlation (influence) Cash
Adequacy, Intellectual Capital and Non Financial Distress of the Sustainable
Growth Rate.

2.2 Population and Sample

The population in this study are all manufacturing companies listed in
Indonesia Stock Exchange (IDX). The selected sample of the population study
using targeted sample selection methods (purposive sampling), with the following
criteria:
1) Included in the manufacturing sector during the three years from 2012
through 2014 in accordance with the classification in the Indonesian
Capital Market Directory (ICMD).
2) Publish the financial statements and annual reports for three consecutive
years, namely 2012, 2013, and 2014.

3) Has a December 31 fiscal year end. It should be equalized in each

company in the sample so that research data can be compared.

403
 4) Using the exchange rate of the Rupiah.

5) Companies that loss excluded from the sample. In the concept of growth
requires the company must make a profit in order to obtain the value of
Sustainable Groth Rate positive.

6) Not doing right issues, mergers and acquisitions during the study period.
In the concept of Sustainable Growth Rate assumed the company just
acquired additional new capital coming from new loans or profit
incorporated into retained earnings. This is because it is assumed that the
owner of the company still wants to keep the company's shareholder
structure.

2.3 Operational Definition of Variables

2.3.1 Sustainable Growth Rate

Sustainable Growth Rate (SGR) is the maximum rate of sales growth of

companies that can be acquired without external equity financing. Formulated
according to Van Horne (1987; 2007) as follows:

( ) ( + )
=

( ) ( )( + )

D
By : E = Debt to Equity
A
= Total Assets to Sales
S
b = Retention Rate
NP
= Profit Margin.
S

2.3.2 Cash Adequacy

According to Fonseka (2012), Cash Adequacy measure the level of a
company's ability to generate sufficient cash from operations to cover expenditure
on long-term debt, the purchase of fixed assets, and dividend payments.
Calculation of the adequacy of cash flows is to compare funds generated by

404
operating activities in the cash outlay for the acquisition of fixed assets, debt
repayments and dividend payments. With the following formula:

=
+ +

By: CA = Cash Adequacy

AKBAO = Net Cash Flows Operating Activities
PAT = Purchase of Fixed Assets
PU = Debt Payments
PD = Dividend

2.3.3 Intellectual Capital

Intellectual Capital is the result of an intellectual and human creations.
Edvinson and Malone (1997) defines IC as knowledge that can be converted into
a value. Sveiby (1997) Intellectual capital classifies into three areas are intangible:
(1) human capital; (2) structural capital; and (3) customer capital.
According Pulic (2000), Intellectual Capital can be measured by using
model Value Added Intellectual Coefficient (VAIC) which is a coefficient that
consists of HCE, SCE, and CEE. company. The components of VAIC used to
measure intellectual ability of the company. Calculations:
VAIC = HCE+SCE+ CEE

Human Capital
Variables measured by the Human Capital Efficiency (HCE), namely:

HCE = VA / HC

By: VA = Gross Profit - Operating Expenses are Outside The Personal Cost
HC = Human Capital (Wages and Salaries in a Company)

Structural Capital
Sructural variables measured by the Structural Capital Efficiency (SCE),
namely:

SCE = SC / VA
By: SC = Structure Capital (VA-HC)

405
 Capital Employed
Variables measured by Capital Employed Efficiency (CEE), namely:

CEE = VA / CA

By: CA = The Book Value of The Net Assets of a Company.

2.3.4 Financial Non Distress

Altman Z-Score analysis is one statistical technique used to predict
bankruptcy (Distress) and growth (Non Distress) company. Altman method was
developed by Edward I. Altman in mid 1960, and revised in 1983 (Kurniawanti,
2012). Mathematically the equation Altman Z-Score can be formulated as
follows:

Z = 0,717 X1 + 0,847 X2 + 3,107 X3 + 0,42 X4 + 0,998 X5

By: Z = Z-score
X1 = Net Working Capital to Total Asset
X2 = Retained Earnings to Total Asset
X3 = Earnings Before Interest and Taxes to Total Assets
X4 = Market Value of Equity to Book Value of Debt
X5 = Sales to Total Assets.
With the assessment criteria if the value of Z > 2.9 then the company does
not have serious financial problems (Non Distress), when 1.23 < Z < 2.9, the
company falls into the category of vulnerable (Grey), and if Z < 1.23 then the
company suffered serious financial problems (Ditsress).
2.4 Types and Sources of Data
In this study, the type of data used is quantitative data, the data of
manufacturing company financial statements 2012-2014. Sources of data in this
research is secondary data obtained from the Indonesia Stock Exchange website is
http://www.idx.co.id.

406
2.5 Method of Analysis
To find out if there is a significant influence of the independent variable on the
dependent variable, we used multiple linear regression model (multiple linear
regression method), which is defined by the following equation:

SGR = + 1 CA + 2 IC + 3 DUM + e

Description : = Constant
= Regression Coefficient
SGR = Sustainable Growth Rate
CA = Cash Adequacy
IC = Intellectual Capital
DUM = Dummy variable is set to 1 for companies that fall into the
category of Non Distress and the value 0 for companies
that fall into the category of Non Non Financial Distress
(Grey Area and Distress).
= Error variable.

3. Research result
3.1 Results Analysis
3.1.1 Descriptive statistics
The results of statistical data processing descriptive study variables can be
seen in the following table:
Table 1
Descriptive Statistics
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation

SGR 120 -.99 3.21 -.0442 .64206

CA 120 -2.05 6.84 .8077 1.21883

IC 120 .46 25.09 5.3970 4.07913

DUMMY 120 .00 1.00 .1333 .34136

Valid N (listwise) 120

Based on the analysis in Table 1 above, indicated that for the variable CA
has an average value of 0.8077 with a standard deviation of 1.21883. Variable IC
has an average value of 5.3970 with a standard deviation of 4.07913. DUMMY

407
variable has an average value of 0.1333 with a standard deviation of 0.34136. Of
the three independent variables (CA, IC, and DUMMY), the variables that have
the highest average value is the IC at 5.3970. As for the independent variable
(SGR) has an average value of -0.0442 with a standard deviation of 0.64206.

3.1.2 Multiple Linear Regression Analysis

The results of multiple linear regression analysis in this study can be seen
in the following table:
Table 2
Results of Multiple Linear Regression Analysis
Coefficientsa
Standardized
Unstandardized Coefficients
Model Coefficients
B Std. Error Beta
(Constant) -.283 .100

CA .026 .047 .049

IC .030 .014 .191

DUMMY .417 .166 .222

According to the table 2 above, the regression model in this study are:

SGR = -0,283 + 0,026CA + 0,030IC + 0,417DUMMY

The constant of -0.283 means if CA (X 1), IC (X 2) and DUMMY (X 3) is

0, then the SGR (Y) will be worth -0.283. The regression coefficient CA (X 1) of
0.026 means if CA increased by 1, then the SGR will increase by 0.026. CA
coefficient is positive, meaning there is a unidirectional relationship between CA
and SGR, the greater the value of CA, the higher the value of SGR.
IC regression coefficient (X 2) of 0.030 means if the IC increased by 1,
then the SGR will increase by 0,030. IC coefficient is positive, meaning there is a
unidirectional relationship between the IC and the SGR, the greater the value of
the IC, the higher the value of SGR. DUMMY regression coefficient (X 3) of
0.417 means if DUMMY increased by 1, then the SGR will increase by 0.417.
DUMMY coefficient is positive, which means that there is a unidirectional

408
relationship between DUMMY and SGR, the greater the value the higher the
value DUMMY SGR.

3.2 Hypothesis Testing

3.2.1 T Test
T tests were used to test the significance of the relationship between Cash
Adequacy (CA), Intellectual Capital (IC), and Non Financial Distress (DUMMY)
to the Sustainable Growth Rate (SGR) partially (separately). The results of the t
test is shown in the following table.
Table 3
Results of T Test
Coefficientsa
Standardized
Unstandardized Coefficients
Coefficients
Model t Sig.
B Std. Error Beta

(Constant) -.283 .100 -2.822 .006

CA .026 .047 .049 .553 .581
IC .030 .014 .191 2.153 .033
DUMMY .417 .166 .222 2.505 .014
Based on Table 3 above, the results are as follows:
1) Variable CA has a significance level of 0.581 and a regression coefficient
of 0.026. This indicates that the CA has significance value greater than
0.05 and the regression coefficient is positive, so it can be concluded that
the variables CA partially no significant effect on SGR.
2) Variable IC has a significance level of 0.033 and a regression coefficient
of 0.030. This indicates that the IC has a significance value less than 0.05
and the regression coefficient is positive, so it can be concluded that the IC
variable partially significant effect on SGR.
3) DUMMY variables have a significance level of 0.014 and a regression
coefficient of 0.417. This shows that the DUMMY have a significance
value less than 0.05 and the regression coefficient is positive, so it can be
concluded that the variable DUMMY partially significant effect on SGR.

409
3.2.2 F Test

F test used in this study to test the accuracy of the model (goodness of fit),
which aims to determine whether the predicted value of the regression equation
was able to describe the actual condition. Test the accuracy of the model
(goodness of fit) is done by comparing the F calculated and F table. The
regression equation is expressed well (good of fit) when the predicted value of the
regression equation was able to describe the actual condition. F test results shown
in the following table:

Table 4
Results of F Test
ANOVAa
Sum of
Model df Mean Square F Sig.
Squares
Regression 16.109 4 4.027 13.992 .000b

Residual 32.811 114 .288

Total 48.920 118

Based on Table 4 above, F calculated value of 13,992, while the value of F table
for N = 120 with the number of independent and dependent variable 4 is of 2.450.
This indicates that the value of F count > F table, which means that the regression
model revealed good of fit.

3.3 Coefficient of Determination (R2)

Coefficient of determination (R2) essentially measures how far the ability of the
model to explain variations in the dependent variable. The coefficient of
determination is between zero and one. The results of the analysis for the
coefficient of determination shown in Table 5 below:

410
 Table 5
Results of Coefficient of Determination
Model Summaryb
Change Statistics
Std. Error
R Adjusted R
Model R of the F Sig. F
Square R Square Square df1 df2
Estimate Change Change
Change
1 .307a .095 .071 .61882 .095 4.036 3 116a .009

Coefficient of determination (R2) Essentially measures how far the ability

of the models to explain variations in the dependent variable. The coefficient of
determination is between zero and one. The results of the analysis for the
coefficient of determination shown in Table 4 below.Berdasarkan Table 5 the
coefficient of determination (R2) of 0.095. This means the dependent variable
(SGR) is influenced by three independent variables (CA, IC, and DUMMY) of
9.5%, while the rest (100% - 9.5% = 90.5%) affected by variables outside the
model. As for the Standard Error of Estimate (SEE) is approximately 0.61882.

4. Discussion, Conclusions and Limitations

4.1 Discussion
4.1.1 The Effect of Cash Adequacy of the Sustainable Growth Rate
Based on the results of multiple linear regression analyzes were performed
with the help of statistical program SPSS, it is known that the variable Cash
Adequacy (CA) has a regression coefficient of 0.026 with a significance level of
0.581. This indicates that the Cash Adequacy has a positive regression coefficient
and a significance level greater than 0.05; so it can be concluded that the variable
Cash Adequacy partially no significant effect on the Sustainable Growth Rate.
Under these conditions, H 1 which states that the Cash Adequacy positive effect
on the Sustainable Growth Rate, rejected.
The results of this study are not consistent with research conducted by
Fonseka (2012) which states that the Cash Adequacy affect the company's
Sustainable Growth Rate. Not sejalannya results of this study with previous
studies because most, almost all companies in the research samples allocate

411
substantial funds for the acquisition / purchase of fixed assets. This then causes
the value of the Cash Adequacy be relatively small. Of the existence of these
things, in other words it can be concluded that the value of the Sustainable
Growth Rate company more influenced by the contributions of other asset classes,
rather than the company's current assets are in the form of cash. It is also made
clear by the statement Higgins (1981) which states that the concept of Sustainable
Growth Rate assumes that the company is not issuing new capital, with most of
retained earnings and debt invested in assets. These assets helped boost sales,
which in turn can increase its profit. Assets intended by Higgins refer to the total
assets. In this study, the type of assets that have the greatest contribution is fixed
assets and current assets beyond cash.

4.1.2 The Effect of Capital Intellectal the Sustainable Growth Rate

Based on the results of multiple linear regression analyzes were performed
with the help of statistical program SPSS note that the independent variables
Intellectual Capital has a regression coefficient of 0.030 with a significance level
of 0.033. This indicates that the Intellectual Capital has a positive regression
coefficient and a significance level of less than 0.05; so it can be concluded that
the Intellectual Capital variable partially significant effect on the Sustainable
Growth Rate. Under these conditions, H 2 which states that the positive effect on
the Intellectual Capital in the Sustainable Growth Rate, accepted.
The results are consistent with research conducted by Kujansivu and
Lonnqvist (2004) which states that there is a positive correlation between the
performance and efficiency of Intellectual Capital, as well as research conducted
by Cabrita and Jorge (2005), which proves that the Intellectual Capital affect
performance, which further drove the company to the Sustainable Growth Rate.
Hasil penelitian ini sejalan dengan penelitian yang dilakukan oleh Kujansivu dan
Lonnqvist (2004) yang menyatakan bahwa terdapat korelasi positif antara kinerja
dan efisiensi Intellectual Capital, sebagaimana juga penelitian yang dilakukan
oleh Cabrita dan Jorge (2005) yang membuktikan bahwa Intellectual Capital

412
berpengaruh terhadap kinerja, yang selanjutnya mengantarkan perusahaan pada
Sustainable Growth Rate.

4.1.3 The Effect of Non Financial Distress the Sustainable Growth Rate
Based on the results of multiple linear regression analyzes were performed
with the help of statistical program SPSS note that the independent variable Non
Financial Distress has regression coefficient with a positive value of 0.417 with a
significance level of 0.014. This indicates that the Non Financial Distress positive
effect (unidirectional) of the Sustainable Growth Rate. Under these conditions, H
3 which states that the Non Financial Distress positive effect on the Sustainable
Growth Rate, accepted. The significance level of 0.014 indicates that the Non
Financial Distress affect significantly the Sustainable Growth Rate.
The results are consistent with research conducted by Fonseka (2012)
which states that there is a positive relationship Non Financial Distress and the
Sustainable Growth Rate. Companies that do not have any difficulty (particularly
serious difficulties), have a tendency to not bankrupt because of the adequacy of
economic resources at their disposal that can be used to finance operating
activities and other activities that are beneficial to their finances. This makes the
increase profitability, and ultimately improve the Sustainable Growth Rate.
Companies in Distress Non conditions will have a Z-Score is high at more than
2.9. Accordingly, the value of the Sustainable Growth Rate she made was also
becomes high.

4.2 Conclusions
This study aimed to analyze the effect of Cash Adequacy, Intellectal
Capital and Non Financial Distress of the Sustainable Growth Rate in companies
listed on the Stock Exchange 2012-2014. From the description in the discussion
can be concluded:
1) Cash Adequacy partially no significant effect on the Sustainable Growth
Rate, so that H 1 is rejected.

413
 2) Intellectal Capital partially positive and significant effect on the
Sustainable Growth Rate, so that H 2 is received.
3) Non Financial Distress partially positive and significant effect on the
Sustainable Growth Rate, so that H 3 accepted.

4.3 Limitations
This study has several limitations, including:
the low value of the correlation coefficient which just shows the value of
9.5%. That is as much as 90.5% (100% - 9.5%) affected by variables outside
the model. This happens because basically investigators did want to find other
variables (outside the constituent variables in the calculation of the SGR). For
further research is expected to apply for other variables that affect the
Sustainable Growth Rate indicated through the combining of different
variables. Using variables moderating or intervening variables if deemed
necessary.
Period of three years of research for the 3rd period of observation, the
numbers are equally large when compared with the number of independent
variables that proxy (CA, IC, and DUMMY). The limited number of samples
and this could be a period of observation may explain why not all the
variables from the regression results significant. In contrast to Fonseka (2012)
who conducted research for the 9-year period of observation with a sample of
15 377 companies. He found significant results for all of the variables that he
proposed. For further research is expected to extend the observation period of
over 5 years and expand the scope of the company that became the study
population.
This study uses only one model of the Sustainable Growth Rate, which is the
model Van Horne. For further research is expected to use measurements of
other models to the Sustainable Growth Rate it, like Higgins or Ross models.

414
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Distressed Debt, Third Edition. John Wiley & Sons, Inc.
Amouzesh, N, Z. Moeinhar, and Z. Mousavi. 2011. Sustainable Growth Rate and
Firm Performance: Evidence From Iran Stock Exchange. International
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Cabrita & Jorge. 2005. Intellectual Capital and Value Creation: Evidence from
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Management 4: 11-20.
Fonseka, MM, CG Ramos & GL Tian. 2012. The Most Appropriate Sustainable
Growth Rate Model For Managers And Researche rs. Journal of
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Ghozali, I. 2011. Aplikasi Analisis Multivariate dengan Program IBM SPSS 19.
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Higgins, RC 1981. Sustainable Growth Inflation Under. Financial Management.
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Intellectual Capital. Journal of Intellectual Capital. Vol. 8, No. 2, pp.
272-287.
Lockwood, L and W. Prombutr. 2010. Sustainable Growth and Stock Returns.
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Rodriguez. 2004. Changes in the Intellectual Structure of Strategic Management
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Ross, SA, RW Westerfield, and Jordan BD. 2002. Fundamentals of Corporate
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Singrimbun, Masri & Sofyan Effendi. 1995. Metode Penelitian Survei Edisi
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Tan, Hong. 2007. Intellectual Capital and Financial Returns of Companies.
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http://www.idx.co.id

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FAA-19

STANDARD COST ANALYSIS OF RAW MATERIALS

AND DIRECT LABOR COST AS DIRECT
PRODUCTION COST CONTROL AT UD. SINAR
ABADI PROBOLINGGO
Joni Hendra
University of Panca Marga Probolinggo, Indonesia
Email: jonihendra221@gmail.com

ABSTRACT

Objectives to be achieved in this research is to analyze the standard cost of raw

materials and direct labor as a direct production cost control. This type of research
include descriptive research quantitative data analysis that perform calculations on
data that is proof. The data used in this study include (1) the standard data of raw
materials, (2) the data of raw materials, (3) the standard data direct labor, and (4)
the data of direct labor. The results of the analysis of the difference in raw
material costs showed that the HST is higher than the HS but KST is lower than
that posed no difference KS joint (joint variance). Results of the analysis showed
that the difference in labor and JKSt tust respectively lower than TUS and JKS
causing a combined margin (joint variance) that contain elements STEU once.

Keyword: Standard Costs, Raw Materials, Direct Labor, Cost Control

1. Introduction
Each company generally established with a view to achieving a company's
goals. One of those goals is to gain profit as much as possible by emphasizing the
least cost. Besides the main objective of the company is maintaining the viability
of the company and pursue its development. Therefore, the company must always
be able to keep abreast of market and production activities to achieve certain
goals. One important activity is the production cost control.
Control over production costs is one part of the internal measures of the
company in an effort to improve efficiency. Pengendaalian costs should primarily
be resolved against the objectives to be achieved by the company, one of the
company's objectives is to obtain the maximum profit with low cost, therefore, to
control production costs the company hopes will get huge profits.

417
 To transform raw materials into finished goods, manufacturing companies
require a production process that requires a wide range of additional costs during
every phase of the production. Accumulation of total costs in the production
process to produce cost prouksi.
According to Firmansyah (2014: 31) "Production costs are costs incurred to
process the raw materials into finished materials". These costs consist of
inventories in the initial process, plus the cost of manufacturing (manufacturing
cost), then reduced the supply of goods in the final process. Eg raw material costs,
labor costs and factory overhead costs.
Trading companies and manufacturing costs also consist of standard
charges, charges that are determined in advance. A company uses a standard cost
to determine how costs should be incurred to produce a product, to be held prior
investigation regarding the most efficient production activities.
Controlling costs at UD. Sinar Abadi Probolinggo is a comparison of actual
costs with standard costs, both for the cost of materials and labor costs by
analyzing the differences, differences arise in order to identify the causes that can
be controlled and taking action to correct or adjust plans in the next year.
The formulation of the problem is; Is the Standard Cost Analysis Raw
Material and Direct Labor Cost Control can be used as Direct Production at UD.
Sinar Abadi Probolinggo

2. Collect Studies
2.1 Benefits Standard Cost in Cost Control
According to Carter and Usry (2005: 154) standard fee helps planning and
control operations. The standard cost provides insight into the possible effects of
decisions on costs and profits. The standard cost is used to: establish the budget,
control costs in a way to motivate employees and to measure the efficiency of
operations, simplify the procedure of calculation of costs and accelerate expense
reports, charges the inventories of raw materials, goods in process and finished
goods, set a contract offer and selling prices.

418
2.2 Actual Cost Deviation Analysis of Cost Standard
Deviations actual costs of standard costs referred to the difference
(variance). The difference in actual costs with standard costs are analyzed, and
from this analysis investigated the cause of the occurrence, and then find a way to
overcome the adverse difference.
2.3 Weaknesses Cost Standard
According to Mulyadi (2009: 417) The level of tightness or looseness
standard can not be calculated exactly. Although clearly defined what kind of
standards required by the company, but there is no guarantee that the standard has
been set in the company as a whole with the tightness or looseness relatively
similar. Often the standards tend to be stiff or flexible, although in the short term.
Production circumstances are always changing, while the standard repair is rarely
done.

3. Research Methods
This type of research include descriptive research quantitative data analysis
that perform calculations on data that is proof ..
The analytical method used is the analysis of variance / difference analysis,
analysis of variance, there are three kinds of models of difference analysis direct
production costs include: (1) model of one-gap, (2) the model of two foreign (3)
model of three difference (Mulyadi, 2009: 424).
Based on the three kinds of models increment above, only the model of
three differences that occur in the company, ranging from raw material cost
difference for the price difference, the excess quantity, the difference in price /
quantity of raw materials and the difference in labor costs for the difference in
wage rates, the difference in efficiency wages up the difference rates / efficiency
wages. The researchers used three methods to analyze the difference in raw
material costs and direct labor costs as production cost control directly at UD.
Sinar Abadi Probolinggo.
In analyzing the cost of materials and direct labor costs as a direct
production cost control with three models seelisih. can be formulated as follows:

419
SH = (HST - HS) x KST
SK = (KST - KS) x HST
SHK = (HST -HS) x (KST - KS)
The difference in price and the excess quantity in the standard price
conditions and the quantity of each standard is higher than the actual price and the
actual quantity can be expressed in the following equation:
SH = (HST - HS) x KS
SK = (KST - KS) x HS
SHK = (HST -HS) x (KST - KS)
The standard price is lower than the real price, but rather a standard quantity
is higher than the actual quantity can be expressed in the following equation:
SH = (HST - HS) x KS
SK = (KST - KS) x HST
SHK = 0
The standard price is higher than the true price, but rather a standard
quantity is lower than the actual quantity can be expressed in the following
equation:
SH = (HST - HS) x KST
SK = (KST - KS) x HS
SHK = 0
If the difference in wage rates and wage efficiency difference in the
condition of a standard wage rates and hours of work each standard is lower than
the actual wage rates and hours of work can actually be expressed in the following
equation:
STU = (tust - TUS) x JKSt
SEU = (JKSt - JKS) x tust
STE = (JKSt -JKS) x (tust - TUS)
Vice versa can be expressed in the following equation:
STU = (tust - TUS) x JKS
SEU = (JKSt - JKS) x TUS
STE = (JKSt -JKS) x (tust - TUS)

420
 Standard wage rates lower than actual wage rates, but instead of standard
working hours is higher than the actual work hours can be expressed in the
following equation:
STU = (tust - TUS) x JKS
SEU = (JKSt - JKS) x tust
STE = 0
Standard wage rates higher than the real wage rate, but instead of standard
working hours is lower than the actual work hours can be expressed in the
following equation:
STU = (tust - TUS) x JKSt
SEU = (JKSt - JKS) x TUS
STE = 0

4. Results and Discussion

As for data on a standard raw material costs and raw material costs can
actually be seen in the following table:
Table 1
UD. Sinar Abadi Probolinggo
Standard Raw Materials

Quantity Price (Rp) Total Palette Description

266,7 m 70.000 2.400 unit 1 m = 9 Paletts

Source : UD. Sinar Abadi Probolinggo

Table 2
UD. Sinar Abadi Probolinggo
Realization of Raw Materials

Quantity Price (Rp) Total Palette Description

342,8 m 65.000 2.400 unit 1 m = 7 Paletts

Source : UD. Sinar Abadi Probolinggo

Direct labor at UD. Probolinggo Sinar Abadi is divided into two parts,
namely the handling of raw materials and production parts. Data direct labor at

421
UD. Sinar Abadi Probolinggo consists of standard direct labor costs and direct
labor costs actually on the looks in the following table:
Table 3
UD. Sinar Abadi Probolinggo
Direct Labor Standards
Working Amount
Section Hours Wage Rates (Rp) (Rp)
1. Raw Material Handling 2.184 hours 5.000 10.920.000
2. Production 2.184 hours 6.000 13.104.000
Source : UD. Sinar Abadi Probolinggo

Table 4
UD. Sinar Abadi Probolinggo
Realization of Direct Labor
Working Amount
Section Hours Wage Rates (Rp) (Rp)
1. Raw Material Handling 2.496 hours 5.500 13.728.000
2. Production 2.496 hours 6.500 16.224.000
Source : UD. Sinar Abadi Probolinggo

The analysis of the difference to the cost of raw materials showed that the
price of a standard higher than the true price, but rather a standard quantity is
lower than the actual quantity.
While the difference analysis for direct labor costs showed that the
difference in wage rates and wage efficiency in the condition of a standard wage
rates and hours of work each standard is lower than the actual wage rates and
actual working hours
From the results of hypothesis testing for the difference in raw material costs and
direct labor costs at UD. Sinar Abadi Probolinggo as follows:
1. Difference in Raw Materials
In conjunction with the raw materials, the difference in price of raw materials
is the responsibility of purchasing functions, while the excess quantity of raw
materials is the responsibility of the production function.

422
 The difference in price / quantity of raw materials into the joint responsibility
of purchasing functions and production functions.
a. The standard price is higher than the true price but the standard quantity is
lower than the actual quantity so as not to cause the difference in the
combined (joint variance).
The difference in raw material prices experienced a profit, but instead the
excess quantity of raw material losses, it happens because:
1) Price Falcata less than the price that has been previously standardize the
company, but
2) The use of wood for the production of higher standards already set by the
company.
In the production process, standards of raw materials can not be used as a
direct production cost control at UD. Sinar Abadi Probolinggo because there
are deviations from the standard cost actual expenses. Action needs to be
corrected / adjusted as planning for the next production process, namely:
1) The standard price and quantity standards should be higher than the
actual price and the actual quantity so that no irregularities and the
company does not lose in the production process.
2) The function of purchasing and production functions to work together
during the production process so that the objectives planned by the
company can be reached.
2. Difference of Direct Labor
Difference in direct labor is the responsibility of the personnel. Difference in
direct labor that occurs at UD. Sinar Abadi Probolinggo, as follows:
a. Standard wage rates are lower than the real wage rates and hours of direct
labor standards are lower than the actual direct hours, causing a combined
margin (joint varience) that contains elements of the difference in wage
rates and efficiency at the same wage
The difference in wage rates, the difference in efficiency wages and the
difference in wage rates / efficiency wage each earn damages it happens
because:

423
 1) Power is unable to complete its work product before the deadline set by
the company.
2) Each of these less direct labor work together to resolve their products.
In the process of production, direct labor standards can already be
used as a direct production cost control at UD. Sinar Abadi Probolinggo
because there is deviation standard cost and actual cost.
Action needs to be corrected / adjusted as planning for next year's
production process, namely:
1) In the completed product should pay attention to the direct labor time to
finish on time.
2) Have a good cooperation between labor with one another in order to
achieve the purpose desired by the company.
From the results of testing the hypothesis the researchers to conclude that
the hypothesis is "Allegedly Standard Cost Analysis Raw Material and Direct
Labor Cost Control can be used as Direct Production at UD. Sinar Abadi
Probolinggo ". Proven correct conclusions obtained from the analysis as follows:
1. Difference in Raw Materials
a. In the production process, standards of raw materials can not be used as a
direct production cost control at UD. Sinar Abadi Probolinggo because there
are deviations from the standard cost actual expenses.
Action needs to be corrected / adjusted as planning for next year's
production process, namely:
1) The standard price and quantity standards should be higher than the
actual price and the actual quantity to urge him to avoid deviation and the
company did not experience a loss in the production process.
2) The function of purchasing and production functions to work together
during the production process so that the objectives planned by the
company can be reached.
2. Difference of Direct Labor
a. In the process of production, direct labor standards can already be used as a
direct production cost control at UD. Sinar Abadi Probolinggo.

424
5. Conclusion
In this research we concluded as follows:
1. In the production process, if the standard price is higher than the actual price
and quantity standards higher than the quantity actually causing the difference
in the combined (joint variance) has to be said that the standard of raw
materials is a direct production cost control at UD. Sinar Abadi Probolinggo
and can be used as planning the following year.
2. In the production process, if the standard price is higher than the true price but
the standard quantity is lower than the actual quantity so as not to cause the
difference in the combined (joint variance) can not be used as a direct
production cost control at UD. Sinar Abadi Probolinggo because there are
deviations from the standard cost actual expenses.
3. In the production process, if the standard wage rates lower than actual wage
rates and hours immediately lower standard of hours actually causing the
difference in the combined (joint variance) can already be used as a direct
production cost control at UD. Sinar Abadi Probolinggo and serve as the
planning of the next year.
While suggestions to the authors give is the company should determine the
standard of raw materials and direct labor more effectively, so that it can be used
as direct control of production costs in the next year, as well as supervise the
activities diilakukan increase production so that the desired goals can be achieved
with good company.

REFERENCES

Bustami, Bastian dan Nurlela. 2006. Akuntansi Biaya: Kajian Teori dan Aplikasi,
Edisi Pertama. Yogyakarta: Graha Ilmu.
Carter, William K dan Usry, Milton F. 2005. Akuntansi Biaya, Edisi Tiga Belas.
Jakarta: Salemba Empat
Akuntansi: Mengungkap Fenomena Dengan Pendekatan Kuantitatif dan
Kualitatif, Edisi Pertama. Yogyakarta: Graha Ilmu.
Firmansyah, Iman. 2014. Akuntansi Biaya. Jakarta: Dunia Cerdas
Mulyadi. 2009. Akuntansi Biaya, Edisi ke-5. Yogyakarta: Unit Penerbit dan
Percetakan Sekolah Tinggi Ilmu Manajemen YKPN.

425
Rudianto. 2006. Akuntansi Manajemen: Informasi untuk Pengambilan Keputusan
Manajemen. Jakarta: PT. Grasindo, Anggota Ikapi.

426
FAA-21

ANALYSIS SERVICES QUALITY, COMPLAINT

HANDLING, IMAGE SATISFACTION AND
LOYALTY IN PT.BANK BNI 46 BRANCH JEMBER

Sumadi
Rachmad Priyadi
Polytechnic state of jember

The aim of the research is to examine the influence of services quality, complaint
handling, image satisfaction and loyalty in pt.bank bni 46 branch jember. The
purpose of this study was to analyze the factors that build customer satisfaction to
increase customer loyalty PT Bank BNI 46 branch Jember given to customers.
The sample of this research is to customers who come to Bank BNI 46 branch
Jember. was determined by using SEM (Structural Equation Model). The result of
riset that the instrument used in this study is valid, and the fourth hypothesis can
be accepted, so that it can be concluded that the quality of the service have
positive influence and significant impact on customer satisfaction, the handling of
complaints has positive and significant impact on customer satisfaction, Citra has
influence a positive and significant impact on customer loyalty, customer
satisfaction has a positive and significant impact on customer loyality.

Keywords: services quality, complaint handling, image satisfaction and loyalty

1. Background
Increasing competition in the banking industry to encourage the banking
industry to rapidly adjust to the surrounding community, it is marked by the
rampant expansion of foreign banks are trying to enter the banking market in
Indonesia. The banking industry is currently vying to improve service to
customers, by providing facilities that facilitate the customer in conducting
financial transactions (Infobank, April 2014)

The financial performance of Bank BNI 46 branches jember in 2014 posted

a net profit of Rp 5.69 trillion, up 36.5% from 2010. However, the increase in the
profit achievement is not accompanied by other accomplishments. This can be
seen in the results of a survey by Marketing Research Indonesia (MRI) on
customer loyalty (Infobank, January 2014) and The Best Bank Services

427
Excellence 2014 or excellent service to customers (Infobank, April 2014), showed
that the scores of Bank BNI 46 branches jember in the case of services is still far
from expectations. It can be viewed only moved up one rank from 2013. While
the target of Bank BNI 46 branches jember to the results of MRI are three major
achievement.

Retaining customers is important compared to attract new customers,

because it can be considered cheaper than draw back customers who've gone,
customer loyalty will reduce the cost of the Bank to find new customers, in
addition to the cost to retain customers cheaper when compared to the costs issued
to prospect for new customers. Experience shows that in order to attract new
customers costs five (5) times more when compared retain existing customers, on
the other hand attract customers who have already moved to a competitor bank
requires 10 s / d 12 times the cost to be incurred. Therefore, customer satisfaction
and loyalty is very important for the banking sector. Customers will be highly
satisfied and loyal to a bank, but also be quick to move to another bank that can
give satisfaction better than other banks, and the background of the authors use
research object in Bank BNI 46 branch Jember because so far there has been no
research discussing the service at Bank BNI 46, especially in the town of Jember.
Here is a detailed overview of this research problems in the field refer to the
phenomenon that occurs in Bank BNI 46 branches jember associated with
excellent services (services excellence).

428
 Table 1
Ten Best Bank in Service Excellence (Service Excellence) Year 2014-2015

Ranking
Name of Bank
2014/2015
Mandiri bank 1
Permata bank 2011
2
BII 3
Bank XXX 4
Indonesian people of bank 5
OCBC NISP 6
CIMB Niaga 7
Danamon bank 8
BCA 9
State Savings Bank 10
Source : Infobank, May 2015

Based on the above data, the formulation of this research is how the process
of improving customer loyalty. The study of the problem lies the question of
research is:1. How does the influence of service quality on customer satisfaction2.
How does the handling of complaints on customer satisfaction3. How does the
image on customer loyalty4. How does the influence of customer satisfaction on
customer loyalty

429
2. Research Methods
2.1 Indicator variable Quality of Service

X1.1.1

X1.1
X1.2.1

X1.3.1
X1.2
X1.2.1

Service
X1.3 X1.2.2
X1.1.1
Quality
X1.3.1

X1.1.1

X1.3.2
X1.1.1

X1.1.1

X1.4 X1.4.1

X1.4.2
X1.5.1
X1.5 X1.1.1 X1.5.2

X1.5.6 X1.1.1

X1.1.1

X1.1.1

Service Quality variable indicators: X1.1.1

X 1.1 = Display (tangible), as measured from the physical facilities provided by

the Bank to customers in the form of comfort waiting room, toilet, completeness
or regularity of the transaction slip.
X 1.2 = Capability (Reliability), the ability of employees to provide services as
promised quickly and precisely.
X 1.3 = Volition (Responsiveness), measured from the speed of inputting
employee in conducting transactions and customer waiting time in the queue.
X 1.4 = Confidence (Assurance), which measured the confidence of customers in
the form of trust, secure the services of the Bank.

430
X 1.5 = Concern (Empathy), which is measured by the ability of employees when
the airport provides a genuine concern, friendly and fun.

2.2 Indicator Variables Handling of Complaints

X2.1

X2.2

Handling Complains X2.3

X2.4

Indicator Variables Handling of Complaints:

X 2.1 = The handling of complaints, as measured from the velocity of employees
in the handling of customer complaints.
X 2.2 = The handling of complaints, as measured from the velocity of employees
in subsequent handling of customer complaints.
X 2.3 = Problem solving customers' customers as measured by customer votes on
the solutions provided by the Bank.
X 2.4 = Ease of procedures for filing a complaint, which is measured by how easy
the procedure given to customers when they file a complaint

2.3 Indicator Image

Indicator variable image
X 3.1 = Name of the company, which is measured by customer ratings of the
firms will be the establishment of firms to compete with other companies.
X 3.2 = image services, measured from the viewpoint of a customer with the
services of the company.
X 3.3 = positive reputation, as measured from the customer view of the good of
the company.X 3.4 = positive reputation, as measured from the views of

431
customers on the health of the company.
X 3.5 = Shopisticating of service technology, as measured from the convenience
of customers in the ease of transaction.

X3.1

X3.2

Image X3.3

X3.4

X3.5

1.4 Indicator Variabel Satisfations Customer

Y1

Kepuasan (y) Y2

Y3

Variable Indicators Satisfaction:

Y 1 = feeling happy / disappointed, measured from a sense of pleasure and

disappointment has become a customer in assessing the services provided by
Bank XXX.

Y 2 = Compliance with expectations, measured by customer feelings that arise

will be the company's ability to meet all of his expectations.

Y 3 = Satisfaction in general, the overall assessment of a customer experience in

the transaction, the purchase and consumption of goods and services provided by

432
the company.

2.5 Indicator of Variabel Loyality

Z
1

Z
2

Loyalitas (z)

Z
3

Z
4

Variable indicator Loyalty:

Z1 = Recommendation, measured from the willingness of customers to invite
other people to make a purchase or use the product.
Z 2 = transaction activity, measured by the willingness of customers to use the
services / products offered by the company.
Z 3 = main options, measured from the willingness of customers to be able to
make the company as the first choice for the decision.
Z 4 = Word of mouth, measured from the willingness of customers to talk about
nice things to the product of the company to others.

2.6 Population and Sample

The population in this study are customers of Bank XXX Jember branch.
Samples were taken with non probability sampling approach, which is a sampling
technique that does not give the opportunity or equal opportunity for every
element (Ismiyati, 2003) to customers who come to Bank BNI 46 branch Jember.

433
While the method of purposive sampling, the sampling technique with a certain
considerations. In this study looked only at customers who make a transaction
savings and handling complaints.
To meet the criteria of an appropriate sample was determined by using
SEM (Structural Equation Model) depending on the number of indicators used in
the entire latent variable representing the whole population (Hair Jr. et al., 1998),
namely:
Number of samples = number of indicator x 5
Because in this study there are 20 (twenty) indicators, the number of samples used
are:
Number of samples = 21 x 5 respon = 105 respondents
To meet the criteria for an appropriate sample size is 100-200 (Ferdinand, 2002),
then the minimum number of samples used in this study was 100 respondents.

2.6 Validity and Test Reliability

From the results presented in the table above can be seen that the entire
value of the significance of each indicator used in the research instrument has a
significance value of less than 5% which is the limit value conclusion. It can be
concluded nahwa instrument used in this study is valid.
From the table above it can be seen that the entire value of Cronbach's
Alpha showed values above 0.06 which is the limit for the decision making of
reliability. It concluded that the instrument used in this study is relliabel.

2.7 Full testing SEM Model

As the CFA test, testing structural equation models are also made with two
kinds of testing, ie test the suitability of the model as well as the significance test
of causality through regression coefficient test
1. Compliance Test Model - goodnes-of-fit test.
The criteria used to assess the suitability of a model similar to that used in the
CFA test, namely:

434
 Table Uji CFA

Goodness of fit Index Cut-off vallue yang disarankan

Significance Probability > 0,05
RMSEA < 0,08
GFI > 0,09
AGFI > 0,90
CMIN/DF < 2,00
TLI > 0,95
CFI > 0,95

2. Causality Test : Regression Weight

This test is performed to test hypotheses about causality developed in the
model.
3. Hypothesis testing
To answer the problem formulation and research hypothesis, then tested the hypothesis by
using value estimates and P-value on the output Amos Regression Weights
Late Model

Tabel 4 6
Regression Weights: (Group number 1 - Default model)

Estimate S.E. C.R. P Label

Satisfy <--- Service Quality ,338 ,098 3,461 *** par_23

Satisfy <--- Handling complain ,321 ,088 3,628 *** par_22

Loyality <--- Image ,285 ,133 2,140 ,032 par_28

Loyality <--- Satisfation 1,184 ,239 4,952 *** par_24

In conclusion, the structural test results show that the final model:
1. The value of the probability (P) between the Quality of Service (X1) to the
satisfaction of (Y) 0,000 (0%) is smaller than the degree of fault inference
(Alpha) = 0.05 (5%); meaning that the variable quality of service (X1)
significant effect on satisfaction (Y).
Estimate the positive sign on the coefficient indicates that there is a
positive correlation between the variables X1 with Y. Conclusion The

435
 results of hypothesis testing:
The first hypotheses (Ha1) studies that the "Quality of service has a
positive influence on customer satisfaction" is proven, or in other words
the null hypothesis (H0) is rejected.
2. A probability value (P) between the Handling of Complaints (X2) to the
satisfaction of (Y) 0,000 (0%) is smaller than the degree of fault inference
(Alpha) = 0.05 (5%); Complaint Handling means variable (X2)
significant effect on satisfaction (Y).
Estimate the positive sign on the coefficient indicates that there is a
positive correlation between the variables X2 with Y.
Conclusion The results of hypothesis testing: The second hypothesis (Ha2)
studies that the "complaint handling has a positive effect on customer
satisfaction" is proven, or in other words the null hypothesis (H0) is
rejected.
3. The value of the probability (P) between Citra (X3) of the Loyalty (Z) of
0.032 (3.2%) is smaller than the degree of fault inference (Alpha) = 0.05
(5%); meaning that the variable image (X3) significantly affects the
loyalty (Z).
A positive sign on the coefficient Estimate (standardized regression
coefficient) indicates that there is a positive relationship between the
variables X3 with Z.
Conclusion The results of hypothesis testing:
The third hypothesis (HA3) study which states "The image has a positive
effect on customer loyalty" is proven, or in other words the null hypothesis
(H0) is rejected.
4. The probability (P) between satisfaction (Y) of the Loyalty (Y) 0,000 (0%)
is smaller than the degree of fault inference (Alpha) = 0.05 (5%);
Satisfaction means variable (Y) a significant effect on loyalty (Z).
A positive sign on the coefficient Estimate (standardized regression
coefficient) indicates that there is a positive relationship between the
variables Y to Z.

436
 Conclusion The results of hypothesis testing:
The fourth hypothesis (Ha4) research stating "Customer satisfaction has a
positive effect on customer loyalty" is proven, or in other words the null
hypothesis (H0) is rejected.
From the above it can be seen that the test results of structural models in
the initial model and the final model reveals the same conclusions on
relations between the variables studied.

5. Conclusions And Limitations

5.1 Conclusion
Conclusions on research problems based on the findings of the research problems
are identified and arranged. Where the purpose of this research is to find answers to the
formulation of the problem posed in this study is how to influence customer loyalty in
line with expectations, the results of the study's findings prove and conclusions to address
these issues which briefly generate three (3) basic processes to improve customer
satisfaction and loyalty. To solve the problem that has been noted in Chapter II described
literature review and developed four (4) hypotheses related to the research problem,
Chapter 3 has been compiled method penelitiaan that support the retrieval of data and
technical analysis to customers who conduct banking transactions at Bank BNI 46 the
branch office Jember, retrieval of data will be using purposive sampling method, in the
analysis of Chapter IV is based on the questionnaire data collected from the Number of
questionnaires distributed a total of 110 copies and returning as many as 105 copies,
shows the significant value of each indicator used in the research instrument has
significance value of less than 5% which is the limit value conclusion. It can be
concluded that the instrument used in this study is valid, and the fourth hypothesis can be
accepted, so that it can be concluded that the quality of the service have positive
influence and significant impact on customer satisfaction, the handling of complaints has
positive and significant impact on customer satisfaction, Citra has influence a positive
and significant impact on customer loyalty, customer satisfaction has a positive and
significant impact on customer lyalitas.

437
5.2 Limitation
Limitations of existing research in this study are as follows:
1. Limitations of the research model involving only variables - variables that seem
to have been developed in many studies. Further development may involve
variables - Additional variables wider.
2. Limitations items or indicators questionnaire compiled allow less good good
language in explaining the concept of variable.

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At PT. PLN (Persero) Rayon East Makassar ".
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FAA-22

EMPIRICAL ANALYSIS OF AUDIT DELAY: A

STUDY OF COMPANIES LISTED IN INDONESIA
STOCK INDEX SHARIA

Ahmad Iskandar Rahmansyah

Universitty of Panca Marga Probolinggo
e-mail: iskandar.rahmansyah@gmail.com

ABSTRACT

This study aims to determine the effect of firm size, profitability, solvency,
quality auditor, and the auditor's opinion on the audit delay on companies listed in
Indonesian sharia stock index. The population in this study are the companies that
are included in ISSI in 2012 to 2015. The sample using purposive sampling
method, the number of samples are 135 companies. Data analyst technique used is
multiple regression analysis.The results showed that 1) the size of the company
significantly influence audit delay, 2) profitability is not berpengarur audit delay,
3) solvency does not affect the audit delay, 4) the auditor's opinion does not affect
the audit delay and 5) the auditor's opinion affect significan on audit delay

Keywords: Audit Delay, Company Size, Profitabilitas, Solvabilitas, KAP,

Opinion, ISSI

1. Introduction
The purpose of the audit of financial statements is to provide an opinion on
the fairness and appropriateness of financial statements with the applicable
accounting standards. With the audit report, users can feel confident bahwasannya
reports they receive is free from errors. Financial statements is one way to
communicate between the company's internal company with less external parties,
but it is also as a form of internal to external parties in a specific period. The
financial statements of the company is very important for users to take a decision,
because it contains information about the company-infornasi. Besides free from
misstatements, the financial statements must also be timely. Because if the

440
financial statements are not timely, it can affect the users of financial statements
in making decisions.
In the process of auditing the financial statements, it takes time varied according
to the needs of each auditor. The time span between the closing date of the
financial year and the date of the audit report is called the audit delay. Timeliness
of financial statement reporting is essential for companies and users of financial
statements. But in fact, in the year 2016 there are 18 listed companies listed on the
Stock Exchange was not able to timely publication of financial statements.
This study will analyze the factors that affect audit delay, which is a
measure of the company, profitability, solvency, quality auditor and the auditor's
opinion. These variables selected for still-penilitian results of previous studies are
inconsistent. The influence of the size of the company audit delay been examined
by Ashton, et al (1987) and Putra and Putra (2016). The results of these studies
indicate that there are influence between firm size and audit delay. The results of
this study are consistent with research Armansyah and Kurnia (2015) which
indicate that there are influence between firm size and audit delay. The results of
these three studies are also consistent with research Rahmawati and Suryono
(2015) which states that the size of the company has a significant influence on
audit delay. But the results of these studies are inconsistent with the results of
research and Rokhman Yendrawati (2008), as well as Lianto and Kusuma (2010)
which states that the size of the company does not affect the audit delay.
Research on the effect of profitability audit delay was made by Putra and
Putra (2016), which concluded that there are significant between profitability and
audit delay. The results of this study are supported by research Rahmawati and
Suryono (2015) which shows that there is influence between the profitability of
the audit delay. The results of these two studies are not consistent with the
research Armansyah and kurnia (2015), as well as Kartika (2009) which states
that there is no influence between profitability and audit delay.
Solvency influence audit delay has been studied by Putra and Putra (2016)
and Siregar (2015) concluded that there is influence between the solvency of the
audit delay. The results of these two studies are not consistent with the research

441
Ashton, et al (1987), as well as Rahmawati and Suryono (2015) which showed no
effect on the solvency of the audit delay.
Influence the quality of auditors to audit delay has been studied by Putri and
Asyik (2015) and Taylor (1998) which states that there is influence between the
quality auditor to audit delay. The results of this study are not consistent with the
research Rahmawati and Suryono (2015), as well as Carslaw and Kaplan (1991)
who found no effect on the quality of the auditor's audit delay.
Research on the effect of the auditor's opinion on the audit delay was made
by Putra and Putra (2016), as well as Armansyah and Kurnia (2015). Both studies
concluded that there is influence between the auditor's opinion by the audit delay.
The results of these two studies are not consistent with the research Ramawati and
Suryono (2015), as well as the Putri and Asyik (2015) which indicates that the
auditor's opinion does not affect the audit delay.
Based on the background described, the problems will be addressed in this
study are as follows:

Are there any influence between firm size and audit delay?
Are there influences the profitability of companies with audit delay?
Are there any influence between the solvency of the audit delay?
Are there any influence between the quality auditor to audit delay?
Are there any influence between the auditor's opinion by the audit delay?
The purpose of this study are:

To determine the effect of firm size on audit.

To determine the effect on the company's profitability audit delay.
To determine the effect on the solvency of the audit delay.
To determine the influence of the quality of auditors on audit delay.
To identify and analyze the effect of the auditor's opinion on the audit
delay.

442
2. Theory and Hypothesis
According Ashton, et al (1987), a company that has a large size are more likely to
report their financial statements as compared with a company that has a small size.
Because the management at companies that have large-size directly supervised by users
of financial statements, so as to reduce the delay in order to audit its financial statements
reported immediately. In contrast, the audit delay is likely to require a longer time if the
size of the audited company even greater. Because of the larger size of the company, the
more also the number of samples that must be thorough and also a growing number of
audit procedures to be followed.
Profitability can describe a company's success in obtaining a profit in a given
period. The level of profitability is very influential on audit delay. Because if we report a
loss, then the market will respond negatively terhapap the company. Indicators that can be
used to assess the level of profitability of a company in this study is the return on assets
(ROA). Research conducted Putra and Putra (2016), Armansyah and Kurnia (2015),
Rahmawati and Suryono (2015), Putri and Asyik (2015), Miradhi and Juliarsyah (2016),
as well as Murti and Widhiyani (2016) using ROA (Return on Assets) as variable
assessment of a company's profitability.
Solvency is also called the leverage ratio. Weston and Copeland in Respati
(2004) stated that the leverage ratio is a company's ability to repay all its obligations, both
short term liabilities and long term liabilities. High and low debt to equity can describe
the level of financial risk in a company. The higher risk means that the company is
experiencing financial difficulties, and the more difficult the company also to be able to
pay its obligations. Research conducted Rahmawati and Suryono (2015), Siregar (2015),
Putri and Asyik (2015), as well as Putra and Putra (2016) using the debt to equity ratio
(DER) as an indicator to determine solvency.
The quality of auditors can be seen from the large audit firms that carry
out auditing the annual financial statements. In the study conducted by
Armansyah and Kurnia (2015), as well as the Princess and Fun (2015) using KAP
affiliated or not with the Big Four as determinants of quality auditors. The
category of the big four in Indonesia, namely: KAP Price Waterhouse Coopers
(PWC), affiliated with Drs. Hadi Sutanto and Partners, Haryanto Sahari &
Partners. KAP Klynveld Peat Marwick Goerdeler (KPMG), affiliated with KAP-
Sidharta Sidharta and Widjaja. KAP Ernest and Young (E & Y), affiliated with

443
KAP Prasetio, Sarwoko and Sanjadja. KAP Thomatsu Deloitte Touche (Deloitte),
affiliated with KAP Hans Tuanakotta and Mustafa, Osman Ramli Satrio &
Partners.
According to IAI Corporate Accounting Reporting Standards (2001),
Opinion auditor is the auditor's report in the form of a statement of opinion on the
financial statements of a company as a whole. If you can not state as a whole, it
must shed some light on the matter. Researchers already done by Putra and Putra
(2016), Armansyah and Kurnia (2015), Rahmawati and Suryono (2015), Putri and
Asyik (2015), as well as Miradhi and Juliarsa (2016) using 5 different auditor's
opinion as a measure of variable auditor's opinion.
According to research conducted by the Putra and the Putra (2016),
Armansyah and Kurnia (2015), Rahmawati & Suryono (2015), Sanjaya and
soeparto (2016), Miradhi and Juliarsa (2016), as well as Murti and Widhiyani
(2016) states that there are influence between firm size and audit delay.
Conversely, research Putri and Asyik (2015) states bahwasannya no influence
between firm size and audit delay. Based on the research results are still not
consistent, the researchers intend to prove back the results of research that has
been done, so the researchers propose hypotheses as follows:
H1: There is influence between firm size and audit delay.

Lianto And Kusuma (2010) and Purnamasari (2012) shows the results affect the
profitability of audit delay. Meanwhile Yendrawati and Rokhman (2008); and
Susilawati, et al (2012) mentioned that the profitability negatively affect audit
delay. Based on the research results are still not consistent, the researchers intend
to prove back Yendrawati research results and Rokhman (2008); and Susilawati,
et al (2012), so the researchers propose hypotheses as follows:

H2: There is the influence of Profitability with audit delay.

Susilawati, et al (2012) and Lianto and Kusuma (2010) found their solvency
influence audit delay. Instead of research Ashton, et al (1987) and Kartika (2009)
showed no effect between the solvency of the audit delay. Based on the research

444
results are still inconsistent, the researcher intends to prove the returned results of
research that has been done, so the researchers propose hypotheses as follows:

H3: There is the influence of Solvency with audit delay.

Research Hossain and Taylor (1998) shows that there is influence between the
quality auditor to audit delay. The results of this study differ from Carslaw and
Kaplan (1991) research, which indicates that the auditor does not affect the
quality of the audit delay. Based on the research results are still not consistent, the
researchers propose hypotheses as follows:

H4: There Influence between quality auditors with audit delay.

Research Yendrawati and Rokhman (2008), Kartika (2009), as well as Susilawati,

et al (2012) states that there is influence of the auditor's opinion on the audit
delay. On the contrary, research conducted by Putri and Asyik (2015), as well as
Rahmawati and Suryono (2015) states that there is no influence between auditor
with the Audit Opinion delay. Based on the research results are still not
consistent, the researchers propose hypotheses as follows:

H5: There is influence between the auditor's opinion by the audit delay.

3. Research Methology
The data used in this research is secondary data, in the form of financial
statements of the companies for the period 2012-2015 were obtained from the
Indonesia Stock Exchange (BEI) through direct search BEI official website ie
www.idx.co.id. The population in this study are the companies that are included in
ISSI in 2012-2015 totaling 214 companies. Sample of this research is using
purposive sampling method, sampling of the population based on the criteria.
Under this method, the criteria for the determination of the sample used in this
study are as follows: 1) Companies included in ISSI and did not experience any
delisting during the period 2012-2015; 2) Publish the audited financial statements
in the period 2012-2015; 3) Companies that use the rupiah currency in the

445
financial statements; 4) The Company has a period of financial year end of 31
December.
1. Dependent Variable
Audit delay, this variable is measured quantitatively in the number of days.
2. Independent Variabe
Company size, this variable was measured using the formula = Number of
Shares x Share Price. Profitability, this study used ROA (Return On Asset) as a
proxy of profitability. ROA measure of income divided by total assets. Solvency
is measured using the ratio of total liabilities to total equity. Quality auditor refers
to whether the firm that audited included in the group of the big four (dummy
value of 0) or non big four (dummy value of 1). This study used two
classifications, ie unqualified (dummy value 1) and a qualified (dummy value of
0).
3. Normality test
Normality test aims to determine whether the regression model, the
dependent variable and independent variables have a normal distribution or not. In
this study, using the Kolmogorov-Smirnov test, the data is said to be normally
distributed if the significance of the variables that were analyzed had a
significance value (P-Value) is greater than 0.05 (5%) (Ghozali, 2006: 147).
4. Multicolinearity
Multikolinearitas is a situation where one or more independent variables
can be expressed as a linear combination of other independent variables.
Multikolonearitas cause the coefficient of each independent variable static
becomes insignificant so that the independent variables that affect the dependent
variable is unknown (Ghozali, 2006: 92).
5. Autokorelity
Testing autocorrelation is used to determine whether there is a correlation
between bullies error in period t with an error in period t-1 (previous). A good
regression model is a regression that is free of autocorrelation (Ghozali, 2006: 96).

446
6. Heteroscedastisitity
Heterokedastisitas test aims to test whether the regression model occurred
inequality residual variance from one observation to another observation (Ghozali,
2006: 125). If the variance of the residuals of the observations of the other fixed,
then called homokedastisitas, and if different called heteroscedasticity. A good
regression model is that homokedastisitas or did not happen heterokedastisitas.
7. Hypothesis Testing
T test showed how far the influence of the independent variables
individually in explaining the dependent variable. The t-test was used to test the
hypothesis partially from the independent variable. If the significance level of less
than 5% or 0.05 means that partially independent variables significantly influence
the dependent variable. Meanwhile, if the significance level is greater than 5% or
0.05 means that the hypothesis is rejected (Ghozali, 2006: 88).
F test is used to test the model fit (feasibility model). The model used is
decent if F count is smaller than the significance level of 0.05 ( = 5%). If the
models used fit (worthy) means that the independent variables are jointly able to
predict / explain the dependent variable (Ghozali, 2006: 88)

4. Results and Discussion

Table 1
Normality test
One-Sample Kolmogorov-Smirnov Test
Unstandardized Residual

N 135
Mean 0E-7
Normal Parametersa,b
Std. Deviation 7,07200077
Absolute ,060
Most Extreme Differences Positive ,043
Negative -,060
Kolmogorov-Smirnov Z ,693
Asymp. Sig. (2-tailed) ,724
a. Test distribution is Normal.
b. Calculated from data.

447
 Based on Table 1 above, the magnitude of the Kolmogorov-Smirnov (K-S)
is 0.693 and the significance at 0,745 (greater than 0.05) so that it can be
concluded that the data in this study has to be normally distributed. Therefore,
data may be continued for further analysis.

Table 2
Multicolinearity Test
Coefficientsa
Model Unstandardized Coefficients Standardized Collinearity Statistics
Coefficients

B Std. Error Beta Tolerance VIF

(Constant) 75,046 1,825

SIZE -,031 ,000 ,048 ,759 1,318

ROA -,128 ,089 -,141 ,761 1,314

1
DER ,676 ,547 ,108 ,961 1,040

OPINI -,120 1,402 -,008 ,939 1,065

KUALITAS 1,673 1,422 ,111 ,816 1,226

a. Dependent Variable: A.DELAY

Based on Table 2 that the results of the calculation of the value of

tolerance for each independent variable no less than 0.10. For VIF each
independent variable give no more than 10. It can be concluded that there is no
multicoloniarity between independent variables in the regression model.

Table 3
Autocorrelation Test
Model Summaryb
Mod R R Adjusted R Std. Error Change Statistics Durbin-
el Square Square of the Watson
Estimate R Square F df1 df2 Sig. F
Change Change Change

1 ,241a ,058 ,029 7,169 ,058 2,004 4 130 ,098 2,099

448
a. Predictors: (Constant), KUALITAS, DER, ROA, SIZE

b. Dependent Variable: A.DELAY

Based on Table 3 it can be seen that the value DW is 2,099. Using a

sample of 135 and a variable number 4 with significant value of 5%, it can be
seen the value du is 1.66 and 2.34. The value of DW 2.099 greater than the lower
limit (du) 1.66 and less than 2.34 upper limit (du), sehigga can be inferred that the
data in this study there is no autocorrelation.

Picture 1
Heteroskidastity Test

As Figure 1 shows that the images spread out and do not form a pattern, so it can
not be concluded not happen heterokedastisitas.

Table 4
Results of Multiple Regression Analysis
Coefficientsa
Model Unstandardized Coefficients Standardized t Sig.
Coefficients

B Std. Error Beta

(Constant) 75,046 1,825 41,124 ,000

1
SIZE -,031 ,000 ,048 2,493 ,044

449
 ROA -,128 ,089 -,141 -1,440 ,152

DER ,676 ,547 ,108 1,237 ,218

OPINI -,120 1,402 -,008 -,085 ,932

KUALITAS 1,673 1,422 ,111 2,176 ,038

a. Dependent Variable: A.DELAY

Based on Table 4 above, the regression equation is as follows::

Y = 75.046 - 0.031X1 - 0,128X2 + 0,678X3 0,120X4 + 1,673X5 + e
Information:
Y = Audit Delay
X1 = Size Companies
X2 = Profitability
X3 = Solvency
X4 = Opinion Auditor
X5 = Quality Auditor
e = Error Term, the error rate in the study

Tabel 5
Result of F Test
ANOVAa
Model Sum of Squares Df Mean Square F Sig.
Regression 412,007 4 103,002 2,004 ,048b

1 Residual 6680,986 130 51,392

Total 7092,993 134

a. Dependent Variable: A.DELAY

b. Predictors: (Constant), KUALITAS, DER, ROA, SIZE

Based on the test results F Table 5, note F count of 2,004, with a

significance level of 0.0480. So it can be said that the independent variable
(company size, profitability, solvency, opni auditors, and quality auditor) jointly
effect on the dependent variable (audit delay) and this model may be feasible.

450
5. Discussion
5.1 Testing the hypothesis 1: Effect of Firm Size on Audit Delay
From the calculation table 4 can be known that the t value of 2.493 while t
table value of 1.978 with a significance of 0.048 or rank of less than 0.05. It can
be concluded bahwasannya no significant relationship between firm size and audit
delay and one hypothesis is accepted. This research is consistent with prior
research conducted by the Putra and the Putra (2016), Armansyah and Kurnia
(2015), Rahmawati and Suryono (2015), Sanjaya and Soeparto (2016), Miradhi
and Juliarsa (2016), as well as Murti and Widhiyani (2016 ) who believes that
there are significant between firm size and audit delay.

5.2 Testing the hypothesis 2: Effect of profitability of the Company on the Audit
Delay
From the calculation table 4 can be known that the t value of -1.440 while
the value t table amounted to 1.978 with a significance of 0.152 tingat greater than
0.05. It can be concluded bahwasannya no significant effect between profitability
and audit delay and the second hypothesis is rejected. This research is consistent
with prior research conducted by Armansyah and Kurnia (2015), Princess and Fun
(2015) who found no effect between profitability and audit delay.

5.3 Testing the hypothesis 3: Effect of Solvency on Audit Delay

From the calculation table 4 can be known that the t value of -1.237 while
the value t table amounted to 1.978 with a significance of 0.218 tingat greater than
0.05. It can be concluded bahwasannya no significant influence of the solvency of
the audit delay and hypothesis 3 is rejected. This research is consistent with prior
research conducted by Rahmawati and Saryono (2015) who found no effect
between the solvency of the audit delay.

451
5.4 Testing Hypothesis 4: Effect of Auditor Opinion on Audit Delay
From the calculation table 4 can be known that the t value for --0,085
while the value t table amounted to 1.978 with a significance of 0.932 tingat
greater than 0.05. It can be concluded bahwasannya no significant relationship
between the auditor's opinion by the audit delay and hypothesis 4 was rejected.
This research is consistent with prior research conducted by Women and Fun
(2015), Rahmawati and Saryono (2015) who found no effect between the auditor's
opinion by the audit delay.

5.5 Testing Hypothesis 5: Influence Quality Auditor at the Audit Delay

From the calculation table 4 can be known that the t value of 2.176 while t
table value of 1.978 with a significance of 0.038 tingat greater than 0.05. It can be
concluded bahwasannya a significant difference between the quality of auditors
with audit delay and 5 hypothesis is accepted. This research is consistent with
prior research conducted by Women and Fun (2015) argue that there is influence
between the quality auditor to audit delay.

6. Conclusion
Company size affects audit delay. This may imply bahwasannya large
companies tend to do reporting on financial statements showing the right time.
Because the financial statements themselves not only as a form of management
responsibility for what is done during a certain period, but also because the needs
of users of financial statements to make decisions.
Profitability does not affect audit delay. This may imply bahwasannya
increase or decrease the level of profitability does not affect the management to
speed up the audit process delay.
Solvency not affect audit delay. It ddapat interpreted the higher the degree
of solvency of a company, does not affect the duration of the audit process.
The auditor's opinion does not affect audit delay. This may imply
bahwasannya auditor's opinion on whether it is unqualified or a qualified audit
does not affect the length of delay.

452
 Quality auditor affect the audit delay. This means the quality of auditors
affiliated with the big four / audit can not affect the length of delay. The big four
generally have greater resources, both in terms of competencies, skills, and
competence of auditors as well as the facilities, systems and auditing procedures
used compared to non-big four so that they can complete the audit work more
effectively and efficiently.
Advice can be given through the research of this kind to auditors,
investors, and for the development of further research are as follows:
To the auditor can perform the audit process effectively and efficiently in
accordance with the procedures and auditing standards established by
Indonesian Institute of Accountants.
Investors should be more careful in looking at the financial statements
primarily financial ratios to reflect the financial performance of the
company. With careful consideration, investors are expected to no longer
feel aggrieved over the investment he has invested.
For further research is expected to examine more deeply which is not only
limited to the variables that have been studied, but the need for the
addition of other variables and is expected to use as object of more
extensive research. Moreover, in a subsequent study

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FAA-25

DIFFERENTIAL FUND ANALYSIS IN MAKING

DECISION TO RECEIVE OR REJECT THE SPECIAL
ORDERING OF UD MAYONG SARI PROBOLINGGO

Khusnik Hudzafidah
University of Panca Marga Probolinggo, Indonesia
e-mail: khusnikhud@gmail.com

ABSTRACT

The aim of this final project to know the applied of Differential Fund Analysis in
Making Decision to Receive or Reject the special ordering of UD Mayong Sari
Probolinggo in order to be used as one of the instrument to make decision of
management company in order to increase the profit. Method of this study is
descriptive quantitative which describes one of data, then make a decision based
on the data. Differential Fund Analysis use comparative between the alternatives
to produce fund, income, and profit differentials. Based on the study above, it
shows that differential cost analysis can be applied in UD. Mayong Sari as
consideration to receive or reject special order with the low price than regular
product, otherwise, the average period of company cannot reach maximum
capacitys production, it will be better if the company considers the special
ordering in order to get maximum and the company can get profit of it.

Keywords: differential cost, differential revenues, differential profit, special order.

1. Introduction
1.2 Backgraound Of Study
In the processing activities of company, the management is often faced
some choices or alternatives activity. From those alternatives, the company
should choose one of alternative which gives profit for the company. Thats why,
the company need informations about cost.
One of managements functions is planning and making decision any kind
of alternatives that should be chosen, means that management faced in making
decision. The role of manager in organization is particularly important because the

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position of manager can motivate to the employers and also top positions to get
succeed in the organization.
Management needs differential cost to make decisions whether it receive or
reject the special order. The activities company industries is make the basic
material to be sold for the commuters who are needed. The processing of basic
material is production process. The industries fund is loaded for 2 (two) periods
in industries processing.
Differential fund analysis helps in making decision whether receives or
rejects, buys or makes by own self, and get up or down the industries volume.
Based on the description above, the writer is interested in doing this study, under
title Differential Cost Analysis in interpretation to Receive or Reject special
order in UD. Mayong Sari Probolinggo.

1.2 Purpose Of Study

Based on description above, the problem of study is How is Differential
Cost Analysis on UD. Mayong Sari in interpreting receive or reject decision of
special order?
Based on problem of study above, the purpose of this study is to analyze
differential cost in interpreting receive or reject decision of special order on UD.
Mayong Sari Probolinggo.

2. Literary Review
2.1 Accounting Concept
According to Atkinson (2009:37) in Tunggal (2014:422), Accountancy is
process to identify, measure, and report the economic information in order to
predict the score and make decision clearly for the other user of the information.

2.2 Management Accounting

According to Halim (2013:3) in Lalenoh,et all (2014:744), Management
Accountancy is activities to produce accounting information for making
economic decision for doing management function.

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2.3 Cost Concept
Based on problem of the study above, the aim of this study is to analyze the
differential cost for making decision to receive money, whether in the past or
future for particularly purpose.

2.4 Special Ordering

1. Definition
According to Hansen and Mowen (2009:76) in Lumowa (Eds) (2015:851),
Special Order is ordering that happened in out of common production.
2. Receive or Rejcet Analysis of Special Order
If the total fixed cost in one year can complete through common order,
then the capacity production and engineering have not used totally. In
serving special order, the manager can receive sold price under common
sold price so long as the sold price can produce profit. If the special order
cannot appear expending of variable cost the opposite of it should
expending of fixed cost because the company operate on available
capacity. It means that the expanding of fixed cost for special order should
be on variable cost and added with the increasing of fixed cost.

2.5 Differential Cost

1. Definition
Differential cost is very useful for planning and making decision. Halim
and Supomo (2005:760 in Rusati (Eds) ((2015:76), Differential cost is
different cost that is compared with other conditions one condition.
Differential cost is different cost as the consequent of 3 (three) levels.
2. Differential Revenues
Management is needed informations for making decisions whereas
differential costs, that is differential income. According to Halim and
Supomo (2005:76) in Rusati (Eds) (2015:4), Differential income is
different income in one condition that is compared with others condition.
Garrison (2006:70) in Hidayati (Eds) (2014:3) stated that different income

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 between two alternatives is called differential income. Differential
income is the income for the future that is different in every alternative
that is chosen.
3. Accountancy Differential Information
Differential Information only relate with the assets, is called differential
assets, related with revenues is called differential revenues, related with
cost is called differential cost. Anothers alternative will be chosen. How
many the differential profit will count with the pattern: Halim, (Eds)
(2013:103) in Rantung (2015:1224) stated that differential accountancy
information consist of:
a. Differential revenues
Differential income is different income in one condition, which is
compared with other conditions.
b. Differential assets
Differential assets is useful for giving measures in total cost that is
planted in changing of certain fixed cost.
c. Diffrential Cost
Differential cost is different cost in one condition that is compared
with others condition.
d. Future Cost
Future cost is cost that is expected for making decision in one
period.
e. Differentialt Profit
It is closely related to definition of differential revenues and
differential cost. Differential profit is different profit for the future
between kinds of alternatives that have been chosen. The great
differential profit is counted with the pattern:
Differential profit = differential revenue differenetial cost

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4. The Advantage of Differential Accountancy Information
According to Carter (2009:327-334) in Gumolung (Eds)
(2014:725) for making decision in short period, Accountancy information
has advantages to decide:
a. Receive or reject special order decision
Management will be faced problems in order to decide whether the
special ordering will receive or reject it. Because of the special
ordering has low sold price than sold price of products are equal for
the common customer
b. The decision to stop the product
It is close to differential revenue and differential cost definitions.
Differential profit is different profit between kind of alternatives
for future that will be chosen. The management will decide to stop
some certain products I order to produce profit. By making
decision to stop certain products
c. Decision of buying or own making
Management decision for buying or own making is maximum
usage of production resources and accountings company. In
making decision is often done correlate with the instrumentations
usage, rooms, and employee that are useless.
d. Sold price decision
Management can be used in some methods of sold price decision.
One of sold price decision is total cost methods added profits that
are wanted by company. This method will be used in the company
to know the target sold volume of company.
5. Differential Cost Analysis
Management can be used in some methods of sold price decision. One of
sold price decision is total cost methods added profits that are wanted by
company. This method will be used in the company to know the target sold
volume of company.

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 6. Advantage of Differential Cost Analysis In Interpretation Decision
Differential cost is used to interpret decision in short time through
quantitative analysis approach. In interpreting decision is done regularly
and relate with the action of operations company that is not regularly done
than the special and amazed operation decision periodic of company.

2.6 Interpretation Decision

1. Defiinition
According to Hansen and Mowen (2011:64) in Rusati, (Eds) (2015:3)
Making Tactic decision is consist of election between kinds of
alternatives with the directly result or limited. The purpose is choosing
strategic alternatives, so can superior compete for long time can reach it. In
tactic interpretaing should support the total purpose whereas the directly
purpose is short time (receive one special order to increase the profit) or in
small scale (own produce than but the component)
2. The Way/Steps In Interpreting Decision
According to Syamsy (2007:10) in Lalenoh, (Eds) (2014: 745), in
interpreting decision is the action of leader to solve the problems that are
faced in organization that he/she lead through one of election between
possible alternatives.
a. formulation and admission problems or chances
b. searching alternative action and each qualifications
c. optimum alternative election or satisfied alternatives
d. implementation and follow up
3. Differential Cost Analysis In Interpreting Receive Or Reject Of
Special Order
According to Ursy (2005:334) Differential Cost Analysis will encourage
the management to receive addition (special) on equal price or over from
differential cost.

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3. Research Methodology
3.1 Research Types
Research used in this research is kuantitative descriptive research that
compares methods of decision to accept or reject special orders used by the
company today with the decision to accept or reject special orders generated using
differential cost analysis. Location of the study conducted at UD. Mayong Sari,
located on Jl. Pawnshop No. 114 RT 03 / RW 03 violations of the District Rural
Hamlet Kalisalam Dringu Probolinggo.

3.2 Research Variable

The variables used in this study are all costs that form the focus of
differential cost analysis in the making of bread, among others:
1. Production Costs
a. Raw Material costs
b. Direct Labor Costs
c. Factory Overhead Cost
2. Before Orders Costs
3. After Orders Cost

3.3 Data Analysis Method

Methods of data analysis performed in this study are as follows:
1. Presenting data is the total cost of production (raw material costs, labor
costs and factory overhead costs) and units produced during 2014.
2. Analyze the cost differential in decisions to accept or reject special
orders

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4. Research Result and Discussion
Tabel 1
Data On The Number of Sweet Bread
Mont Sweet Bread
June 2015 13.565 pcs
July 2015 14.584 pcs
August 2015 12.107 pcs
Total 40.256 pcs
Source: UD Mayong Sari

Tabel 2
Raw Material Cost UD Mayong Sari
In June 2015, July 2015, August 2015
Mont Sweet Bread
June 2015 13.565 pcs
July 2015 14.584 pcs
August 2015 12.107 pcs
Total 40.256 pcs
Source: UD Mayong Sari

Tabel 3
Direct Labor Costs UD. Mayong Sari
In June 2015, July 2015, August 2015

Amount Of Wage Total

Month
Worker Rates Wages
June 2015 4 Rp 1.046.250 Rp 4.185.000
July 2015 4 Rp 1.012.500 Rp 4.050.000
August 2015 4 Rp 976.500 Rp 3.906.000
TOTAL Rp 12.141.000
Source: UD Mayong Sari

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 Tabel 4
Factory Overhead Costs UD. Mayong Sari
In June 2015

Types Of FOH Amount

auxiliary materials costs Rp 3.993.000
fuel costs Rp 657.000
electricity cost, PDAM, and telephone Rp 106.250
depreciation cost of equipment Rp 391.700
Total Rp 5.147.950
Data: processed

Tabel 5
Factory Overhead Costs UD. Mayong Sari
In July 2015

Types Of FOH Amount

auxiliary materials costs Rp 3.993.000
fuel costs Rp 657.000
electricity cost, PDAM, and telephone Rp 106.250
depreciation cost of equipment Rp 391.700
Total Rp 5.147.950
Data: processed

Tabel 6
Factory Overhead Costs UD. Mayong Sari
In August 2015

Types Of FOH Amount

auxiliary materials costs Rp 3.993.000
fuel costs Rp 657.000
electricity cost, PDAM, and telephone Rp 106.250
depreciation cost of equipment Rp 391.700
Total Rp 5.147.950
Data: processed

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 Tabel 7
Production Cost UD. Mayong Sari
In June 2015, July 2015, August 2015

Types Of FOH Amount

June 2015 Rp 28.922.850
July 2015 Rp 28.960.500
August 2015 Rp 29.251.500
Total Rp 87.134.850
Data: processed

Tabel 8
Calculation of Total Capacity Unemployed September 2015
Normal Actual Idle capacity
Production Production
Volume Volume
15.000 pcs 12.107 Pcs 2893 Pcs
Data: processed

Tabel 9
List Typse Factory Overhead Costs
UD. Mayong Sari

Types Of FOH Amount

auxiliary materials costs Variable
fuel costs Variable
electricity cost, PDAM, Phone Variable
depreciation cost of equipment Tetap
Data: processed

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 Tabel 10
Cost Types UD. Mayong Sari

Types Of FOH Amount

raw material cost Variable
auxiliary materials costs Variable
Direct Labor Costs Variable
fuel costs Variable
electricity cost, PDAM, Phone Variable
depreciation cost of equipment Tetap
Data: processed

Tabel 11
Cost Types In September 2015

Costs Amount
raw material cost Rp 19.955.000
auxiliary materials costs Rp 4.633.000
Direct Labor Costs Rp 2.790.000
fuel costs Rp 744.000
electrical cost, PDAM, phone Rp 425.000
depreciation cost of equipment Rp 155.208
Total Rp 28.702.208
Data: processed

Tabel 12
Variable Cost In September 2015

Costs Amount
Raw Material Cost Rp 19.955.000
Direct Labor Costs Rp 2.790.000
Factory Overhead Cost Rp 5.802.000
Total Rp 28.547.000
Data: processed

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 Tabel 13
Calculation of Charges For Special Orders
Information Per Bread 2.500 Bread
Raw Material Costs Rp 1.526,80 Rp 3.817.000
Direct Labor Costs Rp 186,00 Rp 465.000
Factory Overhead Variable Cost Rp 140,73 Rp 351.825
Total Variable Cost Rp 1.853,53 Rp 4.633.825
Data : Processed

Tabel 14
Differential Analysis Report With Or Without Special Orders
In September 2015
Information Spesial Orders (Rp) Reguler Differential Cost
Analysis
Income:
Spesial Orders :
12.107 pcs x Rp
5.000 = Rp
60.535.000

Reguler:
2.500 pcs x Rp
3.500 = Rp
8.750.000
Rp 69.285.000
Production Plan:
12.107 pcs x Rp
5.000 = Rp
60.535.000 Rp 60.535.000 Rp 8.750.000

Variable Cost:
Spesial Orders:
14.607 pcs x Rp
1.853,53 = Rp
27.074.512,71 Rp 27.074.512,71

Reguler:
12.107 pcs x Rp
1.853,53 = Rp
22.440.687,71 Rp 22.440.687,71 Rp 4.633.825

Fixed Costs:
Fixed FOH Rp 1.705.208 Rp 1.705.208
Amount Rp 40.505.279., 29 Rp 36.389.104,29 Rp 4.116.175
(Net Profit)

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4. Conclusion
From the results of research and discussion that has been described, can
disimpulkanan as follows:
1. From the analysis of the cost differential is especially the decision to accept
or reject special orders showed that of the proposed alternative capable of
providing benefits to the company, this can be seen with the differential cost
of Rp. 4,116,175, - with details of income without the order of Rp.
36,389,104.29, - whereas revenue by booking Rp. 40,505,279.29, -
2. Companies will be able to deliver maximum results when companies use
tools by using differential cost analysis for management decision-making
influence in the improvement of corporate profits.
3. The use of differential fees can help companies to establish more terperenci
profit.

5. Suggestion
Based on these results, the authors give advice that can be used as input
for UD. Mayong Sari as follows:
1. The amount of production capacity is not fully utilized can be helped by
increasing the number of regular production company with
memperyimbangkan market absorption capability so that the amount of idle
capacity is not too much.
2. In considering to accept or reject the special order a product the company
should be researched more about the amount of costs that should be
considered.
3. Although the company received special orders from certain customers,
should be in management decision making using tools such as analysis of
accounting information to the maximum differential information so that
decisions taken by the management of the company provide more reliable
results than the use of estimates, assumptions or experience

468
 REFERENCES

Firdaus & Wasilah. 2012. Akuntansi BIAYA, Edisi 3. Jakarta: Salemba Empat.
Garrison, Ray H., Noreen, Eric W Dan Peter C. Brewer. 2013. Akuntansi
manajerial, Edisi 14, Buku 2. Jakarta: Salemba Empat.
Gumolung, Anggreyni, dkk. 2014. Analisis BIAYA Diferensial Dalam
Pengambilan Keputusan MENERIMA ATAU Menolak Pesanan
KHUSUS PADA UD. Berkat Anugerah. Volume 2. No 04. Universitas
Sam Ratulangin Manado.
Hidayati, auful, dkk. 2014. Analisis BIAYA Diferensial Sebagai Dasar
Pengambilan Keputusan MENERIMA ATAU Menolak
Pesanan KHUSUS PADA Perusahaan Kecap Cap Kuda Tulungagung. Volume
11. Nomor 1. Universitas Brawijaya Malang.
Indriantoro, Nur., Supomo, Bambang. 2012. Metodologi Penelitian Bisnis,
UNTUK Akuntansi Dan Manajemen. Yogyakarta: BPFE
Kusumawati, Denis, dkk. 2014. Analisis BIAYA Diferensial Dalam Rangka
MENERIMA ATAU Menolak Pesanan KHUSUS PADA Suksesabiz
Toko Konveksi dan Sablon Sidoarjo. Volume 12. Nomor 01. Universitas
Brawijaya Malang.
Lalenoh, Ardelia, dkk.2014. Analisis BIAYA Diferensial Dalam Pengambilan
Keputusan MENERIMA ATAU Menolak Pesanan KHUSUS PADA
UD. Yunita Bakery. Volume 2. No 04. Universitas Sam Ratulangin
Manado.
Lumowa, Sintia Fitria, dkk. 2015. Analisis Perilaku BIAYA Dalam MEMBUAT
Keputusan MENERIMA ATAU Menolak Pesanan KHUSUS PADA
PT. Putra Karangetang. Volume 3. No 01. Universitas Sam Ratulangin
Manado.
Rantung, Surya. 2015. Penerapan Informasi akuntansi Diferensial Dalam
Pengambilan Keputusan Jangka Pendek PADA CV. Usbina Yasa
Manado. Volume 3. No 01. Universitas Sam Ratulangin Manado.
Rusati, Kumala Rahayu, dkk. 2015. Pengambilan Keputusan MENERIMA ATAU
Menolak Pesanan KHUSUS using Analisis BIAYA Diferensial PADA
PT. Duta Beton Mandiri Pasuruan. Volume 2. No 2. Universitas
Brawijaya Malang.
Tunggal, Monica Gitasari. 2014. Analisis BIAYA Diferensial Dalam
Pengambilan Keputusan UNTUK MENERIMA ATAU Menolak
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Universitas Sam Ratulangin Manado.

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FAA-26

THE EFFECT OF INDIVIDUAL COMMITMENT AND

PATTERN OF FEEDBACK PRESENTATION ON JUDGMENT
OF USEFULNESS IN THE CONTEXT OF COST
ALLOCATION

Oktaviani Ari Wardhaningrum

Gadjah Mada University
Email: oktavianiariw@gmail.com

ABSTRACT

This study investigates the effects of individual commitment and pattern of

feedback presentation on judgment of usefulness in the context cost allocation.
Laboratory experiments 2x2 between subjects design conducted on 55 graduated
students of Economics and Business Faculty, Gadjah Mada University, using
vb.net application. Referring to the theory of cognitive dissonance and belief-
adjustment models, this study develops Jermias (2006) in providing feedback
information patterns in four periods. The results showed that individual
commitment to cost allocation system increase individuals judgment about the
usefulness of costing systems. The results also showed that the constant pattern of
feedback affect individual judgment of usefulness.
Keywords: individual commitment, patterns of feedback, judgment of
usefulness, cost allocation.

1. Introduction
Based on cognitive dissonance theory, individuals who are committed to a
particular system tend to be insensitive to the potential benefits of alternative
choices (Festinger, 1957). Individual commitments may cause a person seeking
information to emphasize the usefulness/advantages of the selected system and the
disadvantages of system that is not selected (confirmatory-biased information)
(Kiesler, 1971). Such information may lead to biases that can support the chosen
system. Individuals who view a particular system is better than the other systems
can lead to the overjudgment of the systems usefulness. Overjudgment is a
cognitive bias because it is based on biased information.
This research is essential for management control in order to create goal
congruence between organizational goals and individual goals. Most of the

470
previous studies examined in the context of investment (Cheng et al., 2003) or
capital budgeting (Buxton and Rivers, 2014). In contrast to previous studies, this
study examined the context of costs allocations (i.e. Traditional, ABC, and Time-
Driven Activity Based Costing).
Jermias (2001) examined the effect of commitment, confirmation and
feedback on assessment of accounting system usefulness. The evidence suggests
that a person's assessment of the system is influenced by commitment to the
chosen system. Furthermore, the person who committed tends to resist change a
system previously used even if they obtain negative feedback. The limitation of
Jermias study is the feedbacks were provided only one time period.
Jermias (2001, 2006) could not evaluate the process of belief revision
because the feedback only provided in one period only. Feedback provided more
than one time is more representative on reality because decisions are rarely taken
by only considering one feedback. Based on the belief-adjustment model (Hogarth
and Einhorn, 1992), individuals tend to revise initial belief when facing the
feedback sequentially in a multi-period setting. Individuals revise their beliefs
using anchoring and adjustment process gradually. Initial opinion (i.e. anchor)
adjusted for subsequent information that obtained by individual (i.e. adjustment).
Belief adjustment is only performed one time if the feedback provided in
one period. This study predicts that the individual perceives the initial decision is
still better than the conditions that resulted from the feedback. In the case of
feedback provided in multi-periods with the same type of content information,
individuals tend to revise initial decision so that the overjudgment can be reduced.
This study examines the effect of individual commitment and feedback
provided in a multi-period on judgment of usefulness. Combining cognitive
dissonance theory and belief-adjustment models creates an assumption that in the
case of dissonance derived from the feedback is stronger than the dissonance
derived from the the initial decision, hence individual tends to revise their beliefs
about the selected system. Feedback is assumed to be more strongly with
sequential feedback compared to one period only.

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2. Literature Review And Hypothesis Development
2.1 Cognitive Dissonance Theory
Cognitive dissonance theory is proposed by Festinger (1957) with a simple
proposition. This theory explains how a person trying to make their belief,
environment, and behavior becomes reasonable or rational. The attractive term
introduced in this theory is the concept of cognition. Cognition is psychological
representation of a persons knowledge. Such knowledge may consist of the
behavior, attitude, or knowledge of surrounding circumstances.
Festinger proposed proposition about the inconsistency between two
cognitions. In the case of having two cognitions that are psychologically
inconsistent (knowledge, attitudes, or his surroundings), a person may experience
dissonance. This dissonance is a state that is not pleasant and cause discomfort, so
a person is trying to reduce them. The way to reduce dissonance is to change one
state (or both) in order to correspond with each other.
Cognitive dissonance theory is developed by years and became the basis
of research that is still in use. Aronson (1997) proposed modifications dissonance
theory leads to the self-concept. Steele (1998) developed a theory that combines
cognition and motivation, i.e. self-affirmation theory that explains how
individuals adapt to the information or experience as opposed to self-concept.
Cooper (2007) stated that consistency is a fundamental requirement of human
psychological. Furthermore, Gawronski (2012) illustrated that the basic idea of
the consistency of cognition can integrate social psychological phenomenon that
is very diverse.

2.2 Belief-Adjustment Model and Pattern of Presentation Feedback

Hogarth and Einhorn (1992) presented a model with a belief-adjustment
based on the assumption that the individual has limited memory capacity to
process information sequentially. Belief-adjustment model considered three
characteristics of the different types of information, including the complexity of
the information or stimuli, long series of information, and the response of a series
of such information (response mode).

472
 Hogarth and Einhorn (1992) assumed that individuals revise his beliefs
using anchoring and adjustment process gradually. Initial opinion (anchor)
adjusted for subsequent information obtained. Ashton and Ashton (1998) shows
that auditors tend to revise his beliefs when new evidence is received and when
evidence is contrary to current belief. Pinsker (2007) conducted an experiment to
examine the effect of information presentation pattern (sequential and
simultaneous), and directional information (positive/negative and
negative/positive) on non-professional investors belief revision using a long
series information. The results showed that the belief revision was greater when
the information is provided sequentially compared when the information is
provided simultaneously.
In contrast to previous studies, this study did not differentiate the
presentation of information as End-of-Sequence and Step-by-Step. This study
presents feedback information sequentially in Step-by-Step mode with constant
content of information. The type of information presented in this study are a
constant positive (+ + + +), and constant negative ( ).

2.3 Traditional Costing Allocation and Time-Driven ABC

Cost allocation system is an interesting context to learn about individuals
judgment of usefulness. Traditional cost allocation system has been widely
adopted by manufacturing companies. Several reason companies implement
traditional cost allocation system is easy to implement, the ability to integrate
internal and external reporting into one system, and could become the basis of
comparison with other similar companies. Automation and technology
improvements have an impact on traditional cost allocation systems that
considered not capable to provide accurate cost information. Inaccuracy of cost
allocation indicated by distorted product costing information.
ABC (Activity-Based Costing) was introduced to provide more accurate
cost information. Costs are allocated to activities in order to improve quality of
product cost information. ABC shows possible cost reduction or process
improvement (Hansen and Mowen, 2007). The perfection of ABC at the

473
theoretical level and difficulties in the implementation level reap criticism from
academics and practitioners. ABC system has several implementation issues. For
example, long period of implementation time, costly, difficulty in defining various
activities, required advanced computing systems and questionable accuracy of the
cost driver (Kaplan dan Anderson, 2014). Moreover, distorted product cost
information is still appearing because of subjective estimation in the selection of
cost driver.
In the development of the ABC system, Time-Driven Activity Based
Costing (TD-of ABC) began to be introduced. TDABC is a new generation of
ABC with an emphasis on the estimation of time (i.e. time-driver). Kaplan and
Anderson (2007) suggested that TD-ABC is more accurate than traditional cost
allocation systems and also much simpler than of ABC. Disadvantages of TD-of
ABC, include the emergence of overestimation bias in estimating the time
required to complete each activity (Cardinaels and Labro, 2008), requirement of
employees participation in suitable top management leadership style (Hooze and
Bruggeman, 2010), and the complexity of implementation TD-ABC that is similar
to ABC system (Ratnatunga et al., 2012).
There is no perfect cost allocation system found in practice. Traditional
cost allocation system, ABC, and TD-ABC is not the best system. The
controversy of traditional cost allocation systems, ABC and TD-ABC created
conditions that make individual (i.e. the manager) made overjudgment usefulness
of the cost allocation system, especially in case of manager had commitment on a
particular cost allocation system (Festinger, 1957).

2.4 Hypothesis Development

2.4.1 The Effect of Individual Commitment
Referring to the theory of cognitive dissonance (Festinger, 1957), the
individual who is given the opportunity to choose a particular cost allocation
systems tends to seek information which confirm the advantages the system
chosen. Individual tends to give high assessment for usefulness of selected system
and give low assessment for the usefulness of the unselected system. Although
given fair information about the two alternative systems, individual tends to favor
because a commitment to the chosen system.

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 Unlike the case when people are not given the opportunity to choose.
Individual feels that assignment on particular system is a duty. Individual tends
not to have any personal considerations in favor of the advantages or
disadvantages of both systems. Further, individuals judgment about the
usefulness of a costing system is predicted to be more impartially than committed
individual. In summary, individual who have commitment to a particular cost
allocation system tends to give higher ratings regarding the usefulness of the
system chosen and lower for systems that are not chosen compared to individual
who do not have commitment. Therefore, hyphotesis 1 is presented as below.
H1: Committed individuals in particular cost allocation system tend to give
higher assessment on the chosen system compared to non-committed
individuals.

2.4.2 The Effect of Constant Feedback

Patterns of sequential feedback presentation are based on psychological
commitment theory delivered by Kiesler (1971). Based on this theory, dissonance
reduction depends on the strength of inconsistent cognition. Individual compared
the conditions resulting from the initial decision and the conditions resulting from
the feedback dissonance. This dissonance conditions are contrary conditions to
initial belief. In case of individuals receive more powerful dissonance than the
initial decision, individuals feel uncomfortable and try to reduce the dissonance
(Cheng et al., 2003).
Combining cognitive dissonance theory and belief-adjustment model
create an assumption that in the case of dissonance derived from the feedback is
stronger than the dissonance derived from the the initial decision, hence
individuals tend to revise their beliefs about the selected system in order to reduce
the overjudgment. Sequential feedback is assumed to be more strongly than one
period only.
Based on belief-adjustment model, belief revision only happens once if
feedback is provided in one period (Hogarth and Einhorn, 1992). Individuals are
predicted to have the perception that the initial decision is still better than the
conditions revived from feedback. In contrast, if the feedback is provided in

475
multi-periods, individuals experience dissonance repeatedly as they receive
feedback. Futhermore, individuals revise initial belief to overcome the dissonance.
Positive feedback is a feedback that consistent to the initial decision.
Negative feedback is feedback that contrary with the initial decision. In case of
the constant positive feedback is provided in multi-periods, individuals are more
convinced in their commitment (initial decision) regarding the usefulness of the
chosen cost allocation system. In case of constant negative feedback is provided
in multi-periods, the dissonance is more powerful than intial belief that
individuals tend to revise the initial decision and the overjudgment is predicted to
be reduced. Therefore, hyphotesis 2 is presented below.
H2: Individuals who receive constant negative feedback tend to produce lower
judgment of usefulness compared to individuals who receive constant
positive feedback.

3. Research Method
3.1 Participants
This study used laboratory experiments. Researchers can provide the
stimulus needed for research purposes and it may not be fully met in the real
world. Researchers can also control the variables studied thus there is high
confidence that the independent variables affect the dependent variable (Nahartyo
and Utami, 2016). Participants who become subjects of the experiment are
students. Criteria for participants in this study are postgraduate students of the
Faculty of Economics and Business, who has taken an introductory course, Cost
Accounting or Management Accounting.

3.2 Design and Experimental Procedures

Experiment was conducted computerized by asking participants to access
the application (vb.net) that had been designed in accordance on the purpose of
research. Participants are given identity number to carry out the experiment task.
The distribution of identity number is random, thus the treatments are also
accepted randomly by each participant.

476
 Participants were asked to play the role of a costing manager who is
responsible to provide judgment usefulness. All participants were provided
information about a brief description and controversy of two cost allocation
systems (traditional and ABC). Individual commitments manipulated between-
subject that is commitment and no commitment. In commitment manipulation,
participants were given the opportunity to choose the cost allocation system. No
commitment manipulation was conducted by not giving participants the
opportunity to choose the cost allocation system or directly assigned to a
particular cost allocation system. The pattern of feedback presentation in sequence
(sequential feedback) is differentiated by two that is constant positive and
constant negative.
The design of experiment is 2x2 between-subjects design. The first factor
is commitment manipulated into two levels that is commitment and no
commitment. The second factor is feedback manipulated into two levels that are a
constant positive and constant negative. Experimental design in detail showed in
Table 1 below.
Table 1 Experiment Treatments in the Second Stage of Experiment
Feedback
Constant Constant
Commitment
Positive Negative
Commitment Cell 1 Cell 2
No Commitment Cell 3 Cell 4

3.3 Variables
Independent or manipulated variables consist of individual commitment to
cost allocation system and sequential presentation of information feedback.
Individuals commitment manipulated by providing the opportunity for
participants to choose between cost allocation system X or Y. Participants in no
commitment group were not given the opportunity to choose. Sequential
presentation of information feedback manipulated by providing two kinds of
feedback that is constant positive and constant negative. The dependent variable
in this study consisted of judgment usefulness of cost allocation system measured
by seven questions (Jermias, 2006).

477
3.4 Analysis Methods
One-way ANOVA was performed to test hypthotesis 1 that examine the
difference judgment usefulness of cost allocation system among individuals who
are committed and uncommitted. One-way ANOVA was performed to test
hypothesis 1. Two-way ANOVA was performed to test hypothesis 2 that examine
the effect of individual commitment on cost allocation systems and patterns of
feedback presentation on judgment of usefulness.

4. Result And Discussions

4.1 Pilot Test
Pilot test of the study include focus group discussions and trials in small
groups. The trial (pilot test) is performed three times. The first pilot test was
conducted paper-based on 20 students of UIN Yogyakarta. The second pilot test
was conducted computer-based test on 20 students of Muhammadiyah Magelang
University. The third pilot test was conducted computer-based on 28 students of
Muhammadiyah Magelang University using improvement suggestions on the
previous trial.

4.2 Demographic Characteristics of Participants and Randomization Test

Experiment is carried out voluntarily by giving invitations and open
announcements participation to students of Master of Accounting, Master of
Management, Master of Science in Accounting and Master of Science in
Management Faculty of Economics and Business UGM. A total of 56 people
willing to be participants in the experiment, one of them did not pass the check
manipulation thus the total participants that can be further analyzed were 55
people.
Assignment of subjects each cell did not consider demographic
characteristics, each subject received same opportunity to get a case material.
Randomized test was conducted to gain confidence that the difference on
judgment usefulness of cost allocation system is not due to the difference in
demographic characteristics. Based on randomization test results, it can be
concluded that the randomization related to gender, work experience, age, and
program is effective (p> 0.05). Further testing is influence of demographic

478
characteristics on judgment of usefulness. Based on test results, it can be
concluded that the demographic characteristics did not affect the judgment of
usefulness, shown with a significance level of p> 0.05.

4.3 Reliability and Validity Testing

Cronbach's Alpha for judgment usefulness of cost allocation system is
0,868; so it can be concluded that instrument is reliable (Hair et al., 2014). KMO
value is 0,802 (> 0,5), the value of Bartlett's Test with Chi-Square was significant
at 654,904 and 0,000. So it can be concluded that factor analysis can be conducted
(Hair et al., 2014). Based on the results of factor rotation with varimax method,
the instrument is a valid measurement tool.

4.4 Hyphotesis Testing

Before testing the hypothesis using ANOVA, testing the assumption of
normal distribution of data is conducted by Kolmogorov-Smirnov. Kolmogorov-
Smirnov test showed that the data are normally distributed with a significance
value of 0,326 (p > 0,05) for the judgment usefulness of the cost allocation
system.

4.4.1 Hyphotesis 1 Testing

The result of hyphotesis 1 testing shows that individuals who have
commitment to the cost allocation system give higher assessment on the selected
system, compared to individuals who do not have commitment. The differences in
judgment usefulness of cost allocation system among committed and
uncommitted individuals is significant at 0,000 (p <0,05) with F-values 86,093.

4.4.2 Hyphotesis 2 Testing

Hypothesis 2 testing was performed simultaneously using two-way
ANOVA. Before hyphotesis testing is performed using two-way ANOVA,
assumption of homogeneity of variance testing should be done. Levene test
showed Levene Statistic value of 1,720 and it is not significant at 0,112 (p >

479
0.05). This result indicates that the observation variance homogeneous, in other
words ANOVA assumptions is met.
Table 2 Descriptive Statistics of Hyphotesis 2
Treatment Commitment
Total
Feedback Commitment No Commitment
Constant Mean = 4,057 Mean = 3,243 Mean = 3,650
positive S.D = 0,835 S.D = 0,761 S.D = 0,888
(+ + + +) n = 14 n = 14 n = 28
Constant Mean = 3,308 Mean = 2,457 Mean = 2,867
negative S.D = 0,904 S.D = 0,499 S.D = 0,830
( ) n = 13 n = 14 n = 27
Mean = 3,647 Mean = 2,846 Mean = 3,246
Total S.D =0,754 S.D = 0,676 S.D = 0,818
n = 56 n = 56 n = 112

Descriptive statistics show individuals who receive constant negative

feedback produces lower judgment of usefulness (2,867) compared to individuals
who receive constant positive feedback (3,650). The difference of judgment
usefulness in cost allocation systems among individuals who receive constant
positive feedback and individuals who receive constant negative feedback is
significance at 0,000 (p < 0,05). This result shows statistically significant support
for the hypothesis 2.

4.5 Research Findings

The results of hypothesis 1 testing confirmed the result of research
conducted by Jermias (2006) that committed individuals to a particular cost
allocation system provides higher judgment usefulness than uncommitted
individuals. In accordance with cognitive dissonance theory (Festinger, 1957),
individual commitment to the cost allocation system leads to the tendency of
individuals to seek the advantages of the chosen system.
The results of hypothesis 2 testing show that individuals who receive
constant negative feedback produces a lower judgment of usefulness compared to
individuals who receive constant positive feedback. This result confirms previous
studies (Cheng et al., 2003, and Ashton and Ashton, 1988) that when people
receive feedback dissonance which is more powerful than the initial decision,

480
individuals trying to reduce the dissonance. The result also provides insight to
Jermias (2006) research that only provides feedback in one period. In this study,
negative feedback was provided in four periods thus emerged dissonance
condition more strongly than the negative feedback provided only once, thus
individuals revised the initial decision or judgment.
Research on the effects of the pattern of sequential information
presentation is mostly conducted in investment (Pinkser, 2007, 2011; Almilia et
al., 2013), audit (Ashton and Kennedy, 2002), and capital budgeting (Buxton and
Rivers, 2014). This study contributes in the field of management accounting that
order effects (both primacy and recency) may occur at the manager's decision to
use a particular cost allocation system.

5. Conclusion, Limitation, And Suggestion

5.1 Conclusion
This study provided some conclusions. First, individuals commitment to
cost allocation system affects the judgment usefulness of cost allocation system.
In detail, the test results show that individuals who have commitment to the cost
allocation system tend to give higher assessment on the chosen system compared
to individuals who do not have commitment. Second, the constant content of
feedback presentation (constant positive or constant negative) affect individuals
judgment of usefulness. In detail, the test results show that individuals who
receive constant negative feedback produce lower judgment of usefulness than
individuals who receive constant positive feedback.

5.2 Limitation
This study has several limitations. First, this study provides same
incentives for all participants, irrespective of the amount of profit gained. Second,
profit information manipulation was pre-determined; participants were only able
to evaluate profit information provided. Third, experiment was conducted once in
a short time thus given periods may not reflect the actual period in real conditions
(i.e monthly or annually).

481
5.3 Suggestions for Futher Research
Limitations of this study may be used as the development of further
research. First, further research could provide incentives based on the
performance of the participants thus participants may internalize the manipulation
given. Second, further research could provide material modifications to the case,
for example, by providing an opportunity for participants to determine cost
product. Determination of cost products by participants could be used as the basis
of profit information received, futhermore it could increase the interest of
participants in the experiment.

REFERENCES

Almilia, L. S., J. Hartono, Supriyadi, dan E. Nahartyo. 2013. Examining the

Effects of Presentation Patterns, Orders, and Information Types in
Investment Decision Making. Gadjah Mada International Journal of
Business, 15 (2): 171-182.
Aronso, E. 1997. Back to the Future: Retrospective Review of Leon Festingers
A Theory of Cognitive Dissonance. The American Journal of
Psychology, 110 (1): 127-137.
Asare, S. K. 1992. The Auditors Going-Concern Decision: Interaction of Task
Variables and the Sequential Processing of Evidence. The Accounting
Review, 67 (2): 379-393.
Ashton, A. H., dan R. H. Ashton. 1988. Sequential Belief Revision in Auditing.
The Accounting Review, 63 (4): 623-641.
Ashton, Robert H., dan Jane Kennedy. 2002. Eliminating Recency with Self-
Review: The Case of Auditors Going Concern Judgments. Journal of
Behavioral Decision Making, 15 (3): 221-231.
Buxton, M., dan R. Rivers. 2014. Escalation of Commitment: The Effects of
Magnitude of Loss, Monitoring and the Presence of an Alternative
Investment. Can a Project 90% Complete be Stopped? Journal of
Accounting & Finance, 14 (5): 72-85.
Cardinaels, E., dan E. Labro. 2008. On the Determinants of Measurement Error in
Time-Driven Costing. The Accounting Review, 83 (3): 735-756.
Cheng, M. M., A. K-D. Schultz, P.F. Luckett, and P. Booth. 2003. The Effects of
Hurdle Rates on the Level of Escalation of Commitment in Capital
Budgeting. Behavioral Research in Accounting, 15: 63 85.
Cooper, J. 2007. Cognitive Dissonance 50 Years of a Classic Theory. SAGE
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Dillard, J. F., N. L. Kauffman, dan E. E. Spires. 1991. Evidence Order and Belief
Revision in Management Accounting Decisions. Accounting,
Organizations and Society, 16 (7): 619-633.
Festinger, L. 1957. The Theory of Cognitive Dissonance. Stanford, Ca: Stanford
University Press.
Gawronski, B. 2012. Back to The Future of Dissonance Theory: Cognitive
Consistency As A Core Motive. Social Cognition, 30 (6): 652-668.
Gudono. 2014. Analisis Data Multivariat. Yogyakarta: BPFE.
Hair, J. F., W. C. Black, B. J. Babin, R. E. Anderson. 2014. Multivariate Data
Analysis. United States of America: Pearson Education Limited.
Hansen, D. R., dan M. M. Mowen. 2007. Managerial Accounting, 8th Ed. United
States of America: Thomson South-Western.
Hogarth, R. M., dan H. J. Einhorn. 1992. Order Effects in Belief Updating: The
Belief-Adjustment Model. Cognitive Psychology, 24 (1): 1-55.
Hoozee, S., dan W. Bruggeman. 2010. Identifying Operational Improvements
during the Design Process of A Time-Driven ABC System: The Role of
Collective Worker Participation and Leadership Style. Management
Accounting Research, 31: 185-198.
Jermias, J. 2001. Cognitive Dissonance and Resistance to Change: the Influence
of Commitment Confirmation and Feedback on Judgment Usefulness of
Accounting Systems. Accounting, Organizations and Society, 26: 141-
160.
Jermias, J. 2006. The Influence of Accountability on Overconfidence and
Resistance to Change: A Research Framework and Experimental
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Kaplan, R.S., dan S. R. Anderson. 2007. Time-Driven Activity-Based Costing: A
Simpler and More Powerdul Path to Higher Profits. United States of
America: Harvard Business School Publishing Corporation.
Kiesler, C. A. 1971. Escalation of commitment in information systems
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Indeks.
Pinsker, R. 2007. Long Series of Information and Nonprofessional Investors
Belief Revision. Behavioral Research in Accounting, 19: 197-214.
Pinsker, R. 2011. Primary or Recency? A Study of Order Effects When
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Behavioral Research in Accounting, 23 (1): 161-183.

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Sri Lanka: A Case Study on Volume, Activity and Time as Cost Drivers.
The International Journal of Accounting, 47: 281-301.
Steele, C. M. 1988. The Psychology of Self-Affirmation: Sustaining the Integrity
of the Self. Advances in Experimental Social Psychology, 21: 261-302.
Theis, J. C., K. Yankova, dan M. Eulerich. 2012. Information Order Effects in
The Context of Management Commentary-Initial Experimental
Evidence. Journal Management Control, 23: 133-150.

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FAA-27

THE EFFECT OF GOOD CORPORATE GOVERNANCE AND

AUDIT QUALITY ON EARNING MANAGEMENT

Nujmatul Laily
Universitas Negeri Malang
nujmatul.laily.fe@um.ac.id

Lutfi Ardhani
Universitas Kanjuruhan Malang
lutfi.ardhani@gmail.com

ABSTRACT

Empirical studies of the existence of earning management have been proven by

prior research but research that focuses on how to reduce the activity of earning
management undertaken by managers still lacking. The purpose of this study is to
examine the effect of good corporate governance and audit quality on earning
management. Good corporate governance are proxied by the existence of bord of
commisioner and audit commitee in Indonesian Manufacturing Public Listed
Companies. Audit quality is proxied by size of accounting firm and dichotomous
variable and assume that big four auditors has higher audit quality than non big
four auditor. Consistent with prior research, earning management is measured by
using discretionary accrual modified by Jones (1995). Population of this research
are 151 manufacturing listed companies and there are 86 public listed companies
were taken as sample. Sampling method used purposive sampling and data
analysis were done by regression. The result showed that (1) Size of accounting
firm have no significant effect on earning management, it indicates that firms
audited by big four or non-big four cant detect the existence of earning
management undertaken by manager; (2) Board of commisioner and audit
commitee also have no significant effect on earning management. It indicates that
good corporate governance proxied by the existence of board commisioner and
audit commitee cant reduce the activity of earning management.

Keywords: Earning management, audit quality, good corporate governance

Introduction

1. Introduction

The financial report is a tool to assess the performance of a company. The

financial statements are also used by companies as a tool to communicate the
condition of the company both financial and non-financial information to external
parties such as investors (shareholders), creditors, government and other

485
interested parties (stakeholders). However, the preparation of financial statements
is often in the spotlight for investors because of the financial statement is a
product of management, which means management has intervened in the
preparation of such financial statements because in the Statement of Financial
Accounting Standard requires companies to prepare financial statements based on
the accrual basis, except for the statements of cash flow.
This requirement implies that the accrual-based financial statements
resulted in better performance measurement as compared to a cash basis. This is
thought to provide the opportunity for the manager to perform earnings
management (earnings management). Earnings management occurs because
discreationary accruals where the manager has discretion in determining the
choices of accounting methods. This is supported by Radzi, et al (2011) which
states that the use of accrual accounting enables managers to make adjustments to
the cash flows to reflect the company's performance is better, while Scott (2009)
defines earnings management as the selection of a manager of accounting policies
or behavior / actions of managers that can affect earnings with a view to achieve
certain objectives related to reporting earnings. Furthermore, Scott (2009) states
that the manager did earnings management motivation based on the bonus plan,
debt covenants, and political costs. Managers are motivated to regulate the
amount of earnings numbers to achieve targeted performance related to the bonus
that will be obtained, minimizing the possibility of violation of the loan agreement
with creditors, as well as minimizing the political costs that may arise as a result
of government intervention.
Scott (2009) added that based on the perspective of financial reporting,
manager of the possibility of using earnings management to produce the expected
profit expectations with the aim of preventing the decline in the company's
reputation and market reaction on the negative share price, which in turn resulted
in failure to achieve investor expectations for the company. For this reason, the
manager tends to polish the financial statements so that financial statements
generated more attractive to investors. Wardani and Kusuma (2012) states that
there are two ways a manager perform earnings management: earnings

486
management is done with the accrual manipulation without affecting cash flow
(accrual earnings management) and earnings management performed by the
manager using real activity that could affect the company's cash flow. When
managers use accruals to earnings management, the income measurement is no
longer reliable as an indicator of a company's performance. Not easily identify
their earnings manipulation makes the issue of earning Management of always
interesting to study. The empirical evidence on the existence of earnings
management practices has been proven by previous studies. Research conducted
by Schiper (1989) who the first considering the real activity management as part
of the earnings management. Roychowdury (2006) found that the company
reported a profit for the low (small) positive by using techniques such as
discounted prices to increase sales, over production which aims to lower the fixed
cost per unit resulting in lower COGS, reduce discretionary expenses in order to
prevent loss of the financial statements and changes negatively on earnings.
Furthermore, Gunny (2005) provides empirical evidence that real activity
management have significant economic consequences on the performance of
companies in the future.
Previous studies focused only on how the behavior of managers in
performing earnings management and economic consequences arising from such
practices so that very little research has focused on how to reduce earnings
management activity undertaken by managers. One factor expected to reduce the
practice is to audit the financial statements by external and independent auditors.
Auditing mediated the interests of the company's financial statements because in
this case the manager has more information about the company than the investor.
This is known as agency theory. Agency theory (agency theory) explain the
relationship between the investors (shareholders) as a principal and as agent
management. Management (manager) is a party contracted by investors to work in
the interests of investors. Because the manager is selected, then the manejemen
must account for all their work to investors. Furthermore, Jensen dan Meckling
(1976) states that agency relationship as a contract under which one or more
person (the principals) engage another person (the agent) to perform some

487
service on their behalf which involves delegating some decision making authority
to the agent. Because of that, they need audit services to examine the financial
statements of the company that aims to mediate the relationship between agents
and principals as well as ensuring the reliability and fairness of the financial
statements made by the company so that investors do not doubt the credibility of
financial statements for decision making.
Audit quality hypothesized to have a correlation with earnings
management practices undertaken by managers. Quality audits defined the extent
to which an auditor can identify and find errors and fraud conducted by the
management. DeAngelo (1981) defines audit quality as the joint probability by
which the auditor can detect material errors or fraud. Results of the research
conducted by Becker, et al (1998) showed that the companies audited by the big
six do earnings management is lower than that of non-big six. This research uses
non big six and big six as a proxy of audit quality and use discretinoary accruals
as a proxy of earnings management. However discretinoary accrual is calculated
using a model of Jones (1991). While in this study, the quality audit which is
proxied by firm size and big four and non-big four. In addition, the calculation of
accruals discretinoary using modified model of Jones (1995) that predicted having
a better prediction with previous models. Audits conducted by big four audit firm
are considered to have a better quality than non-big four because big four have a
better system than non big four and have more resources so the timeliness of audit
also shorter. In addition, the expertise (competence) of auditor at big four is
considered better for the development of human resources (knowledge and skills)
are uptodate. This is supported by Dinuka and Zulaikha (2014) which proved that
firm size significantly and negatively related to earnings management. However,
in contrast to research conducted by Radzi, et al (2011), which failed to prove the
correlation between firm size with earnings management so that the study sought
to reexamine the inconsistency of results of such research. Based on these
descriptions, it is hypothesized as follows:
H1: There is a significant effect audit quality on earnings management

488
 Good Corporate Governance (GCG) is always an interesting topic for
discussion. Good Corporate Governance (GCG) is the guiding principle to control
the company in providing accountability to investors and stakeholders. NCG
(2006) explains that good corporate governance (GCG) is one of the pillars of the
market economy and is closely related to the good faith of the companies that
execute them or to the business climate in a country. Implementation of GCG
encourage the creation of healthy competition and a conducive business climate.
Board of Commissioners is a component of the audit committee / organ
companies that can support and ensure effective implementation of GCG well.
Furthermore, the NCG (2006) explains that the company's board of directors as
the organ in charge and collectively responsible for overseeing and advising the
Board of Directors and ensure that companies implement GCG.
The composition of the board of commissioners which there are
independent commissioner allegedly has particularly significant effect on earnings
management. The presence of independent directors is expected to have an
important role to ensure the implementation of good corporate governance
practices so that the existence of independent commissioner will reduce earnings
management practices conducted by a manager. Results conducted by Hasan and
Ahmed (2012) found that the presence of independent directors have a significant
negative effect on earnings management. This shows that the supervisory function
carried out by independent commissioners can reduce opportunistic attitude of the
management to manipulate financial statements to perform earnings management.
Based on the description it is hypothesized as follows:
H2: There is a significant effect composition of board of
commissioners on earnings management
The audit committee is one of the organs of the company in addition to the
board of commissioners. NCG (2006) states that the Audit Committee assists the
Board of Commissioners to ensure that: (i) the financial statements are presented
fairly in accordance with generally accepted accounting principles, (ii) internal
control structure is implemented, (iii) the implementation of internal audit and

489
external audit conducted in accordance with applicable standards, and (iv) the
follow up audit findings by the management.
The existence of the audit committee is very important to protect the
interests of shareholders. If the audit committee perform its role properly in the
monitoring activities of management in preparing the financial statements, the
quality of financial statement will be increased so that the existence of an audit
committee will have a negative influence on earnings management. This means
that their audit committees can reduce opportunistic attitude of a manager to
manage earnings. Results conducted by Hasan and Ahmed (2012) showed that the
presence of audit committees have a significant negative effect on earnings
management. Thus hypothesized as follows:
H3: The audit committee has a significant influence on earnings
management

2. Method
This research is categorized as explanatory research that focuses on the
disclosure of a causal relationship between the independent variables and the
dependent variable. The data used in this research is secondary data obtained from
the website of the Indonesia Stock Exchange in the form of audited financial
statements starting in 2014. The population was all manufacturing companies
Indonesi Stock Exchange listing in 2015 as many as 151 companies. The unit of
analysis of this research is a manufacturing company's financial statements.
Sampling method is purposive sampling, that the sampling method with a specific
purpose which the researchers have established certain characteristics beforehand.
The independent variables in this study is the quality of the audit consists of audit
quality and Good Corporate Governance (GCG). Audit quality was measured by
using a dummy variable that is 1 if the company audited by the big four
accounting firm and the value 0 if the companies audited by non big four while
GCG proxied by the composition of the board of directors and audit committee.
The composition of the board of commissioners which there are independent
directors. Measurement of the composition of the board of commissioners use the

490
ratio scale by counting the number of commissioners in the respective companies
while measuring the audit committee also use the ratio scale by counting the
number of audit committee of the company. Earnings management using the
modified Jones model (1995).

3. Results and Discussion

The first hypothesis which states that the quality of audits performed by
the big four accounting firm and non big four are not shown to have a significant
effect on earnings management (earnings management). It can be seen from table
1 which shows that the value of sig t> p value (0.566> 0.05), which means that the
first hypothesis is rejected. Next, the second hypothesis studies suggest that there
is significant influence the composition of the board of commissioners of the
earnings management is also unproven. It is also often can be seen from Table 1
which shows that the value of sig t> p value (-0.645> 0.05), which means that the
second hypothesis was also rejected. The latter hypothesis can not prove the
existence of audit committee effect on earnings management. It can be seen by
Table 1 which shows that the value of sig t> p value (-0.090> 0.05). This means
that the audit committee has no influence on earnings management.
Table 1
Results of Hypothesis
Independent variable B t Sig
X1 1.041E26 .576 .566
X2 -3.769E24 -.090 928
X3 -2.163E26 -.645 .521
Dependent variable : Earning management
R square : 0,008
F :0,225

Based on the analysis, this study can not prove the existence of significant
influence audit quality proxied by the big four and non big four to earnings
management. That is, the audit of financial statements both by the big four and
non big four are not shown to detect the presence of earnings management
performed by the manager / management. This indicates that audit quality is not
only determined by the size of accounting firms and not necessarily affiliated with

491
big for to detect fraud committed by management. This can happen if the practices
of fraud occurs massively so that the auditor can not detect the fraud, in addition,
it is not the evidence of firm size in detecting earnings management can also be
affected by the audit procedures performed in which the audit is done by basing
the sampling so that there is a possibility samples taken incidentally are samples
that are not material (wrong in taking the sample) so that it is this which is likely
to cause not proven hypothesis of this study. The results support the results of
research conducted by Radzi et al (2011) who also can not prove the existence of
a significant effect on earnings management firm size.
The second hypothesis which states that the composition of the board of
commissioners significant effect on earnings management is also unproven. This
suggests that the presence of independent directors may not prevent the behavior
of managers in managing earnings. This indicates that Good Corporate
Governance has not been implemented to the fullest where independent board that
oversees the management is not able to prevent or reduce earnings management
practices undertaken by the company. Weak internal control system also has an
impact on the implementation of GCG in the company. The results of this study
do not support the results of research conducted by Hasan and Ahmed (2012),
which proves that the existence of independent commissioners lowered earnings
management activity undertaken by managers.
The third hypothesis which states that the audit committee significantly
affect earnings management is also unproven. The audit committee is in charge of
ensuring the reliability and fairness of the financial statements. Their audit
committee is expected to reduce the opportunistic attitude of managers to manage
earnings in order to meet personal desires. The audit committee has a duty to
ensure the reliability and fairness of financial statements prepared by
management. No evidence of the hypothesis of the study indicate that the audit
committee in the company is not able to prevent the occurrence of earnings
management. This may happen if the function of the audit committee is not
working properly or not an independent audit committee as required by the
regulations issued by Bapepam-LK. The possibility of the company just put up an

492
audit committee to meet the new rules issued by Bapepam-LK . The results of this
study do not support the results of research conducted by Radzzi, et al (2012) who
found that audit committees can reduce earnings management practices
undertaken by managers.

REFERENCES

Becker, C., M. DeFond., J. Jimbalvo, and K.Subramanyam. (1998). The effect of

audit quality on earning management.Contemporary Accounting
Research 15(Spring): 1-24.
DeAngelo, L. (1981). Auditor size and audit quality. Journal of Accounting and
Economics 3: 183199.
Dinuka, V.K & Zulaikha. 2014. Analisis Pengaruh Audit Tenure, Ukuran Kap
Dan Diversifikasi Geografis Terhadap Manajemen Laba. Diponegoro
Journal Of Accounting.
Gunny, K. (2005). What are the consequences of real earning management?
Working paper, University of Coloradoat Boulder.
Hasan, S.U & Ahmed, A. 2012. Corporate Governance, Earnings Management
and Financial Performance: A Case of Nigerian Manufacturing Firms.
American International Journal of Contemporary Research
KNKG. 2006. Pedoman Umum GCG Indonesia.
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Malaysia Exchange for Securities Dealing and Automated Quotation.
International Journal of Economics and Finance. Vol.3, No.2, May
Roychowdhury, S., 2006. Earnings management through real activities
manipulation. Journal of Accounting & Economics 42: 335 370.
Schipper, K. (1989). Commentary on earning management. Accounting Horizon
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Scott, William. 2009. Financial Accounting Theory. Person: Toronto
Wardani, D.K & kusuma, I.W. 2012. Is earning management informational or
opportunistic?. Gadjah Mada International Journal of Business. Vol.
14, P.61-75

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FAA-28

INCREASING CASSAVA FARMERS' INCOME

BY CREATING VALUE ADDED OF
CASSAVA AS TAPE AND CHIPS

Ahmad Roziq
Muhamad Saleh
Nur Hisamuddin
Universitas Jember
ahmadroziq@yahoo.com

ABSTRACT
This study aims to discover and prove that by creating added value of cassava as
tape and chips can increase cassava farmers' income. Indonesian government has
food security programs at the same time improving the welfare of farmers. This
study will support and help a Jember regency government to acheive the
Indonesian government programs. Researchers want to continue a previous
research about business feasibility study of foods processing with using cassava as
raw material. In this study, researchers use a survey method and multicase study
with data collection technique through the documentation, interviews and
observations. Data analysis included data collection, data reduction, data display,
verification and conclusion ying and concluded. To improve the quality and
validity of the data, researchers conducted a credibilty test, transferability test,
auditability test and confirmability test. The results of this study concluded that
cassava farmers have benefited in farming cassava, but the profit is very small and
requires a long time of about eight months, so if revenue from the profits of
agriculture cassava is calculated per day then income of cassava farming is not
meaningful or not enough to support the farmer family. Besides, waiting period of
harvest of cassava for 8 months, then it's basically a lot of cassava farmers
unemployed. The cassava farmer who run business in producing tape have
created high added value so as to produce a huge advantage compared to the
profits of farmers of cassava and also compared to the same business which
cassava purchased from other parties / other farmers. The cassava farmer who run
business in producing cassava chips have created a high added value so as to
produce a huge advantage compared to the profits of farmers of cassava and also
compared to the same business which cassava purchased from other parties / other
farmers.
Keywords: farmer, cassava, tape, chips, added value

494
1. Introduction
Indonesia is a country that includes three (3) cassava-producing countries
in the world. In 2014 the production of cassava in Indonesia stood at
23.436.384.00. tons or productivity 233.55 Ku / Ha. In East Java in 2014 had
cassava production rate of 3.635.454.000 tonnes or with productivity 231,39 Ku /
Ha with relative productivity high enough, one of them is Jember. Jember has a
productivity rate of 204.36 Ku / Ha. Production of cassava in Jember is dominated
by a few districts, namely districts Sumberbaru, Sukowono and Tempurejo. In
addition to be a main meal instead of rice, cassava and cassava are also developed
for domestic industry, such as tape, Suwar suwir, chips, tapioca flour until prol
tape. Cassava production in Jember district in 2010 found the number as many as
55 228 tonnes. However, in the next 3 years cassava production has decreased
continuously. In 2014, cassava production increased to 59 733 tonnes. Cassava
production in Jember district dominated by districts Sumberbaru consistently
followed by other districts.
In the mid-2000s emerged a variety of innovative products made from raw
cassava ranging from just chips are packaged in a modern up with brownies made
from tape. Call it Maichi which was grounded in 2011's until now. The chips are
well known for their specifics serving cassava chips with a spicy taste and
attractive packaging. Can be seen from the examples Maichi cassava products
when processed properly and combined with innovative ideas can make cassava
products as excellent product that can be accepted by the public. Here is the
business name of cassava chips production ever in Jember. The following table
shows the companies of cassava chips in Jember. UD Lestari Mandiri, Queen UD,
UD Barokah Jaya, Tera Cuwi, King Chip Gie Zelyn Food Sukses Makmur, Risky
Court. There are 12 businesses or companies engaged in the business of making
cassava. Among them are Super Madu Sari Source Honey Honey Honey King Sae
Sae 86 96 Sweet Sweet Honey Bee Sweet Honey Vela Madu Sari Triangle with a
productive capacity of each business ranging from 2 ton.
For businesses both small enterprises, micro enterprises or medium-sized
enterprises, especially in the agriculture and agribusiness sector stagnated in an

495
effort certainly is not desirable and undesirable. Of course every farmer and
entrepreneur in the field of agribusiness want to improve the business from time
to time. But stagnation and stagnation sometimes venture into something that can
not be avoided, and sometimes even backward steps. Many things can affect
business conditions of farmers and entrepreneurs in the field of agribusiness,
which started flagging market, tighter competition, decreased productivity,
increased production costs and others.
The results of the study Roziq et al (2013) by conducting a survey of
cassava farmers in the district of Pakusari found that the problems faced by
farmers of cassava which are disease caterpillar, lack of capital, difficult market,
poor quality of cassava during the rainy season, the price of cassava low at harvest
and no change or innovation effort and difficulty of access to bank credit. The
results of the study provide advice so that farmers earn more income than crops of
cassava, farmers should develop into a business from raw cassava as cassava
chips and cassava.
Roziq et al continued research in 2015 about the business feasibility
analysis from raw cassava, financing models and marketing strategies for
entrepreneurs cassava farmer in Jember. The study concluded that business
feasibility analysis covering production, marketing and financial aspects of that
business generated from raw cassava as business cassava chips, cassava
businesses and entrepreneurial efforts cassava flour for cassava farmer meets
eligibility and very profitable to run. The findings of the study that in order to
increase the income of farmers of cassava, farmers should develop the business of
planting cassava into businesses in processing cassava raw such as cassava chips,
cassava tape and cassava flour. Farmers of cassava should prioritize business of
tape and cassava chips because it will need little capital but generate huge profits.

1.1 Purpose Of The Study

The Purposes to be achieved from this research are: (a) analyze the value
added of agribusiness in cassava farming into cassava chips and its impact on

496
farmers' income (b) analyze the value added of agribusiness in cassava farming
into cassava tape and its impact on farmers' income

2. Methodology
This case study was conducted through a survey on farmers who have
agricultural businesses cassava, tape production enterprises and enterprises of
cassava chips. Data used in this study of primary data in the form of opinion about
agriculture business cassava farmers, businesses and tape production of cassava
chips. Data were collected by conducting structured interviews with farmers and
directly observing the production process tape and cassava chips production
location. Analysis of the data in this study using Miles and Huberman approach
consist of (a) data collection, (b) data reduction, (c) data display and (d)
conclusion drawing / verification.

3. Findings And Discussion:

3.1 Analysis of Cassava Farming and Tape
3.1.1 Analysis of Cassava Farming
Here are the results of the survey, observation and interviews with a
cassava farmer and businessman cassava named Pak Susyanti located in Central
Source RT 07 RW 02, Desa Poler. Agricultural land cultivated one hectare but the
amount of land planted with cassava hectares. The length of time of planting to
harvesting cassava need 8 months with a total production of cassava during
harvest 1.5 tons. If sold by way of weigh Rp. 140.000 / quintal. If the sale to slash
amounth Rp. 1.200.000, paid in cash and by way of estimates. Total sales at
harvest are Rp. 2.100.000 (Rp. 140.000 x 150 quintals) . Yields of cassava was
used alone for cassava production efforts. Number of cassava stem yellow type
planted 1,000 stems / trees with a total cost of cassava seedlings Rp. 100.000.
Others farming cost consist of (a) fertilizer Rp. 180,000, (b) wages for weeding
initial land Rp. 100.000, (c) cost of labor for arranging land Rp. 100.000, (d) cost
of labor of spreading manure Rp. 50.000, (e) cost of labor for planting cassava
Rp. 50.000. and (f) cost of harvest and transport Rp. 300,000.Total cost of

497
cassava production amounted to Rp.880.000. The total sales revenue was Rp.
2.100.000. So that the amount of profit of Rp.1.220.000. If the calculated cost per
kg, the production cost of farming cassava Rp 587 calculated from Rp. 880.000 /
1.500 kg. While the selling price per kg Rp. Rp 1.400 calculated from Rp.
2.100,000 / 1,500 kg. Then the profits of farming cassava per kg Rp. 813
calculated from Rp. 1.400 - Rp. 587.
Based on interviews with Pak Susyanti that the obstacles encountered in
farming cassava, among others, (a) the presence of white caterpillar and (b)
destroyed wild boar (pig). Cassava farm experience difficulty in marketing /
selling. In sales never gained slash at the time not yet harvested cassava. The
farmer never received loans from commercial banks, rural banks or cooperatives.
Although based on the calculation of cassava farming is profitable but Pak
Susyanti would get much more profit if he process cassva became tape and sell
its.

3.1.2 Analysis of Cassava Tape

Based on the interview Pak Susyanti, at the same survey and observations
of production and processing of cassava into a tape obtained information that the
calculation of the cost of the process of making cassava both derived from farm
crops of cassava and cassava purchases from other farmers. The raw material
comes from the tape business cassava crops of 1.5 tons at a cost of Rp. 880.000
and if sold at Rp. 2.100.000 during the planting period of 8 months. However,
because the production of tape a lot, then the need for raw materials also obtained
by purchasing from other farmers were 6 quintals or Rp. 840.000. If compared
with cassava supplied from the crop and by buying cassava from other growers,
Pak Susyanti have advantages in raw material costs or experience the efficiency
with which the production cost of cassava farmer Rp. 880.000. Pak Susyanti gain
of 1.5 tons while the purchase cost of raw materials amount to Rp. 840.000. Pak
Susyanti only received cassava number 6 quintals, or if the count is calculated by
the sum of Rp. 880.000 to buy cassava then Pak Susyanti only got 6 quintal 29 kg
of cassava that is by counting from (Rp. 880.000 / Rp. 840.000) X 6 quintals. If

498
calculated from planting cassava production costs per kg Rp. 587 and the
purchase cost of cassava per kg to Rp 1.400 is calculated from the amount of the
purchase of Rp. 840.000 / 600 kg, in order to produce the tape of cassava from the
crop itself obtain the efficiency of raw material per kg of cassava Rp 813
calculated from Rp.1.400 - Rp. 587.
The production capacity of tape owned Pak Susyanti at 6 kw per day, or
180 kw per month. Trade mark of cassava named "Grup Tape Manis". Total cost
of cassava production 6 quintals of cassava to 325 kg tape (tape requires a ratio of
1 kg 1.85 kg yam) is required in addition to the cost of raw material costs cassava
Rp. 200.000 or fees other than the process of cassava to produce 1 kg of tape
requires a processing fee of Rp 615 was calculated from (200.000 / 325 kg tape).
When calculated the cost to produce 1 kg of cassava required processing fee of
Rp. 333 for processing into cassava is Rp 200.000 / 6 quintals (600 kg cassava). If
cassava from the crop itself Rp. 587 kg of the total production cost per kg of
cassava tape Rp. 920 is calculated from the cost of Rp. 333 plus yields itself Rp.
587 kg. To produce 1 kg of tape needed 1.85 kg of cassava crop itself and costs
Rp. 615 tape the production cost per 1 kg Rp. 1700 is calculated from the cost of
Rp. 615 plus the cost of cassava Rp. 587 / kg x 1.85 kg = Rp. 1,085. But if
cassava is obtained from the purchase of the tape outside the production cost per 1
kg Rp. 3165 is calculated from the cost of Rp. 575 plus the cost of cassava Rp.
1,400 / kg x 1.85 kg = Rp. 2590.
If cassava is obtained by buying from other farmers, the production
process is produced tape tape as much as 3.25 quintals per day, or 325 kg per
quintal with a selling price of Rp. 430,000 or Rp. 4.300/ kg of the obtained results
tape sales of Rp 1.397.500, -. In a day of production Pak Suyanti make a profit of
Rp 368. 875 calculated from the total sales of Rp. 1.397.500.- reduced production
cost tape Rp 3.165 per kg x 325 kg = Rp. 1.028.625 or per 1 kg tape makes a
profit of Rp1.135 of the selling price per kg Rp. 4.300 - the cost of production per
1 kg Rp. 3.165.
But if the raw material is obtained from the harvest cassava cassava farmer
himself then with the production process of the tape produced a tape as much as

499
3.25 quintals per day, or 325 kg per quintal with a selling price of Rp. 430.000 or
Rp. 4.300 kg of the obtained results tape sales of Rp 1.397.500, -. In a day of
production Pak Suyanti make a profit of Rp 845.000 was calculated from the
amount of sales of Rp. 1.397.500.- reduced production cost tape. Rp 1.700 per kg
x 325 kg = Rp. 552 500 or per 1 kg tape makes a profit of Rp 2.600 from the
selling price per kg Rp. 4.300 - the cost of production per 1 kg Rp. 1.700.
Based on this calculation, it can be concluded that Pak Susyanti can create
value added of cassava as tape and very profitable if the raw material in the
production of cassava own rather than buy cassava from farmers or other parties.
When compared with a profit of cassava farming per kg Rp. 813 with a waiting
period of 8 months with production of tape, Pak Susyanti has created value
added or profit of Rp. 2.600 per kg tape with gains each day. If converted into 1
kg of cassava in the ratio of 1 kg tape requires 1.85 kg of cassava, the profitability
of tape per kg of cassava is Rp. 1405 is calculated on the profit per 1 kg tape Rp.
2.600 / 1.85 kg of cassava. It is concluded that Pak Susyanti as cassava farmer
become producer of tape have created value added per kg Rp. 592 calculated from
Rp. 1.405 - Rp. 813.

3.2 Analysis of Cassava Farming and Chips

3.2.1 Analysis of Cassava Farming
Based on the survey, observation and interview with a farmer and
businessman cassava chips cassava named Pak Joko Santoso has agricultural land
planted with cassava more than hectare. The length of time of planting to
harvesting cassava 8 months with a total production of cassava during harvest as
much as 2 tons. If sold by way of weigh price of Rp. 120.000- / quintal. If the sale
to slash Rp. 1.800.000, - but all harvesting costs are borne by the buyer.
Yields of cassava used alone for the production of cassava chips business.
Number of cassava stems planted varieties of cassava tales about 2,000 stems /
trees with a total cost of Rp 100.000. Others cost of cassava farming consist of (a)
manure 40 bags amount Rp. 200,000, (b) freight of seeds and manure amont Rp.
210,000, (c) fertilizer (urea and NPK) amount Rp. 200,000, (d) labor of weeding

500
land amount Rp. 210,000, (e) labor of cassava seedlings amount Rp. 120,000.
The total cost of cassava production is about 2 tons of Rp.1.040.000 and sold at a
price of Rp. 120,000 / quintal x 20 quintals) amount Rp. 1.800.000, -. So the total
profit of cassava farming Rp.760.000, its calculated from total sale revenue Rp.
1,800.000 the production cost of farming cassava amount Rp.1,040.000. the
production cost of farming cassava / cassava per kg amount Rp 520 calculated
from Rp.1.040.000 / 2,000 kg. While the selling price per kg Rp. 900 calculated
from Rp. 1,800,000 / 2,000 kg. So total profit of farming cassava per kg Rp. 380
calculated from Rp. 900 - Rp. 520.
Based on interview with Pak Joko Santoso that the obstacles encountered
in farming cassava is relatively nothing because it is not too difficult. Pak Joko
Santoso not require funds received from outside sources eg bank loans. Cassava
farming no trouble marketing / selling. Farming cassava does not require the help
of funds from the credit / financing banks and also never received cassava
business loans from commercial banks, rural banks or cooperatives.

3.2.2 Analysis of Cassava Chips

Based on the survey, observation and interview with a farmer and
businessman cassava chips cassava named Pak Joko Santoso noted that costs of
materials needed for the production of cassava chips per day needs about 70 kg to
as much as 225 packs of cassava chips.
Table 1
Costs of Material of Cassava Chips
No. Description Price (Rp)
1 Cassava raw 70 kg @ Rp. 1.200 84.000
2 Herbs and spices 23.000
3 Salt 2.000
4 Cooking oil 7 litre @ Rp. 12.000 84.000
Source: field data

501
 The following details the use of the depreciation cost of equipment for
producing cassava crackers per day needs about 70 kg to as much as 225 packs of
cassava chips.

Table 2
Depreciation Cost Of Equipment
No Describtion Total Price Period of Depreciation Penyusutan
(Rp) usage /Month (Rp) /day (Rp)
1 Knife 2.917 97
7 70.000 2 years
2 Large skillet 3 years 9.722 324
2 350.000
3 Basket 2 years 2.000 67
8 48.000
4 Cormorant 4 years 6.250 208
2 300.000
5 Trades tool 1 60.000 1,5 years 3.333 111

Total 24.222 807

Source: filed data
The following details of others cost associated with the production process
of cassava chips per day needs about 70 kg into cassava chips as much as 225
packs weighing 90 grams /pack
Table 3
Others Cost Associated with Production Process of Chips
No. Description Per Month (Rp) Per Day (Rp)
1 Electricity costs 10% of household needs 8.000 267
2 Firewood 450.000 15.000
3 Labor costs 2 persons Rp.1.200.000 per
2.400.000 80.000
month
Source: field data

Here is a breakdown of costs / cost of goods sold per day of production of

cassava chips require about 70 kg of cassava into cassava chips as much as 225
packs weighing 90 grams per plastic packaging.

502
 Table 4
Costs of Goods Sold
No. Description Per day (Rp)
1 Materials cost 193.000
2 Labor cost 80.000
3 Overhead cost:
- Firewood cost 15.000
- Electricity cost 267
- depreciation cost 807
- Plastic packaging roll 23.000
4 Total Cost Of Goods Sold Rp. 312.074
Source: survey data
Based on the results of the calculations in Table 4 cost of goods sold
amounted to cassava chips. Rp. 312. 074 with the amount of packaging as much
as 225 packaging weight per package of 90 grams so that cost of goods sold per
package of Rp. 1.387. Sales of cassava chips per day to spend on average cassava
as much as 70 kg to 225 plastic packaging plastic packaging at a price per Rp.
2,000 the number of sales per day Rp. 450,000. So the advantages of production
of cassava chips per day Rp. 137. 926 calculated from sales of Rp. 450,000 minus
the cost of goods sold amounted to Rp. 312 074. Profit per plastic packaging Rp.
613. Compared in ratio needs 70 kg of cassava per day to produce a total profit of
Rp. 137 926 then gains the use of 1 kg of cassava Rp. Calculated from Rp 1,970.
137 926/70 kg. When compared with the advantages of producing cassava only
Rp. 380 per kg of cassava for 8 months of planting and processing gains further
into cassava chips Rp. 1,970 Pak Joko Santoso then farmers have created value-
added cassava Rp. 1,590 per kg of cassava per day.
In the tape business, each 1 kg of cassava has created an value added of
Rp. 592 while in the cassava chips business, each 1 kg of cassava has created an
value added of Rp.1.590. So cassava chips business has created an value added 3
times greater than the tape business. The first best business with using raw
cassava for cassava farmers is cassava chips business because it is very

503
profitable, easy to process and requires a little working capital and investment and
affordable for farmers because it can be processed with simple equipment /
traditional and can utilize the equipment in the family kitchen; (4) The second
best business with using raw cassava for cassava farmers is tape business
because it is very profitable, easy to process and requires little working capital and
investment, but greater than the cassava chip business because it can be processed
with simple equipment / traditional; (5) Central Government and Local
Government (provincial and district) and other related parties shall assist
wewujudkan cassava farmer entrepreneurs by conducting cooperation and
coordination with relevant parties to create an entrepreneurial farmer from raw
cassava through regulations and policies that support the growth of an
entrepreneurial farmer, aid financing, training, mentoring and marketing and (6)
Successful entrepreneurs for cassava farmer can be an example for other farmers
to make a new effort made from cassava raw and supported and assisted by the
Central Government and Local Government and other related parties, it can create
food security while farmers get richer.

4. Conclusions And Recommendations:

4.1 Conclusions:
Based from the results of the study, the researcher arrived at the following
conclusions: (1) Problems faced by cassava farmers are diseases such as white
caterpillar, wild boars destroyed, soil conditions and irrigation; (2) Cassava
farmers have gained an advantage in cassava farming business the benefits are
small and require a long time of about eight months, so if revenue from cassava
farm profit is calculated per day then pengasilan of cassava farming is not mean or
not enough to feed a family of farmers , besides, with the harvest waiting period
for 8 months, then it's basically a lot of cassava farmers unemployed.
(3) The cassava farmers who have process their cassava become tape has been
creating high added value so as to produce a huge advantage compared to the
profits which gained farmers from cassava farming and if cassava obtained /
purchased from other parties / other farmers.

504
(4) The cassava farmers who have process their cassava become chips has been
creating high added value so as to produce a huge advantage compared to the
profits which gained farmers from cassava farming and if cassava obtained /
purchased from other parties / other farmers.
(5) In the tape business, each 1 kg of cassava has created an value added of Rp.
592 while in the cassava chips business, each 1 kg of cassava has created an value
added of Rp.1.590. So cassava chips business has created an value added 3 times
greater than the tape business.

4.2 Recommendations
Based from the conclusions, the following are recommended: (1) the
farmers of cassava should have efforts to create value added so that business
profit can be increased, reducing the period of unemployment, provide jobs,
increase incomes and welfare for farmers cassava ; (2) The cassava farmers
should not only planting cassava and sell cassava crops but should have tried to
make the business of processing cassava for example, cassava chips and tape; (3)
The first best business with using raw cassava for cassava farmers is cassava
chips business because it is very profitable, easy to process and requires a little
working capital and investment and affordable for farmers because it can be
processed with simple equipment / traditional and can utilize the equipment in the
family kitchen; (4) The second best business with using raw cassava for cassava
farmers is tape business because it is very profitable, easy to process and requires
little working capital and investment, but greater than the cassava chip business
because it can be processed with simple equipment / traditional; (5) Central
Government and Local Government (provincial and district) and other related
parties should assist cassava farmer by conducting cooperation and coordination
with relevant parties to create an entrepreneurial farmer through regulations and
policies that support the growth of an entrepreneurial farmer, aid financing,
training, mentoring and marketing and (6) Successful entrepreneurs for cassava
farmer can be an example for other farmers to make a new effort made from
cassava raw and supported and assisted by the Central Government and Local

505
Government and other related parties, it can create food security while farmers get
richer.
REFERENCES

Bank Indonesia (2006). Indonesian Economic Report. Jakarta : www.bi.go.id.

Bank Indonesia (2010). Pattern Syariah Financing System for Small Business.
Cassava Flour Processing Business.www.bi.go.id
Departemen Koperasi (2011). Criteria for Micro, Small and Medium (UMKM).
www.infoukm.wordpress.com/
Dinas Koperasi dan UMKM (2015). Jember is known as one of largest producers
of cassava products especially tape and suwar suwir. http://www.umkm-
jember.web.id
Husnan, Suad, Enny Pudjiasturi (2012). Financial Management. UPP.STIM
YKPN.
Krisnamurti, B. (2005). Microfinance Development for Development in Indonesia
. Media Information Rural Bank. Edition IV Maret 2005.
Miles Matthew B; Huberman Michael A.(1984). Qualitative Data Analysis, A
Sourcebook of New Methods. Sage Publications, Beverly Hills London,
1984.
Nainggolan, M Hadi (2012). Evaluation of Feasibility Studi.
www.banghadinainggolan.com
Roziq, Ahmad, Nur Hisamuddin, Nining IkaWahyuni, Indah Purnamawati (2013).
Salam Financing Model for Cassava Farmer and Small Business Using
Raw in Jember Regency. Journal of JAUJ.LPPA.Jember,Pages. 22 32.
Roziq, Ahmad, Muhamad Saleh Nur Hisamuddin (2016) Analysis Of Business
Feasibility Of Cassava Chips And Cassava Tape, Financing And
Marketing Strategies For Entrepreneurial Cassava Farmers in Jember
Regency Journal of Arts, Science & Commerce Vol. VII, Issue 3, July
2016
Sugiyono (2012). Understanding of Qualitative Research. ALABETA.
Tjiptoadinugroho,R, (1994). Banking Credit Problems. Jakarta: PT. Pradnya
Paramitha.
Umar Husein (2003). Study of Business Feasibility. Edition 2. Gramedia. Jakarta.

506
SHA-01

MEASURING THE PERFORMANCE OF ISLAMIC BANKING WITH

SYARIA VALUE ADDED APPROACH: IMPLEMENTATION OF
SYARIA ENTERPRISE THEORY IN ISLAMIC BANKING IN
INDONESIA

Sri Wahyuni
Email: yuni_7067@yahoo.co.id
Pujiharto
Emai: p_harto@yahoo.co.id

ABSTRACT

This study aims to measure the performance of Islamic banking in Indonesia using
Syaria Value Added Approach, so implementation of syariah accounting can do
exactly, corresponding with Syaria Enterprise Theory. The sample of this study is
Islamic Banking, with research period 2010-2014, selected with purposive
sampling. Financial performance was measured is return on asset (roa), return on
equity (roe), net profit to productive asset (nppa) and net profit margin (npm).
Spesific targets to be achieved in this research is drafting syaria value added
reporting on Islamic banking and then be used as syaria based performance
assessment to be applied to Islamic banks in Indonesia. Analysis tools being
used is paired sample t test. The result of study show that there are a significant
differences fiancial performance of Islamic banking that measure with income
statement approach and financial performnce of Islamic banking that measure
with syaria value added statement approach. The result of this study provide a
significant contribution to developing theory, that is syaria enterprise theory. For
manager of Islamic banking, Bank Indonesia and Syaria Financial Standard
Board, the result of study can used to create policies related to measurement of
Islamic Banking performance.

Keyword: performance, Islamic banking, syaria value added approach, syaria

enterprise theory

1. Introduction
Development of Islamic banks grew rapidly along with the release of the
latest regulations specifically regulating Islamic banking, the Law No.21 of 2008.
Islamic Bank is a financial institution/bank operations and products are developed
based on the Qur'an and Hadith. Wahyudi (2005) defines the Islamic bank as a
financial institution which engages provide financing and other services in

507
payment traffic and circulation of money that operation adapted to the principles
of Islamic law.
The main principle that must be developed by Islamic banks in improving
financial performance is the ability of Islamic banks provide for optimal results to
customers. It shows the ability of Islamic banks in managing the fund. Islamic
bank's financial performance assessment can be done by analyzing the financial
statements are issued. Financial performance analysis can be done by measuring
the level of profitability of Islamic banks is concerned, using four ratio are Return
on Assets (ROA), Return on Equity (ROE), Net Profit Margin (NPM), and
Operational Efficiency Ratio (REO). Quality financial performance of Islamic
banks, it can be seen how much financial performance ratios obtained. The greater
the ratio obtained means ability of Islamic banks in the benefit to customers,
better results, and vice versa if the acquisition of financial performance ratios are
small, it means that ability of Islamic banks provide profit sharing to its
customers, lower.
However, the fact remains that the current users of financial statements,
such as: customers, governments, communities and management are faced with
the challenges of the financial statements of Islamic banks can not be the basis of
analysis of financial performance of Islamic banks are appropriate, given the
financial statements of Islamic banks, as contained in statement of financial
Accounting Standards (SFAS) No.101, only contains a number of elements of
financial statements as elements in a conventional bank financial statements,
coupled with some reports as Stement of Changes in Unrestricted Investment
Fund, the Sources and Uses Zakat Fund and the Sources and Uses Benevolent
Fund. Also in the Framework for the Preparation and Presentation of Financial
Statements Islamic Bank stated that the financial accounting purposes of Islamic
banks is the provision of financial information plus about information relating to
Islamic principles, which are characteristic of Islamic banks. If studied further, it
can be concluded that the objective of financial statements of Islamic banks is still
oriented to the direct interests of stakeholders.

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 Given the Islamic bank is a business unit that is based on Islamic law, it
should be used financial accounting is sharia accounting. Syaria accounting
purposes are not only limited to providing information related to the economic
decision-making, but also as disclosed by accounting experts syaria, syaria
accounting purposes is mu'amalah namely Amar Ma'ruf Nahi Munkar, justice and
truth, social beneficiaries, cooperation, remove usury, and encourage charity.
Thus, the objectives of sharia accounting emphasizes the importance of providing
information for calculating zakat, the administration of justice and the report of
activities contrary to the sharia. These objectives need to be done in order to meet
the responsibility of the bank to direct stakeholders and indirect stakeholders
(Wahyudi, 2005).
Furthermore, in relation to compliance with the accountability of the
financial statements of Islamic banks, Baydoun and Willet (2000), an expert
report recommending Syaria Value Added Statement, in addition to the financial
statements of Islamic banks. According to a report value added Baydoun and
Willet (2000), is a financial statement which emphasizes the principles of full
disclosure and will be encouraged moral and ethical awareness. Because the
principle of full disclosure is a reflection of the sensitivity of the process
management of business activities of the parties involved in it. Sensitivity was
realized in the form of presentation of accounting information through a more
equitable distribution of income. Report their added value has changed
mainstream accounting purposes of decision making shifted to social
responsibility, which is in line with sharia accounting purposes.
Based on explanation above, this research is important to do, because the
application of enterprise theory in Islamic banks will encourage the fit between
the goals and objectives of sharia accounting practices of human life as a servant
of God. By applying sharia value added approach will obtain real information
about the company's value, the precision and the accuracy of the values and
cooperation in it, so that the resulting financial performance can be measured in
real terms. The urgency of this research are: First, during the Islamic bank's
financial information as defined in SFAS No. 101 in 2007 did not fully

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correspond to the characteristics of Islamic banks, because it only contains the
elements as well as elements that exist in conventional banks, and some additional
reports such as the Statement of Changes in Unrestricted Investment Fund, The
Sources and Uses of Zakat and The Sources and Uses Benevolent Fund.
Implicitly, the standard uses the concept of entity theory is based on the values of
capitalism and utilitarianism in the concept of ownership and management of
business entities. Of course, this concept is not in accordance with Islamic
principles. By applying Sharia Enterprise Theory in Islamic banks are expected to
Islamic principles can be applied correctly. Second, during this time BI measure
the performance of conventional-based Islamic banking, which is based on the
profit/ operating results achieved whose information is obtained from the
Financial Income Statements. Whereas conventional performance appraisal is not
appropriate when applied to Islamic financial institutions, because it is not in
accordance with Islamic principles. Therefore, as an attempt to apply the
principles of sharia in Islamic banking in order to improve the sustainability of its
business and improve its competitive advantage compared with conventional
banks, it is necessary the application of Sharia Enterprise Theory with
performance assessment model based on Sharia Value Added Approach. The
application of sharia enterpresise theory with a model of performance
measurement to Sharia Value Added Approach is expected to provide a
comprehensive performance information sharia-based Islamic bank in Indonesia.
Third, this study will examine the differences financial performance of Islamic
banks between income statement approach and sharia value-added approach.
These results will provide information of financial performance of both
approaches. Fourth, with the drafting of Islamic Bank Syariah Value Added
Reporting, the responsibility of the bank to direct stakeholders and indirect
stakeholders are met.

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2. Literature And Development Hypothesis
2.1 Sharia Enterprise Theory
The development model of Sharia Value Added Approach is based on
Sharia Enterprise Theory (SET) is expressed by Triyuwono (2002), which was
developed based on the metaphor of zakat character balance. SET is not seated
human as the center of everything as it is understood in antrosentrisme, but put
God at the center of everything. God becomes the center of the return of human
and the universe. Therefore human on this earth only as a representative of God
which has consequences obedient to God's laws, so welfare solely concentrated on
stakeholders. Zakat (which then becomes a metaphor of zakat) implicitly contains
egoistic-altruistic values, material-spiritual, and individual-worshipers. The
consequences of the receipt of enterprise theory sharia as the basis for the
development of sharia accounting is the recognition of income in the form of
added value instead of income in terms of profit as adopted in the entity theory.

2.2 The concept of Value Added Approach

Value Added Statement (VAS) or Statement of Value Added Accounting
is also related to Human Resources Accounting and Employee Reporting
especially in terms of the information presented. Value Added Statement is
resolved lack of information presented in the primary financial statements,
Balance Sheet, Income Statement, and Cash Flow. Because of all these reports
failed to provide information regarding: 1) The total productivity of the company;
2) Share of all stakeholders or team members who participate in the management
process, namely: shareholders, creditors, employees, society and government.
VAS seeks to address this deficiency in addition to providing information
about the compensation given to employees and their stakeholders against other
enterprise information. If the conventional financial statements emphasizing its
information on earnings, the VAS emphasis on generating wealth. Due to
shareholder returns (capitalists) usually only describe the rights or interests of
shareholders alone is not the whole team involved in the activities of the
company.

511
 Value added is the increase in value of the wealth generated by the
productive use of all the resources of the company by the whole team were there
including the owners of capital, employees, creditors, and government. Value
added is not the same as profit. Profit show income for shareholders while the
value-added measure increased wealth for all stakeholders.
VAS is an alternative to the income statement in conventional accounting.
Baydoun and Willet (2000) explains that VAS is a financial statement that is
applying the principles of full disclosure and driven by moral and ethical
awareness. Because the principle of full disclosure at least reflect the sensitivity of
the process management of business activities of the parties involved, so that the
sensitivity is embodied in accounting information through a more equitable
distribution of income. This means that the mainstream VAS company has
changed its accounting purposes of decision making vague shifted to social
responsibility. VAS concept is one proof of reporting that describes the values of
Islam.
By applying the VAS alignment with Islamic principles of justice,
honesty, full disclosure and accountability can be realized. Furthermore, VAS is
constructed as a manifestation of the unity of purpose companies not only in the
social, but also accountability to the Creator. That is the purpose of the financial
statements into a media management liability vertically and horizontally. With
goal setting it is expected that there is no bias between the purpose and practice of
accounting with the purpose of our life as a servant of God.

2.3 Hypothesis Development

This research hypothesis formulated based on the conceptual theory and
also based on empirical findings in previous research.
The hypothesis to be tested in this study are as follows:

2.4 Hypothesis Difference Return On Asset (ROA)

Return on Assets (ROA) shows the company's ability to generate profits,
of all the assets held. The greater the ROA ratio of a bank, the greater the level of

512
profit that the bank achieved and the better the bank's position on the use of assets.
Fauzi research results (2012) states that quantitativly Syaria Value Added
Approach had higher ROA ratio despite the small difference compared to the
Income Statement Approach. While Wahyudi (2005) proved that the ROA ratio
by using income statement approach in a healthy condition. While ROA using
value-added approach showed an increase, this is because in the calculation of
value added influenced by their cost of inputs and depreciation. Based on the
description a bove, then formulated the following hypotheses:
H1: There are significant differences in ROA ratio Islamic bank when analyzed
with income statement approach and syaria value-added approach.

2.5 Hypothesis Difference Return On Equity (ROE)

Return on equity is the ratio used to measure the ability of banks to earn
profits and overall operational efficiency through the use of its own capital. This
ratio is obtained by dividing the profit for the year by the total capital. ROE is an
important indicator for shareholders and potential investors to measure the ability
of banks to earn net income attributed to the dividend payment. The higher the
ROE, the higher the profits from the company so that bank profitability is getting
better (Rahmawati, 2008).
In Fauzi study (2012) show that quantitatively Syaria Value Added
Approach has a higher ROE ratios despite the small difference compared to the
Income Statement Approach. While on Kartika study (2013) concluded that the
difference in the application of the theory used in the income approach and the
added value causes the result of financial performance analysis ROE showed
different results in terms of quantity. So the acquisition using a value-added
approach shows the results of analysis ratios greater financial performance
compared to using the income approach. Based on the above description, then
formulated the following hypotheses:
H2: There are significant differences in the ratio ROE Islamic bank when
analyzed with the income statement approach and syaria value-added
approach.

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2.6 Hypothesis Difference Ratio of Net Income and Total Assets
Profit represents the excess of revenue over expenses during the
accounting period. Profit is not the same as value added. Earnings showed
revenue for the owner of the shares, while the value-added measure increased
wealth for all stakeholders (Harahap, 2006). Understanding earning assets
investment of bank funds both in rupiah and foreign currency, in the form of
loans, securities, interbank placements, investments, commitments and
contingencies in administrative account transactions (Rindawati, 2003). This ratio
is used to determine the ability of banks to manage the funds invested in the total
assets. So that hypothesis is:
H3: There are significant differences in the ratio of total net income to total
productive assets of Islamic bank when analyzed with income statement
approach and value-added statement approach.

2.7 Hypothesis Difference Ratio NPM

Net Profit Margin (NPM) is a ratio used to measure the bank's ability to
generate net income from operating activities substantially. To search for the
magnitude of net profit margin by dividing the amount of net income to operating
income is then multiplied by 100%. The higher the ratio of a bank NPM, it shows
better results. Conversely, if the result of the lower NPM ratio, then shows the
results are getting worse.
Sulastri study (2010), which calculates ratio of NPM based net profit
approach proves that the Islamic bank's ability to generate net income are
increased. This increase is due to increased amounts of revenues and profit, while
NPM ratio calculated with value-added approach, then the calculation is different.
So that the fourth hypothesis to be tested are as follows:
H4: There are significant differences in the ratio NPM Islamic bank when
analyzed with income statement approach and syaria value-added approach.

514
3. Research Methods
The population in this study are Islamic banks operating in Indonesia
during the period of 2012 to 2014. The sampling method in this research is
purposive sampling method, the sampling according to criteria that have been set.
The data used in this research are secondary data from the financial statements of
Islamic banks, which were obtained from sites BI. Financial performance will be
measured include: Return on Assets (ROA); Return on Equity (ROE); Net Income
to Asset Productive (NIAP) and Net Profit Margin (NPM). Step-by-step analysis
is carried out as follows: 1) Calculate the ratio of islamic banking performance
with income statement approach; 2) Develop Syaria Value Added Statement; 3)
Calculate financial ratios are based on Syrariah Value Added Statement, which
has been arranged. 4) Perform descriptive analysis; 5) To test the difference (t-
test); 6). Make conclusions and suggestions for management of Islamic banks.

4. Results And Discussion

The 11 Islamic banks registered in Bank Indonesia, there is one bank that
does not have complete data that were excluded from the sample, so the sample of
this research consisted of 10 BUS with a five-year observation period (2010-
2014) obtained 50 samples of observation. Islamic banking listing the sample of
this study can be found in Appendix 1.

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 Table 1
Comparison of Average Financial Ratios Islamic Bank Statement of Income
Approach (ISA) and the Value Added Approach (VAS) 2010-2014

INCOME STATEMENT APPROACH

Year 2010 2011 2012 2013 2014
ROA (%) 1,54 1,55 1,69 1,58 1,22
ROE (%) 7,57 9,51 12,36 12,63 9,75
LBAP (%) 2,86 2,74 3,16 2,30 0,30
NPM (%) 0,81 0,71 1,40 1,08 0,45
SYARIA VALUE ADDED STATEMENT APPROACH
Year 2010 2011 2012 2013 2014
ROA (%) 3,81 5,71 4,80 5,04 4,60
ROE (%) 17,46 11,41 9,92 12,70 14,70
LBAP (%) 0,029 0,50 0,056 0,053 0,036
NPM (%) 5.75 6,37 5.05 5,69 5,31

Table 1 shows that the ratio of Islamic Banking of 2010-2014 experienced

fluctuating growth, both of which are calculated with the income statement
approach and the value added statement. Based on the income statement approach,
the average ROA ratio increased in 2011, but the increase was not significant, ie
from 1,54% to 1,55%, and then in 2012 to 1,69%, then fell in 2013 and 2014
respectively to 1,58% and 1,22%.
Value Added Approach based approach, the average ROA ratio increased from
3.81% in 2010 to 5,71% in 2011. In 2012 fell to 4,80% and increased again in
2013 to 5,04%. But decreased in 2014 to 4,60%. Volatile development also
occurred on the average ratio of the other, the ROE, NPM and NIAP.

4.1 Descriptive Statistical Analysis Results

Descriptive analysis was intended to look at the characteristics of the data, which
in this study using the average, minimum value, maximum value and standard
deviation of each ratio is calculated with the income statement approach (ISA)
and the syaria value added statement approach (SVASA). The results of

516
descriptive statistical analysis both the income statement and syaria value added
statement approach can be seen in Table 2 below:
Table 2
Descriptive Statistics Financial Ratios Islamic Banking in Indonesia with ISA and
SVASA Period 2010-2014
INCOME STATEMENT APPROACH
ROA ROE NPM LBAP
Mean 1,54 10,36 7,78 0,89
Minimum 0,08 0,44 0,80 0,08
Maximum 4,48 32,87 18,84 2,71
Standard 1,07 9,29 0,89 0,75
Deviasion
SYARIA VALUE ADDED STATEMENT APPROACH
ROA ROE NPM LBAP
Mean 4,49 13,24 0,44 5,63
Minimum 0,24 2,90 0,01 0,08
Maximum 13,34 47,55 0,14 15,54
Standard 3,54 10,71 0,037 4,52
Deviasion

4.2 Hypothesis Test Results

Testing the hypothesis in this study using a paired sample t test. Hypothesis
testing results are shown in Table 3 below:
Table 3
Research Hypothesis Testing Results
Hipothesis Variable t-test Sig (2 tailed) P value Kesimpulan
H1 ROA -4,847 0,001 P<0,05 Difference
(H1 accepted)
H2 ROE -4,467 0,002 P<0,05 Difference
(H2 accepted)
H3 NPM -0,960 0,398 p>0,05 Not difference
(H3 rejected)
H4 LBAP 10,017 0,000 P<0,05 Difference
(H4 accepted)

First Hypothesis Testing Results (H1)

From table 1 value of t on equal variance assumed is -4,847 with a significant
probability of 0,001 <0,05 it can be concluded that the ratio of ROA in the income
statement approach and syaria value added approach is different. This means that

517
the first hypothesis stating that there are significant differences ROA ratio when
calculated with the income statement approach and syaria value added approach,
acceptable. The results of this study support Rifai (2013).
Second Hypothesis Testing Results (H2)
From Table 5.5 on equal variance t values assumed is -4,487 with a significant
probability of 0,002 <0,05 it can be concluded that the ratio ROE in the income
statement approach and syaria value added approach is different. This means that
the second hypothesis which states that there is a significant difference if the ROE
ratios are calculated with the income statement approach and syaria value added
approach, acceptable. The results of this study support Rifai (2013).
Third Hypothesis Testing Results (H3)
From table 5.5 on equal variance t values assumed is -0,960 with a significant
probability of 0,398 <0,05, it can be concluded that the ratio of NPM based
income statement approach and value added approach is the same. This means
that the third hypothesis which states that there are significant differences NPM
ratio when calculated with the income statement approach and syaria value added
approach, rejected. These results do not support the research Rifai (2013).
Fourth Hypothesis Testing Results (H4)
From table 5.5 on equal variance t values assumed is a significant probability
10,017 to 0,001 <0,05 it can be concluded that the ratio NIAP on the income
statement approach and syaria value added approach is different. This means that
the fourth hypothesis which states that there are significant differences NIAP ratio
when calculated with the income statement approach and syaria value added
approach, acceptable. The results of this study support Rifai (2013).

5. Conclusions And Suggestions

The financial condition of Islamic banking in the years 2010-2014 are in
healthy condition, whether measured by income statement and syaria value added
approach.
The development of the average financial ratios of Islamic banks has
fluctuated from year 2010-2014. There are significant difference financial ratios

518
Islamic banking if calculated with the income statement approach and syaria value
added approach. Syaria Value Added Statement can be used as an alternative
method to measure the financial performance of Islamic banks because the
approach is in accordance with Sharia Enterprise Theory, which focuses on the
balance of the world and the hereafter. The managers of Islamic banks should
draw up a value added reporting in addition to the income statement. The users of
financial statements Islamic banks should not base their decision solely based on
performance as measured from the income statement, but also the syaria value
added statement.

REFERENCES

Baydoun, N., dan Willet, R. 2000. Islamic Corporate Report. ABACUS 36 (1):
71-90.
Damastuti, Isnaini Endah. 2010, Analisis Perbandingan Kinerja Keuangan Bank
Syariah dengan Menggunakan Income Statement Approach dan Value
Added Approach. Fakultas Ekonomi Universitas Diponegoro.
Fauzi, Muchamad. 2012. Analisis Perbandingan Kinerja Keuangan Bank Syariah
Dengan Menggunakan Income Statement Approach dan Value Added
Approach. Jurnal Fokus Ekonomi. Vol.7 No. 2 Desember 2012: 58-79.
Harahap, Sofyan S. 2006. Menuju perumusan Teori Akuntansi Islam. Jakarta:
Pustaka Quantum.
Kartika P, Putri. 2013. Analisis Kinerja Keuangan Bank Muamalat Indonesia
dengan menggunakan Pendekatan Laba Rugi dan Nilai Tambah (Survei
Pada PT Bank Muamalat Indonesia). Jurnal Ekonomi dan
Kewirausahaan Vol. 13, No. 2, Oktober 2013: 193-203.
Marie, Atea., A. Nasser dan M.Ibrahim. 2013. Operational, Profitability, Quality
Performance of Dubai's Bank: Pararel Data Envelopment Analysis.
Journal of Management Research, 12 (1): 25-34.
Muhammad. 2005. Manajemen Bank Syariah. Yogyakarta: TrustMedia.
Mulawarman, A.D., Iwan, T dan Unti L., 2006. Rekonstruksi Teknologi
Integralistik Akuntansi Syariah: Syariah Value Added Statement.
Prosiding Simposium Nasional 9 Padang.
Raharjo, Budi. 2007. Keuangan dan Akuntansi. Yogyakarta: Graha Ilmu.
Ratmono, D. 2004. Pengungkapan Islamic Value dalam Laporan Keuangan Bank
Syariah Menurut Paradigma AS Filosofis-Theoritis dan PSAK 59.
Prosiding Simposium Nasional Sistem Ekonomi Islam II. PPBEI,
Universitas Brawijaya Malang.

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Rifai, Agus. 2013. Analisis Perbandingan Kinerja Keuangan Bank syariah
Menggunakan Pendekatan Income Statement (ISA) dan Value Added
Reporting (VAR).
Setyaningsih, Ari dan Utami Setyaningsih S. 2013. Analisis Perbandingan Kinerja
Keuangan Perbankan Syariah Dengan Perbankan konvensional, Jurnal
Ekonomi dan Kewirausahaan, Vol. 13, No. 1, April 2013: 100-115.
Triyuwono, I. 2002. Sinergi Oposisi Biner: Formulasi Tujuan Dasar Laporan
Keuangan Syariah: Journal of Islamic Economics. Vol 4, No.1.
Wahyuni, Sri. dan Iwan, F. 2008. Analisis Faktor-faktor yang Mempengaruhi
Sustainability Ratio Perbankan Syariah di Indonesia. Laporan Penelitian
LPPM UMP
Wahyuni, Sri dan Pujiharto. 2014. The Factors that Affecting Sustainability Ratio
Islamic Banking during the Global Financial Crisis: Empirical Evidence
from Indonesia. Prosiding Seminar International. UIN Kalijaga.
Wiranti, Wahyuni. 2014. Analisis Komparatif Kinerja Keuangan Bank Syariah
Berdasarkan Income Statement Approch dengan Value Sdded Statement
Pada Bank Syariah Mandiri Di Indonesia. eJournal Ilmu Administrasi
Bisnis, 2014, 2 (1): 30-40.
Yudistira, D. 2004. Eficiency in Islamic Banking: an Empirical Analysis on
Eighteen Banks. Islamics Economics Studies, 12 (1): 1-19.

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Appendix 1

Reasearch Samples List

No. Nama Bank Umum Syariah Kode

1. BCA Syariah BCAS

2. BNI Syariah BNIS

3. BRI Syariah BRIS

4. Bank MayBank Syariah BSM

Indonesia

5. Bank Muammalat Indonesia MBS

6. Bank Panin Syariah BPS

7. Bank Syariah Bukopin BSB

8. Bank Syariah Mandiri BSM

9. Bank Syariah Mega Indonesia BMS

10. Bank Victoria Syariah BVIC

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SHA-02

THE FINANCE REPORTING CONSTRUCTION OF MOSQUE:

SHARIA BASIS

Munir Isadi
University of Jember
munirisadia@gmail.com

ABSTRACT
The mosque (Masjid) is a place where all the activities that led to obedience to
Allah SWT are done. The mosque is nonprofit or for-profit organization where the
founding purpose is not solely to make a profit. Implementation of resource
management activities of the mosque becomes the concern, especially in the
implementation of financial reporting of the Mosque. Finance reporting form or
accounting of public funds which are the donors of the existing financial in the
mosque still do not have standard form. This is because the organization reports of
the mosque are different from one another. Organization forum and zakat
management in corporation with IAI are finishing the Standard financial
statements based on Syariah (Sharia Basis). PSAK 45, PSAK 109, and PSAK 101
are a form of construction of financial statements using Sharia-based accounting.
Keywords: Finance reporting of Mosque, Financial Reporting Standards, and
Sharia Basis.

1. Introduction
The mosque is a places of worship or prayer for Muslims, but by looking at
the origin, the word mosque comes from sajada which can be defined as the place
where all the activities that lead to compliance to Allah are done. This is in
accordance with the word of God in the Qur'an Surah Al Jin 72: 82, "Actually
Masjid belongs to God, so do not worship anything other than Allah".
Shihab (1996) says that The Prophet established the Quba mosque when he
migrated from Makkah to Madinah. The Prophet did not build his house in
advance and do not set up a trading center. This illustrates how important the
position of the mosque to the development of a civilization. There are seven
strategic steps carried out by the Apostle in building civil society in Madinah,
namely: 1) setting up a mosque, 2) binding of brotherhood among the Muslim
community, 3) binding agreement with the non Muslim, 4) establishing the

522
political system (shura), 5) laiding the basic economic system, 6) building an
exemplary on the elite of society, and 7) to make the teachings of Islam as a value
system in society.
Mosque has elevated the human essence of humanity as the best servant on
earth. The mosque was built to undermine the myth that the mosque is landfills
and scavengers, because that is what is done by the musrikin to build mosque. The
mosque was built by the munafiqin not to perform its function as a mosque. Allah
describes the condition of the munafiqin according to the word of God In surah At
Tawbah (9): to inflict the believers and to divide between the believers, while
observe the arrival of the those who uphold the religion.
The function of the mosque, according LPPSDM BKPRMI (2000) as: 1. a
place of worship, which as its primary function that the mosque is a sacred place
for activities of worship; 2. a place to study, the mosque serves as a place for
learning, especially religious knowledge is a must for Muslims. Now, there are
educational institutions in the mosque, such as Taman Pendidikan Al Quran,
kindergarten, elementary schools, and other institutions of formal schools, and
Libraries; 3. Coaching for pilgrims, the mosque caretakers opportunity is to build
the mosques congregation so that people get more value with the mosque; 4.
Cultural center of Islam, the mosque is the heart of Muslim life that always flow
value of kindness to the people; community regeneration center, where the
process regeneration As Muslims, many young workers (Youth of Masjid) are
given more opportunities to participate in the process to make them become
professional to continue the struggle and propaganda. The promotion of cadres
should be prepared and centered in mosques since they were children to adults;
Service Centers and mosques were social and economic community. Masjid is
nonprofit or for-profit organizations where its founding purpose is not solely to
make a profit. Implementation of resource management activities of the mosque is
often in the spotlight, especially in the implementation of financial reporting
Masjid. Application of a good financial system will provide the right solution to
reduce suspicion and to doubt the people on organizations and Ta'mirnya Mosque.
The greatest hope with their financial statements properly then the whole wealth

523
or property entrusted by worshipers to the mosque committee or takmir, mosque
will be detected and recorded correctly, so that suspicions pilgrims will disappear
or at least be reduced.
The mosque trustees actually have good intentions by announcing that the
financial statements through Friday forum, bulletin, mosque wall magazine or
other sheets, but the report - a report prepared by the board has not provided full
or complete picture of the organization's statement of financial position of the
mosque. The financial statements of the mosque only display income and
expenses not attach any of the assets or property of the mosque organization.
Many cases of loss of assets or property caused due to poor record in keeping
mosques financial statements, so that the wealth of mosques reduced and even
disappeared. Examples of events that happened in Masjid Jamik Baitul Amien
Jember where in 2000 there was a dispute with one of the community that is near
Masjid Jamik Baitul Amien Jember, where he claimed that land to the house is
hers has since purchased a long time from unscrupulous takmir and he has the
deed of sale and purchasing, while the Foundation Masjid Jamik Baitul Amien
Jember have never sold and still have the certificate or certificates are still valid
about the position and condition of the land. So it ended in a legal party, but with
the data and evidence-owned Yayasan Masjid Jamik Baitul Amien Jember so that
the land was won by the Yayasan Masjid Jamik Baitul Amien Jember (Wong,
2013).
The financial statements or accounting for the organization of mosques do
not have a fixed form so that the organization reports mosque with one another is
not the same or different. Accounting statements or financial statements of public
organizations includes the process of collecting, recording, classifying, analyzing
and reporting of all financial transactions of a public organization providing
financial statement information for managers and donors. Financial reporting or
accounting systems Non-profit organizations are already regulated by the
government in Statement of Financial Accounting Standards (SFAS) No. 45. The
financial management of public mosque is in a form of financial or accounting
report.

524
 This study became the beginning of the formation of the financial
statements of the mosque construction by sharia. As happened with SFAS 109
where the formation begins from the Forum organization and zakat 2015 makes
rules regarding the financial statements, but prior to this concept is widespread,
Forum organization and zakat in 2007 took IAI remedy made standard financial
report and only in 2008 IAI together with the Forum organization and zakat finish
in financial statements or SFAS 109 and only used in 2009. the research will
focus on the development of the institution's financial statements mosque
construction, construction is only used for the organization of mosques and
construction of these financial statements using the syariah-based Accounting ,
Issues to be resolved in this research are: 1) How the financial statements of the
mosque, and 2) How to make the construction of mosques, enables financial
statement users / administrators of the mosque in the financial management of the
mosque.

2. Discussion
2.1.Enterprise Theory
Sharia Enterprise, in Islamic law, is the equilibrium shape concretely
manifested in a form of worship, namely zakat consequence of the value of this
balance led to the theory of sharia enterprise not only care about the interests of
the individual (in this case the shareholders), but also other parties. Enterprise
theory of sharia has accountability wider coverage than the entity theory.
Accountability in question is accountability to God, man, and nature (Triyuwono,
2012).
Enterprise theory of sharia have or contain values of justice, truth, honesty,
trust, accountability and most importantly that the theory has no basis in sharia
enterprise concept of God, where God / Allah SWT be used as a central and basic
of all accounting activities. Allah is the source of the mandate giver where all that
is on earth belongs o him. While, all resources possessed by humans or
stakeholders is a mandate given by Allah SWT in which there is an obligation that

525
must be accounted for in accordance with the rules of the rules that have been
determined by the sole owner i.e. Allah SWT.
Man is the representative of Allah SWT or used to say that man is
Kholifatullah fil ard are given the right to manage natural resources and distribute
them fairly and correctly, where as the representative of Allah should run the
whole commanded by Allah SWT and reported what he had obligated to humans,
Reporting form as kholifatullah fil ard to the owner is to account for the activities
of human beings and the natural environment.

2.2. Mosque Organizations

Mosques, which are public institutions that ownership of his property is
owned by the people who deposited to manager or commonly called takmir.
Treasure deposited or given to takmir must be run with a full mandate. Institutions
of mosque are also a nonprofit institution whose activities are not for profit but
they are there only to serve his people, (Wijangsongko, 2004).
The revenue generated from ordinary people composed of: 1) Zakat, 2)
Infak / alms, 3) educational institutions, and 4) Enterprises. Capital owned by
mosque institutions is big enough then it should be managed professionally. An
example is the mosque assets that have not or rarely reported when the asset
Calculations must be done carefully. As counting the price of land and houses
owned. In management of the mosque, it is necessary here to build a trust and this
trust that has been given by the people to the takmir, financial statements, which is
one form of accountability of the managers of the mosque / takmir must be made
by the board of the mosque.

2.3. SFAS 45 and Financial Statements

SFAS No. 45 (IAI, 2015) explains that the traits or Nonprofits characters
will be very different from business organizations, this difference occurs in
something major where the organization bussiness obtain resources from the
activities of its operations, it is very different from the organization of Nonprofit
organization that may have gained resources comes from contributions of its

526
members, pilgrims, and other contributors who do not expect the rewards of
nonprofit organization. By varying the fundamental then within nonprofit
transaction will be different business organizations.
This nonprofit organization has characteristics that are not much different
from business organizations in general. The users of financial statements of
nonprofit organizations have a common interest which is no different from
business organizations, which is to assess: a) Services provided by nonprofit
organizations and their ability to continue providing the service, and b) How
managers carry out their responsibilities and aspects of the manager's
performance.
IAS 45 is intended to regulate financial reporting and non-profit organizations
with their reporting standards, financial statements are expected to non-profit
organizations can be more easily understood, relevance, and has a high appeal.
The scope of IAS 45 is:
1. This statement applies to the financial statements provided by nonprofit
organizations that meet the following characteristics: a) the entity's
resources are those of the contributors who did not expect repayment or
economic benefits is proportional to the amount of resources given; b)
producing goods and / or services without profit aims to foster, and if an
entity making a profit, then the amount is never shared with the founders or
owners of such entity; and c) There is no ownership as usual in business
organizations, in the sense that ownership in non-profit organizations can
not be sold, or redeemed, or such ownership does not reflect the proportion
of resource sharing entity upon liquidation or dissolution of the entity.
2. This statement does not apply to government agencies, departments and
other similar units.
3. he financial statements for a nonprofit organization comprised of the
statement of financial position, statement of activities, statement of cash
flows, and notes to the financial statements. The financial statements differ
from the financial statements for business organizations in general.

527
 4. This statement sets out the basic information required to be presented in the
financial statements of non-profit organizations. Things are not regulated in
the accounting standard statement should refer to the statements generally
accepted accounting standards. The financial statements of non-profit
organizations include the statement of financial position at the end of the
reporting period, activity reports and the statements of cash flows for a
reporting period, and notes to the financial statements. The purpose
statement of financial position is to provide information about the assets,
liabilities, and net assets and information about the relationship between
these elements at any given time. The information in the statement of
financial position that is shared disclosures and information in other
financial statements, to help the contributors, the organization's members,
creditors and others to assess: a) the organization's ability to provide
services in air-continuation, and b) liquidity, financial flexibility, ability to
meet its obligations, and the external financing needs.
Statement of financial position, including the notes to the financial
statements, provides relevant information on the liquidity, financial flexibility,
and the relationship between assets and liabilities. Such information is generally
presented with a collection of assets and liabilities that have similar characteristics
in a relatively homogeneous group. For example, organizations typically report
each of the elements of assets in homogeneous groups, such as: a) cash and cash
equivalents, b) receivables patients, students, members, and recipients of other
services, c) supplies, and d) rent, insurance and other services are paid for in
advance.

2.4 SFAS 109 and Financial Statements

SFAS 109 (IAI, 2015) issued by Indonesian Institute of Accountants is
talking about statements that aims to regulate the recognition, measurement,
presentation and disclosure of transactions zakat and donation / charity. Scope
Statement SFAS 109 applies to all amil (business Zakat) who receive and
distribute zakat and donation / charity. In the distribution of zakat and donation /

528
charity there are rules that must be followed by every amil zakat and receiver
specifically for this so called Mustahiq is the person or entity entitled to receive
zakat. Mustahiq consists of: 1. indigent; 2. Poor, 3. Riqab, 4. The people who
were in debt (ghorim), 5. muallaf; 6. Fisabililla,7. Ibn sabil; and 8. amil.
Statements in SFAS 109 do not apply to entities which receive and
distribute Islamic zakat and donation / charity, but it is not the main activity.
While the presentation of such entities referred to SFAS 101, Presentation of
Financial Statements Sharia. Components of financial statements sharia full of
amyl consisting of: (a) the balance sheet (statement of financial position), (b)
statement of changes in funding, (c) statement of changes in assets under
management, (d) the cash flow statement, (e) notes to the financial statements,

2.5. Islamic Accounting

The proliferation of Islam and the implementation of social practices
implicate in many forms of human life. Banks, insurance and other matters
concerning the lives of many people has been widely labeled sharia, the terms of
accounting also known as sharia accounting. During the campaign for the Sharia
Accounting socially oriented, sharia-based accounting means not only serves as a
reading of economic conditions but also as a method of economic explanations
from the Islamic perspective. Accounting sharia certainly cannot be assessed with
the mindset of conventional accounting, because in accounting sharia also
includes elements of religious life.
The element of religious life itself such as a belief in the end of the day,
thus accounting also will become part of the derivation. So practice more on
advocating good and avoid the bad. Religious values are certainly an impact on
the accounting practices of the sharia itself. Real conditions of sharia accounting
we can see from the accounting zakat.
Accounting zakat shows the process of acquiring wealth by the through
the kosher business. This is one example of a derivative of Reckoning is an
accounting field. Not only that, through the Quran, it also has stated that the
concept of accounting is the emphasis of responsibility or accountability, which

529
aim to maintain justice and righteousness. There is some understanding of Islamic
Accounting, among others:
Subqi (2014) describe in the language, the word comes from the English
accounting, accounting, and in Arabic called "Muhasabah" is derived from the
word hasaba, hasiba, muhasabah, or wazan else is hasaba, hasban, hisabah,
meaning weigh , taking into account, calculate, record, namely calculate carefully
or thoroughly that should be noted in particular bookkeeping. The word
"reckoning" is found in the Qur'an with the understanding that is almost the same,
which led to the number or numbers, such as the Word of Allah: QS.Al-Isra '(17):
12 "... . years and counting .... ". QS.Al-Thalaq (65): 8 ".... then our awareness of
the country's population with a hard reckoning ... ". QS.Al-Insyiqah (84): 8 "....
then he will be examined by screening and mjudah ... ". The word reckoning in
these verses show the numbers or calculations rigorous, thorough, accurate, and
accountable. Therefore, accounting is knowing something in sufficient quantities,
not less nor more.
Harahap (2008.56) defines: "Plann Accounting or Sharia is essentially the
use of accounting in implementing Islamic law. Islamic Accounting is accounting
socially oriented. This means that accounting is not only as a tool to translate
economic phenomenon in the form of monetary measure but also as a method to
explain how economic phenomena it runs in an Islamic society. Islamic
Accounting includes an unusual issues considered by the conventional accounting.
Human behavior is judged on Judgment Day. Accounting should be considered as
one of the derivation / reckoning that encourage good and forbid what is not good.
Based on the understanding that it can be concluded that the Islamic Accounting
is an activity of identification, clarification, and reporting in taking economic
decisions based on the principle of agreement-contract sharia, which does not
contain zhulum (Injustice), usury, maysir (gambling), gharar (fraud), goods
unclean and dangerous. Understanding common meaning that Sharia accountings
enforce more is muamalah. Certainly, by promoting the good and avoid the bad
and still insists on responsibility or accountability, which aim to maintain justice
and righteousness.

530
 Sharia accounting is a socially-oriented accounting. This means that
accounting is not only as a tool to translate economic phenomenon in the form of
monetary measure but also as a method to explain how economic phenomena that
runs in the Islamic community. Sharia accounting includs issues that could not be
considered by the conventional accounting. Human behavior is judged on
Judgment Day. Accounting should be considered as one of the derivation /
reckoning that is advocated is good and forbidding what is bad. Islamic
Accounting reality is reflected in the accounting zakat.
The principle of Islamic transactions by Salman (2012, 98-99) that Islamic
transactions based on the principle: the brotherhood (uhkuwah), justice, welfare,
and balance. While the characteristics of transactions Syariah explain
Implementation of the Transaction in accordance with the paradigms and
principles of Islamic transactions must meet the characteristics and requirements
among other things: the transaction must be equally as Ridho, the object must be
lawful and good, money is only used as a means of exchange, does not contain
elements which haram, does not adhere to the principle of time value,
dillakukanberdasarkan transaction agreement, no distortion, and no element of
collusion.
Harahap (2008, 162) explains that the purpose of financial statements
Syar'ah are: to provide information concerning the financial position, provide
information regarding the performance, providing information relating to changes
in the financial position of the entity's decision-making, improve adherence to
Islamic principles, provide compliance information sharia entity how to obtain
and use finance, provide information that helps evaluate the fulfillment of the
mandate responsibilities in sharia entity charged, and provide information on the
level of profits.
Islamic finance institutions have different functions with other agencies.
Salman (2012.103) clarified some elements of sharia financial statements: (1)
Component of financial statements reflecting commercial activity consists of
financial report position (balance sheet), income statement, cash flow and changes
in equity.; (2) Components of financial statements reflecting the social activities

531
include sources and uses of funds received; and (3) Components of other financial
statements reflect the activities and responsibilities of the entity sharia.

2.6 Financial Statements of Mosque

Mosque is nonprofit or for-profit organizations carrying out resource
management activities of the mosque. Application of a good financial system will
provide the right solution to reduce suspicion and doubt on people's organizations
and Ta'mir of the Mosque. The existence of the financial statements of the mosque
is good and right to inform whole wealth or property entrusted worshipers to the
mosque committee or takmir mosque.
The financial statements or accounting for the organization of mosques do
not have a fixed form so that the organization reports mosque with one another is
not the same or different. Many financial statements mosques that are still based
on cash (cash basis) informing receipt and disbursement. This resulted in not all of
the events recorded so that it can lead to remove the asset of mosque. The concept
of actual base should be implemented in the Financial Statements of the mosque
which includes the process of collecting, recording, classifying, analyzing and
reporting of all financial transactions of a public organization.
Financial reporting or accounting systems of nonprofit organizations is set
by the government in Statement of Financial Accounting Standards (SFAS) No.
45. The financial statements for a nonprofit organization comprised of the
statement of financial position, statement of activities, statement of cash flows,
and notes to the financial statements, whereas SFAS 109 applies to all amil
(business Zakat) who receive and distribute zakat and donation / charity and
presentation by SFAS 101.

2.7 Financial Statements Construction of Mosque

Institutions of mosque are a nonprofit institution whose activities are not
for profit but they are there only to serve his people. Revenues derived from the
people consist of: 1) Zakat, 2) Infak / alms, 3) educational institutions, and 4)
Enterprises. Capital owned by mosque institutions is big enough then it should be

532
managed professionally. Statement of Financial Accounting Standards (SFAS)
No. 45 is a financial report for a nonprofit organization comprised of the
statement of financial position, statement of activities, statement of cash flows,
and notes to the financial statements. While in IAS 45 does not address the
organization implementing the Sharia-based accounting that IAS 45 has not met
the basic concepts of sharia.
SFAS 109 applies to all amil (business of Zakat) who receive and
distribute zakat and donation / charity. In the distribution of zakat and donation /
charity, there are rules that must be followed by every amil zakat and receiver
specifically for this so called Mustahiq is the person or entity entitled to receive
zakat. Mustahiq consists of: 1. indigent; 2. Poor, 3. Riqab, 4. The people who
were in debt (ghorim), 5. muallaf; 6. Fisabililla, 7. Ibn sabil; and 8. amil. The
presentation of such entities referred to SFAS 101, Presentation of Financial
Statements Sharia.
Construction of the mosque built financial report is a combination of the
application of SFAS 45, SFAS 109, and SFAS 101. The Indonesian Institute of
Accountants has not specifically regulate the financial statements of the mosque
which is a non-profit organization based on Sharia. The amalgamation of the three
IAS is a way out and need to be evaluated and studied in depth so that IAI may
make the determination on the financial statements of the mosque.

3. Conclusion
Application of a good financial system of mosque would give the right
answer to reduce suspicion and doubt of people on the organizations and the
tamir of Mosque. Many financial statements of mosques that are still based on
cash (cash basis) informing cash receipts and disbursements and financial
statement form has not been fixed so that the financial statements of the mosque
with one another is not the same or different. Merger of SFAS 45, SFAS 109, and
SFAS 101 is a solution that can be developed and applied. Implementation needs
to be evaluated and need to be studied in depth so that IAI may make the
determination of standards for the financial statements of the mosque.

533
4. Research Implication
This study has implicate theoretically for further academic research and
can contribute to the development of science in the public sector, particularly in
the scientific development of sharia. In practical implications for the management
of the mosque to make financial statements better and acountable, the Indonesian
Mosque Council (DMI) to be used as build institutions mosques under its control
so that the institution of the mosque into an institution that is more reliable, and
the Indonesian Institute of Accountants (IAI) to be financial accounting standard
materials for the mosque institution.

REFERENCES

Bodnar, George H., and William S. Hopwood. (2006). Sistem Informasi

Akuntansi. Diterjemahkan oleh: Julianto Agung Saputra dan Lilis
Setiawati. Andi, Yogyakarta.
Harahap, Sofyan Syafri. 2011. Teori A k u n t a n s i Edisi Revisi. Jakarta:
Rajawali Pers.
Harahap Sofyan Syafri , 2008. Kerangka Teori dan tujuan Akuntansi syariah
(kumpulan makalah) Pustaka Quantum Jakarta
Ihsan Moch. 2004 Sejarah Masjid Jamik Al Baitul Amien Jember Penrbit Yayasan
Masjid Masjid Jamik Al Baitul Amien Jember .
LPPDSDM BKPRMI 2000 Pembinaan Remaja Masjid Indonesia. DPW
BKPRMI Jawa Timur
Nurleni Nurlailah, dan Madris, 2014.Akuntabilitas dan Keuangan Masjid Di
Kecamatan Tubo Sedana Kabupaten Majene diterbitkan oleh
ASSETS,Volume 4, Nomor 2 , Desember : 206-217
Nawawi Ismail Uha, H. 2012. Metode Penelitian Kualitatif, CV. Dwiputra
Pustaka Jaya, Jakarta
S Anzar Dahnil,. dan Mukhtar, 2010. Akuntansi dan Pengelolaan Keuangan Di
Masjid
http://nswahdi.com/wp/wp-content.
Subqi Tajus M, 2012. Akuntansi syariah dasar-dasar gagasan akuntansi islam.
www.slideshare.net/tajussubqiKINGCROWN
Salman Riza Kautsar, 2014. Akuntansi Perbangkan Syariah Berbasis PSAK
Syariah , Akademia
Sihab Qurais. 1998.Wawasan Al quran Penrbit Mizan Cetakan ke 7 Mizan
Triyuwono, Iwan, 2012. Akuntansi Syariah (Perpectif, Metodologi dan teori),
Raja Grafindo Jakarta,

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Wijangsongko Jenar Lingga, 2014. Implementasi Akuntansi dalam Organisasi
Keagamaan Di Masjid Istiqomah UPN Veteran Jawa Timur.
http://eprints.upnjatim.ac.id/6118/1/file1.pdf Tgl. 1 Nopember 2015, jam
17.00 WIB
Wulandari Fresisca, 2015. Penerapan PSAK 45 dalam mengkomunikasikan
aktivitas pelayanan masjid Al falah Surabaya Terhadap Publik, Jurnal
Ilmiyah Mahasiswa Universitas Surabaya Vol 4 No 1

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SHA-03
IMPLEMENTATION OF PSAK 105
IN FUNDING AND FINANCING OF MUDHARABAH
TRANSACTION ON SHARIA BMT
(CASE STUDY ON KSPS BMT UGT OF SIDOGIRI
INDONESIA BRANCH OF LECES)

Tatik Amani
University of panca marga
Email :tatikamani@gmail.com

ABSTRACT

Baitul Mal wat Tamwil (BMT) is a Microfinance Institution that operates based
on Islamic principles. BMT incorporated cooperative or also known as the Islamic
Financial Service Cooperative (KJKS). Products KJKS include deposits and of
financing, namely contract business cooperation between the two parties in which
the first party (owner of the funds) provide all the funds and the second party (the
fund manager) to act as the manager of the business profits divided between them
according to the agreement, while the financial loss is only covered the fund
manager. The research method is qualitative descriptive approach, with a view
KSPS research objects BMT UGT of Sidogiri Indonesia Branch of Leces. The
data collection was done by direct interview, observation, documentation and
deposits and of financing. This study aimed to analyze implementation of PSAK
105 on accounting the mudharabah funding and financing system that is in KSPS
BMT UGT of Sidogiri Indonesia Branch of Leces. Based on the results of the
study it can be concluded that KSPS BMT UGT of Sidogiri Indonesia Branch of
Leces has generally been applied all Mudharabah savings products in accordance
with PSAK 105 except Mudharabah Savings Deposit or Living Cost
Students/Pupils division results in a value instead of a percentage. It is not
justified because the same with interest (M. Shafi Antonio, 2001). Looking ahead
to the percentage specified ratio. Financing is financing the non-enforcement
showed interest. Weakness of financing in BMT is the absence of a written report
of the results of operations mudharib. BMT is the duty to promote ways of
making reports.
Keywords: Funding, financing, mudharabah, SFAS 105

536
1. Introduction

BMT is a Micro Finance Institutions that operates based on Islamic

principles. BMT is the principal business of providing services in the form of
deposits, financing and services that do not use interest but using a profit-sharing
system products based on the Qur'an and hadith. BMT is a non-bank Islamic
financial institutions operated by the principle of sharing and working to develop
micro-enterprise businesses in order to elevate and dignity and defend the
interests of the poor.
In order to obtain legal certainty and legal protection, BMT cooperatives
to convert into a legal entity. BMT is a legal entity, it can take legal actions
(rechtshandeling) in legal relations (rechtsbetrekking), can conduct transactions
and make contract agreements, both internal organization and external to the
organization, with members, government and society.
The form of savings and financing offered by each BMT among others
hawalah, kafalah, murabaha, qardh, mudharaba, Ijara and Musharaka and the
focus of this research is a deposit and of financing mudharabah.
According to PSAK 105 paragraph 4 (IAI, 2007), mudharaba is an
"agreement of cooperation efforts between the two parties in which the first party
(owner of the funds) provide all the funds, while the second party (the fund
manager) to act as the management and the business profits divided between them
according whereas the agreement only covered financial losses the fund
manager,"

1.1 Formulation Of The Problem

Based on this background, the principal problem of this research is how

implementation of PSAK 105 in funding and financing of mudharaba transaction
on KSPS BMT UGT of Sidogiri Indonesia Branch of Leces?

1. Previous Research
Rosita and Rahman, 2011 entitled Evaluation of Implementation of
Mudharabah and Its Effect on Corporate Profit (Case Study at PT Bank Muamalat

537
Tbk Indonesia, Branch Bogor). evaluate the implementation of financing and the
impact on corporate earnings of Bank Muamalat Indonesia Branch Bogor. Current
research focuses on the implementation of PSAK 105 and its location in KSPS
BMT UGT of Sidogiri Indonesia Branch of Leces.
Ayu Sastika Rani, 2015 examines the application of the accounting system
of Mudharabah on Barokah BMT Amanah Sharia Warujayeng. The study
menganilisis application of the sharing system through the process of financing in
BMT BAS Warujayeng. Research is now analyzing implementation of PSAK 105
in funding and financing of mudharabah transaction on KSPS BMT UGT of
Sidogiri Indonesia Branch of Leces.

2.1 Theoretical Basis

2.1. 1 Baitul Maal wat Tamwil (BMT)
BMT is an Independent Business Centres namely Integrated Micro
Finance Institutions that operates based on Islamic principles. The principal
business of BMT is to provide the savings, financing and services that do not use
interest but using a profit-sharing system products based on the Qur'an and Hadith
and strive to develop micro-enterprise businesses in order to elevate and defend
the dignity and interests the needy to avoid usury interest law.

538
 Table 1
Differences System Sharing System WithInterest
Case Profit-sharing system Rate system

Determination of After attempts, after it is pointless Previous

the results
Determined Agreeing on the proportion of profit Interest, the rupiah
Previous sharing for each party, for example 50:50, value
40:60, 35:65 ect
If losses occur Borne by both parties, clients and Borne customers
institutions only
Calculated from? Of profit that would be obtained, not Of the loaned funds,
necessarily the amount fixed (fixed)
Focal point of The success of the project / venture so The amount of
the project / common concern, clients and institutions money financial
How many
business Proportion (%) times the amount of profit It must: (%) times
interest
Magnitude that is unknown = unknown the amount of the
The legal status Implement of Qs Luqman : 34 Contrary to Qs
loan that was
Luqman : 34
certainly known
Source : M. Syafii Antonio, Bank Islam Teori dan Praktek, Jakarta: Tazkia
Institute cooperation with Gema Insani Press, 2001.

2.1.2 Funding and Financing Mudharabah

Mudharabah is derived from the acronym, "Ad-dhorbufi'lardhi", traveling
to business. These words are synonyms Qiradh, which comes from the word Al-
Qardhu or pieces, because the owner cut off part of his property to be traded and
acquire some of the profits, and often referred to with the word muamalah.
According to Imam Shafi'i, Qiradh according to dialect, meaning someone going
to trade. According to the terms treasures handed over to someone to be traded,
while the profits are shared (bersyarikat) between them (Sabiq 1987: 31).
Mudharabah consists of mudharabah muthlaqah, muqayyadah and
Mudharabah Musytarakah. If an entity acts as the fund manager, the funds
received are presented as temporary syirkah funds. (PSAK 105 paragraph 6, IAI,
2007)

539
1. Mudharabah muthlaqah
Transactions referred to mudharabah muthlaqah is a form of
cooperation between shahibul maal and mudharib very broad and is not
limited by the specifications of the type of effort, time and area businesses. In
the discussion of jurisprudence Salaf Salih ash often exemplified by the
phrase if al ma syi'ta (do as you please) of shahibulmaal to mudharib which
gives substantial powers.
2. Mudharabah muqayyadah
Mudharabah muqayyadah or also called restricted mudharabah /
specified mudharabah is the inverse of mudharabah muthlaqah. Mudharib
limited to specifying the type of effort, time or place of business. These
restrictions are often reflects the general trend of the shahibulmaal entering
the business world.
3. Mudharabah Musytarakah
Mudharabah Musytarakah is a form of mudharabah which includes
fund manager or fund capital in investment cooperation.

2. Research Methods
3.1 Types Of Research
This study used qualitative research with descriptive approach. Qualitative
research is research that aims to understand the phenomenon of what is
experienced by the subjects holistically and by way of description in the form of
words and language, in a specific context that is naturally and by utilizing a
variety of natural methods (Moleong, 2006: 6).
In this study, researchers tried to provide information that aims to describe
a systematic, factual, and accurate information on the application of SFAS No.
105 in mudaraba transactions as well as matters relating to savings and financing
is on KSPS BMT UGT of Sidogiri Indonesia Branch of Leces. But the researchers
did not intend to draw conclusions widely, the conclusions of this study will only
apply to the areas studied.

540
3.2 Object Of Research
The object of research in this regard is the adoption of PSAK 105 in the
transaction mudharabah on KSPS BMT UGT of Sidogiri Indonesia Branch of
Leces the address of Jalan Kyai Sekar village sub-district Sumber Kedawung
Leces, Probolinggo.

3.3 Data Collection Technique

Technique data collecting by observation method (observation), interviews
(conducted by Deputy Branch Mr. Haji Zainul Fata and some employees are also
customers), documentation on KSPS BMT UGT of Sidogiri Indonesia Branch of
Leces, financial reports, customer deposits and recapitulation list of financing.

3.4 Data Analysis Technique

Data analysis technique used in this research is qualitative descriptive
analysis, a study that is intended to describe a particular situation that is factual
systematically and accurately (Danim, 2002: 21).
Technical analysis of the data used in this study is the collection of data,
both from the primary data and secondary data obtained from the study. Then the
data is organized by reviewing and discussing carefully collected data, presented
the data in the form of theories that correspond to existing problems, which is
associated with the adoption of PSAK 105 in the transaction mudharabah, the data
is analyzed and adjusted between the concept, implementation and application of
PSAK 105 in the transaction mudharabah on KSPS BMT UGT of Sidogiri
Indonesia Branch of Leces and final interpretation and a review back in
descriptive verification

3. Results and discussion

4.1 Research Object Description
KSPS BMT UGT of Sidogiri Indonesia Branch of Leces with Mr. Fath
Munir Branch chief and Deputy Branch Mr. Haji Zainul Fatah. BMT is comprised
of 5.521 and borrowers 545. The cooperative is a financial institution established

541
with the aim to empower UKM through an entity that is professional and
integrated into a type of business that can generate profits for the welfare and
benefit of all members of the community based on Islamic law. In carrying out its
activities, this KSPS follow the operational standards by government regulation
adapted to the conditions KSPS.
KSPS capital sources BMT UGT of Sidogiri Indonesia Branch of Leces
obtained from savings, compulsory savings, voluntary savings, capital
investments and savings or deposits from customers. To determine the division of
SHU carried out in the Annual Member Meeting. SHU division is based on
existing provisions in the AD/ART KSPS and the amount is based on the
calculation of the amount of capital invested by each member.
For financing facility, KSPS BMT UGT of Sidogiri Indonesia Branch of
Leces have operational standards by applying the precautionary principle
(Prudent), where each application for financing facilities to do a feasibility
analysis that is commonly known as "5C" that takes into account the character of
the prospective customer, capacity or capability in order repayment of loans,
financial condition, assurance can be given as an alternative in case of fraud and
economic conditions and macro finance business. In addition, people who want to
take advantage of this funding should be enrolled as members KSPS first.

4.2 System Deposit and Mudharabah KSPS BMT UGT of Sidogiri Indonesia
Branch of Leces
a. Implementation of Accounting Standards and sharing Mudharabah on KSPS
BMT UGT Sidogiri Indonesia Branch Leces.
KSPS BMT UGT Sidogiri Indonesia Branch Leces as savings and loan
financial institutions have products syariah deposits and financing. Among
Musharaka and mudaraba savings products of financing.
1) Mudharabah Deposits: deposits where the depositor is entitled to a ratio in
accordance with the agreement previously agreed upon, and the savings can
be taken in accordance with the agreement.

542
 Currently being introduced new deposit products Mudharabah
Savings Deposit with terms or Living Cost Students / Pupils. By placing
funds at BMT with a certain amount, the sons and daughters / students will
receive funding of certain items every month for 24 months, with details of
the number as follow :
Table 1
Placing of Fund
Placement Living Cost was accepted
(Rp) (Rp)
50.000.000 350.000
70.000.000 500.000
100.000.000 700.000
150.000.000 1.000.000
Source : BMT UGT Sido Giri Leces

The calculation of the above ratio by M. Shafi Antonio, Bank Islam

Theory and Practice, Jakarta : Tazkia Institute in collaboration with
GemaInsani Press, 2001 is not allowed because the same interest, should be
calculated based on the ratio of indirect distribution proesntase mention the
value of the rupiah. Even if the cost of living assessment of equivalency
with a percentage then there must be an explanation of the percentage ratio
at the beginning of brochures distributed.
2) Mudharabah Musytarakah Savings : customer deposits where the deposit is
managed by BMT for business. In this case, BMT as a fund manager and
customer as the owner. Depositors are entitled to the savings ratio according
to mutual agreement. Various savings products mudharabah musytarakah
and the number and ratio:
Table 2
Report Per September 30, 2016

No. Funding Total (in Rupiah)

1 Tabungan Umum Syariah 7.578.894.539

2 Tabungan Berjangka, terdiri dari :
a. Tabungan Tarbiyah/Pendidikan 230.521
b. Tabungan PeduliSiswa 129.583.781

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 c. Tabungan IdulFitri 68.871.076
d. Tabungan Haji 241.807.753
e. Tabungan Umroh 765.824
f. Tabungan Ziaroh/Wisata 1.396.705
g. Tabungan Dim Sidogiri 5.396.076
3 Deposito mudharabah berjangka
a. Depositomudharabah3 bulan 729.500.000
b. Depositomudharabah6 bulan 480.000.000
c. Depositomudharabah12 bulan 1.428.000.000
d. Depositomudharabah24 bulan 675.000.000
Total 11.339.446.275
Source: BMT UGT Sido Giri Leces

Table 3
Percentage Ratio
Nisbah (%)
No. Funding
Customer BMT
1 a. Tabungan Umum/Syariah 30 70
2 a. Tabungan Tarbiyah/Pendidikan 30 70
b. Tabungan PeduliSiswa 40 60
c. Tabungan IdulFitri 40 60
d. Tabungan Haji 50 50
e. Tabungan Umroh
40 60
f. Tabungan Ziaroh/Wisata
40 60
g. Tabungan Dim Sidogiri
80 20
3 Deposito mudharabah berjangka
a. Depositomudharabah3 bulan 52 48
b. Depositomudharabah6 bulan 55 45
c. Depositomudharabah12 bulan 60 40
d. Depositomudharabah24 bulan 70 30
Source: BMT UGT Sido Giri Leces
The overall ratio calculation above are calculated based on the profit
sharing basis is net income (net profit) is gross profit minus expenses related
to the fund management mudharabah as stated in PSAK 105 paragraph 11.
3) Mudharabah financing, KSPS BMT UGT of Sidogiri Indonesia Branch of
Leces role as shahibul maal/owner and manager of funds. KSPS fund
mudharib as necessary and also acts as a manager. If any damage occurs
then the loss is borne entirely by KSPS provisions do not there is an error or
fraud committed by mudharib/manager. Various savings products
mudharabah musyarakah in BMT UGT of Sidogiri are as follows:

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 Table 4
Report Per September 30, 2016

No. Financing Total (in Rupiah)

1 Musytarakah Financing 25.000.000

2 Mudharabah Financing 5.000.000
Total 30.000.000
Source: BMT UGT Sido Giri Leces

The calculation of the ratio of financing agreed to equalize the

monetary value of the results obtained mudharib, not based on a percentage
of revenue sharing. This is done because mudharib is merchandise small
market difficulties make financial reports. Refusal of mudharib report the
results of these efforts has led to the development of financing difficulties.
b. Recognition and Measurement to Own Funds
Mudharabah fund which is distributed by KSPS BMT UGT of
Sidogiri Indonesia of Branc Leces as the owner recognized as mudharabah
investment fund at the time of payment of cash or cash surrender to the fund
manager. It was in accordance with PSAK 105 paragraph 12.
c. Fund Accounting for business
1. Funds received BMT from a client as the owner of the funds in
mudharabah
2. Recognized as investment funds are not bound by the amount of cash
received or the fair value. This is in accordance with PSAK 105
paragraph 25.
3. The investment fund is not bound supplied by BMT recognized by
BMT as an asset/property. This also in accordance with PSAK 105
paragraph 27 and 28 of the revenue and the profit as revenue sharing
principle mudharabah presentation been applied in KSPS BMT UGT of
Sidogiri Indonesia Branch of Leces.

545
d. Presentation
KSPS BMT UGT of Sidogiri Indonesia Branch of Leces as mudharabah
investment fund owner present at carrying value in the financial statements.
This is in accordance with paragraph 36 in PSAK 105, and as a manager of
customer funds, customer funds amounting to BMT present carrying values for
each type of Mudharabah (Mudharabah savings, deposits mudharabah, etc.).

4. Conclusion
This study aims to determine the implementation of PSAK 105 in funding
and financing of mudharabah transaction on KSPS BMT UGT of Sidogiri
Indonesia Branch of Leces. From the research that has been conducted by
researchers, it can be concluded that the application of all products except Savings
Mudharabah savings Futures or Living Cost Students/Pupils at KSPS BMT UGT
of Sidogiri Indonesia Branch of Leces have with PSAK 105. The calculation of
the ratio of the Living Cost savings not to mention the value percentage.
According to M. Shafi Antonio, Bank Islam Theory and Practice, Jakarta: Tazkia
Institute in collaboration with Gema Insani Press, 2001 the ratio of the value of
the rupiah is not allowed because the same with interest. Supposedly ratio is
calculated based on the percentage of revenue sharing does not directly mention
the value of the rupiah. Even if the vote living cost is an equalizing with a
percentage then there must be an explanation magnitude of the percentage ratio at
the beginning of the brochures were circulated.
The research result shows that financing is not financing the
implementation of interest but there is a revenue sharing agreement which had
previously been discussed jointly by the owners of capital that KSPS BMT UGT
Sidogiri with mudharib. The agreements set out in a contract or agreement.
Mudharib should provide assurance to KSPS anticipation of misappropriation of
funds. This is in accordance with PSAK 105 paragraph 8. The weakness of the
financing is in KSPS BMT UGT of Sidogiri Indonesia Branch of Leces are no
reports of the results of operations of mudharib. Forward is the duty of the BMT

546
to promote ways of making reports for the purpose of financing totally in keeping
with the rules.

REFERENCES

Dewan Syariah Nasional No: 07/DSN-MUI/IV/2000 Tentang Pembiayaan

Mudharabah (Qiradh).
M. Syafii Antonio 2001, Bank Islam Teori dan Praktek, Jakarta: Tazkia Institute
cooperation with Gema Insani Press.
Muhammad. 2002. Pengantar Akuntansi Syariah, Edisi Pertama, Jakarta:Salemba
Empat.
Ridwan, Muhammad, 2004 Manajemen BaitulMaal Wa Tamwil (BMT),
Yogyakarta: UII Press
Subana, M. Sudrajat. 2005. Dasar-Dasar Penelitian Ilmiah. Pustaka Setia.
Bandung.
Danupranata, Gita, 2006. Ekonomi Islam, Yogyakarta: UPFE-UMY
IAI 2007 PSAK Nomor 105
Sumiyanto, Ahmad, 2008.BMT Menuju Koperasi Modern, Yogyakarta: PT. ISES
Consulting Indonesia
Rosita dan Rahman, 2011 dengan judul Evaluasi Penerapan Pembiayaan
Mudharabah dan Pengaruhnya Terhadap Laba Perusahaan (Studi Kasus
pada PT Bank Muamalat Idonesia Tbk, Cabang Bogor)
Haryo Bimo Pramudito. 2013. Perlakuan Atas Pembiayaan Mudharabah Pada
BMT SYARIAH (Studi Kasus Penerapan PSAK 105 Pada BMT Bina
Tanjung Jember dan BMT UGT Sidogiri Cabang Wuluhan) Skripsi.
Jember : Universitas Jember.
Ayu Sastika Rani, 2015 meneliti tentang penerapan akuntansi sistem bagi hasil
pembiayaan mudharabah pada BMT Barokah Amanah Syariah
Warujayeng.

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SHA-05

THEORY OF ISLAMIC ACCOUNTING:

ACCOUNTING PERSPECTIVE OF SOCIAL AND RESPONSIBILITY

Hendrarto Widodo
University of Jember
E-mail jhon_hendra_09@yahoo.co.id

ABSTRACT

The assumption that the accounting value of free science and practice has been
criticized sejak1970's. There is a very basic question that accounting is a value-
free or not. some fundamental concepts now again questioned, eg position of
interest, the basic assumptions or concepts and their impact on practice, and
methodologies. This paper discusses the Islamic perspective of accounting and
practice, otherwise known as sharia accounting. accounting major source of
Islamic sharia based on the Qur'an and Hadith, both on paradigms and practices. It
is not only a social orientation but also the orientation of the responsibility.
accounting sharia will report the social impacts of an activity and responsibility
humanistic, emancipatoric, transcendental and theological. In Islamic
terminology, accounting sharia is zakat and oriented mandate.
Keywords: Islamic Accounting, Social Responsibility, Zakat

1. Preliminary

In The Recent years religious values has been used as a foothold in the
development and implementation of business activities, so that the business is
expected not leave ethics. In Islam, the whole ethic which is used as a business
framework, built on the basis of Sharia. Sharia is a guideline used by Muslims to
behave in all aspects of life. For Muslims, the business activities (including the
banking business) will never be separated from the bonds of Islamic ethics.
Therefore, it is not excessive if, for example, Islamic banks operate based on
Islamic ethical values. Even formally Islamic bank established a special body within
the organization. The agency is tasked with providing views of the basics of ethics
(or oversight) Sharia in the management and operations of the bank (including
recording and reporting accounting). The agency called the Sharia Supervisory
Board is standing does not depend on the other bank (independent) in the bank's
organization.
In the area of economic development of the people, the existence and presence
of business organizations, such as Islamic financial institutions is the absolute.

548
Because banks act as intermediaries (intermediary) between the unit supply (supply)
with unit demand (demand). Here we need the process of recording and reporting of
all transactions and activities conducted in the muamalah business unit. Therefore,
we need a proper accounting system (relevant).
Therefore it will be important to their accounting processes. The accounting
process will not only affect the behavior of management, shareholders, employees
and the surrounding community, but also the organization concerned.
Besides other factors such as the economic system, social, political,
legislation, culture, perceptions, and values prevailing in society has a major
influence on accounting forms. It is proved that accounting is a wholeness (entity /
entities) information that is not value free.
In connection with the foregoing, Baswir states that: "the impression that
accounting have also been associated with the ideology is difficult for the
inevitable, and accounting as currently taught in the majors - major in accounting in
Indonesia, was strongly influenced by capitalism. The influence of capitalism was
especially looked very real to the strong influence of the capitalist economic
principles in its income statement presentation.
Thus, if a country follows Islamic Economic System, the measures to be
developed is the Accounting System of Islam (Sharia). But be aware that the
assumption of the existence of accounting Sharia (Islamic) still a lot of questionable
people. The birth of Islamic accounting is less certain after the assumption of the
existence of conventional accounting as a science and practice in relation to the
issue of value in accounting.Dalam persepsi Islam, manusia di muka bumi adalah
sebagai khalifah.
Therefore, all efforts made by humans should be able to answer the needs of
the community or to be socially oriented. Similarly, our efforts to develop sharia
accounting. Accounting must evolve to meet their needs.
Islam through the Qur'an has outlined that the concept of accounting to be
followed by the business or the making of accounting report emphasizes the
concepts of responsibility or accountability, as confirmed in Surat al-Baqarah verse
282. In addition, accounting Sharia should be socially oriented. This means, that the
accounting not only as a tool to translate economic phenomenon in the form of
monetary measure but also as a method to explain how economic phenomena was
running in society (Islam).

2. Formulation Of The Problem

Based on the background of the above problems, the problems in this article
is formulated as follows:

549
 How is the nature of sharia accounting from the perspective of social
accounting and accountability?
Whether it is a form of accounting knowledge and practices are largely
determined by the environment (non value-free), or in other words, whether the
accounting was the "son" born of the local culture (local)?

3. Research Methods
Rational effort, determination of the truth of the nature and existence of
sharia accounting need to be investigated with appropriate research methods.
Appropriateness of research methods will be reflected in the stages through
which the research.
Writing articles is done to discover the nature of rationality and truth,
knowledge and accounting practices, the study of critical theory to be used, the
application is done through two phases: phase descriptive and evaluative stage /
criticism. The second phase of this study each using a different method, in
accordance with the essence of the problems of this article.
At this stage of the reduction of the lead author on the points of concern
have been raised by using the basic framework of the philosophy of science.
Based on the philosophy of science is, then wake up the essence sharia
accounting framework can be seen from the side: the ontology; epistimologi,
methodology and axiology, so that the objectives and orientations wake sharia
accounting can be realized. Referred to wake sharia accounting of them is the
wake of accounting that reflects the social dimension and accountability.
Ontology concerns about the nature of what is studied or the science of
being qua being epistimologi is related to how science to review and prepare the
body of knowledge or study of philosophy that discusses the scope and limits of
knowledge. The methodology used for the test method - the method used or to be
used to generate valid knowledge. While axiology is a pillar of the philosophy of
science related to the usefulness of science that has been arranged is used or
theory of value.
Based on the three sides will then do an analysis of the essence of science.
Although it must be recognized that as the material to study Accounting Sharia

550
(Islamic) then the best path taken is studying Accounting West which is already
so well established and growing, even been embraced both by the West and the
Muslim community.
An enterprise / organization / institution aimed either for profit or non-
profit (non-profit) require information for decision-making and development
company. On this side of the accounting role. Accounting is an integral part of a
cluster management tasks in achieving its goals. Accounting will provide much
needed information management in carrying out its functions, namely: Planning;
organizing; Briefing; and Oversight.

3.1 Phase Evaluative

The method used in the evaluative stage is the critical-rational analytical
method. This method is applied considering at this stage attempt to compare the
Western Accountancy concept with the concept of Islamic Accounting. As is the
case in an attempt to study or build a social theory, including accounting theory,
the thinking process analysis: rational critical and highly charged. In accounting
research, critical approach (critical studies) is one of the recommended approach
to be applied.
In connection with the development of a new economic system, the
economic system of Islam, of course, these conditions require the relevance of all
instruments, models, systems and accounting paradigm. In other words, this
condition must be accompanied by greater transparency and awareness of
scientists to discover and develop new knowledge in accordance with existing
disciplines. Therefore, Cooper and Hopper stated that: critical accounting is
critical of convetional accounting theory and practice and, through critical social
science theory, it seeks to explain how the current state of accounting has come
about.
This statement indicates how important: critical theory in order to build a new
theory that is appropriate (relevant) to the development of society. How the
framework will be pursued if we use approach critical theory? On a broader
level, according to Lodeh suggested that: an accounting researcher can ask:

551
what, how and why accounting rationale has become purposive, is being used, is
to be used, and what are the means for doing so in a particular context?
Through the approach of critical theory we will see a theory that not only lies
in the effort to put ideology as a 'form of thought' but also will try to assess how
social conditions, such as the accounting system developed by the capitalists, the
fulfillment of the satisfaction of the necessities of life, and the freedom of self of
social conditions which rentan.29
Based on the above, then through a critical approach of this theory will be
able to find a rational framework nature and application of accounting theory is
more in keeping with the local culture of Islam, which is loaded with value. In other
words, the approach adopted in this study must be established as: a process which
can be used for analysing and changing the nature of any accounting system,

and its social context, of any particular organisation.30

That is, a process that can be used to analyze and process the nature of
accounting systems in relation to social conditions or specific organizations.

3.2 Method Of Collecting Data

In accordance with the approach used in this study, the data used is in the
form of statements made by relevant experts. Thus the data sampling technique is
purposive sampling / data, which is further supported by the content analysis
technique (content analysis). This technique according to Bogdan and Biklen
(1982) cited Syafi'ie intended for sampling internal (internal sampling). Internal
sampling, that the decisions taken, so researchers have a general idea about the
number of documents as well as the kinds that will be studied, with whom will
speak, and when to make observations.
Excavation primary data initially by collecting the verses relating to the
term calculation (computation), balance, accountability, and then create an
outline in order to determine the verses that are directly related to the verses that
do not directly reveal about reckoning, deep excavation using pure
documentation techniques. As for the secondary data gathering is done by
looking for basic thoughts written by thinkers or scientists who have written in

552
the book - the book mainly related to the central theme that has been proposed, in
order to discover the essence of the concept of accounting.
Teknik dan Model Analisis
In qualitative research, the analysis stage at least, there are three main
components that should be realized by the researchers, namely: data reduction, the
data display and conclusion drawing (Miles & Huberman, 1984; Sutopo, 1988). The
three components are interrelated and mutually supportive.
In connection with the accounting problems Gaffikin suggest four steps that
must be passed by researchers in applying analysis methodologies. The four stages
are: Logical, Environmental, ideological and Linguistic.

4. Hisab, Muhasabah And Accounting

Islamic Sharia is the Shari'ah that give great attention to the problem of
reckoning Reckoning is one of the charity during the calculation process of human
life in the world by God. As caliph, man was given the mandate by God to manage
the earth and then the results are accountable to Him. Therefore, every man in her life
should always be trustworthy, honest and committed to the promise he had spoken to
God. It thus is a part of human behavior that is Islamic. In connection with this,
Ghamidi (1997) says that "the behavior of the Islamic, is the behavior of the
perpetrator, always feel the lack of oversight by God both in a state of covert and
visible person and always did muhasaba (calculating or evaluating) themselves,
against the Muslims as well as against the other, the road preaching to Islam the best.
Therefore, Muslims must return to God, to self-correct them, applying
behavioral Islami in all facets of life, always honest, faith and qana'ah, so that the
glory can be achieved again.
In connection with the word muhasaba above, according to Atiya stated, that
the Arabic word for accounting is muhasabah (computation). This word appears 48
times in al- Qur'an.35 While Muhammad Khir cited by Harahap stated that "The
term of reckoning is found 109 times in al- Qur'an.36 muhasabah The root word is
the verbal form hasaba HSB and other forms yahsaba that means counting (to
compute) or measure (to measure).

553
 Further changes in the reckoning be muhasaba word is as follows Al-
Muhasaba derived from changes in the word "al-reckoning", ie calculations. In
terms of language, appearance of the word al-muhasabah occur because of changes
isim, ie reckoning / hisaban or hasaba as isim masdar including madli deed, then
yuhasibu as isim masdar included in the deed mudhari mim '.
The use of the word reckoning will change according to the context and form
sentences. So that the reckoning will turn into hasaba, if the sentence is formed
means "complete responsibility" or "to be neutral". Then it will turn into tahasaba
which means "keep" or "trying to get to." It can also be turned into ihtisaba which
means "expect reward in the afterlife with the receipt book of someone from God",
also means "the immediate attention" or "give an account" .37 Finally in a further
development, the terminology of the English word evolved etymologically, the term
Arab thrive phonetically (sound), said muhasabah (accounting) relating to ihtisab
and image associated with the recording of one's actions continuously until the
court afterlife and through scales (mizan) as a tool and God as an accountant.
Another term that has the same meaning as the word is al-Hisba muhasaba,
but said al-hisbah refers to the application or operation of an institution. In
connection with that, Taymiyah called it, that "al-WH is a public institution that has
existed in the Islamic community since the early Islamic period until the occupation
of the West. The personnel who manage institutions Hisba called muhtasib. Agency
activities include comprehensive task that is from things that are economic to the
ethical nature.
The above description shows that the word reckoning or muhasaba and actors
muhasaba or muhtasib is said and functions related to the effort to calculate,
measure or control all human activities during the life of the world to be
accountable in the hereafter. Thus, muhtasib have immense task, from surveillance
assets, which concerns social interest to the examination of the company's business
transactions.
As outlined above, that in the Koran are found verses that use the word
reckoning associated with the nature and function of the reckoning of God to

554
 human actions. Verses is used as texts about the calculation of human deeds
during the life of the world to be accountable in the hereafter.
Moreover, the process of trade or transaction in recent times has
experienced a shift. That is, the culture of the transaction with a credit system is
currently a lot done in addition to the trade transaction in cash (cash). Thus, the
registration process should be done for credit and cash transactions. Therefore,
every transaction in the trade should be written well and properly. For such cases
can be vital in conducting commercial activities in the periods to come. By doing
writing to all transactions, the borrower or seller would be easier mempertang-
accounted niaganya. This is the essence of paragraph 282 QS. Al-Baqarah
mentioned above. Thus, referring to the above description, then briefly formulated
general principles of sharia accounting as follows:
Justice
Truth
Responsibility
Based on these three general principles and supported by practical forms of reckoning
listed in the paragraph above thirty-which will be subject to God to mankind, then the
next match specific principles in accounting sharia. Hence, the value of justice, truth
and accountability can be achieved if the recording of transactions carried out by the
accounting reporting: right; fast; bright, clear, concise and informative; thorough;
addressed to all parties; detailed and thorough; there is no element of manipulation;
and is performed continuously.

5. Theory Of Islamic Accounting Adjustments

Discussion accounting sharia (Islamic), lately more and more often we hear,
both domestically and abroad, despite the presence of sharia accounting itself, such
as the presence of the Islamic economic system is still questionable. Such talk arose
because of accounting are studied to date still fixed and refer to the Western
accounting system, which also contain the problem. Some of them are (1) the issue
kepemihakan, (2) the assumptions or basic concept, (3) the effects of the basic
concept of course the issue of the level of a standard perk, or even accounting

555
method selected. Departing from the three basic issues, all assumptions, postulates,
rules, and principles in Western accounting can be applied to institutions or
companies that uphold Islamic values. Therefore, need to be designed or built
systems, accounting format that uphold the values of Islam.
In keeping with this topic, the discussion focused on the following topics:
Islamic Accounting Theory; and Islamic Accounting Practices, in which discussed
about the reflection of social accounting and accountability, with the following
description:

6. Islamic Accounting Theory

There is a remarkable change in the field of accounting for the past few
decades. Before the 1970s it was thought about accounting as a science and
practice independent of the value (value-free) have started shaken existence. The
assumption has long dominated the majority of accountants and researchers in the
field of accounting. Such a state is getting stronger because of the tendency of the
behavior of people who get carried away by the flow of the information age and
globalization.
In the era of information and globalization in the field of accounting there
are efforts to harmonize accounting practices. This means that there is the will to
impose uniform accounting practices worldwide. In other words, the values of
local accounting practices, which may be very different from the practice of the
international community, as far as possible eliminated because of the diversity of
accounting practices in each country is considered difficult to interpret financial
statements or accounting practices vary it can not diperbandingan (uncomparable).
This case invites a reaction many people, so comes the views that are the
pros and cons. Those who believe cons denounced that action to harmonize the act
of harassment against local values. Instead, they saw that in fact accounting is a
form of knowledge and practices that determined the environment (non value-
free). Some even say accounting is the "son" born of the local culture (local).
The second view, is explicitly rejected the first view is functionalist,
positivist, if traced back to the roots pemikiranya comes from August Comte. This

556
thinking has a reductionist nature, namely eliminating value content they should
have in the science and practice of accounting. This causes dryness of the value of
the business community, social order imbalances, and environmental damage
occurs.
Based on the above case, the search for forms of accounting are faced
humanist, emancipatory, transcendental, and teleologikal the necessary effort. The
question arises, what efforts should be made? This effort is philosophically and
methodologically can be done by using a meta perspective, which is a view of
trying to be on top of existing perspectives. Because this way philosophical views,
such as views of human nature and society, ontologies, epistimologi, axiology and
methodology, to be more extensive and intact, so that the formulation of
knowledge and practice of accounting to be more humane and loaded with value.
Accounting sharia, according to Iwan Triyuwono and Gaffikin said, is one
effort mendekontruksi modern accounting in the form of humanistic and value-
laden. The purpose of accounting the creation of sharia is the creation of a
business culture with insights humanist, emancipatory, transcendental, and
teleologikal. The consequence of this effort is that the ontological critically
accountant should be able to free mankind from the bondage of the reality of
civilization, and their networks of power, then give or create an alternate reality
with a set of Divine power networks that bind people in everyday life (ontology
tawhid).

In this way, alternative realities is expected to raise the awareness of self

in full obedience and submission someone to the power of God. With self-
awareness, he will always feel the presence of God in the dimension of time and
place in which it is located. Thus, through the sharia accounting, social reality will
be designed and constructed through a value-laden monotheism and submission to
the divine power networks. All this was done with the perspective khalifatullah fil
ard. This perspective means worldview aware of the nature of the human self and
responsibility later in life before God Almighty.

557
Therefore, accounting sharia is a theory that explains how to allocate resources
equitably there is not a lesson about how the accounting was there. In connection
with this Shahata explain the possible existence of sharia accounting as follows:
"postulates, standards, explanation and accounting principles illustrate all the
things ... therefore theoretically accounting concepts, principles, and goals of
Islam and all of these simultaneously run alongside the economic field, social,
political, ideological, ethical owned Islam, Islam and the life of justice and
Islamic law. And Islam is a program that has areas of economic, social, political,
ideological, management, accounting, and others. All this is a package that can
not be separated.
In search of the accounting form of sharia, must depart from the assumption
that accounting is an entity that has a two-way force. The first force is that
accounting is something that is shaped by its environment. The second strength is
that accounting is something that has the power to affect the environment, including
human behavior using accounting information. If so, then efforts should be made by
accountants is how they can create a form of accounting that can direct the behavior
of people towards ethical behavior and to the formation of an ideal business
civilization. According Triyuwono said that the ideal business is a business
civilization with humanist values, emancipatory, transcendental, and theological.
In accordance with the nature of the business, the sharia accounting must also
possess a humanist, emancipatory, transcendental, and theological. Furthermore
Triyuwono decipher these properties as follows. Accounting humanist values of
sharia is that the established accounting is intended to humanize humans, or restore
the holy man by nature. Because according to research by Morgan (1988) note, that
the accounting practices have resulted in humans becoming less humane. Or in
other terms, that our society is undergoing a process of dehumanization.
Humanist nature of accounting or other form of business, it is expected to
encourage human behavior itself. So that people increasingly strong self-
consciousness about its nature. Through self-awareness of human nature is the
foundation for human beings to give emancipatory values in sharia accounting.
These properties mean that it is no longer valid forms of domination or oppression

558
of one party to the other party. In other words, the accounting information provided
by the sharia is the form of exemption and fixed on all sides and did not
underestimate the other party, or sharia accounting will be established in a fair
position.
Therefore accounting is built on the sharia Islamic law, the sharia accounting
transcendental values clearly visible. This is a strong indication that the accounting
Sharia not merely be an instrument of business profane, but also as an instrument
that cross borders profane world. Thus, it is during this accounting tool known as
accountability to the owner of the company, then the sharia accounting is more than
that, namely accountability to stakeholders and God. With these properties, in doing
business and accounting practices, the person involved will always use, or submit
and surrender to the will of God (ethics shari'a). Values of this kind is the
theological. This means that the accounting practices of sharia will deliver real
culprit is actualized in the form of activities creating and spreading prosperity to all
the worlds.
Why sharia surfacing accounting, accounting whereas the West has been
deeply rooted in the core business of the community? As it turned out, the pioneers
of accounting, particularly the field of political economy accounting, have some
doubts about the view that modern accounting will show important. They
questioned the role of accounting to connect with the social problems and individual
organizational issues. Because attention to accounting in the community is not the
same everywhere although amongst the people (countries) that embrace the concept
entirely.
Accounting theory should review the accounting in the community where it is
practiced. This means that this attitude may be a way to give birth to the accounting
rules. As explained by the Gambling, by the absence of accounting rules, the
accounting rules the West does not address any issues related to the organization
(company), related to society and individuals. Such rules can be called as a discussion
of accounting theory now. On the other hand the public about the requirements of
accounting quantitatively increased as well.

559
 Accounting sharia does not reject the idea that the accounting adjusting the
groups concerned. But the Islamic Accounting concerning economic issues, political
issues, and also the accounting problems. In other words, its function as part of sharia.
In that context must be accepted that the accounting Islam (shari'a) play a role in
adjusting interest groups in society. Briefly explained, that sharia accounting theory
studied as an accounting system and at the same time be interpreted as something
related to management, economics, law, politics, and religion.

7. Practice Islamic Accounting

The emergence and development of Islamic financial institutions in Indonesia
which is phenomenal, has fueled the debate - more serious discussion, starting from
the product or service being offered, the pattern of the institution's management, to
the pattern of accounting. Accounting aspects of business entities is always
interesting to be used as a study and discussion, especially when the agency has its
own peculiarities as well as Islamic financial institutions. Interestingly accounting to
be discussed, of course because of some reasons. First: accounting is known as a
communication tool, or often termed as the language of business. Second, accounting
is often debated whether he is neutral or not. Third, the accounting is strongly
influenced by the environment (political, economic, cultural) in which it was
developed; and Fourth, the accounting has a very important role, because of what it
produces, can be a source or basis for legitimacy of an important decision and
determine.
In consideration of the above factors, then when the Islamic financial
institutions discussed many, the question arises as how to adopted by the Islamic
financial institutions? Is Islamic financial institutions may use accounting now
known, or should apply a different accounting practices? If so, what form of
accounting that is more acceptable Islamic or sharia? The extent to which sharia
accounting differs from the accounting practices that now exists?
In the order of technical operations, sharia accounting instrument is used to
provide accounting information that is useful for those who bekepentingan in
economic decision making. The problem that arises is how the economic decisions

560
that are likely not deviate from Islamic law, or be accepted by Islam. Therefore, in the
discussion of economic theory and practice (including the fields of management or
accounting, for example) should be discussed from the point of Islam, not merely in
terms of religion. In this regard, Qaradawi suggested that: "we do not discuss the
economy from the angle of religion, but (discuss) economy from the point of Islam
It is thus clear that the efforts we find the format of economic theory and
practice (management and accounting Islam) should be based on Islam as
something integral. Then reduced to the deeper part of an operational nature such as
how to manage zakat, how the problems of usury, and so forth. Such things is what
is the characteristics of the development of fields / aspects of Islamic life, in
accordance with the Islamic sharia.
As a derivative of the above description, perhaps the description of economic
decisions generated by sharia accounting is characterized as follows: use ethical
values as the basic building accounting, provide direction on, or stimulate the onset,
ethical behavior, fair to all parties, balances the properties of egoistic with altruistic,
and have concern for the environment.
Based on the foundation and the characteristics of the foregoing, it is expected
that sharia accounting will have a more perfect form when compared to
conventional accounting. Because through these characteristics are reflected
something that will be full accountability, social values and clear. Why so? Because
it was realized that the more technical order, namely in the form of financial
statements, accounting sharia still looking for the form. In this thesis, the concrete
form of sharia accounting as a whole can not be displayed, because to arrive at the
level of practice and intact form of financial statements requires the support of a
complete theory and strong.
In addition, businesses establish sharia accounting model is not a step
"patchwork" made to improve conventional accounting. However, this effort must
be made with a very basic philosophical footing. Behind it, a lot of philosophical
thought will not give change, if not resumed in theoretical thought and
teknis.kesimpulan that for zakat measurement of property and assets owned by an
individual or company, other approaches must be used.

561
 Islamic Accounting as a Reflection of Social Accounting and Accountability.
The form of sharia accounting is reflected in the figurative or metaphorical
"trustworthy". Metaphor mandate can be lowered to the metaphor of "zakat", or in
other words, the reality is the reality of sharia accounting organization
dimetaforakan with the charity organization. This metaphor consequences on
business organization, the business organization that is no longer oriented to profit
(profit- oriented) or oriented shareholders (stakeholders-oriented), but oriented in
zakat (alms-oriented). With the orientation of zakat, the company strives to achieve
the "numbers" zakat payment is high. Accordingly, net income (net profit) is no
longer a measure of performance (performance) of the company, but instead zakat
be a measure of corporate performance.
Judging from the practical value, accounting sharia mandate metaphor and
metaphor accounting-oriented charity is very focused on the social orientation and
accountability. For accounting (business) which bermetaforakan mandate normally
has a practical value humanist, emancipatory, transcendental and teleologikal. This
practical value, indicating the nature of the mandate for offenders
The practical value accounting sharia-oriented charity, the consequences
ontological, that the accountant is critical to be able to free mankind from the bonds
of reality (civilization) human beings with networks of power, then give or create an
alternate reality with a set of network - network Divine power that binds humans in
everyday life. By other terms, can be awakening ontology monotheism. In this way,
alternative realities is expected to raise the awareness of self in full obedience and
submission to someone on divine power. Through this self-awareness, a person will
always feel the presence of God in the time dimension and where located.
So, with sharia accounting, social reality is constructed to contain the value of
monotheism and submission to the divine power networks; that everything is done
with a meta-perspective, that perspective-Ullah khalifa fil ard, worldview aware of
the nature of the human self and responsibility later in life before God Almighty. In
the micro-scale, social reality can be identified with the reality of the organization,
that is the reality created in business organizations, thus forming conditions as
envisioned in earlier monotheism ontology. When the reality of such an

562
organization is created, it is very possible that the reality will spread the grace,
which is not just for those who are actively involved in the operation of the
organization, but also to the wider community and the natural environment.
Islam is a religion that rahmatan lil'alamiin. This means that Islam will be
applied or used by anyone, anywhere. Rahmatan lil 'alamiin is a concept that relies
on the concept of justice. Justice is the contents of the content that can not be
eliminated from the Islamic faith. So the ideal conditions of Islamic society can not
be achieved if justice is not served. Islam wants to tame all dzalim behavior of
society. Including the business community dzalim behavior. Dzalim behavior is
behavior in the form of discrimination, injustice, exploitation, pressure and behavior
sewanang-treatment with this behavior can harm others.
The basic question that arises is when a justice in a society realized? Ideal of
justice is justice, where people can live decently in various fields. It is not possible
to get the ideal Islamic society while justice is not upheld.
Based on the above explanation, the one thing that can not be avoided from the
Islamic belief that man is a caliph (deputy) of God, and man must arrange to live in
accordance with their status. Directives contained in the teachings of Islam is in order
to help realize this goal. The scholars strongly believe that the welfare of the people
and their mitigation of the burden of severe life is a basic objective of sharia. This
view, when viewed from an economic standpoint is the emphasis on the creation of
economic viability through the fulfillment of basic needs and the creation of socio-
economic justice.
Talks on Islamic accounting must be understood as a tool that has a social
orientation. Why is that? For accounting Islam not only as a tool to translate economic
phenomenon in the form of monetary measure but also as a method to explain how
economic phenomena it runs in an Islamic society. This is not the same as the
difference between the accounting descriptive and normative accounting. Descriptive
Accounting aims to offer a suitable accounting with a specific purpose. If goals are
different, then surely the norm is also different.
Clearly Islamic accounting applied to Islamic financial institutions are efforts
accounting application concerning economic issues, political issues, and also the

563
accounting problems itself. In other words, their function as part of sharia. In that
context must be accepted that sharia accounting play a role in adjusting the business
interest groups in society. Herein lies the social position of Islamic accounting.
Socially-oriented accounting is an accounting presenting or exposing the
company's social impact on the community. Thus, disclosure of the company's social
impact on society as a liability. If ihwalnya is related to the problem of social
obligation, then the way to the development of accounting standard that is acceptable
to all the people conforming to the nature of rahmatan lil 'alamiin the Islamic teachings
is by expanding the basic concepts of zakat system.
Why should extend the basic concept of zakat system? Because, as described
in the previous section, that charity as an institution that has a social perspective
should apply to all assets of companies and individuals. Although even be seen in
advance whether zakat charged to current or noncurrent assets. Given the charity is
spending to be paid upon reaching nishab. Nishab occurs when property owned by
the person or company to expand and grow, so the question will be subject to
spending zakat is as much as 2.5%, 5% or 10%, depending on the type of assets that
generates owned by a person or company. In other words, zakat in accounting
imposed on current assets.
Therefore sharia accounting social orientation is charged to the expansion of
the concept of zakat, then figuratively (metaphor) accounting organizations should
be referred back to the orientation of zakat, is no longer on the orientation of the
profit or stakeholder oriented. This is further said by the organization
bermetaforakan Triyuwono as "trustworthy". Orientation zakat implies a broad and
comprehensive. Because charity is not just expressed in terms of percentage figures,
but through charity can know the performance of the company. Ie the higher zakat
issued by the company means greater profit in the can company.
More specifically it can be said, that the use of figurative (metaphorical) to
create a reality zakat organization has multiple meanings. According Triyuwono
meaning of reality there are five such organizations, namely
There is a transformation of net profit (maximum) to the achievement of zakat.

564
 Because of the objectives is zakat, then all forms of operating companies
(accounting) should be subject to the rules (rules of game) specified in the
sharia.
Zakat contains a balanced blend of humanitarian character between the
characters egoistic and altruistic / social.Zakat mengandung nilai
emansipatoris.
Zakat is a bridge between human activities are worldly and ukhrowi.
When analyzed further, the above discussion clearly shows a clear social
orientation of zakat. At the time of zakat placed as metofora organization or charity
as a core accounting organization.
As the first meaning: there is a transformation of net profit (maximum) to the
achievement of zakat. This means that the achievement of profit is not the ultimate
goal of the company, but just a goal between.
Therefore zakat be the ultimate goal, then all forms of operating companies
(accounting) should be subject to the rules (rules of game) specified in the sharia.
For example: when a person or company issuing charity as the social orientation of
the company; what percentage of zakat issued by a person or company; and who
should be given alms. All of this is executed following the rules of the game that
exists in Islamic sharia. Violations of the rules or sharia law makes it unlawful
purpose of zakat.
Zakat contains a balanced blend of humanitarian character between the
characters egoistic and altruistic / social. That is, that someone issued zakat means
he has been concerned with other people's interests first rather than personal
interests. Egoistic character reflects that a person or company still allowed for profit
(but still within the framework of Sharia), and then a portion of the income (and net
worth) acquired is allocated as zakat. While altruistic or social means that the
company also has a very high concern for the welfare of human beings and the
natural environment, all of which is reflected in the charity itself.
Zakat containing an emancipatory values. This means, that the zakat as a
symbol of human liberator from oppression economic, social, and intellectual, as
well as the nature of liberation from oppression and human exploitation. Finally,

565
Zakat is a bridge between human activities are worldly and ukhrowi. This means,
that the zakat as a bridge, giving ontological awareness for human beings, for all
forms of profane activities are always closely linked to human life before God in the
Hereafter.
From the above discussion indicates, that all the organizations to be
prepared should really reflect on charity as a figurative (metaphorical). This
suggests a form of transformation. This transformation will not only affect the
behavior of management, stockholders, employees and the surrounding
community, but also information devices. Device information contained in this
company that is usually in the form of accounting used by the organization
concerned.
The above figures should be used as a foothold in the development of sharia
accounting format, which berdimensikan responsibility (accountability).
Dimensions of liability in accounting sharia is to have comprehensive coverage.
So accountability is not only accountable for the money (financial) used in
carrying out the activities, but this accountability should be able to increase the
responsibility of horizontally and vertically. Horizontal accountability fixed on the
public, government and regulatory compliance. While vertical accountability is
fixed on the transcendence of activity (financial, etc.) to the One who gives
responsibility. In detail, with respect to these interests Hadjisarosa identified as
follows:Kelangsungan hidup dan perkembangan perusahaan
Customers
Capital owners
Employees
Partner
Government
Society, and
Environmental Conservation.
Despite there have been eight interest that must be considered in performing
accountability for the conditions and accounting information, but it is only eight
new limited horizontal dimension. The question arises, where were the vertical

566
dimension? The answer is there on the dimensions of zakat. Zakat as a
manifestation of accountability servant who acts / business activity can be audited
later accounted for the sanctity of the Essence of capital to capital providers. It is
these dimensions which is the highest dimension.
Subject relating to accountability vertically by sharia governed by the laws of
God contained in the Qur'an and the Sunnah of the Prophet. The next issue is how
efforts to improve the accountability associated with the horizontal dimension.
Presumably view Lee Parker can be a reference or hint for increased accountability,
as follows:
Integrate between data of financial and non-financial
Assessment of the results that are financial and non-financial by comparing
it with the purpose to be achieved.
Expanding the scope of responsibility include community / neighborhood
The report regarding the level of the company's compliance with government
regulations and accounting standards.
Within this framework, the accountants faced with the progress of the future,
which is fraught with uncertainty, irregularities. When this condition occurs, then
the accountant should respect the values, norms and theological ethics. So that they
are able to present himself as an accountant who is reliable, honest, responsible, and
so forth. Thus, accounting should not only future-oriented decision-making
(decision making oriented) but should be oriented towards accountability
(accountability oriented).
According to the keywords of this discussion, namely accountability, then
accounting is a hallmark of sharia accounting. For accountability accounting is
accounting provide fair information and bernar. Thus accounting sharia (Islamic)
which has an element of understanding of economics, politics, and religion are most
likely to show the key to accounting Post-Newton.

567
8. Conclusions And Recommendations
7.1 Conclusion
Based on the above description can be concluded as follows: On a
practical level sharia accounting is socially oriented accounting and
accountability. Because sharia accounting can be present or reveal the
company's social impact on the community and at the same time presenting
accountability reports humanist, emancipatory, transcendental and theological.
Therefore, the basic concept of accounting islamic zakat and trustful nature
oriented.
The further development of accounting is not just considered as a science
(science) and the universal value-free technology. However, accounting is a
product of history that reflects the culture in the accounting implemented. In
other words, accounting sharia is a science and technology that is growing and
developing universal in accordance with changes in its environment, both social,
economic, political, regulatory, culture, perceptions and values (community)
where sharia accounting is applied.
Accounting accounting sharia is developed not only by way of
"patchwork" of conventional accounting, however, is the philosophical
development of the values of the Qur'an which was revealed the thinking of
theoretical and technical accounting. Therefore, substantive sharia accounting
humanist, emancipatory, transcendental and theological.

7.2 Suggestion
Whereas in the implementation of corporate activities, sebaikanya slightly
from the earnings / profit good company is always used for charity. The
government in this case acts as one of the stakeholders - should be sanctions to
companies that do not emit or not to do so. Because zakat can be included in one
of the company's CSR activities.

568
 REFERRENCES

Adnan, M. Akhyar (1996). (Teknologi) Akuntansi Syariah, Kertas Kerja

Seminar Nasional Hari Teknologi Nasional, Yogyakarta.
Baswir, Revrisond. (1996). Akuntansi dan Ideologi, Kertas Kerja pada
SeminarNasional Harteknas, Yogyakarta 27 Desember.
Cooper, D.J. dan T.M. Hopper, (1987). Critical Studies in Accounting, Accounting
Organization and Society. New York: Prentice-Hall International, Inc.
Gaffikin, M.J.R. (1998). Accounting Methodology and The Work of R.J. Chambers.
New York: Garland Publishing, Inc.
Gambling, Trevor E. (1971). Toward a General Theory of Accounting.
International Journal of Accounting Education and Research, Vol. 7, No. 1
Fall.
Gilling, D.M. (1996). Accounting and Social Change, International Journal of
Accounting, Education and Research, Vol. 1, No.2 Spring.
Hadjisarosa, Poernomosidi, (1997), Makalah Kursus Singkat dan Lokakarya
Ekonomi Islam II Sekolah Tinggi Ilmu Syari'ah, Yogyakarta, tanggal 18
- 21 Agustus , Hal. 4.
Harahap, Sofyan Syafri, (1997). Akuntansi Islam, Jakarta: Bumi Aksara,
Hayashi, Toshikabu. (1995). On Islamic Accounting, Tokyo:
Institute of Middle Eastern Studies, International University of Japan.
Kuntowidjojo, Paradigma Islam: Interpretasi untuk Aksi, Bandung: Penerbit Mizan,
Laughlin, R.C., T. et. al. (1989). Contextual Studies of Accounting and
Auditing: An Introduction, Accounting, Auditing and Accountability.
Journal.
Lodh, Sudhir C. (1996). Critical Studies in Accounting Research, Rationality and
Habermas: A Methodological Reflection, Paper to be Presented at the
Fourth CPA Conference. New York City, 26-28 April
Neimark, M. and Tinker, (1996). The Social Construction of Management Control
System. New York: Prentice-Hall.
Parker, Lee D. (1994). Heres to An Accountable Future. Australia: International
Accounting Conference, November 14-16.
Shahata, Shauqi Ismail. (1987). Financial Accounting from the Islamic Point
of View, Cairo: Alzahra al-A'lam al- A'rabi, Hal. 9.
Triyuwono, Iwan (1996). Organisasi, Akuntansi, dan Spiritualisme Islam, Makalah
Stadium General Mahasiswa Syari'ah Banking Institute Yoyakarta,
tanggal 28 September, (19970 Akuntansi Syariah: Implementasi Nilai
Keadilan dalam Format Metafora Amanah, Kertas Kerja, Disampaikan
dalam Kuliah Umum di Fakultas Syariah IAIN Walisongo Surakarta, 24
Februari.
M.J.R. Gaffikin, (1996), Shari'ate Accounting: An Ethical Construction of
Accounting Knowledge The Fourth Critical Perspectives on Accounting
Symposium, 26-28 April 1996, New York City,

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SHA-06

OPTIMIZATION OF QUALITY IN ISLAMIC

BANKING FINANCE MUDHARABAH

Fitri Tat Mainul Qulub

University of Jember, Indonesia
Email: Fitri_tatmainul87@yahoo.co.id

ABSTRACT

The purpose of this study was to determine the effort that can be done to optimize
the financing is to be competitive with murabaha financing and Musharaka. This
study shows the optimization can be done in several ways first, sustainability and
transparency of information on the business carried on, both, coaching and
development of small industries are directly supervised by the Islamic Bank, third,
make the rules and regulations are appropriate and standardized with Islamic
principles , Method used is the study of literature and data used are secondary data
source that is obtained indirectly from journals, financial reports, website and
others.
Keywords: Bank Syariah, Mudharabah Financing

1. Preliminary
The existence of Islamic banking institutions is driven by a strong desire of
the people of Islam who want to avoid bank transactions deemed contain elements
of usury. Riba is taking extra exaggerated, either in buying or selling or lending
and borrowing, as falsehood contrary to the principles of Islamic economics. The
prohibition of usury in Islam is a comprehensive primer for Islamic banks in the
ordinary course of business, so the contract between Islamic banking debts with
the customer must be in the interest-free corridor (Erni Susana, 2011). So in the
operations of Islamic banks does not use the principle of interest but instead uses
the principle of sharing which is expected to lead to the welfare of society.
In recent years, Islamic banking has developed significantly, namely by the
increasing number of Islamic banking office offers a variety of facilities and
products, it is due to public demand for products and services of Islamic banks.
From the statistical data of Islamic banking (SPS) issued by Bank Indonesia (BI)

570
showed that up to April 2016 the number of banking offices sharia reach 199
Islamic banks consisting of 12 units of Islamic Banks, 22 Business Unit Syriah
and 165 Unit Financing Bank Rakyat Syariah. (www.bi.go.id).
In the development of Islamic banking, the government has issued several
laws, including Law No. 10 of 1998 on a stronger provide a legal basis for Islamic
banking. Then Law 23 In 1999, the government gave authority to the Bank
Indonesia to be able to carry out their duties based on Islamic principles. In law
No. 21 in 2010 described 8 kinds of financing in Islamic banking, namely contract
wadiah, mudharabah, Musharaka contract, contract murabaha, salam contract,
contract istishna, Ijara contract, and qardh.
One of the financing used in Islamic financial institutions of which uses a
system of financing that is expected to be a product that dominates the existing
financing in Islamic banking. According to (Yusuf and Wiroso 2011) Mudharabah
is a partnership contract partnership among providers of operating funds (called
shahibul maal / rabulmal) with fund management / business management (referred
to as mudharib) to obtain the results of operations in accordance portion (ratio)
agreed jointly at the start contract. According to Antonio (2012: 95), the notion of
mudaraba are: Al-Mudharabah is a contract of business cooperation between the
two sides in which the first party (shabibul maal) provides a whole (100%) of
capital, while the other party to become a manager.
One of the financing used in Islamic financial institutions of which uses a
system of financing that is expected to be a product that dominates the existing
financing in Islamic banking. According to (Yusuf and Wiroso 2011) Mudharabah
is a partnership contract partnership among providers of operating funds (called
shahibul maal / rabulmal) with fund management / business management (referred
to as mudharib) to obtain the results of operations in accordance portion (ratio)
agreed jointly at the start contract.
So Mudharabah financing is a form of financing agreement that will be
given to customers. Losses in this financing is borne by the owner of the funds
(shahibul maal) unless the loss is a result of the error manager (mudharib), then
the manager should be responsible for the losses. Business profits are divided

571
 according to the collective agreement that has been set forth in the contract. With
mudaraba system is expected to move a productive business so as to creating new
jobs.
But in reality, the data show that financing is always smaller than
Musharaka financing and murabaha Islamic bank in Indonesia. As shown in the
table have been below:
Table 1
Percentage of Bank Syariah Financing Agreement
(Dalam Milyaran Rupiah)

Pembiayaan 2009 (%) 2010 (%) 2011 (%) 2012 (%) 2013 (%) 2014 (%) 2015 (%)

Mudharabah 6.597 15,23% 8.631 14,20% 10.229 11,96% 12.023 9,41% 13.625 8,30% 14.354 7,90% 14.906 7,98%

Musyarakah 10.412 24,03% 14.624 24,07% 18.960 22,16% 27.667 21,67% 39.874 24,30% 49.387 27,26% 54.033 28,93%

Murabahah 26.321 60,75% 37.508 61,73% 56.365 65,88% 88.004 68,91% 110.565 67,39% 117.371 64,80% 117.777 63,08%

Total 43.330 60.763 85.554 127.694 164.064 181.112 186.716

Source: www.bi.go.id, June 2015

Judging from the table even though over the years the amount of financing
is increasing, yet the number of nominal growth financing is still far smaller than
the Musharaka financing and murabaha. Of financing continued to decline since
the period of 2010, even in the period of 2014 financing is only 7%. Financing the
Islamic Banks in Indonesia is dominated by Murabahah financing in 2012 that is
equal to 68.91%.
The decline Mudharabah in some Islamic Banks in Indonesia in 2014-2015
can be seen in the following table:
Table 2
Development Financing Mudharabah in Islamic Bank
Bank 2014 2015
Bank Syariah Mandiri 3.164.130.260 2.888.566.081
Bank Muamalat Indonesia 1.723.619.000 1.052.718.000
Bank BRI Syariah 886.663.000 1.121.467.000
Bank BCA Syariah 188.351.931.162 198.422.896.821
Bank BNI Syariah 1.041.245.000 1.279.950.000
Source: Data processed annual report, 2015

From year to year financing is constantly decreasing. The decline

Mudharabah financing this indicates a low drive customers to the mudaraba

572
financing. It makes going blindly customers to choose more than its financing of
financing.

2. Research methodology
This study uses literature or literature. In this study, the data used is
secondary data source is data obtained indirectly, for example journals, financial
reports, website, seminar and others. The purpose of this study was to find out
efforts should be made to optimize the financing is to be competitive with
murabaha financing and Musharaka.

3. Discussion
As the state of the Indonesian economy slightly deteriorated with the decline
in the rupiah, then people start to earn a lot through business activities to make
ends meet. To run the business community requires funds that can be derived
from Islamic banking financing. One of the financing used in Islamic banking is a
system of financing that is expected to be a major financing from other financing,
but in fact compete with the mudaraba financing murabaha financing and
Musharaka.

3.1 Mudharabah financing

Mudharabah is a type of contract that could generally be carried out by an
Islamic bank. Kind, including contract Trust Financing. System of Bank Syariah
Mudharabah on a business cooperation agreement between the two parties in
which the first party to provide the entire capital, while the other party to become
a manager. Business profits are divided according to the agreement set forth in the
contract. In the determination of his contract, to be performed at the beginning
when it will start the mudaraba contract. In this mudaraba contract, the manager
must perform its obligations carries on business in the best way possible and in
running the business, it should be clear and in accordance with Islamic principles.
Meanwhile, if the loss is borne by the owners of capital loss is not due to the
negligence of the manager.

573
3.2 Murabahah financing
Murabaha is a sales and purchase agreement between the bank and its
customers. Here the Islamic bank customers purchase necessary items were then
sold to the customer at cost plus an agreed profit margin between Islamic banks
and customers. Murabaha, Islamic connotations basically means sales. One thing
that distinguishes it from other sales method is that the seller in murabaha clearly
tell the buyer how the value of the goods sold and how much profit
dibebankannya on that value. That advantage can be based on a percentage.
Murabaha is a sale and purchase transactions outstanding, which bank to buy
goods from manufacturers and then sell it back to the bank customer is added to
the benefits agreed by the bank and the customer.

3.3 Musharaka financing

Musharaka is a partnership agreement between the two sides or more to a
specific business, in which each party contributes funds provided that the profits
are shared by agreement while the loss is based on the portion of the fund.
In a business activity there will always be a risk, it can not guarantee that it
will experience a gain or loss. As already explained, the financing is also
emerging risks.
According to Antonio (2012) the risk of financing, among others:
(1) asymmetric information problem is the tendency of one party that controls
a lot more information to be dishonest. Therefore, the determination of the
financing for the results must be conducted with respect to incentive
compatible constraints (limits to provide an incentive for customers to be
honest),
(2) side stream that customers use the funds not as called for in the contract
(3) negligent and willful misconduct. These risks can not be avoided but can
be managed and controlled.
Prakoso and Anwar (2001) found several problems in mudharabah,
including the low level of customer honesty in giving reports the results obtained
in the exercise of business resulting in asymmetric information. This condition is

574
causing the banks assign different policies related to financing is to be able to
anticipate the loss by giving the condition that there is a guarantee for those who
asked for financing with skim mudharabah. The implications of the guarantee led
to more lack of financing requests.
Another issue regarding the risks of financing is borne by the owner of the
funds when experiencing loss. In other words, if a loss occurs, the loss is only
covered by one of the parties. This of course can cause doubt, both from the bank
and from the customer. Thus indirectly impact on how much banks prefer to
further improve the financing murabaha and loss and also have an impact on
customers' motivation to prefer murabaha financing which was considered easier
and advantageous both from the bank and the customer.
In addition prospective customers of financing should be directly involved
as a fund manager and also are required to have expertise, skill so it is this which
also affects the motivation for customers to choose other financing easier and
advantageous both from the bank and the customer such as the financing
murabaha which is financing sale of goods between banks and customers and also
musharaka financing that is an investment without having to involve the customer
in the execution of projects financing.
According Adiwarman Karim (2003) To reduce the likelihood of these
risks, the Islamic banks can implement a number of certain restrictions when
disbursing financing to mudharib, which is the goal for mudharib systematically
"forced" to behave maximize profit for both parties either mudharib it itself as
well as for shahibul-maal. The limitation as the necessity of guarantees in the
form of fixed assets to prevent mudharib commit fraud because of the guarantee
that has given it into the price of fraud behavior and set a ratio of a maximum of
operating costs, which are intended to mudharib run their business operations
efficiently and sharing of benefits based on the profit and los sharing.
In addition to minimizing the risk of the banks can control and monitoring
to continue to monitor and track the customer's company, directly or indirectly, in
order to avoid distortions. As well as the banks can provide advice and consulting
for the company that customers can run well.

575
 Muhammad (2005) explains that in order to attempt to optimize the
financing is to be done with some effort: first, the sustainability and transparency
of information on the business carried on, both, coaching and development of the
industry - small industry that is directly supervised by the Islamic Bank, third,
make the rules and appropriate regulation and standardized with islamic
principles. Additionally Muhammad (2005) explains that the implementation of
risk management is one way to optimize the results of the financing for Islamic
banking. Implementation of this risk management related to the anticipation of a
variety of risks that would potentially arise in the financing for the results,
including credit risk, market risk (associated enterprises financed).
Implementation of risk management can be initiated with screening (screening) of
prospective customers and projects financed, for the management of Islamic bank
financing is strongly associated with the risk of the customer code and projects to
be financed (Muhammad, 2005).
Of financing can also be optimized in a way that is by increasing the
revenue share. Through the scheme for optimal results, improvements allocation
of economic resources and finance. According to Antonio (2001) in Yahya
(2013), that the result is a system for the processing of funds in the Islamic
economies sharing venture between the owners of capital (sahibul maal) and
managers (mudharib).
Similarly, according to Maryana (2006), also revealed the level of revenue
sharing can be defined as the level of presentation in profit sharing. Previous
research in Malaysia by Haron and Ahmad (2000), have shown levels for Islamic
banking results have an impact on third-party funds of Islamic banks. In
Indonesia, a similar study was also conducted by Arudina (2007) as well as
research Budiati (2007), which showed that the level of revenue sharing is closely
related to third-party funds of Islamic banks.
Financing is supposed to be able to remain in place in the Islamic banking
without having to fear the risk, because the system of profit sharing (Mudharabah)
is a cornerstone of public investment and operational characteristics of Islamic
banks in an effort to avoid the practice of usury. As described above, in order to

576
reduce the possible risks of Islamic banks can apply restrictions and control and
monitoring. Meanwhile, to make the sharing system attractive to Islamic banking
business by using the level of expectation in the results and try to provide profit
sharing ratio is higher. And to address issues that are reluctant to share the profit,
the bank introduced a system of Net Revenue Sharing so that no aggrieved party
both banks and customers.
But the fact is the most dominant financing murabaha financing which is
one type of financing non-sharing, and the banks are the world's top Islam also
has a tendency to make murabaha scheme as the main financing. Given the
Islamic bank is a bank that is the main principle for the results, it should be the
result of financing or the preferred and dominant than the financing murabaha
(non profit-sharing) (Friyanto, 2013).

4. Conclusion
Financing is always compete with other financing caused by several
factors including the risk of loss if the loss was borne by only one party, but it is
still a low level of customer honesty in the reporting results. To overcome these
banks can make efforts to optimize the financing mudharabah in order to become
a finance major, namely by increasing the percentage ratio or for hasinya. In
addition to optimizing can also be done in several ways like the first,
sustainability and transparency of information on the business carried on, both,
coaching and development of the industry - small industry that is directly
supervised by the Islamic Bank, third, make the rules and regulations are
appropriate and standardized with islamic principles.

5. Suggestion
1. Required thorough dissemination of Islamic banking products to enhance
the community's understanding of the mudaraba financing products.
2. It takes a kind of appreciation and incentives for Islamic banks to
effectively distribute products of financing through the performance
appraisal

577
 REFERENCES

Adimarwan Karim, Bank Islam Analisa Fiqh dan Keuangan, Jakarta: IIIT, 2003
Amat, Y. 2005. Faktor-faktor Yang Mempengaruhi Minat Masyarakat untuk
menggunakan Jasa Perbankan Syariah.Jurnal Ekonomi Keuangan dan
Bisnis IslamEKSIS Vol 1 No 2 April-Juni 2005
Antonio, Syafii. (2012). Bank Syariah Dari Teori ke Praktik. Jakarta: Gema
Insani
Arundina, T. 2007. Pengaruh Tingkat Suku Bunga Bank Konvensional dan
Tingkat Bagi Hasil Bank Syariah Terhadap DPK Bank Syariah.Skripsi :
FEUI.
Erni Susana, Annisa prasetyanti. Pelaksanaan dan Sistem Bagi Hasil Pembiayaan
Al Mudharabah pada Bank Syariah.Jurnal Keuangan dan Perbankan,
Vol. 15.
Fitriyah, N. 2010. Kontribusi Incentve Compatible Constrains dan Prinsip Bagi
Hasil untuk Mereduksi Terjadinya Indikasi Moral Hazard dalam
Penyaluran Dana Pihak Ketiga dan Pengaruhnya terhadap Pertumbuhan
Dana Bank Syariah Survey pada Bank Umum Syariah di Indonesia).
Thesis : Unpad
Friyanto. Pembiayaan Mudharabah, Risiko dan Penanganannya. Jurnal
Manajemen dan Kewirausahaan, Vol 15.
Haron, S. dan W. N. W. Azmi. 2005. Measuring Depositors of Malaysian
Islamic Banking System: A Co-integration Approach. Proceeding 6th
International Conference On Islamic Economic and Finance Vol.2.
Muhammad, Y., Wiroso. (2011). Bisnis Syariah. Jakarta: Mitra Wacana Media
Muhammad. 2005. Manajemen Bank Syariah Edisi Revisi. Yogyakarta: Unit Penerbit dan
Percetakan (UPP) AMP YKPN.
Nasser, K. dan J. A. Al-Khatib. 2005. A Study Of customer satisfaction and
Preferrence in Jordan Islamic Banking. International Journal Of Bank
Marketing 173 MCB UniversityPress.
Prakoso, Sigit dan Syamsul Anwar (2001) Permasalahan Mudharabah Dalam
Aplikasinya Di Lembaga Keuangan Syariah, Tesis Program Pasca
Sarjana UIN Sunan Kalijaga Konsentrasi Keuangan dan Perbankan
Syariah.
Wiroso. (2011). Akuntansi Transaksi Syariah. Jakarta : Ikatan Akuntan Indonesia

578
SHA-07

THE VALUE OF ISLAMIC SOCIAL REPORTING DISCLOSURE

Novi Wulandari Widiyanti

University of Jember
Email: novie_first@yahoo.co.id

ABSTRACT

Indonesia is one of the largest muslim country in the world. Therefore, Islam has
significant value that influencing the manner in wich muslim conduct their public
and private live. In fact, the rapid development in Islamic Capital Market and
sharia banks in Indonesia, show that sharia Islam has formulated a
comprehensive ethic governing how business should be run and how banking and
finance is to be arranged. Those also force accounting to have additional
dimension to financial reporting to stakeholders. The sharia bankings need to
disclose a religious aspect to their financial statement. The additional information
should cover the fulfilment of companies obligation with sharia frameworks, such
as zakat, sadaqa, shariah compliance status, wages and compensation, etc. This
situation makes companies, particularly sharia bankings, are expecting to have
Islamic social reporting disclosure. The muslim stakeholders need to be assure
that the companies were operating under Islamic laws or sharia framework. This
paper aims to measure the extent of ISR as practiced by sharia banking in their
annual report on 2015. The result showed that there were two themes that highly
disclosed by sharia banking, which were employees and society. Based on the
data of the disclosure index, it could be concluded that the extent of ISR in the
annual reports of 5 top sharia banking around 2015 in Indonesia is considered to
be adequate.

Keywords: Islamic social reporting disclosures, sharia framework, sharia banking

1. Introduction
Financial reporting was one of effective communication language for
corporations to their stakeholders, such as the employee, individual and
institutional investors, and also the government. Such communication deemed
important as it reflects the companies accountability towards their stakeholders.
Stakeholders, commonly sharehoders and other potential investors are mostly
rely on financial report to assist them to make economic decisions. Information

579
is useful for decision-making when social and environmental information are
provided according to the demand of the more influential users (Zain, 1999).
Financial report made based on the principle of full-disclosure, no
information of substance of interest to an average rational investor should omitted
or concealed as this may affect judgement (Haniffa, 2002). Financial reporting
standard stated that as means of full-disclosure, additional information should be
included in financial report. One kind of disclosure that are needed by
stakeholders is social reporting. The primary purpose of social reporting is to
determine the impact of corporate actions on the quality of life of the society
(Daykin, 2006)
Companies have been pressured by stakeholders to expand their social
reporting and disclosed in the annual reports. Each stakeholdes have various needs
of information. Companies need to take into account those needs in order to
improving stakehoders decisions. Thus would affect how companies formulated
their disclosure policy. Although it is hard to accomodate all the needs of the
stakeholders, it is companys responsibility to provide information and disclose it
to all users.
Additionally, there was massive growth on corporate disclosure
perspective. The disclosure has extended to encompass other types of information
concerning employees, community and the environment. Companies must go
beyond the economic responsibility and respond to the changing on expectations
of the society. Companies disclosure policies need to accommodate the values,
norms, beliefs and attitudes of each stakeholders which are always changing all
the time, as demanded by society.
Since there are various needs on corporate disclosure, thus has resulted in
a non-standardized CSR form of measurement. For example, the CSR form of
measurement build by Environics International, construct from 4 dimensional
measurement. The first is the consumer behaviour towards an irresponsible
company.Secondly is the companys role expectation. Thridly is the notion factors
of the company and the fourth is the ability to testify a responsible company.
Another way to measure the CSR was build by China CSR mapping. There were

580
five measurement dimensions which are the environment, community, employees,
customers interest and policy of the company (Wolzak, 2010)
Furthemore, with the resurgence of Islam, muslim decision-makers may
expect companies to disclose more information that would help them fulfil their
spiritual needs (Othman, 2010). In Islamic perspective, the context of CSR form
of measurement was different with the typical CSR measurement build. Asyraf
Wajdi (2008) has developed two dimension on Islamic CSR dislosure, namely
Shariah (Islamic Law) and Piety. Shariah is used as tool to guidance companies to
understand the concept of CSR. The characteristics of CSR such as human
dignity, free will, equality and rights, truth and responsibiliy called Piety. The
similar research is conducted by Chamhuri and Hossain (2009). It is showed the
importance of responsible behaviour on society, environment and economy. The
study also highligted the relevance of Islam and the concept of CSR.
However from those study above, the conceptual model of Islamic CSR
was not a major concern. It is apparently considered as a research gap to the
knowledge of the CSR especially in Sharia Banking practice. Lacking of study
that look specifically into the Islamic CSR, caused a big gap on developing
Islamic CSR literature. In accordance with the universal nature of Islam, Islamic
CSR measurement also faced inconsisteny of the use of dimension and ellement.
Those problem becoming the gap to the research on Islamic CSR.
This study attempt to measure the extent of Islamic CSR as practiced by 5
sharia-banking in their annual reports in Indonesia during 2015. Indonesia is the
country with the fast growing numbers of moslem in the society. Therefore
sharia-bankings have an important role as financial institutions and financial
intermediaries. Sharia bankings are built to fulfill the needs of muslim related to
finnace. They were expected to be more accountable in terms of reporting their
activities in conformance with Shariah

581
2. Literature Review

2.1 Accountability

Accountability on Islamic perspective was an extention of the basic

Islamic concept of Tauhid which meant of unity with God. It means that every
person was accountable to God, society and the environment. Thus would bring
consequences that every corporations must strive for an optimal balance on
making close and good relationships among society and God. Therefore the
difference between Islamic CSR and typical CSR definiton is in the concept of
accountability to the God. Commonly CSR goals only related to the interest of
people or organizations. This built relationship involves only the human relation
(habl min al-nas) without achieving spiritual needs, namley the human relation
with the God (habl min Allah).
The Islamic perspective of disclosures comprises of two essential
principles. The two princliples are underlie the concept of accountability in Islam.
It consist of full disclosure and the concept social accountability (Baydoun and
Willet, 2000). The concept of full disclosure and social accountability have the
similar purposes to serve the public interest. Public particularly Islam society has
the right to know about how corporations conduct their operations, how its affect
society and whether the objectives are appropriate with the requirements of
Shariah. Hence the importance of Islamics CSR disclosure were, to show the
compliance of corporations with sharia and the affect of corporations to their
society, and also to help muslims perform their duties to God.

2.2 Nature of Social Reporting

Gray, Owen and Maunders (1987) has been defined corporate social
reporting as follow:

...the process of communincating the social and environmental

effects of organisations economic actions to particular interest
groups within society and to society at large. As such, it involves
extending the accountability of organisations (particularly companies)

582
 beyond the traditional role of providing a financial account to the
owners of capital, in particular, shareholders.

From the definition above, social reporting reflect the new and broader
expectation of society with regard to the role of companies. It also part of
communicating information about social reality for both inside and outside of
companies.
However, as a form of communication process, social reporting consist of
the five elements of communications which are: source (who), channel (how),
encoding process (why), message (what) and recipient (to whom). From those
five elements, there are two elements caused problems in communicating social
reporting. The two elements are encoding process wich referring to the
objectives of disclosing social reporting and the message which referring to the
extent and format of disclosure.
The objectives of the corporate responsibility are vary depends on how
companies interpreted the concept of CSR. Identification and interpretation on
activites that are generally recognised as beneficial to the well being of society is
often based on human ethical or moral reasoning (Adnan, 2015). In ethics
perspective, it is hard to decide the the rights and responsibilities of users of
financial statement and companies respectively. There also no mandatory
regulation that particularly decide on the extent and type of disclosure. From the
perspective of the users of information, more disclosure means better information
to make optimal decission. However, it also has consequencess. Generally,
companies unwilling to adding additional cost through expanded disclosures
unless there are law mandatory for that.
Hence, the problems of social disclosure can be identified as two
important factors. Firstly, to find the appropriate balance between cost and benefit
of disclosure, without neglecting the accountability and responsibility to the
stakeholdes. Another problems appearce due to reaching a consensus on type of
information to be disclosed , and form of measurement and presentation of social
reporting.

583
2.3 The Sharia Framework
There were development on several frameworks in addressing the issue on
corporate social reporting. One of the conventional frameworks has the basic
elements developed by Gray et all., 1996. He stated that:
a formal account: prepared and communicated by an organisation;
about social and environmental aspects of organisations activities;
and communicated to the internal and external participants of the
organisation
In the conventional framework, one of the drawbacks is that
companies commonly do not give reasoning on disclosing or not
disclosing some items of information on their financial report.
Furthemore, there are limited discussions on social impact of social
reporting.

The conventional framework might not be perfect, since it based on human

faith. The frameworks objective basically address material and moral aspects
(Haniffa, 2002). The spiritual aspect is less relevance to accounting disclosure
practice.
In contrast, the sharia framework would be the most comprehensive. It
takes into account the material, moral and spiritual elements and balance between
those elements and obligation to serve God. It also part of manifestation of value
commitment and value fulfilment as embodied in the Quran and Hadith.
The basic foundation of the Sharia is Tawahid (unity of God). God is the
ultimate owner of everything on the universe (Quran, 57:5) and that ummah is
ultimately accountable to God (Quran, 2:28). This directs moslem to accepting
Sharia Islamiyyah wich is derived from Quran, Hadith and Fiqh. Sharia consisting
of Gods commands and prohibitions, govern mans external actions, human
reasoning and intuition of what is right and wrong (Khadduri, 1984). Mainly
sharia concerned on promoting social justice and realising benefits for the people
in this world and hereafter.

2.4 Islamic Social Reporting

Islamic social reporting is an extention of social reporting which
encompasses not only a broader expectation of the society with regard to

584
companies role in the economy buat also on spiritual perspective (Haniffa, 2002).
The major concern of Islamic social reporting is on social justice, instead of the
environmet, minority interests and employees. Another issues which also
considered as most importance are related to the well-being of the society
pertaining to interest and unfair trading practices (Sulaiman, 2005). For example,
their lawful dealing, income distributions to the beneficiaries called zakat,
sadaqa(charities or gift), etc. It is consistent to the stakeholders theory whereby
management need to maintain companys success by providing information to all
stakeholders. Therefore, management need to identify, evaluate and disseminate
information on social and environmental information for fullfill the stakeholders
need.
Recently, there was an increasing number of Islamic bankings and Islamic
capital market. They were expected to present a religious dimension to their
financial statement disclosures for Islamic stakeholders. Haniffa and Hudaib
(2001) clearly stated that the conceptual framework for Islamic accounting should
be based on sharia and it was supported by the purposes of Islamic accounting.
Commonly the purposes of Islamic accounting are to assist in achieving socio-
economic justice and obey the obligations to God (Allah), society and individual
concerned. Islamic accounting also suggested that corporations need to disclose
certain information on how corporates work to fullfill all the requirements on
sharia (Ghani, 2016). For example: Islamic corporations was expected to disclose
on the obligation to pay zakat as part of their social responsibility through society.
Thise meant that financial reporting disclosure in Islamic corporation was more
detailed than the conventional disclosure requirements.
Islamic social reporting has been developed based on Sharia. Sharia
adressed three interrelated dimensions which are: 1. Establishing socio-economic
justice as primary objective 2. Sharing benefits to the community 3. Achieving
wealth. Those three interrelated dimensions would lead to the essential
characteristic of the report. Islamic social reports need to address the importance
of the concept of ummah and the obligation and prohibitions om matters related to
commercial activities (Baydoun and Willet, 2000).

585
2.5 Development of Islamic Social Reporting Disclosure Index
Prior studies were undertaken to develop a list of ISR disclosures index.
The study conducted by Haniffa (2002) result on the scope of ISR disclosure is
confined to five main themes: finance & investment, product, employees, society
and environment. The table below explained the summary contents of Islamic
Social Report according to Haniffa, 2002.
Tabel 1
The Summary Contents of Islamic Social Report
Theme Ethics Content
Finance & Investment Tawhid; Halal v Riba activities: Identify
Haram; Wajib activities and % profit
contribution
Gharar activities: Identify
activities and % of profit
contribution
Zakat: amount and beneficiaries
Product Tawhid; Halal v Nature of product/service:
Haram Identify activities and % of
profit contribution
Employees Tawhid; Adl; Wages
Amanah Nature of work: religious
provisions: Holidays and leave,
working hours
Education and training; Equal
opportunities
Society Tawhid; Ummah; Saddaqa: Amount and
Amanah; Adl Beneficiaries
Waqf: Type and Value
Qard Hassan: amount and
beneficiaries
Environment Tawhid; Khilafah; Use of resources: Description
Mizan; Akhirah; and amount
Itidal v Israf Conservation of Environment :
Description and amount spent
Source: Haniffa, 2002
Othman (2010) adding some other themes on disclosures of the
Islamic social reporting. He was reviewing the dislosure requirements of
the Companies Act 1965, Financial Reporting Act 1997, Malaysian

586
Accounting Standard Board, Financial Reporting Standard 2006 and Malaysian
Code of Corporate Governance Revised 2007, and made some changes in the
disclosure index. The disclosure created by Othman are: finance and investment,
product and services, employee, society, environment and corporate governance.
The ISR disclosures made by Othman has a total of 43 items of disclosures index
were developed under the 6 themes above. The full items available in the
appendix.

3. Research Method
The objective of this study is to measure the extent of Islamic social
reporting disclosed in the annual reports of shariah banking companies in
Indonesia. The research method was content analysis because this method mainly
used to examine written material contained in the annual reports (Othman, 2010).
The sample data selected from 5 top sharia banking in Indonesia based on their
total asset. A review of annual reports was done on 2015.
Data Analysis made through content analysis. It was used to describe the
presence of absence of the 43 ISR items, built by Othman (2010) which were
coded according to the themes of the disclosures The nominal score was used to
record the absence (represented by 0) or the presence (represented by 1)of an
item which was called the un-weighted aprroach. This was displayed in appendix.

3.1 Data Analysis

Descriptive statistic through content analysis was used to describe the
presence of absence of the 43 ISR items which were coded according to the
themes of the disclosures. The table displayed in appendix A. The maximum score
for each items was 43 items multiplied by 5.

3.2 Key Finding

There were two ISR themes that were frequently disclosed by the sharia
banking in Indonesia, employees theme and society themes. There were 8 items
under employees theme that frequently disclosed, which were: nature of work:
working hours/holidays/other benefit; education and training/human capital

587
development; equal opportunities, employee involvement, health and safety,
working environment, higher echelons in the company perform the congregational
prayers with lower and the middle level mangers; muslim employees are allowed
to perform their obligatory prayers during specific times and fasting during
ramadhan on their working day. Almost all sharia banks disclose those 8 items in
their annual report. This means that employees were have an important role on the
operation of the company and therefore have to be disclosed.
This study also found that under society theme, there were 7 items that
commonly disclosed in the annual report. There were: saddaqa/donation, qard
hassan, graduate employment, underprivileged community, children care,
charities/gifts/social activities and sponsoring public health/recreational project/
sport/ cultural events. Society also was the highest theme of disclosure on annual
report of 5 sharia banking in Indonesia on 2015.
The riba activities were reported as interest income or interest
expensein the annual report. All the sharia banks disclosed that they were not
involve in riba activities. Those were suitable with the status of sharia banking,
which had to be comply the sharia frameworks.
Another key findings were that several items that were not disclosed,
namely policy on late repayments and insolvent clients/bad debt written-off,
current value balance sheet, employment of other-special-interest-group,
endangered wildlife, ownership structure: number of muslim shareholders and its
shareholdings, BOD structure muslim vs non muslim members.
There were two themes which highly disclosed in the annual reports of 5
top Sharia Banking in Indonesia on 2015. The results show that employees and
society were two themes which commonly disclosed in the annual reports. In
average, the ISR disclosure of 5 top sharia banking on 2015 annual reports was
68%. This showed that sharia banks were well aware of their corporate
responsibility and the involvement of companies with society was a key part of
ISR. This result comply with the study of Othman, 2010.

588
4. Conclusion
The objective of this study was to examine the extent of Islamic social
reporting in the annual reports by 5 top sharia banking in Indonesia. There were
two themes, emplot yees and society which highly disclosed in annual reports on
2015. Based on the data, it showed that the disclosure index was adequate. In
average there were 68% items were disclosed on annual reports. Thus indicating
that there were transpararency in the disclosure with respect to Islamic values
despite the fact that the concept of social accountability under Islam is related to
the principle of full disclosure. This were also show that sharia banks in Indonesia
were aware of primary objective of muslim society. Based on sharia framework,
companies had obligation to establish the social justice, equitability and
maintenance of welfare. All these should lead to better transparancy and
accountability to society, especially for muslim society.

5. Future Research
This research had focussed only on annual reports of 5 top sharia bankings
on 2015 to measure the extent of Islamic social reporting dislcosure practices.
Future research could be extended to include other forms of disclosures for
example press release, interim reports etc. The interpretation of some items in the
codding process was subjective. Therefore, future research could be improved by
using objective rating and evaluation.

REFERENCES

Adnan, A., 2015, The Missing Dimensions of Corporate Social Responsibility

(CSR) Measurement in Malaysian Islamic Banks, British Journal of
Economics, Finance and Management Sciences, Vol. 10, No. 1
Asyraf Wajdi D. And Humayon Dar., 2005, Stakeholders Perceptions of
Corporate Social Responsibility of Islamic Banks in Malaysia. Paper
presemted at the International Conference of Islamic Economics and
Finance, Jakarta, 21-24th November 2005
Baydoun, N. and Willet, R., 2000, Islamic Corporate Reports, Abacus, Vol. 36
No. 1, p: 71-90.

589
Chamhuri Siwar and Md. Tareq Hossain, 2009, An Analysis of Islamic CSR
concept and The Opinions of Malaysian Managers, Management of
Environmental Quality: An International Journal, 20 (3), pp. 290-298
Daykin, T., 2006, The role of Internal Auditing in Sustainable Development and
Corporate Social Reporting IIA Research Foundation Report.
Ghani, 2016, The Development of Islamic Social and Environmental Reporting,
Journal of Education and Social Science, Vol. 4 (June).
Gray, R., Owen, D., Maunders, K., 1987, Corporate Social Reporting:
Accounting and Accountability, Prentice-Hall International, USA
Gray, S.J., Owen, D., and Adams, C., 1996, Accounting and Accountability:
Changes and Challenges in Corporate Social and Environmental
Reporting, Prentice-Hall, UK
Haniffa, R., 2002, Social Reporting Disclosures-An Islamic Perspective,
Indonesian Management & Accounting Research, Vol 1. No.2, pp. 128-
146.
Haniffa, R. and Hudaib, 2001, A Conceptual Framework for Islamic Accounting:
The Sharia Paradigm, paper presented at Accounting, Commerce and
Finance: The Islamic Perspective Conference IV, New Zealand
Khadduri, M.H., 1984, The Islamic Conception of Justice, John Hopkins
University Press, USA
Othman, R and Azlan Md. Thani, 2010, Islamic Social Reporting of Listed
Companies in Malaysia, International Business & Economics Research
Journal in Malaysia, Vol. 9 No. 4, pp. 135-144.
Sulaiman M., 2005, Islamic Corporate Reporting: Between the Desirable and the
Desired, Research Centre IIUM Publication.
Wolzak, N., 2010, The CSR Index, Yes-Use Erwin Saas Judith Beugals.

590
SHA-08

THE TREATMENT PRINCIPLES ACCOUNTING OF

ZAKAT, INFAQ AND SEDEKAH
BASED ON PSAK 109

Anang Ariful Habib

University of Jember, Indonesia
Email: anang_ariful@yahoo.co.id

ABSTRACT

The purpose of this study was to determine whether the accounting treatment of
zakat, infaq and sedekah the Badan or Lembaga Amil Zakat (BAZ or LAZ) in
accordance with PSAK 109. This research uses descriptive method with the data
that obtained from the research literature. Results from the study showed that
most BAZ or LAZ in making financial report has not been guided by PSAK 109,
which use many simple financial reports with the cash basis method. In this case
the need of holding training and coaching so BAZ and LAZ be accountable and
transparent organization.

Keywords: Accounting of zakat, infaq and sedekah, PSAK 109.

1. Introduction
Islam is the bless for the nature, whose the main goal is to bring welfare,
blessing, and peace for all people in the world. Besides, Islam teaches us to help
each other as human beings. Moreover, Allah has given the natural resources and
others in the large amount for human to use as a vicegerent on earth. The concept
of helping in islam is reflected in the human obligation of zakat issued in
accordance with islamic sharia. We know that in Indonesia is predominantly
Islam thus has the potential to be developed into an instrument of income
distribution.
Zakat is one of the pillats of islam that must be implemented. In the
Qur'an, not less than 28 verses of Allah, which mentions zakat command,
including the letter of Al Baqoroh ayat 43, which is means "Establish worship,
pay the poor-due, and bow your heads with those who bow (in worship)"

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(Departemen Agama. 1989: 43). Zakat terms of islamic sharia for society to
purify treasure they gained. Zakat in this case is not just a religious ritual but also
includes the social, economic, justice and prosperity. Because of it zakat requires
a good management, systematic, accountable and transparent. Government
regulation on the management of zakat has been regulated in the Law of the
Republic of Indonesia Number 23 of 2011. This law regulates the management of
zakat includes planning, implementation, and coordination in the collection,
distribution and utilization of zakat. In the management zakat must based on:
Islamic shari'a, trust, benefit, justice, rule of law, integrated, and accountability.
The law also mentions zakat management organizations operating in Indonesia,
called as zakat management organizations in the legislation is Badan Amil Zakat
(BAZ) and Lembaga Amil Zakat (LAZ).
BAZ or LAZ is an organization established to help people who have the
task of collection, distribution, and utilization of zakat. As an open organization
BAZ or LAZ has run private interests of both internal and external, it gives
responsibility to the BAZ or LAZ to be accountable and transparent in the
management of zakat funds to all parties that have an interest. With the financial
statements that structured, it can increase confidence and maintain the trust of
society to LAZ as institutions accountable philanthropy. To carry out the
reporting and accountability to the community, BAZ or LAZ requires accounting
standards not only regulate the reporting of charity, but also regulates the
recognition, measurement, presentation and disclosure of transactions zakat, infaq
and sedekah.
Ikatan Akuntan Indonesia (IAI) has had zakat accounting standards,
namely PSAK 109 About accounting zakat, infaq and sedekah which used is for
organization or institution of amil zakat. The purpose of PSAK 109 is to used by
BAZ or LAZ to presents the sources and uses of funds Zakat, Infaq and Sedekah
(ZIS) which has been received from the public, PSAK 109 also regulates how
BAZ or LAZ perform the recognition, measurement, presentation, disclosure and
reporting.

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 Linked from the above description, the writer is interested to understand
and review the accounting treatment of zakat, infaq, and alms conducted by BAZ
or LAZ. Because of it, the authors take the title "The treatmen principles
accounting of zakat, infaq, and sedekah based on PSAK 109". Is the accounting
treatment of zakat, infaq and sedekah for the Badan atau Lembaga Amil Zakat
(BAZ or LAZ) accordance with PSAK 109.

2. Literature Review
2.1 Agency Theory (Theory Agency)
According to Jensen and Meckling (1976) agency theory is a delegation of
authority from the owner (principal) in making decision to an organization or a
company (agent). Later the agency has a duty to account for or report information
on its activities to the principal. Agency theory also provides a role in providing
accounting information, which will be reported to the principal agent of the
events that have occurred.
Agency relationship in the accounting treatment of zakat can be seen from
the relationship between zakat management organizations with the society.
Society acts as the principal, it is because society has gave the resources to
organizations in the form of zakat payment ZIS. While zakat management
organizations acting as agent, where the organization has gave the trust of zakat
on ZIS funds from the public to be managed as well as possible and be
accountable for the management of ZIS funds to the society as well.

2.2 Islamic Accounting

Accounting is defined as a service activity to provide quantitative
information especially those that are financially to the parties who require such
information for making decision (Soemarso, 2002: 3). The sharia in Arabic means
the path or line that should be passed. In terms of terminology meaningful points
of law laid down by Allah to be obeyed and traversed by a moeslim to live a life
that all activities of worship in the world (Nurhayati, 2009: 14).

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2.3 Definition of Zakat, Infaq and Sedekah

According to the laws of the Republic of Indonesia number 23 of 2011 on

the management of zakat, that the definition of zakat is a treasure that must be
issued by a moeslim or a business entity to be given to those who deserve it in
accordance with islamic shari'a. The definition of treasure infaq is issued by a
person or entity outside the zakat for the public. While the definition of charity is
a treasure or non treasure issued by a person or entity outside the zakat for the
public.
According Mu'is (2011: 32), the purpose of concreating zakat are: (1)
Lifting the degree of poor society; (2) To help solve the problem of the gharimin,
Ibnusabil; (3) Establishing the kinship among the ummah of Islam; (4)
Eliminating the miserly of the property owner; (5) Cleaning the envy and jealousy
from the poor society.

2.4 Basic Law of Zakat

As for the basic obligation to pay zakat is mentioned in the Qur'an and the
Sunnah:
1. The Qur'an
Surah Al-Baqarah, ayat 43: "And build the pray, pay the poor zakat and bow
together with those who bow."
2. As Sunnah (Hadits)
Prophet Muhammad said: "Islam is built upon five pillars; creed is no god but
Allah and Muhammad is his messenger, upholding the prayers, paying zakat,
fasting Ramadan, and pilgrimage for those who can afford "(Bukhari and
Muslim).

2.5 Muzakki and Mustahiq

According to PSAK 109, the definition muzakki is Muslim sharia
individual is obliged to pay (perform) charity. While Mustahiq is the person or
entity entitled to receive zakat. Mustahiq consists of: indigent, poor, riqab, people
who were in debt (ghorim), reverts, fisabilillah, the way in (Ibn sabil), and amyl.

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 The Word of God in QS. At-Taubah ayat 60: "The alms are inly for the
poor and the needy, and those who collect them, and those whose heart are to be
reconciled, and to free the captives and the debtors, and for the cause of Allah,
and for the wayfarer; a duty imposed by Allah. Allah is knowe, Wise".

2.6 Definition of Zakat Management Organization (OPZ)

Widodo and Kustiawan (2001: 6) Zakat managing organization according
is an institution engaged in charity management zakat, infaq, and sedekah. Based
on the rule of law is recognized two institution such as Badan Amil Zakat (BAZ)
and Lembaga Amil Zakat (LAZ).

2.7 Zakat Accounting Based on PSAK 109

Accounting is defined as a process of recording, identification and
grouping of data to be made a useful financial report to make decision both for
internal and external coorporation. Accounting zakat is not different from general
accounting, the difference between the accounting zakat assess the assets or
income that must dizakatkan, assign levels of zakat and distribute it to the posts in
accordance with the context of Islamic law. According Mahmudi (2003: 4) there
are two purpose of accounting, the first Management Control and accountability.
Indonesia govern regulation of Statement of Financial Accounting
Standard on accounting for zakat, infaq and sedekah are in PSAK 109. The
regulation is used for the basis for the preparation and presentation of financial
statements. The purpose of PSAK 109 is to regulate the recognition,
measurement, presentation and disclosure of transactions and infak zakat and
alms. This standard is intended to amil zakat or organizations that receive and
distribute zakat, infaq and alms.

2.8 Components of Financial Statements According to PSAK 109

The financial statement is important for management organizations zakat,
infaq and sedekahin this case the financial statement is a form of responsibility to
society related to utilization of zakat. Besides these financial statements is a

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means for the public information related to utilization of zakat, infaq and sedekah
managed by an agency or institution of amil zakat, infaq and sedekah.
Components of the complete financial statements of Amil in accordance
with the guidelines of PSAK 109 consist of: balance sheet (statement of financial
position); Statements of changes in funding; Statements of changes in assets under
management; Cash flow statement; and notes to the financial statements.

3. Research Method
This research uses descriptive method. This study uses research literature
in which the emphasis on the use of secondary data. The data used were obtained
from the results of the research literature in the form of books, journals, previous
studies, articles, and all information related to the management of zakat
accounting.

4. Discussion
In accordance with main duties of BAZ or LAZ are to collect, distribute
and utilize in accordance with islamic sharia. So the role of accounting in the
management of zakat, infaq and sedekah by BAZ or LAZ aims to performs their
responsibilities to the society, particularly to the muzakki. With the issue of PSAK
109 about accounting for zakat, infaq and sedekah is expected to manage zakat
management standardization organizations system in Indonesia
Now a days BAZ or LAZ still have problem in publication of the report, it
is based on the basis of cash receipts and expense it is made as a balance sheet
saldo, it is like the recognition of basis cash accounting method. According to
Fathonah (2013) showed that in general the accounting recognition of the charity
fund by LAZISMU and Klaten BAZDA is based on basis cash method in which
all transactions are recognized at the transaction date or time of the cash flow in
and cash flaw out. Revenue is recognized when cash is received, while costs are
recognized when cash is excluded. Sularno (2010) in his research in the area of
Yogyakarta BAZDA still have the problem of human resources which are having

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double positions so BAZDA is only used as a part time. It is not conducive to the
ZIS management and making financial report.
Kristin and Khoirul (2011), state the accounting of the zakat funds that is
collected by LAZ DPU DT Semarang representative is mode as a model of cash
basis recording of accounting transactions book all revenue has been received.
LAZ reporting process DPU DT Semarang branch only make sourse of fund
usage and report of receiving fund usage, because LAZ DPU DT Semarang
branch has not had own assets such as land and buildings, so the DPU DT LAZ
Semarang representative has not made five financial report based on PSAK 109.
The results of Metari (2013), showed that, all application of accounting
performed by Dompet Dhuafa representative is accordance with PSAK 109 based
on recognition, measurement, presentation and disclosure. But there is little
difference in the form of presentation of the balance of funds on the balance sheet
made by Dompet Dhuafa Branch Makasar, where the balance of the funds showed
is not separated, but it is the amount of all ZISWAF funds are collected. This
means that the financial reporting is only in the form in which the balance
between zakat funds, donation funds, amyl funds, and inviolable fun are mixed
into one. Mixed funds would also be difficult in management system because they
do not know the size of each zakat, alms and funds infaq and amyl fund section.
The problems that arise from BAZ and LAZ still use simple financial
reporting, so that every BAZ or LAZ report vary, but the government together
with Ikatan Akuntan Indonesia (IAI) has developed accounting standards zakat,
that is PSAK 109 About accounting of zakat, infaq and sedekah that are used for
body or institution of amil zakat. This shows that human resources in BAZ or
LAZ has low capabilities in ZIS fund management the leaderof fund management
has not applied the rules on they way to make financial report published. In pasal
19 of Law Nomor 23 of 2011, states that LAZ should report the implementation
of the collection, distribution, and utilization of zakat which has been audited to
BAZNAS regularly.
Government regulation of zakat fund management rules, infaq and alms at
BAZ or LAZ has stated in PSAK 109, but there are still many problems that arise

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related to the application of the accounting reporting standards zakat, infaq and
alms. From the problems there are several solutions in order to minimize the
problems that arise, such as: first there are many human resources in BAZ or LAZ
work as par time job to solve the problem BAS or LAZ should improve the
structure and management organitation and BAZ or LAZ should accept a new
recruitment to fix the system and create the innovation. Second BAZ an LAZ
should maximize Forum Organitation Zakat (FOZ) that locate is many places to
work together, exchange the knowledge and information about government
regulation and reporting ZIS fund management. Third government should make
regular training and coaching accounting of ZIS based on accounting PSAK 109
espeacially for financial managers and financial staff of BAZ and LAZ, it is hoped
thee can make a structured financial report that affects in improving accountability
and transparency. In this case the government play role as stated in pasal 34 rule
of law nomor 23 of 2011, explains The Minister for carrying out guidance and
supervision of BAZNAS, BAZNAS province, BAZNAS districts or cities, and
LAZ. Fourth for BAZ or LAZ who already have sufficient funds amyl, it is
advisable to have special software that facilitate in making the financial
statements.

5. Conclusion
Now a days BAZ and LAZ management is more advanced and complex,
so it need more attention, both in terms of activities and reporting of its
accounting treatment. The objective of establishing BAZ or LAZ is to facilitate
the public to distribute zakat, infaq, and sedekah. In that case BAZ or LAZ should
manage and apply principles of trust and transparency to the community. BAZ
financial reporting or LAZ expected and continue to be pursued using the
standards-based reporting of PSAK 109, although in practice there are still many
problems that hinder the implementation of PSAK 109 based reporting
preparation.
Most of the research results of BAZ and LAZ in Indonesia shows that
financial statements is simple because it used cash basis method, so it does not

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switable with the standards based reporting PSAK 109. In addition management
BAZ or LAZ is not good enough so it need improvement such as reform the
structure of the board and BAZ or LAZ management, it badly need the training
and coaching so BAZ or LAZ into an organization that accountability and
transparency.

REFERENCES

Arifin, Gus. 2011. Zakat, Infaq, Sedekah Dalil-Dalil dan Keutamaan. Jakarta:
Elex Media Komputindo.
Departemen Agama Republik Indonesia. 2005. Al-Quran Terjemahan. Jakarta.
PT. syamil Cipta Media.
Fathonah. 2013. Analisis Penerapan Akuntansi Zakat Pada Organisasi Pen
Gelola Zakat (Studi Kasus Lazismu Kabupaten Klaten Dan Bazda
Kabupaten Klaten). Yogyakarta: Universitas Islam Negeri Sunan
Kalijaga.
Ikatan Akuntan Indonesia. 2008. Exposure Draft Pernyataan Standar Akuntansi
Keuangan No. 109 tentang akuntansi Zakat, Infaq/Sedekah. Jakarta: IAI.
Jensen, M. C and Meckling, W.H. 1976. Theory of the Firm : Managerial
Behavior, Agency Costs and Ownership Structure. Journal of Financial
Economics, Oktober, 1976, V. 3, No. 4, pp. 305-360. Avalaible
from:http://papers.ssrn.com
Kristin, Ari dan Khoirul, Umi. Penerapan akuntansi zakat pada lembaga amil
zakat (Studi Pada Laz DPU DT Cabang Semarang ). Jurnal IAIN Wali
Songo Semarang: - Vol. 7 , No.2, Maret 2011 Agustus 2011.
Mahmudi, Sistem Akuntansi Organisasi Pengelola Zakat, Yogyakarta: PPPEI
Press, 2009.
Metari, Andi. 2013. Analisis penerapan akuntansi zakat, infaq dan sedekah pada
laz (lembaga amil zakat) dompet dhuafa cabang makassar. Makasar:
Universitas Hasanuddin.
Muis, Fahrur. 2011. Zakat A-Z Panduan Mudah, Lengkap, dan Praktis tentang
Zakat. Solo: Tinta Medina.
Nurhayati, Sri dan Wasilah. 2009. Akuntansi Syariah di Indonesia (Edisi II).
Jakarta : Salemba Empat.
Republik Indonesia. 2011. Undang-undang No 23 Tahun 2011 Tentang
Pengelolaan Zakat. Lembaran Negara Republik Indonesia Tahun 2011
Nomor 115. Menteri Hukum dan HAM. Jakarta.
Sularno, M. Pengelolaan Zakat oleh Badan Amil Zakat daerah kabupaten/kota
sedaerah Istimewa Yogyakarta (Studi terhadap implementasi Undang-

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 Undang No. 38 tahun 1999 tentang pengelolaan zakat). Jurnal Ekonomi
Isalam vol IV, No. 1, Juli 2010.
Widodo, Hertanto dan Kustiawan, Teten. 2001. Akuntansi dan Manajemen
Keuangan Untuk Organisasi Pengelola Zakat. Jakarta: Institut
Manajemen Zakat.

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SHA-11

THE VIEWS OF ISLAMIC FINANCIAL

INSTITUTIONS ON AUDIT SHARI'A
Siti Maria Wardayati
Abdul Muis Al Wahi d
Abd. Mujib
University of Jember
siti.maria@unej.ac.id

ABSTRACT

Islamic banking in Indonesia is growing rapidly since the issuance of policies on

Islamic Banking. In order to minimize the risk of problems in the banking system,
efforts are made to control the use of patterns and mechanisms to be better and
comprehensive. Audit Sharia in the Islamic financial services means the
accumulation and evaluation of evidence to determine and report the level of
concordance between the information and the criteria established for the purpose
of Shariah compliance. Audit should be conducted by a competent and
independen. Therefore, auditors are representatives of the shareholders who want
jobs (investment) them according to the laws of Islamic Shari'a.

Keywords: Syariah Banking, Islamic Bank, Shari'a audit

1. Introduction
Shari'a Financial institutions in Indonesia have shown rapid development
over the last decade. Based on data from Statistics Islamic Banking (Bank
Indonesia, 2012) states that the number of Islamic Banks in 2006 amounted to 3
(three) bank with its number as many as 349 pieces. Meanwhile, until the end of
2012 the number of Islamic banks increases more than doubled the total of 11
(eleven) which stood by the number of bank offices are also experiencing a
significant increase than in 2006 that as many as Office 1745. It shows that the
growth of Islamic banks in Indonesia is quite rapid. According to a survey that has
been conducted and reported in Global Islamic Finance Report (CIMB Islamic,
2012) that Indonesia ranked seventh in the development of Islamic banking in the
world (Wardayati and Wulandari, 2014). This is also shown by the increasing in

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assets, the increasing in third party funds (DPK) 15% s.d. 45% per year, as well as
financing rises significantly to 50.05% per annum (Nengsih, 2015).
Sharia is the main economic pillars of Islamic banking (Muhammad, 2008).
Target customers on the use of Islamic banking products or expectation of reward
is sharing ratio, so that the customer is often referred to as an investor. Their
financial and banking crisis has provided a lesson that the Islamic banking system
turned out to have the endurance to face the crisis and this is driving a more
intense development of Islamic banking which actually started in 1992 with the
enactment of Law No. 7 of 1992 on Banking, which is updated by the government
the Law of the Republic of Indonesia Number 10 of 1998.
Law No. 7 of 1992 this is the gate of the commencement of Islamic banking
in Indonesia, but the Act has not provided the legal foundation that is strong
enough for the development of Islamic banks because not explicitly regulate the
existence of banks based on Islamic principles, but the bank for the results
(Rahman, 2008). When referred to the historical development of Islamic banks,
the principal reason of the existence of Islamic banking is the awareness of the
Muslim community who want to run the entire financial activities in accordance
with the guidance of religion. The idea of the establishment of the bank using the
system for this result appears for a long time, which is marked by numerous
thinkers who wrote the idea of Islamic banks (Sudarsono, 2004).
Islam is very hard in addressing the phenomenon of usury. All Muslims are
strictly forbidden to approach especially dabbling in it. All parties associated with
usury got the anathema of the Prophet is known to be very generous. Jabir bin
Abdullah ra. said:

"The Prophet, condemn someone who eats usury treasure, which feed on usury
treasure, treasure taker of usury, and the two witnesses. And he said, they are all
the same. "(HR. Muslim)

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 He even gives a terrible overview related to the position usury treasure
users, in his saying it is narrated by Ibn Majah and al-Hakim from his friend
Abdullah bin Masud ra. that He said, "Riba consists of 73 door. The door is the
lightest as a man to marry his own mother." Conceivably, how great a sin given to
the perpetrators of usury, if the lightest only sin like to marry his own mother
(Ramadan, 1987).
Based on such considerations as the basis for the various parties, to make a
concerted effort towards the development of the bank is based on Islamic
principles. Eventually, business activity does not only aim for worldly gains, but
also the hereafter (Asra and Musirin, 2013).

2. Study Of Islamic Bank And Islamic Audit

2.1 Islamic Bank
In general, the basic functions of Islamic banks and conventional banks are
the same, so that the general principles of regulation and supervision of the
banking system also applied to Islamic banks. A special characteristic of Islamic
banking requires special handling in the regulation and supervision by the
introduction of the Sharia Supervisory Board (Antonio, 2001). Another distinctive
characteristic can be seen from the guarantee of regulatory compliance and
adherence to Islamic principles in all activities, in particular the prohibition of
interest is replaced with revenue sharing instrument (Rifa'I, 2002).
Operation of Islamic Bank must follow or be guided by the principles of
business that were developed at the time of the Prophet Muhammad, which
follows the principles of business and business forms that are not prohibited by
the Prophet Muhammad, or forms a new business as a result of ijtihad of the
scholars or Muslim scholars who do not deviate from the provisions of the Al-
Quran and Al-Hadith. In addition to the provisions based on the Quran and al-
Hadith, the establishment of Islamic Banks also shaped by the realities explained
by Syaei (2002) as follows:
1) Practice of interest and its consequent. The system in question is the
additional interest payment on the principal of the loan, the amount of

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 which has been set in advance, usually specified as a percentage (%) and
continues to be as long as there is still residual loan.
2) The existing banking system has a tendency of concentration of economic
power in the hands of the elite, bankers and financiers. The concentration
of economic power will result in collisions and even conflicts between
social classes, which in turn has the potential to destabilize the state of the
national economy and internationally.
3) The banking system which applies interest can cause high inflation, where
it is caused by the tendency of banks to extend credit to excess. On the
other hand, it is often the interest rate and the inflation rate are closely
related, so it is a choice of a dilemma for policy makers of development.
4) The banking system which applies interest now felt less successful in
helping the fight against poverty.
5) In the current era of economic development, the role of banking
institutions is crucial and affects the development in a country.
Islamic banking in Indonesia is growing rapidly since the issuance of
various policies on the Islamic Bank. Statistical Data Bank Indonesia in Indonesia
in December 2007 showed there were already three Islamic Banks, 26 Bank
Syariah Business Unit and 114 syariah rural banks with total assets in million of
Rp 36,719,603 (excluding Sharia Rural Bank). Basically, conventional banking
operations are different from sharia banking activities that can be seen from the
basic principles that are used in banking operations (Wjaya, 2004), such as;
1) Syariah Bank in conducting business activities in the banking sector
adheres to the principle of sharing, while conventional banks adhere to the
principle of interest money.
2) The principle of the agreement adopted by Syariah Bank is the principle of
trading while the Conventional Bank adheres to the principle of
borrowing.
3) The relationship of Islamic Bank and the customers is a partnership
relationship while Conventional Bank shaped debtor relationship with the
lender.

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 4) From the operational side, in the Islamic Bank, public funds is in the form
of deposit and investment that will get results if "should be" first afforded
on the lawful and profitable, while in conventional banks in the form of
deposits of public funds to be paid interest upon maturity tempo and
distribution on a profitable sector, halal aspect is not a major
consideration.
5) From the social aspect, the Islamic Bank stated explicitly and
unequivocally stated in the Mission and Vision, while conventional banks
can not be known explicitly.
6) From the organizational aspect, the Islamic Bank shall have the Sharia
Supervisory Board, whereas in conventional banks do not have the DPS.

2.2 Supervision of Islamic Financial Institutions in Islam

Given the diversity of the activities of Islamic banks plus the liabilities obey
the rules of Sharia, the regulatory process through an independent agency
becomes urgent to do (Minarni, 2013). One of the differences between
conventional banking to Islamic banking is the Sharia Supervisory Board (DPS)
in each Islamic bank. His job is to ensure Islamic banking operates in accordance
with the rules of Islam so as to minimize the things that are forbidden in Islam. To
give confidence to the people who still doubt Islamic banking operations over the
years, it also regulates the business activities that do not conflict with Islamic
principles including activities that do not contain elements of usury, gambling,
gharar, illegitimate and unjust.
As the legislation specifically regulating Islamic banking, in Law Number
21 Year 2008 concerning Islamic Banking set of laws on the issue of adherence of
sharia (Sharia compliance) whose authority is at the Indonesian Ulama Council
(MUI) is represented by the Sharia Supervisory Board (DPS) and should formed
in each of the Sharia Bank and Sharia Business Unit. Implementation of the fatwa
issued by MUI into Bank Indonesia Regulation the creation of a committee of
Islamic banking in internal Bank Indonesia which consists of representatives from

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Bank Indonesia, the Ministry of Religion, and the public compositionally
balanced.
Islamic bank supervision functions as mandated in legislation aims to
support efforts to achieve a healthy Islamic banking, operate prudently meet
various applicable banking regulations, protect interests of users of banking
services and consistently run on Islamic principles. Islamic bank supervisory
approach uses integrated pattern that integrates indirect supervision (off-site
supervision) and the direct supervision or inspection of the field (on-site
supervision) and adopt a risk-based approach to bank supervision.
Supervisory activities done off-site and on-site aimed to maintain the
soundness of banks and to support the achievement of its business plan with due
regard to the principle of prudence and adherence to Islamic principles. Off-site
supervision activities carried out by analyzing the financial condition through the
Management Information System Control (SIMWAS) and reports submitted by
the bank, and the bank assess compliance with applicable provisions.
Islamic banking supervision basically have two systems, namely: (1) The
control of the financial aspects, compliance with the banking in general and bank
prudential principles, and (2) supervision of Sharia principles in bank operations
(Harisman, 2002).
Terms of membership DPS as regulated by the DSN-MUI among others
(Umam, 2015) 1) good character, 2) have the competence expertise in the field of
sharia muamalah and knowledge of banking and / or finance in general, 3) has a
commitment to develop financial based on sharia, 4) have sharia supervisory
eligibility as evidenced by a letter / certificate of DSN.
Another task of DPS is to examine and make recommendations of new
products from banks it supervises. Thus, the first DPS acts as a filter prior to a
product recall and issued by DSN. Based on the report of DPS at their respective
of Islamic financial institutions, the DSN can give warning if the agency deviated
from the guidelines that have been set. If the institution concerned did not heed
the warning given, DSN can make recommendations to the institutions that have
authority, such as Bank Indonesia and the Ministry of Finance, to impose

606
sanctions (Triandaru and Santoso, 2006). DPS mechanism can be described as
follows:
Figure 1
Mechanish of DPS

2.3 Sharia Audit

Sharia Audit in the Islamic financial services means the accumulation and
evaluation of evidence to determine and report the degree of correspondence
between the information and the criteria established for the purpose of compliance
with sharia. Audits must be performed by a competent and independent (Tugiman,
1996). To conduct the audit, there should be information in the form of verified
and some standards (criteria) in which the auditor can evaluate the information.
Information are obtained and taken from all fronts. Sharia auditors conduct audits
on two objective information of interest (eg, profit sharing financial information)
and subjective information (information shari'a) to ensure compliance of Shariah
in Islamic banks.
Instructions or Sharia Audit evidence is to conduct an audit of the sharia in
the determination of audit evidence. Hint or shariah audit evidence can be defined
as any information used by the auditor to determine whether information is
audited in accordance with the stated criteria. Instructions or Sharia Audit
evidence is to conduct an audit of the sharia in the determination of audit
evidence. Hint or shariah audit evidence can be defined as any information used
by the auditor to determine whether the information being audited is stated in

607
accordance with the criteria established for the purpose of guaranteeing the sharia.
Criteria for evaluating information are various depending on the information
being audited. In the audit of historical financial statements by auditors, the
criteria are usually financial reporting standards (FRS).
Sharia audit program also needs to be written in a language that can be
easily understood by potential shareholders. There are three-phase of Sharia Audit
(Harahap, 2002), namely:
1) Planning. Auditors must understand the business of Islamic financial
institutions including the nature of the contract used for various types of
Islamic financial services. Then, Sharia auditors need to identify the right
techniques, resources and scope to develop an audit program. The audit
program will then identify the main activities to be conducted, the purpose
of each activity and the techniques to be used, including sampling
techniques in order to achieve the objectives of the audit. Among the
techniques that can be used include paper checks, interviews,
benchmarking, surveys, case studies, flowcharts, etc.
2) Examination. Appropriate audit techniques need to be identified and
described. Proper techniques needed to gather the necessary evidence,
both quality and quantity to reach a reasonable conclusion in accordance
with sharia compliance. The main aspect of the checks in the field requires
sampling techniques. More detailed examination of the documentation
would be required whether the sampling methodology is used or not. Audit
working papers and notes are the two most important things in the
assessment phase. The purpose is to provide a working systematic records
of work performed during the audit and the records obtained information
and facts to support the findings and conclusions.
3) Reports. The results of the audit, the audit report includes the preparation
of sharia, which is good communication from the auditor to the users or
readers. In general, the report will be different, but all have to inform
readers of the degree of correspondence between the information and the
criteria that have been set.

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2.4 Multilayer Audit System
In the audit of Shariah, known as a layered control system (multilyer audit
system) consisting of:
a. Self Control
This is the key of Shari'ah system success. The first key is that good quality
recruitment, with measurable input standards and properly maintained. The
quality of individuals can guarantee the process and good results. A good self
control can guarantee the quality of the organization, so that other control is
hardly needed.
Self control in a Shari'ah audit is very important. In the Islamic concept,
there is a system of self-control that we already know that:
1) Ihsan, which means that in any case only, a Muslim should feel that he is
always in the direct supervision of the Creator, Allah 'azza wajalla. If being
overseen by the company leader, the employees are very careful in their work,
then it should be a believer when supervised by the Most High, his passion and
caution becomes more extras and multiplied as in the Hereafter all his actions will
be in-reckoning and responsible for.
2) Muhasabatun nafs, it is a mean for a Muslim to make an introspection. Before
being audited by the system and others, a true believer should have an internal
audit system of your good self.
3) Triangle fraud and control of faith. There are three conditions that normally
cause fraud, the pressure or motive, an opportunity and rationalization. But all that
actually are died and come back on the quality of faith and self-control
respectively.
b. Integrated Control (Built-in Control)
This second stage requires the existence of procedures and rules of the
organization, because it implied the integrated control system. Each section has
contributed in creating a conducive climate to the organization. In Surah As-Shaf
paragraph 4, of Allah. said:

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"Truly Allah loves those who fight in the way of God in orderly row as if they like
solid cemented structure."
Also in Surah Ali Imran verse 103:

"You hold fast to the rope of Allah and do not scatter."
c. Internal audit
The third phase of this role is to ensure both the control phase had
previously been in line with expectations. Internal audit needs to be carried out by
other elements in the organization who is not directly involved in the activities.
d. external Auditor
This is the fourth level of the audit, conducted by an external and
independent so as to provide a neutral and objective assessment for the
organization.

2.5 Audit in Islam

Based AAOIFI-GSIFI 3 explained that Islamic audit is independent internal
report of Sharia or part of the internal audit testing and evaluation approach sharia
rules, edicts, instructions, etc. which are issued by fatwa IFI and supervision
institution of sharia. Rahman (2008) describes the auditing in Islam is:
1. The process of counting, checking and monitoring (systematic process)
2. Individual acts (of worldly work or deeds)
3. Complete and sharia-compliant
4. To get a reward from Allah in the Hereafter
The Audit Objectives in Islam, namely: (1) to assess the degree of
completion (progress of completeness) of an action, (2) to repair (correction)
error, (3) provide rewards (rewards both) on the success of the work, and (3)
provides punishment (bad retribution) for lack of work. The ultimate goal is not to
"find fault", but how "establish the truth".

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2.6 Audit in the Qur'an and Hadith
In the Al-Quran conveyed that we should measure the fair, do not overbid
and should not be reduced. We are forbidden to demand justice for our size and
scale, while for others we do any less. In this case, the Quran states in various
verses, among others, in Surah Asy-Syu'ara 181-184 paragraph which reads:
. .
.

"Full measure and do not include those that harm and weigh with a balance that is
straight. And do not harm humans on their rights and do not rampant in the earth
to make mischief and keep your duty to Allah who has created you and the
followers the first. "
In the hadith mentioned:

"Weigh your food properly, and then you will get the blessing."

3. Conclusion
Supervision on Islamic banks to carry out an audit of Sharia does not mean
it can replace the task of the bank's management and does not guarantee the bank
could be free from crisis, loss or bankruptcy which are caused by several factors,
including: human error, asymmetric information, policy and regulation is less
supported, and reward and punishment are not clear. Embodiments of effective
and efficient supervision willed Bank Indonesia as the authority's banking
supervision Indonesia to fully support all oversight activities of Islamic banking
that involves the National Sharia Council (DSN) and Sharia Supervisory Board
(DPS) by providing guarantees of independent, worth incentives and clear
accountability.
In addition, Bank Indonesia in cooperation with the Ministry of Finance
should make strict rules and policies regarding to the management of reward and
punishment in the Islamic bank for its commitment to run banking business based
on the principles and rules of Sharia. As for the audit should be run according to

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Sharia correct mechanism and adapted to AAOFI auditing standards that apply to
all Islamic Financial Institutions (LKS). All the weaknesses that exist in the
system audits, such as the human error factor, asymmetric information, and others
let minimized to achieve the right results. For that very important that all the
strategic positions filled by the right people and have the ability as required.

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Jakarta: Gema Insani Press
Bank Indonesia. 2014. Undang-Undang Perbankan Syariah No. 21 Tahun 2008.
(Online), (www.bi.go.id)
Direktorat Perbankan Syariah Bank Indonesia.Desember 2007. Data Statistik
Perbankan Syariah. Jakarta
Halim, Marah. 2011. Eksistensi Wilayatul Hisbah dalam Sistem Pemerintahan
Islam. Jurnal Ilmiah Islam Futura. Volume X, No. 2, Februari 2011.
Haqqi, Abdurrahman Raden Aji. 2007. Shariah Advisory Board in Islamic
Financial Institutions In The Eye of Asian Islamic Banks Laws: A
Must?. Paper presented in ASLI Conference, Fakultas Hukum UI,
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Harahap, Sofyan S.2002.Auditing Dalam Perspektif Islam. Jakarta: Pustaka
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Hiro Tugiman. 1996. Pengenalan Internal Audit. Yogyakarta: Penerbit Kanisius.
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Nasional No : 01 Tahun2000 Tentang Pedoman Dasar Dewan.
Majelis Ulama Indonesia (PD DSN-MUI).Laporan Perkembangan Perbankan
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Maksum, Asra dan Musirin. 2013. Pemikiran Kiai Asad tentang Ekonomi dalam
Islam. Cet. Kedua. Surabaya: Pena Salsabila.
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Minarni. 2013. Konsep Pengawasan, Kerangka Audit Syariah, dan Tata Kelola
Lembaga Keuangan Syariah. Jurnal Ekonomi Islam La Riba, Volume
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Implementasi PSAK Syariah. Yogyakarta : P3EI Press.

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Keuangan Inklusif di Indonesia. Jurnal Etikonomi Vol. 14 No. 2,
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Perbankan Syariah. Fakultas Hukum Universitas Indonesia, Jakarta.
Peraturan Bank Indonesia No. 6/24/PBI/2004 tentang Bank Umum yang
Melaksanakan Kegiatan Usaha Berdasarkan Prinsip Syariah.
Rahman, Abdul Rahim Abdul. 2008. Shari'ah Audit for Islamic Financial Services:
The Needs and Challenges. Makalah dipresentasikan pada International
Shari'ah Research Academy for Islamic Finance (ISRA) Islamic Finance
Seminar, Kuala Lumpur,11 November 2008.
Ramadlan, Abu H.F.. 1987. Tarjamah Duratun Nasihin. Surabaya: Penerbit
Mahkota.
Rifai, Moh. 2002. Konsep Perbankan Syariah. Semarang: CV.Wicaksana.
Sudarsono, Heru. 2004. Bank dan Lembaga Keuangan Syariah. Edisi 2.
Yogyakarta: Penerbit Ekonisia.
Syaei, A. Wirman. 2002. Optimalisasi Pengawasan Dewan Syariah Nasional.
Media Indonesia, Rabu 11 Desember.
Umam, Khotibul. 2015. Urgensi Standarisasi Dewan Pengawas Syariah dalam
Meningkatkan Kualitas Audit Kepatuhan Syariah. Panggung Hukum,
Jurnal Perhimpunan Mahasiswa Hukum Indonesia. Vol. 1, No. 2, Juni
2015.
Undang-Undang Republik Indonesia Nomor 10 Tahun 1998 tentang Perubahan
atas Undang-Undang Nomor 7 Tahun 1992 tentang Perbankan.
Wardayati, Siti Maria and Wulandari, Sisca Ayu. 2014. Comparisons and
Differences of Level Islamic Social Reporting Disclosure Islamic
Banking in Indonesia and Malaysia. Annual International Conference
On Islamic Studies- 14 th AICIS, Stain Samarinda, Balikpapan
Wijaya, Lukman Denda. 2004. Lima Tahun Penyehatan Perbankan Nasional.
Bogor: Ghalia Indonesia.

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TPS-01

THE VILLAGES FINANCIAL MANAGEMENT

ACCOUNTABILITY
(CASE STUDY ON KLOMPANGAN VILLAGE AJUNG
JEMBER REGENCY)
Supriyadi
Whedy Prasetyo
Ririn Irmadariyani
University of Jember, Indonesia

ABSTRACT

This study aims to identify and analyze accountability in financial management in

the village of Klompangan village Ajung District of Jember. This research is
descriptive qualitative with data collection techniques using interviews,
observation and documentation. Location and research at the Village of
Klompangan Ajung District of Jember with research informants that Village
Head, Village Secretary, Treasurer and Chief of Village Consultative Entities
(VCE) Klompangan Village. Technique authenticity of data using triangulation
sources. The results of this study indicate that management of village finances
starting from planning, budgeting, until the process of accountability,
Klompangan village already perform well. Mechanisms and procedures that run in
the stage of planning and budgeting village finances related to the preparation of
the Draft Budget of Village (BV) not in accordance with Law No. 6 of 2014 and
Regulation No. 113 of 2014, as in the phase of Village Government Work Plan
(VGWP) and Preparation Plans Legislation Village (PLV) about BV carried out
does not comply with the deadline specified in the Act and regulations on the
management of village finances. As for each procedure and mechanism of
implementation BV, BV changes, financial administration and accountability of
BV, fully implemented in accordance with the legislation and a full understanding
of village government officials involved in the process of financial management
Klompangan village.

Keyword : Accountability, Financial Management village.

1. Introduction
As the issuance of Law No. 6 of 2014 About the village, need special
attention given during the Village Administration regulated by Law No. 32 Year
2004 on Regional Government. The birth of the Act the subject of an interesting

614
study that is expected to strengthen the autonomy of the village and to accelerate
rural development. Therefore, the village provided with guidance and technical
guidance on financial management.
Since published Law on the Village, the Government provides funding on
the Budget of the Village (BV) is pretty big for the management of the village.
The enhanced capabilities for financial management and assets of the village, is
needed to create a good accountability. One way to implement such management
by implementing information systems based on Good Governance (GG). These
principles include: accountability based on results and work, transparency in all
financial transactions, Empowerment professional managers, and the existence of
the external audit institutions is strong, professional and independent.
Accountability is one of the foundations of the creation of GG, is needed
in the management of village finances. Without accountability it is quite possible
the belief in a village financial management will be stopped. Accountability is
also an instrument for the control activities mainly in achieving results in the
public service. In this connection, the necessary performance evaluation was
conducted to determine the extent to which the achievement of results and the
means used to achieve it. Control as an essential part of good management is
complementary to accountability. In other words, the control can not be run
efficiently and effectively if it is not supported with good accountability
mechanisms and vice versa.
The publication of Minister Regulation No. 113 of 2014 About the
Financial Management of the village has changed some provisions in the
Regulation of the Minister of Home Affairs Number 37 Year 2007 on Guidelines
for the Management of Financial village. According to Soleh and Rochmansjah
(2015: 69), mentions that some of the changes related to the transfer of the Village
Fund of the State Budget, which means it will affect / add code revenue account,
changes related to group shopping village sebelunya grouped into Indirect
Expenditures (IE) and Direct Expenditure (DE) is replaced with 5 (five) Group of
the Governing Shopping is Shopping Village, Shopping Implementation of
Development, Shopping Cart Development Community, and the Community

615
Empowerment Shopping Shopping Unexpected. While it's kind of expenditure of
each activity is divided into 3 (three), namely personnel expenditures, Shopping
Goods and Services and Capital Expenditures. Other changes are in respect of the
financial administration aspects of the village, when the change in some format
which, according to the author, more complete than those defined in Regulation
number 37 in 2007. In addition, this rule provides the foundation for the village to
be more autonomous in practice, not just a normative , With the granting of
financial management authority of the village, the village should have been more
accountable, transparent and participatory to the process of financial management.
Regarding the financial management of the village, further described in
Government Regulation No. 43 Year 2014 on Implementing Regulations of Law
No. 6 of 2014 concerning the village and in the General Provisions Regulation
No. 113 of 2014 concerning Financial Management of the village, which stated
that the Financial Management of the Village is a whole activities that include
planning, implementation, administration, reporting, financial accountability
village. So with the autonomous rights of the village hopes to manage its finances
independently. Better manage revenue and income sources also manages the
budget expenditures. However, in reality many villages that have not been able to
take advantage of these privileges. Dependence of funds from central and local
government is still very strong. The village has not been able to optimize revenue
sources based on the village by the wealth and potential of the local village.
Formulation and implementation of the Budget of the Village (BV) should be
filled with activities / programs needed by the community, for example, physical
development activities. But sometimes implementation of physical development
activities are not carried out in accordance with those contained in BV (among
other less volume, less quality), even some who did not / have not been
implemented.
Actually, the implementation of activities that do not correspond with
those contained in BV will not happen if there is active involvement of
Neighborhood Association and Citizens Association (NA/CA) from the planning
phase (Rural development planning), implementation and supervision of the

616
construction of up pertangunggjawabannya. However, what happened is still
difficult to involve the active participation of community representatives in this
village NA/CA, because based on the facts that exist in the community, village
governments often ignore the role of village representatives to not include them in
development activities or the management of village finances.
The above description is not in accordance with Regulation No. 113 2014
in article II stating that the village finances are managed based on the principles of
transparent, accountable, participatory and orderly and disciplined budget.
Implementation of these regulations is an important step that should be done in
order to realize the financial management of the village which has an important
role in representing all activities, political and economic policies of the village
administration. Because of financial management accountability village is one of
effectiveness and efficiency of good governance. In this regard, the accountability
of village financial management is defined as a part of a financial management
system that provides financial information that is open to the public in the context
of good governance and accountable management of resources as well as the
implementation of policies for the achievement of the goals set.
Referring to the regulations on the management of village finances,
financial management activities should the village government is compiling BV
conducted with the participation of a part of the community (NA/CA), provides
information on village finances are transparent and can be obtained by the public,
the preparation BV to be adjusted the needs of the village, the village government
is fully responsible for financial management, and the public, either directly or
through a representative body to supervise the financial management undertaken
by the village government.
Based on data from the village in 2015, the Village of Klompangan is a
high potential village that the village has fertile agricultural land with flat
topography or slightly tilted and are equipped with technical irrigation and
supported by the potential physical and non-physical so it has a great ability to
develop further , But if the terms of area and population, Klompangan village has
an area of 9.2654 km2 with a population of 10.475 inhabitants (1.130 inhabitants /

617
Km2) so that the village does not fall into the category Klompangan ideal region
in the development of the construction. Community needs for rural development,
the challenge of accelerating the development of autonomous village makes the
background of how the village of Klompangan manage finances, whether carried
out with the full understanding of the executor of village financial management
and whether it is appropriate or not with the law and regulations regarding the
management of village finances. Based on the information very interesting to do
research on accountability in financial management of the village. Based on the
above, then formulated the problem in this research is how accountability in
financial management in the village of Klompangan village Ajung District of
Jember?

2. Theoretical Framework
In Act No. 6 of 2014 on villages, accountability is seen as the overall
process or activity carried village government to perform its obligations with a
full understanding of the government apparatus villages conducted with
compliance with laws and regulations. Based on Minister of Interior No. 113 2014
Article 1 is the overall financial management of the village are activities that
include planning, implementation, administration, reporting, and financial
accountability village. Management also called the management in a general sense
is an art, skill or expertise. That is the art of the work done through other people
or expertise to move people to do a job.
According to Arif (2007: 32) explain to Financial Management of Rural is
the overall activities that includes planning, budgeting, administration, reporting,
accountability, and financial oversight of the village. Village governments are
required to manage the village finances in a transparent, accountable, participatory
and orderly and disciplined. In addition, the village must be recorded in the
financial accounting system correctly in accordance with the rules of financial
accounting systems of government (Nurcholis, 2011: 82).
The village head as the head of the village administration is the village
financial management authority and represents the village administration in

618
villages separated the ownership of property. The village head in implementing
the financial management of the village assisted by the Technical Implementation
of Financial Management of Villages (TIFMV), the village secretary and other
village. Village Secretary acts as coordinator for the implementation of the
financial management of the village and is responsible to the village head. The
account holder of the village is the village treasurer. The village head village
treasurer set by the decision of the village head. Each stage of the process of
financial management of villages have rules that must be understood and
implemented in accordance with a predetermined time limit.
Referring to government regulation of the financial management of the
village, the village government planning rural development in accordance with its
authority with reference to the planning district / city. Rural Development Plan
includes RMTDP and VGWP arranged futures and defined by Regulation village.
Rural Medium Term Development Plan (RMTDP) for a period of 5 (five) years,
while the Annual Development Plan or the so-called Village Government Work
Plan (VGWP) for a period of 1 (one) year. VGWP is an elaboration of the
Medium Term Development Plan for the Village. Rural development planning is
based on an agreement in the meetings whose implementation no later than in
June of the current budget year. RMTDP set out in a maximum period of 3 (three)
months after the inauguration of the village head.
Village Government Work Plan (VGWP) prepared by the village
government in accordance with information from local government district / city
indicative ceilings relating to the village and plan the activities of government,
provincial governments, and local government district / city. VGWP the basis for
the drafting of BV. The draft regulation on VGWP village discussed and agreed
on by the Village Head and Village Consultative Body to be set into a village
regulation on VGWP.
In the explanation of Soleh and Rochmansjah (2015), argued that after
VGWP set then followed the process of preparing BV. Work Plan and Budget
Plan set out in the VGWP used as a guide in its budgeting process. Budget Village

619
(BV) is an annual financial budget plan village government were set to organize
programs and activities under the authority of the village.
Process BV accordance with the Regulations on management of village
finances starts with communication of the proposed Regulatory activity budget to
the Secretary of the Village by VGWP predetermined; then secretary of the
village to draft Regulation concerning BV and deliver to the Village Head; The
village head then put forward to the Village Consultative Body to be discussed
and agreed. Draft Regulation Village on BV agreed at the latest in October of the
current year between the Village Head and VCE; The next draft Regulations
Village of BV that have been agreed as subsequently submitted by the Village
Head to the Regent / Mayor through the district or other designation at the latest
three (3) days since agreed to be evaluated; Regent / Mayor draft set of evaluation
results BV maximum of 20 (twenty) working days from receipt of the draft
regulation Village on BV; if regent / mayor does not provide evaluation results
within the time limit then the Village Regulations apply by itself. In the case of
Regent / Mayor declared the results of the evaluation of the Draft Regulation
village BV not in accordance with the public interest and the legislation of higher
Village Head perfecting least seven (7) working days after the receipt of the
evaluation results. If the results of the evaluation were not followed by the village
chief and village heads remains set Draft Regulation Village on BV into village
regulations, Regent / Mayor cancels Village Regulations by the Decree of Regent
/ Mayor who once declared the ceiling BV previous budget year; Village
regulations concerning BV set no later than December 31 of the current budget
year. Regent / mayor in evaluating the draft Regulation of the village of BV may
delegate to the district head. Further provisions regarding the evaluation
delegation Draft Regulation Village on BV to the district head in Rule Regent /
Mayor.
Explanation BPKP (2015) regarding changes BV to do in the event: the
circumstances that led to do the shift between the types of spending, the
circumstances that caused the remaining budget (RB) the previous year should be
used in the current year, the addition and / or a reduction in rural incomes in the

620
current year, special events, such as natural disasters, political crisis, economic
crisis, and / or prolonged social unrest, a fundamental change of policy of the
Government and Local Government. BV changes can only be done once in a
budget year. Procedures for the submission BV is generally the same as the
procedures for determining BV. In terms of the Financial Assistance Provincial
Budgets and Budgets Regency / City as well as grants and third party which is not
binding to the village disbursed after enactment of Amendment Village of BV,
then the change is accommodated and regulated by the Village Head of Change
BV. Regulation on the Amendment village chief of BV will then be
communicated to the VCE.
Based Financial Management Guidelines Bimkon Village BPKP (2015) in
the implementation of village finances, there are some general principles that must
be adhered which includes revenues and expenditures. This principle is such that
all revenues and expenditures implemented through the village of Desa Cash
Account. All revenues and expenditures of the village is supported by evidence of
a complete and valid and signed by the Head of the Village and the Village
Treasurer.
Furthermore, BPKP (2015) describes the Rural Finance Administration is
recording the activities performed by the Treasurer in particular village. Village
Treasurer shall keep records of all transactions that exist in the form of revenue
and expenditure. Village Treasurer perform a systematic and chronological
recording on financial transactions that occur. Village Treasurer keep records of
all revenues and expenditures in the General Ledger for that is CASH. While
transaction receipts and expenditures through bank / transfer is recorded in the
Book Bank. Ledger Assistant Treasurer Tax used by the village to record the
receipt of money from taxes and expenses recorded in the form of tax payment to
the state treasury. In addition to recording in the General Ledger or Bank Book,
Treasurer Village also posted revenue into book income details. Revenues in the
recording book details useful to classify the details of the actual income received
in order to be reported to the Realization Report BV. Recording all the receipts
carried out properly and orderly. According to article 35 Regulation 113 of 2014,

621
the Village Treasurer shall be accountable for the money through accountability
reports.
Based on Law and the ministerial decrees on the village, in carrying out
their duties, authorities, rights and obligations in the financial management of the
village, the village head has an obligation to report. The report periodic quarterly
and yearly, which was delivered to the Regent / Mayor and there was also
submitted to the VCE. The report details the Regent / Mayor (through sub-district
head) and consists of a Semester Report realiasasi BV Implementation,
Implementation Realization BV Accountability Report to the Regent / Mayor of
the end of each fiscal year, Report on Utilization of Village Fund. While the
Report to the Village Consultative Entities (VCE), which reports Realization
Implementation Specification Accountability BV consists of Income, Expenditure
and Financing.
Actual Implementation Accountability Report Fiscal Year End BV Each
submitted to the Regent / Mayor through camat consists of Income, Expenditure
and Financing established by Regulation village. After the village authorities and
VCE has agreed to the realization Accountability Report Implementation BV in
the form of village regulation, then this Village Regulations submitted to the
Regent / Mayor as an integral part of the management report Village Government.
Realization Accountability Report Implementation BV as stated in the article 41
Regulation 113/2014, submitted no later than 1 (one) month after the fiscal year in
respect. Implementation of the construction carried out by the village government
should be informed including finances to the public. It was as a form of
accountability which is the principle of management of village finances.
Realization Accountability Report Implementation BV accordance with the
provisions and public openness to the public is informed in writing to the media
information that is easily accessible by the public, among others bulletin boards,
community radio, and other information media.

622
3. Research methods
This descriptive qualitative study in order to describe in detail and
interpret symptoms in every village financial management mechanism in the
village of Klompangan. The strategy used in this study is a case study mentioned
by Creswell (2013) is a research strategy in which researchers investigated
carefully inside a program, event, activity, process, or group of individuals.
This research was conducted in-depth interviews, observation and
documentation are carried out for two months from April 25 until June 25, 2016.
The interview in the study carried out by several informants among others: Mr.
Sofyan as Head of the village, Mr. Ansori as the village secretary, Mrs. Evi as
Village treasurer, and Mr. Mudjiono as the Head of VCE. In this study,
researchers recorded / recorded either in a structured or semi- structured.
Researchers can also engage in a variety of roles, starting as a participant and non-
participant to participant intact. Study documentation in this study focused on
village data archives relating to the financial management of the village in the
Klompangan village.
In this study using triangulation strategy. Denzin in Moleong (2007: 330)
distinguishes four types of triangulation of them make use of the resources,
methods, investigators and theories. In this study, four types of triangulation, the
researchers used a technique examination by utilizing resources.

4. Results and Discussion

Financial management Village of Klompangan to achieve accountability in
the implementation of each party or apparatus related to the financial management
of the village in any implementation mechanism should be based on a solid
understanding of the financial management of the village and executed with
regulatory compliance of the financial management of the village from the
planning phase to phase accountability.

623
5. Sub-Chapter One: Drafting BV in Klompangan Village
The village head was first elected office are required to compile Village
Medium Term Development Plan (RMTDP) in accordance with the vision and
mission in building the Village of Klompangan become more advanced and
developed in all aspects. Based on that the village chief is required to formulate
RMTDP as a first step or the early stages of the preparation of the Draft
Regulation Village on BV. Rural Medium Term Development Plan (RMTDP) is
an essence or essences beginning how the process of village financial
management will be carried out. In the RMTDP there are government programs
village next 5 years how the course of development and the governance and
management of the village so as to achieve the medium-term objective.
Determination RMTDP according to Regulation No. 113 of 2014 no later than 3
months since the inauguration of the chief. Mr. Sofyan as Klompangan village
chief has made RMTDP as mandated by the Regulation on financial management
of the village.
With the enactment of the RMTDP people can know the running of the
government forecast period village next 5 years. Preparation of RMTDP not be
separated from the regulations of the district, meaning the course of the village
administration in the five years must be in accordance with the higher laws and
does not deviate from the laws and regulations governing the financial
management of the village. If they do not match then the RMTDP needed re-
evaluation of the RMTDP order not to deviate from the rules that have been set.
Based on that, Mr. Sofyan review the RMTDP Klompangan and adapt them to the
regulations and the Act in force today, he explained:

Iyo wong wajeb iku (Iya memang wajib itu), dasar penyusunannya ya
Undang-Undang ya, karena memang sudah diamanatkan dengan Undang-
Undang nomer berapa yang baru itu? nomer enam ya, PP-nya juga sudah
ada revisi. Amanat Undang-Undang, tiga bulan setelah pemilian kepala
desa baru itu wajib menyusun rencana apa? RPJMD Rencara
Pembangunan jangka menengah selama lima tahunan itu amanat

624
 Undang-Undang seperti itu. Karena paling tidak RPJMDes itu adalah
frame, apa namanya, etalase-etalase, pajangan-pajangan selama lima
tahun, paling tidak dengan perencanaan lima tahun ini kan kita sudah
bisa melihat arah pembangunan selama lima tahun itu seperti apa, artinya
RPJM itu tidak bisa menyimpang dari RPJMKabupaten. Penetapannya
awal, tapi barusan ini saya review lagi kaitan dengan RPJMDesnya
karena emang diminta seperti itu dengan undang-undang yang baru awal
dari dulu emang RPJM harus ada. [Iyo wong wajeb iku (Yes indeed
obligatory), basic preparation yes yes Act, because it is mandated by law
how the new number? number six yes, regulation is also a revision.
Mandate of the Act, three months after the election of a new village head
was required to plan what? RMTDP medium-term plan development over
the five-year mandate of the Act as it is. Because at least RMTDP it is a
frame, what it's called, the storefront, the exhibits for five years, not least
with the planning of this five-year right we can see the direction of
development for five years is like, means RMTDP it can not deviate from
RMTDP. Assignment beginning, but just now my review again linked to
RMTDP because weve asked like that with the new law beginning from
the first RPJM must exist].

This re-evaluation of the RMTDP will affect the process and mechanisms
for financial management as the other villagers who mentioned that this RMTDP
an early stage in the financial management mechanism of village. After making
RMTDP, then Mr. Sofyan along Village Consultative Body (VCE) will develop
in accordance with RMTDP VGWP based Rural Development Plan Meeting
(Rural development planning). According to his opinion regarding RMTDP
readjustment of the period resulted in delays in the preparation of the Village
Government Work Plan (VGWP) which is based RMTDP. VGWP formation
with consultation with VCE conducted in accordance with the regulations on the
management of village finances. Preparation of VGWP not necessarily

625
correspond with the time of their establishment RMTDP that had been developed
previously, Statement of Mr. Sofyan make these things:

Setelah RPJM nanti ke RKP, apa namanya, Rencana Kerja Pemerintah

Desa. Tapi didesa itu bukan Rencana Kerja Pemerintah Desa, tapi
Rencana Karepe Petinggi (Rencana kemauan kepala desa), tak kasi tau
sampean (kamu) ya, RPJMDes baku sudah, sesuai aturan, serius ini kan
RPJMDesnya. RPJM itu dasar hukumnya undang-undang tapi untuk
menyusun ini adalah berangkat dari menyerap aspirasi ditingkat bawah
tingkat dusun tingkat RT itu ada, apa yang dimau baik dibidang
kesehatan, bidang pertanian, bidang keagamaan, pendidikan, ketika sudah
tercover semua, ini kan sudah aturan ya, ranahnya pemerintah kepala
desa ketika mengambil, memetik dari RPJMDes selama lima tahun kita
ngambil ke RKP. Tapi saya memelesetkannya itu menjadi Rencana Karepe
Petinggi, kenapa? Karena saya jabatan politis. Sejauh yang saya ambil di
RKP itu tidak menyimpang dari RPJMDes itu tidak salah. Karepe petinggi
itu, jika masyarakat butuh ini, walaupun ada ditahun terakhir, tapi ketika
kebutuhannya dibutuhkan sekarang, kenapa tidak? Karepe petinggi tapi
framenya tidak menyimpang dari RPJM ini. [After RMTDP later to
VGWP, what the name implies, the Government Work Plan Village. But
the village was not the Village Government Work Plan, but Rencana
Karepe Petinggi (Plan willingness village head), do not know sampean
cation (you) yes, raw RMTDP already, according to the rules, it's serious
RMTDP. the legal basis of RMTDP for the legislation but to compile this
is a departure from aspiration level below the level of village
neighborhood level that there is, what desirable both in the field of health,
agriculture, the fields of religion, education, when it covered all, it's been a
rule yes , direction government village head when picking, picking off
RMTDP for five years we take to VGWP. But I call it became Rencana
Karepe Petinggi, why? Because my political position. As far as I take in
the VGWP it does not deviate from RMTDP was not wrong. Karepe

626
 Petinggi (willingness village head) that, if people need this, although there
last year, but as the need is needed now, why not? willingness village head
but the frame does not deviate from this RMTDP].

Based on the interview with him can be seen that the determination
VGWP can be arranged outside the periods set out in the determination of
RMTDP but do not deviate from RMTDP. Furthermore, Mr. Sofyan statement
regarding the establishment of VGWP whose meaning he call it be Rencana
Karepe Petinggi had the sense that VGWP a work plan established under the full
authority of Mr Sofyan as the chief. In this case the formation VGWP which is
the work plan short-term period of 1 year is certainly not deviate from RMTDP,
but even in RMTDP annual plans that should be implemented in the last year but
appropriate measures taken, Mr. Sofyan if the plan needs to be realized in time
before period listed in RMTDP, then it is allowed and the full power of Mr.
Sofyan as a village chief who is mentioned in the Act as the authority's financial
management of the village. The policy was taken out of course taken into account
earlier. VGWP formation mechanism described Mr. Sofyan does not deviate from
the Act and the Regulations on the financial management of the village,
according to the process set forth in the regulations on the management of village
finances. Non-compliance mechanism with the Act and regulations village
financial management occurs in the delay determination period VGWP
Klompangan Village caused by a review of the previously mentioned RMTDP
that affect the determination period VGWP.
Rural financial management mechanism is the preparation of the next
Klompangan Draft Regulation Village on BV which is a step performed after the
determination VGWP. After Mr. Sofyan set VGWP, Mr. Ansori village secretary
then draw up Draft Regulation on BV based VGWP village. Draft Regulation
Village on BV were then handed over to Mr. Sofyan to be discussed together and
then the Village Consultative Body agreed. Determination draft regulation
Village on BV are not running according to schedule which should result of
conflict with the rules of the district and review of RMTDP had a direct effect on

627
the determination of VGWP that period Draft Regulation The village was joined
late and not in accordance with the timetable should be.
In determining the draft regulation Village on BV, Village of Klompangan
must be approved by the Regent through the evaluation phase. The results of the
evaluation will be ditetapka later than 20 days after such filing. If, within 20 days,
it did not give the results of the evaluation, the draft regulation Village on BV can
be passed into a village regulation. If the Regents did not approve the draft
regulation of the village, Mr. Sofyan and VCE should evaluate the draft
regulation of the village. If Mr. Sofyan did not evaluate the draft regulation, the
Regent Village will impose a budget ceiling of the previous year.

6. Sub-Chapter Two: Implementation of the BV in Klompangan Village

Implementation Klompangan BV in the village in accordance with the Act
and the regulations, where all revenues and expenditures made through cash
accounts rural village. Programs and activities undertaken by the village recorded
in BV as well as any income and expenditure on these programs and activities
must be equipped with a complete and valid evidence. This is consistent with the
results of interviews with Ms. Evi Puji Village Treasurer as Klompangan:

Semuanya dek, semua melalui rekening kas desa. Tapi kalau pelayanan
enggak, kayak pelayanan dari masyarakat dari kas umum, ndak masuk.
Kalau anggaran-anggaran semuanya masuk. Semua pemasukan dan
pengeluaran kas itu harus dibuatkan surat bukti dari pemasukan
pengeluaran itu, dilampiri dengan nota atau bukti kwitansi dan harus
sepengetahuan Kepala Desa karena dalam hal ini saya selalu didampingi
pak Kades sama staf yang lain biasanya pak Sekdes juga. [Everything bro,
all through the village treasury account. But if the service not, like the
service of society from the public treasury, not sign. If budgets are all
entered. All inflows and outflows of cash that must be made proof of
income that expenditure, accompanied by a memorandum or evidence of
receipt and must be knowledge of the Village Head because in this case I

628
 was always accompanied by the Village Head and other staff usually
village secretary well].

In order to execute Klompangan BV in the village, the submission of

disbursement of funds to carry out the activities must be accompanied by valid
evidence and Budget Plan which previously had to be verified first by Ms. Evi as
Treasurer of the Village and Mr. Ansori village secretary Klompangan. Referring
to the implementation of activities in accordance with BV, operational
responsibility for the actions that cause the load expenditure budget ledger
activities by using activities as a form of accountability for pelaksanaak these
activities. Based on the Budget Plan, operational submits a Request for Payment
(RP) to Mr. Sofyan accompanied by a Statement of Expenditure Responsibility
and attachments evidence of a legitimate transaction.
Further associated with the filing of the implementation of the payment,
Mr. Ansori coordinator TIFMV obliged to examine the completeness of payment
requests submitted by the implementing activities, and then test the correctness of
the calculation of the bill at the expense BV listed in the payment request. After
that Mr. Ansori test the availability of funds for such activities, and if the
submission of payment requests that have not qualified diteteapkan Mr. Ansori
entitled and obliged to reject the payment of a request. The next payment of a
request approved by Mr. Sofyan based on the results of verification of Mr.
Ansori, then Ms. Evi make payments and expense account.
Related to the revenue collection of the village, Mr. Sofyan has
implemented in accordance with the terms set out in the regulations and in
accordance with the Law on the financial management of the village, even
according to Mr Sofyan levies in the village who had made rules just now should
not be raised again. Mr. Sofyan stated that harvesting was his duty has been
adjusted to the fact the field. Mr Sofyan explained:

Sebetulnya pungutan di desa itu hampir tidak ada ya di, Kecuali surat-
surat itu apanya yang mau dipungut. Wong masyarakat sekarang dimintai

629
sewu ae wes ngunu (seribu saja sudah seperti itu) , malah lebih suka dimintai
nasi, ini fakta dilapangan ya. Mungkin kalau bicara teori partisipasi
masyarakat, oke teori, tapi fakta dilapangan. Aku bangun jalan misalnya,
memang disitu juga kalo bisa, ini Cuma pancingan saja diharapkan bisa
muncul partisipasi walaupun tidak dalam bentuk pungutan, tapi
partisipasi itu semen misalkan, nyumbang semen, karna memang ada
proyek itu yang saya minta harapannya agar masyarakat berpartisipasi
dalam bentuk nyumbang, tapi jika bicara uang masyarakat sudah ndak
mau , tapeh mon epentaeh nasek (tapi kalau dimintai nasi), epentaeh
lemaebuh (dimintai lima ribu) merasa keberatan orang itu, tapi kalau
dimintai nasi sepuluh bungkus dia mau. Ndak ngerti saya pola pikirnya
apa padahal nasi sepuluh bungkus itu lebih mahal dari lima ribu. Bisa
jadi karna ketidakpercayaan masyarakat pada pemerintahnya, karna
mungkin takut dikorup, atau mungkin masyarakat ini pikirannya kalau
uang untuk uang saku anak gitu kan, yowes, beras iku wes masaken
(yasudah beras itu saja dimasak), kan gitu kan bisa seperti itu. Tapi yang
namanya pungutan itu ndak ada. malah pungutan yang diVillage
Regulationskan saja saat ini sudah tidak boleh memunculkan kaitan
dengan kependudukan, ini didesa gak ngerti saya dikecamatan. [Actually
levy in the village was virtually nothing, except the letters ass wants
levied. society is now held sewu ae wes ngunu (just thousand rupiah is like
that), instead preferred rice held, this fact the field yes. Maybe if you talk
to the theory of community participation, okay theory, but the fact the
field. I woke up the road, for example, is there also if you can, it's just
provocation alone is expected to appear participation, although not in the
form of levies, but the participation of the cement for example, donate
cement, because there is a project that I'm hope that the community
participates in the form of chip in, but if you talk to people already do not
want money, tapeh mon epentaeh nasek (but if held rice), epentaeh
lemaebuh (held five thousand rupiah) objected that person, but if ten packs
of rice held he wants. I dont know what the mindset is ten packs of rice

630
 when it is more expensive than five thousand rupiah. It could be because
the public distrust in the government, because fear may be corrupted, or
maybe the public's mind if the money for child allowance so right, yowes,
beras iku wes masaken (alright, rice was just cooked), do so right to be
like that. But the name of the levy was not there. instead levy made rules
just now should not generate relation to population, this village in the
district do not understand me].

The fact that there is in the community Klompangan village not the same
as the existing theories regarding community participation. Village Community
Klompangan its participation in the development process or the execution of the
financial management of the village, preferring to include participation by
donations consumption in implementing the activities of in the form of money or
goods helper activity.
Withholding Income Tax and other taxes by Ms. Evi mandatory and then
deposit all revenues cuts and taxes levied to the account of the State Treasury in
accordance with applicable regulations. Treatment related to remaining balance
budget has been implemented in accordance with the mechanism in accordance
with the legislation on the management of village finances. The Remaining
Budget (RB) in the village of Klompangan This can happen because the revenue
is greater than expenditure and the excess is recorded and can be used in the
coming budget year. RB can be used to cover the budget deficit if it occurs, and
to fund further activities at the expense of direct expenditure or other obligations.
Mr. Sofyan added that RB recorded also happened as a result of the incentives
that are not channeled annually and the funds can be used for other purposes.
Regarding the treatment of the Reserve Fund, the Reserve Fund is
recorded in another account and on behalf of the Reserve Fund singled out the
village government. In the use of the Reserve Fund can not be used to finance
activities outside the established in the Regulation of the village and the reserve
fund has been created in accordance with the estimates have been adjusted to
finance the implementation of the activities that have later. But for the village of

631
Klompangan has not formed a reserve fund from previous years, the village of
Klompangan will bring it on BV in this year accordance with the instructions of
Law and the regulations at this time.
Klompangan village for the previous year are not allocated to the Reserve
Fund. According to information Mr. Sofyan, the Reserve Fund is a relative thing
for every village, because the circumstances of each village is not equal to one
another. The difference according to him is the basis why Klompangan village for
years and do not include or allocated to the Reserve Fund. Determination of the
Reserve Fund must be adapted to the existing situation and potential that will
occur in each budget year, it became the basis for the calculation and
determination of the Reserve Fund in BV. The village itself in 2016 Klompangan
this form and enclose their Reserve Fund in BV Rp 10,000,000. The Reserve
Fund will be used in case of unexpected events such as natural disasters and other
unexpected things.
Mr. Sofyan statement regarding the Reserve Fund that are not included in
the previous year BV because according to him to unexpected events such as
natural disasters when there can be handled directly by the social services district
if the village government reported it. Rapid handling of the District Government
gives reason for Mr. Sofyan not budgeted BV Reserve Fund in previous years.
But for 2016 in accordance with the Act and the Regulations on the financial
management of the village, the village of Klompangan specify your budget to the
Reserve Fund.

7. Sub-Chapter Three: Changes of BV in Klompangan Village

According to the Regulations on the management of village finances, BV
changes can occur due to the circumstances that caused the shift between the
types of spending, the addition or subtraction of income, the circumstances that
caused the Remaining Budget (RB) the previous year is used in the current year, a
state of emergency. It is the same as the mechanism of change BV Klompangan
village.

632
 Based on the interview with Mr. Sofyan, Mr. Ansori and Mr. Mudjiono,
changes BV Klompangan village can occur if there are changes in expenditure or
revenue that converts part of the BV. Changes that can occur due to an increase or
reduction in income, the use of funds RB last year for the current year and in case
of unexpected things such as natural disasters or changes in government
regulations and policies. Mr Ansori explanation by stating the following:

Ya begini, APBDesa bisa dirubah itu Cuma satu kali selama periode
anggaran, itu biasanya karena ada perubahan belanja atau bisa juga ada
peraturan baru seperti undang-undang yang baru misalnya yang bisa
merubah isi dari APBDesa itu. [Yes this time, BV can be changed it's just
one time during the budget period, it is usually because there are changes
in spending or it could be a new regulation such as new legislation, for
example that can change the contents of the BV].

BV changes can only be done once in a budget year in accordance with

the results of interviews with sources mentioned above. If there is a change in
BV, Mr. Ansori draw up Draft Regulation Village on the Amendment BV and
conveyed to Mr. Sofyan together VCE to be discussed and agreed upon. Draft
Regulation Village on the Amendment BV mutually agreed upon will then be
submitted to the Regent to be evaluated and determined to be of Village
Regulations. BV change mechanism is carried out together with the mechanism
for setting BV previously conducted in accordance with the Act and regulations
on the management of village finances.

8. Sub-Chapter Four: Rural Financial Administration Klompangan

The mechanism of financial administration of the village of Klompangan
are in accordance with the provisions of the Act and regulations on the
management of village finances. As the interview is not mentioned previously
there are several documents that must be made in the administration. The
documents are created and compiled by the Treasurer Village in the budget period

633
as explained in interviews conducted over the administration mechanism all in
accordance with those contained in Regulation No. 113 of 2014.
Village Treasurer shall implement the revenue and expenditure
administration by using the general book, cash book and bank book tax helpers,
especially for revenue and income details of financing using books and books
detailing the financing. Mrs. Evi as Treasurer of the Village did a systematic and
chronological recording on financial transactions that occur. The administration
was conducted by Ms. Evi done in a simple way in the form of bookkeeping yet
using accounting journals. Mrs. Evi gives the following explanation:

Gini dek, pendapatan dan pengeluaran yang ada, semuanya dicatat dalam
buku harian yang saya pegang, terus nantinya direkap dalam buku kas
umum. Nanti di akhir saya akan melaporkan dan
mempertanggungjawabkannya kepada pak kades. [like this bro, revenues
and expenditures, are all recorded in the diary which I hold, will continue
to be recapitulated in the general book. Later in the end I will report and be
accountable to the village head].

From interviews obtained information that Ms. Evi as Treasurer of the

Klompangan Village has carried out its duties and responsibilities associated with
the financial administration of the village. The mechanisms implemented by Ms.
Evi accordance with the information in the Law and regulations on the
management of village finances. In conducting the financial administration of the
village, Ms. Evi record every receipt and expenditures happened and must be
supported by evidence that is complete and valid. Recording is done starting with
evidence of both revenue and expenditure transactions recorded in the Diary
Assistant, and then inserted into the General Ledger. In the village administration
documents Klompangan not use additional book as object granularity receipts or
expenditures for the General Ledger is contained at the same object details of
receipts and expenditures.

634
 As control over the administration of which was conducted by Ms. Evi as
Treasurer of the Village, Ms. Evi required to account for the receipt and
expenditure of money through an accountability report to Mr. Sofyan as the chief.
Attach to the Accountability Report Diary Assistant, General Ledger and valid
evidence.

9. Sub-Chapter Five: Accountability Implementation BV in Klompangan

Village
Implement the whole village BV either Mr. Sofyan as village chief, Mr.
Ansori village secretary, Ms Evi and VCE Village Treasurer is responsible for the
implementation of the BV. Financial management is inseparable from the village
of reporting and accountability of financial management of the village.
From the results of interviews with Mr. Sofyan, Mr. Ansori, Ms. Evi and
Mr. Mudjiono, Klompangan village in the manner of filing of the Draft
Regulation on Accountability Implementation BV and Village Heads Draft
Decision in accordance with those contained in the Act and the Regulation on
financial management of the village. Mr Sofyan said:

Untuk penetapan pertanggungjawaban pelaksanaan APBDes, penetapan

tersebut dilakukan Kades kepada bupati sebetulnya, tapi dihadapkan
kepada BPD dulu terhadap apa yang telah dilakukan dari APBDes yang
ada itu, sudah terealisasi semua atau tidak, kalau memang tidak
terealisasi apa masalahnya, kelebihan itu di SILPAkan di APBDes tahun
yang akan datang. Jangka waktu penyampaiannya itu pada waktu tahun
berjalan karena itu harus diperdeskan juga, Perdes pertanggungjawaban.
Itu kan berarti untuk yang tahun yang kemarin harus diperdeskan juga,
pertanggungjawaban itu harus dibikin walaupun kadang-kadang lebih ke
bulan satu gak masalah. Karna apa? Karena itu menjadi syarat
pengajuan pencairan untuk tahun yang akan datang, berarti kan harus
dibikin sebelumnya gitu lo. [For the determination of accountability of the
BV, such determination made Village Head to the regents in fact, but

635
 faced with VCE used for what he has done from BV that there was,
already realized all or nothing, if it is not realized what the problem is,
excess of it in RB in BV year which will come. The term of delivery was
on time for the current year should made rules also, rules accountability.
That means that the last year for which must made rules also, that
accountability must be constrained even though sometimes it's not a
problem for one month. Because what? Because it is the requirement of
filing disbursement for years to come, it means that must be made before
that].

The accountability mechanisms begins with the creation of the Village

Draft Regulation on the Implementation Accountability BV and Draft Decision
Village Chief on Village Chief Accountability conducted by Mr. Ansori. The
draft Regulation of the village and then submitted to Mr. Sofyan and discussed
with VCE for approval together. If agreed upon and then submitted to the Regent
to be evaluated and then made the Village Regulations on the Implementation
Accountability BV. The village of Klompangan based explanation for Mr.
Sofyan, filing a draft regulation on Accountability Implementation village BV
made until one month after the fiscal year ends. According to the explanation, Mr.
Sofyan Village Regulations on the Implementation BV Accountability must be
submitted to the Regent after the Village Regulations set. This is related to the
filing requirements disbursement of funds coming year. This means that every
process and financial management mechanisms villages conducted by the village
government are all related and continuous.
Klompangan village government as a form of village financial
management accountability and public openness, inform Accountability Report
Implementation BV to the public in writing by the board as a announcements
media easily accessible information society. Each village financial management
mechanism in the village of Klompangan do conform with the Act and
regulations concerning the financial management of the village and carried out
with full understanding of the parties implementing the financial management.

636
10. Conclusion
Rural Financial Management Mechanism Klompangan performing well
overall. Mechanisms and procedures that run in the stage of planning and
budgeting village finances related to the preparation of the Draft BV not in
accordance with Law No. 6 of 2014 and Regulation No. 113 of 2014, as in the
phase of VGWP and Preparation Plans Legislation Village (PLV) about BV
carried out does not comply with the deadline specified in the Act and regulations
on the management of village finances. Such differences regarding the
determination period RMTDP which resulted in the determination period VGWP
and of course also resulted in the period of creation and establishment of the Draft
Regulation Village on BV.
This led to indiscipline in financial planning and budgeting processes
village in the Village of Klompangan guided by the law and regulations on the
financial management of the existing village. As for each procedure and
mechanism of implementation BV, BV changes, financial administration and
accountability of BV, fully implemented in accordance with the legislation and a
full understanding of village government officials involved in the process of
financial management Klompangan village.

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TPS-02
ACQUAINT THE MANAGEMENT OF INVENTORIES
IN THE APPLICATION OF ACCRUAL-BASED
GOVERNMENT ACCOUNTING STANDARDS
Sri Wahyuni
University of Jember
E-mail: younaiy@yahoo.com

Isti Fadah
University of Jember
E-mail: istifadah1966@gmail.com

Diana Sulianti K. Tobing

University of Jember
E-mail: dskltse@yahoo.com

ABSTRACT

Financial Reform on the Government characterized by PP 71 of 2010, and

supported Permendagri 64 of 2013. The embodiment of the finance reform
demands the application of accrual-based accounting system for local
governments throughout Indonesia since 2015. The application of accrual-based
accounting impact on the accounting records of inventories. Inventories is one of
the elements of the assets on the balance sheet in the financial report of the Local
Government. The accounting conduct of inventories will determine the
reasonableness of the presentation of the value of the inventories on the balance
sheet and the related inventories expense on the operational reports. Based on
existing literature, it was concluded that the management of the inventories
affected by apparatur resources competency within the management of
inventories; internal control system is adequate and can be accountable; and
information systems (application program) in the management of inventories. To
be able to manage the inventories for the better, be required to strategy in curbing
and administering inventories, inventories stock opname, and inventories
reporting.

Keywords: The Management of Inventories, Governement Accounting

Standards, The Application of Accrual Based.

1. Introduction
The reform of finance in Government was marked by the publication of
Government Regulation No. 71 of 2010 about SAP (Government Accounting
Standard), and supported Permendagri No. 64 of 2013 about The Application of

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Accrual-Based Government Accounting Standards on Local Governments. The
year 2015 is the first year for local governments throughout Indonesia to apply
accrual-based accounting system, either the application of accounting systems as
well as the presentation of financial reports. Previously, the government
accounting system using the cash basis. Cash basis is a base of accounting who
acknowledge the influence of transactions and other events at the moment of cash
or cash equivalents received or paid. While the accrual basis of accounting is to
acknowledge the influence of transactions and other events at the time of the
transactions and events that occur, regardless of when the cash or cash equivalents
received or paid. With the application of the accrual-based financial statements,
local governments can be more comprehensive to present all of the rights,
obligations and his wealth, operating results as well as the realization of the
budget and the remaining budget excess. With this accrual-based of the local
government financial reports, local governments are expected to ensure the
implementation of the APBD in a more transparent, accountable and also give
better benefits for stakeholders, whether users or auditor of the government
financial statements.
Based on Permendagri No. 64 of 2013 about The Application of Accrual-
Based Government Accounting Standards on Local Governments, financial
statements consist of: Budget Realization Reports; Report Changes In Budget
Balance More; Balance Sheet; Operational Reports; Cash Flow Reports; Report
Changes In Equity; and Notes to The Financial Statements. One element of the
assets on the balance sheet is inventories. Every government instance is certainly
need inventories in its operations activity, at least in the form of consumer goods
such as office stationery. Whereas instance which provide services to the public
(public service) such as hospitals and schools for example, have inventories in the
form of medicines and books that will be handed over to the community. The
existence of inventories in addition to essential to support the operational
activities of an instance, often also have significant value or material in total
assets. (Antoro, 2015).
The application of accrual-based accounting is very influential on the

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accounting records of inventories. According to the accrual basis, the government
should present usage of inventories as a expense that would reduce the equity/net
worth values and presented in the operating statements. While the post of
inventories will be presented in the balance sheet on current assets part.
Information relating to posts of inventories, made accountability over inventories
became extremely important. This is done to know the number and value as well
as the actual inventories conditions, which is lies on the assignment of the user of
the goods and that all data and information about inventories can be presented and
communicated to the parties concerned with accurate. Information about
inventories give contribute significantly and decanted in the Government's
financial statements. Data accuracy of inventories is very needed and affect the
auditor's opinion (Audit Board of the Republic of Indonesia) on the financial
statements of the Ministry/Agency or Central/Local Government to be presented
fairly. (Megantara et al., 2006).
Some research about the management of inventories has been done
before. Ng'ang'a (2013) in his research in Nairobi-Kenya finding there are four
factors that influence the effectiveness of the management of inventories, namely:
bureaucratic procurement procedures, computerized system, the allocation of
funding for the management of inventories, and staff within the management of
inventories. While Janurmahendra (2016) in his study about operational audit to
assess the effectiveness of the management of drug inventories revealed there are
a constrains on the function of drug storage, and the function of stock control of
the drug. This article tries discusses how to management of inventories that
occurred in local governments in the application of accrual-based Government
Accounting Standard (SAP), the constraints in the management or remedial steps
that can be done in addressing existing problems.

2. Literature Review
2.1 Definition of Inventories
Inventories are current assets in the form of goods or supplies intended to
support operational activities of the government, and goods that are intended for

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sale and/or handed over to in order of service to the community. PSAP No. 5 on
inventories stated that the assets are classified into inventories if:
a. Goods or supplies are used in the framework of the operational activities of
the government;
b. Materials or supplies are used in the production process;
c. Goods in the production process which are intended to be sold or handed over
to the community.
d. Goods are kept for sale or handed over to the community in the framework of
the activities of the government.
From the explanation above, may include of the inventories are: consumer goods;
ammunition; materials for maintenance; spare parts; inventories for the strategic
purpose/for alert purpose; banderoles and stamp; raw materials; goods in
process/half so; land/building for sale/handed over to the community; animals and
plants for sale/handed over to the community. In the event that the government of
storing goods for the purpose of strategic reserves such as energy reserves (eg oil)
or for the purpose of warning for reserve food (eg rice), goods are recognized as
inventories. While animals and plants for sale or handed over to the community,
among others, in the form of a cow, horse, fish, rice, seeds and seedlings of the
plant. While inventories with damaged or worn condition was not reported in the
balance sheet, but disclosed in the notes to the financial statements.

2.2 Recognition of Inventories

The inventories are recognized at the time of potential future economic
benefits obtained the government and have value or cost can be measured reliably;
and at the time of the ownership rights be accepted and/or power move. Antoro
(2015) states that the value or the cost of the inventories to be supported by source
documents that can be verified its validity, such as invoices, receipts, BAST, or
SPP/SPM/SP2D.

2.3 Measurement of Inventories

There are three measurement alternative of value inventories, namely:

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a. The cost of acquisition when acquired by purchase.
If obtained through the purchase, the value of inventories measured at cost
which includes the purchase price, freight costs, handling costs, and other
costs which are directly can be imposed on the acquisition of the inventories,
and reduced by discounts, rebates, and other pieces.
b. The standard cost if obtained by producing its own.
If obtained through its own production, the value of the inventories measured
production cost which includes raw material costs, labor costs, and indirect
costs are allocated systematically.
c. Fair value when obtained by other means such as donations/booty.
If obtained through other means, the value of inventories is measured by fair
value. Included in this is the result of breeding of plants and animals, the
result of donations/contributions, and booty goods.
The inventories can be recorded with:
a. The perpetual method, namely the method of recording inventories are
always updating the value of inventories every incoming and outgoing
inventories. Each addition or subtraction (usage/submission) inventories
occurs will be recorded in the inventories accounting. At the time of
inventories consumption would be recognised as inventories expense. If its
inventories in the form of materials for the maintenance, when usage will be
recognized as maintenance expense. In its inventories in the form of materials
to be sold/handed over to the community, then the time of handover will be
acknowledged as "goods" expense (depending on the shape of its inventories)
to be handed over to the community. In the meantime, if its inventories in the
framework of social assistance, then when handed over to the recipient will
be recorded as a social assistance expense.
b. The periodic method, namely the method of recording inventories indirect
updating value of inventories during the usage. The amount of the ending
inventories is known to do a physical audit (stock opname) at the end of the
period. Physical audit (stock opname) on inventories made to validate the
value of the inventories record. An inventories of physical audit was done at

643
 the end of the reporting period (the end of each semester). If the value of the
inventories of physical audit results is lower than the value of the inventories
of recorded, then do the adjustment inventories value reduction recorded by
recognizing the expense. Conversely, if the results of the physical audit is
higher than the value of the inventories of recorded, then do the adjustment
value adding inventories of recorded by reducing the expense that was
recorded previously. (Antoro, 2015).
The determination of the value of the inventories can be done using:
a. FIFO Method (First In, First Out)
That is determine the value of inventories is based on the value of the goods
was first purchased value of goods is used/sold/handed over at the first time.
b. LIFO ACCOUNTING method (Last In, First Out)
That is determine the value of inventories is based on the value of the final
goods purchased value of goods is used/sold/handed over at the first time.
c. Average method (Average).
In this method, the cost of goods is the average price of the entire goods
owned by local governments. Thus the value of the inventories is calculated
based on the average price.

2.4 Presentation and Disclosure of Inventories

Inventories are presented in groups of current assets on the balance sheet
of the government, based on the last of acquisition prices when obtained by
purchase, with the standard cost if obtained by producing its own, and fair value
when obtained by other means such as donations/booty. In the meantime, the
inventories/maintenance expense of goods to be handed over to the
community/social assistance expense is presented on Operational Reports.
An adequate disclosure related inventories poured in Notes to Financial
Statements, at least include about the accounting policies used in measuring
inventories; further clarification over the inventories including of recorded
inventories values of the difference with the results of the physical audit; as well
as the number, type, and value of the inventories in the condition of

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worn/damaged. (Antoro, 2015).

2.5 Accrual-Based Government Accounting Standards

The Government Accounting Standards (SAP) is the accounting
principles applied in compiling and presenting the financial statements of the
government. Accrual-based SAP recognizes revenue, expense, asset, debt, and
equity in the accrual-based financial reporting, as well as recognize revenue,
expenditure and financing in the reporting of budget execution on the basis set out
in APBN/APBD. (Government Regulation No. 71 of 2010).
The use of accrual basis aims to: improve the efficiency and effectiveness
of (budgeting, accounting, and reporting); improve fiscal control, and asset
management; improving accountability in the program providing the
goods/services of the government; presents a more complete information to
government for decision making; reforming the expenditure budget system; and
broader transparency over the cost of services performed by the government.
(http://www.academia.edu/22905511/KONSEP_DASAR_AKUNTANSI_PEMER
INTAHAN_BERBASIS_AKRUAL)

3. Research Method
This research is a literature study research is research by studying and
reading various previously references of the problem which is the object of
research, namely management of inventories in local government. The literature
used in the form of books, regulations, articles, journals and the writings of
various kinds of media.

4. Result and Discussion

Improved resource competence pointed out as one way of achieving good
governance in the management of inventories. Welcomes the implementation of
accrual-based accounting system in 2015, BPKAD (Board of Finance and
Management of Assets) Belitung district has held Bimtek Management of
Inventories Goods on October 27 - November 1, 2014. This Bimtek aims to

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improve the competence of personnel resources in the field of management of
inventories, especially Keeper of Goods (Penyimpan Barang)/Maid Keeper of
Goods (Pembantu Penyimpan Barang) and also Assistant Candidates Keeper of
Goods (Calon Penyimpan Barang) and in order to improve the understanding, the
ability of the utilization administratering/inventories, security, distribution,
maintenance, guidance, control and supervision in each work unit in accordance
with the regulations and the applicable legislations.
(http://bkppd.belitungkab.go.id/read/1350/bimtek-pengelolaan-barang-persediaan)
Similar disclosed by the Daily Executive (Plh.) Sekprov Kaltim Dr
Meiliana. She expects an improved in human resources in the field of
management of inventories namely administrators of goods (pengurus barang),
keeper of goods (penyimpan barang) and managers of financial as well as the need
for adequate internal control system which can be accountable. On July 26, 2016,
East Kalimantan provincial government has facilitated the management of
inventories by launching Kaltim Information System for Inventories (SIKAP),
which aims to harmonize and improve the understanding related to the
implementation of inventories management. The existence of SIKAP expected to
be useful in generating quality inventories report in accordance with the
provisions and existing legislation and avoid mistakes.
(http://kaltimprov.go.id/berita-samakan-persepsi-pengelolaan-persediaan.html)
The importance of the use of information systems in the management of
inventories disclosed by Riyanto, 2014. Riyanto explained that work units in the
central government has been using the SIMAK-BMN application for
administering Goods Country (BMN) and PERSEDIAAN application to
administer the inventories, which includes activity to bookkeeping, inventories,
and reporting. Furthermore, the data of PERSEDIAAN application be combined
in the SIMAK-BMN application, then merged into SAKPA application to produce
the balance sheet of work units. But, Riyanto deplore PERSEDIAAN application
does not exist in local government, because he thinks that the administration of
inventories that is done manually is more complicated than administration of
Local Assets (BMD).

646
 Ng'ang'a (2013) in his research found that the effectiveness of the
management of inventories, influenced by: bureaucratic procurement procedures,
computerized systems, the allocation of funds for inventory management, and
inventory management staff. While Janurmahendra (2016) found little constrain in
assessing the effectiveness of the management of drug inventories, namely the
storage function of drugs, and drug stock control functions. Furthermore, based on
LHP (Report Audit Results) by BPK (Audit Board of the Republic of Indonesia),
the problem of public inventories are becoming the exception in some local
governments located in the inventories reporting and record-keeping systems are
not yet adequate. This is because the keeper (penyimpan) and administrator of
goods (pengurus barang) did not do adequate record-keeping over the inventories
on a work unit regional (SKPD).
Overcoming these problems, few strategies that local governments can
do, namely:
a. Curbing and administering of inventories
Curbing can be done with the commitment of local governments as outlined
in accounting policy for inventories governing procurement procedures and
the use of inventories in each SKPD.
Administering of the inventories can be done by:
1) Take note of the list/books of inventories are provided regularly about the
procurement and usage of inventories and save the evidence of purchase
and usage of inventories.
2) Make a user requests card as proof for expenditure items of inventories.
3) Make a inventories cards per items of goods or card stock as a control.
b. Stock opname of inventories
Physical audit or stock opname of inventories is administering the inventories
control measures required by the local government. Any movement of goods
inventories recorded in the card stock and books of inventories , but there are
some events concerning the inventories get away from recording (recording),
namely the inventories of expired, damaged or lost in storage. This incident
can be summed up by the time stock opname of inventories. According to

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 Permendagri No 17 of 2007 about technical guidelines of management of
Local Assets (BMD), administrators of goods (pengurus barang) obliged to
report inventories items consumables per semester so that it can be concluded
at least 2 times a year will have to do a stock opname. Next, based on the
results of the stock opname then made a letter of news event which described
physical audit of inventories that contains the remaining inventories at a
certain period and the inventories conditions (good/damaged, expired, or
missing).
c. Reporting of inventories.
Value of the inventories is reported in the balance sheet based on the book of
inventories after a reconciliation between the notes and the results of a
physical audit done and inventories in the event of the difference should be
able to explain it in The Notes to Financial Statements (CaLK).
(warungkopipemda.com in
http://dppkadboltim.net/index.php/informasi/berita/16-persediaan-daerah-
masalah-dan-solusinya)

5. Conclusion
The inventories is an asset that belongs to every work unit. The
accounting conduct of inventories will determine the reasonableness of the
presentation of the value of the inventories on the balance sheet and the related
inventories expense on the operational reports. Inventories are recognized when
the potential future economic benefits obtained and have value or cost can be
measured reliably, and at the time of the ownership rights be accepted and/or
power move, supported by evidence of valid and reliable transactions. In
determining the value of inventories, government of instance can use the FIFO
method, LIFO, or the method of average. The method of election is determined by
the level of materiality of the value of the inventories is supported by policy on
each entity.
Based on a description of the management of the inventories which had
been expressed earlier, the authors can conclude there are at least some of the

648
factors that affect the management of the inventories include:
a. Competency of human resources in a field of management of inventories.
b. Internal control system is adequate and can be accountable.
c. Information systems (application program) in the management of inventories.
To be able to manage the inventories for the better, be required to
strategy in curbing and administering inventories, stock opname inventories, and
reporting of inventories. Support local governments in the management of the
inventories can be done by setting up: (DPPK Kab. Bondowoso, 2015)
a. Books, documents (purchase document, document acceptance, document
expenditure, etc.), inventories reports and evidence administration of
administering other inventories in the fiscal year concerned.
b. Security/storage inventories (cupboard, warehouse, etc.).
c. News event handover of goods which handed over to/sold tothe
community/third party.
d. News events physical audit (stock opname).

REFERENCES

Antoro, Setyawan Dwi. 2015. Akuntansi Persediaan dalam SAIBA. Jakarta:

Publikasi Karya Tulis Widyaiswara Muda Pusdiklat Anggaran dan
Perbendaharaan.
Dinas Pendapatan dan Pengelolaan Keuangan Kabupaten Bondowoso. 2015. Buku
Panduan Penatausahaan Persediaan SKPD. Bondowoso: DPPK.
Janurmahendra, Yoga. 2016. Audit Operasional untuk Menilai Efektifitas
Pengelolaan Persediaan. Jurnal Ilmiah Mahasiswa FEB Universitas
Brawijaya Vol 4, No 2: Semester Genap 2015/2016.
Megantara, Andie, Dodie Iskandar, Kuwat Slamet. 2006. Manajemen
Perbendaharaan Pemerintahan Aplikasi di Indonesia. Jakarta: LPKPAP
Bandiklat Keu Depkeu RI.
Nganga, Kariuki James. 2013. An assessment of the factors influencing
effectiveness of inventories control; Ministry of State for Provincial
Administration and Internal Security, Nairobi - Kenya. International
Journal of Business and Commerce. 3.1 (Sept. 2013): p33. From InfoTrac
Business and Economics Collection 2017.
Peraturan Menteri Dalam Negeri Nomor 17 Tahun 2007 tentang Pedoman Teknis
Pengelolaan Barang Milik Daerah.

649
Peraturan Menteri Dalam Negeri Nomor 64 Tahun 2013 tentang Penerapan
Standar Akuntansi Pemerintah Berbasis Akrual pada Pemerintah Daerah.
Peraturan Pemerintah Nomor 71 Tahun 2010 tentang Standar Akuntansi
Pemerintah.
Pernyataan Standar Akuntansi Pemerintah Nomor 5 tentang Persediaan.
Riyanto. 2014. Aplikasi Barang Persediaan Berbasis Ms. Excel. Cimahi: Publikasi
Karya Tulis Widyaiswara Balai Diklat Keuangan Cimahi.
http://dppkadboltim.net/index.php/informasi/berita/16-persediaan-daerah-
masalah-dan-solusinya
http://bkppd.belitungkab.go.id/read/1350/bimtek-pengelolaan-barang-persediaan
http://kaltimprov.go.id/berita-samakan-persepsi-pengelolaan-persediaan.html
http://www.academia.edu/22905511/KONSEP_DASAR_AKUNTANSI_PEMERI
NTAHAN_BERBASIS_AKRUAL)

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TPS-03

THE IMPLEMENTATION OF FIXED ASSET

ADMINISTRATION AND ACCOUNTING
BASED ON ACCRUAL IN THE GOVERNMENT
OF BONDOWOSO REGENCY

Emy Dwi Trisnani

University of Jember, Indonesia

ABSTRACT
This article discusses the administration implementation of the fixed assets and
the fixed asset accounting based on accrual in the local government of Bondowoso
regency in 2014 and 2015. This study used descriptive qualitative method and
analize secondary data from Financial Statements of the Government Bondowoso
regency have been audited by BPK-RI in 2014 and 2015 as well as the
Bondowoso regency government's accounting policies. The results showed that
the administration of fixed assets in 2014 has not been orderly so it has not
sufficient in accordance with government regulation. There are some problems in
implementing fixed asset accounting based on accrual in 2015 : damaged assets
were still listed as fixed assets, and there are fixed assets that have not been
discovered its existence. Bondowoso government is expected to administrate its
fixed assets more properly so its fixed assets presentation in the financial
statements is complete and reliable.

Keyword : Accrual Basis , Fixed Assets Accounting , Fixed Assets Administration

1. Introduction
Indonesia government has enacted Act (UU) Number 17 of 2003 on State
Finance, Act (UU) Number 1 of 2004 on State Treasury and Law , and Act (UU)
Number 15 of 2004 concerning State Finance Management and Responsibilities in
order to ascend the transparency and accountability of state financial management.
One proof in transparency of state financial management is the obligation for
government to present a financial statements, as a form of state accountability in
implementing national financial management (APBN) / local financial
management (APBD), resulting from the implementation of the accounting
system.

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 Article 51 paragraph (3) of Act No. 1 of 2004 also states that the
accounting practices used for preparing the financial statements of the
central/regional government must be in accordance with Government Accounting
Standards (SAP), so the government issued the Government Regulation (PP) No.
71 of 2010 concerning to the Government Accounting Standards (SAP). Based
this regulation, in 2015 all units of Indonesian government must run the accrual-
based government accounting. Recording with the accrual basis is recording a
transaction at the time of, or at the time that the incident or environmental
conditions influence on government finances, regardless of when cash or cash
equivalents be received or be paid (Ritonga in Halim, 2014; 210)
Financial reporting of local government is prepared to provide relevant
information about the financial position and all transactions conducted by local
governments during the period. One important component of local government
financial statements is the balance sheet that presents the financial position of an
entity's reporting on the assets, liabilities and equity as of a specific date. Fixed
assets have a very important role because it has significant value when compared
with other balance sheet components (Halim, 2014; 305). Presentation of an asset
should refer to Regulation No. 71 of 2010 as contained in the Government
Accounting Standards Statement (PSAP) No. 07 on fixed asset accounting that
regulated the accounting of fixed assets either the recognition, measurement and
disclosure of which is applicable to all units of government that serves the
financial statements. (PP 71; 2010).
Administration of fixed assets / local government property (BMD) in order
to realize an orderly administration including BMD drafting reports that will be
used as preparation materials local governments balance sheet of must be based
on Government Regulation (PP) No. 27 of 2014 on the Management of State /
Region Property and Regulation of Minister of Home Affairs (Permendagri No.
17 of 2007 on Technical Guidelines on Management of Regions Property. An
orderly administration would have impact on the availability of adequate database
that generates a report of local assets on the balance sheet with precise and
accurate figures (DJPK; 2014).

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 The fixed assets is still an exempt account or deemed not reasonable in the
opinion of local government financial reports. But whether these problems affect
the opinion depends on whether a restriction of the scope and misstatement and
materiality levels is used, and their impact on the overall financial statements.
Based on the audit report of BPK RI (The Audit Board of the Republic of
Indonesia) on 35 Local Government Finance Report (LKPD) in 2015 revealed
incompatibility of issues fixed asset reporting with SAP in the 32 local
governments so that its LKPD are not qualified as an unqualified opinion (WTP).
The problems include: 1) the value of presented fixed assets in balance sheet is
not supported by recording in the inventarization items card (KIB) and
reconciliation, as well as it is not adequately inventoried; 2) fixed assets remain
unaccounted and are not supported by proof of ownership. (BPK RI; 2016).
Bondowoso regency government as a reporting entity has an obligation to
prepare the regions financial statements. The presentation of Bondowoso
governments financial statements in 2014 is still use the cash to accrual basis,
and in 2015 applied the accrual basis. Fixed assets are big component of the
financial statements of the Bondowoso Government, so it needs a good
administration and accounting. In 2014 the percentage of fixed assets amounted to
88.10% of total assets, and in 2015 decreased to 82.04% of total assets as fixed
asset depreciation has been applied (BPK RI, 2016). The result of the BPK-RI
audit on Bondowosos LKPD in 2014 and 2015 reveals that there was internal
control system weakness in the administration and the presentation of fixed assets
on financial reporting.
This article will discuss the matching between implementation of fixed
assets administration and accounting accrual-based in the Bondowoso regency
government with the applicated regulations based on LKPD Bondowoso in 2014
and 2015 which have been audited by BPK RI.

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2. Literature Review
2.1 Understanding Fixed Assets
According to the Government Accounting Standard Statement (PSAP) No.
07 on PP No. 71 of 2010, the fixed assets are tangible assets which its useful life
is more than 12 months for used in government operations or used by the general
public. (Setneg RI; 2010).

2.2 Administration of Fixed Assets

Administration, under Government Regulation (PP) No. 27 of 2014 is a
serial activities which include: book keeping, inventarization, and reporting. Book
keeping is an activity of registration and recording of BMD to the goods list at the
users and managers based on its catagory and codification. Inventarization is an
activity of data collecting, recording and reporting in BMD data. Inventarization
is activity contains of counting physically on regencys goods, believing on the
truth and fairness of ownership according to the condition of regencys goods, and
then assessing due to the appropriate accounting policies of local governments.
User of goods and goods managers required to conduct an inventarization of
BMD every five years (Setneg RI, 2014).
Reporting is the activities of data and information submission undertaken
by the implementing unit of BMD to the users and the managers of regencys
goods. The manager assistant has been gathering all items reports in every
semester, annually and every five (5) years from the respective work units
(SKPD) as an ingredient preparing the local governments balance sheet.

2.3 Fixed Asset Accounting

Accrual accounting is the recording of a transaction at the time of incident
or environmental conditions influence on government financial, regardless of
when cash or cash equivalents received or paid (Ritonga in Halim; 2014). Fixed
asset accrual basis accounting according to the PSAP 07 are activities include of :

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a. Recognition

To be recognized as fixed assets, an asset must meet some criteria (Setneg

RI; 2010): have a useful life of more than 12 (twelve) months, the cost of the item
can be measured reliably, not intended to be sold in the entity normal operation
and obtained or constructed to be used. Recognition of fixed assets would be very
reliabel when the assets has been received or handed over its ownership rights at
the time of acquisition, and completed with ownership proof (Setneg RI, 2010).
b. Measurement / Valuation
Fixed assets valued at its acquisition cost. If the fixed asset valuation using
the acquisition cost is not possible, then the value of fixed assets based on fair
value at acquisition time (Setneg RI, 2010). Acquisition cost of a fixed asset
consists of the price purchasing or construction cost, including an import cost and
any costs directly attributable to bring the asset in to the conditions that make
these assets usable for its intended use.
c. Presentation and Disclosure
Fixed assets presented on the balance sheet at acquisition cost minus
accumulated depreciation value (Setneg RI, 2010). The fixed assets capitalized are
presented in the balance sheet, while the not capitalized fixed assets are not
presented in the balance sheet but are disclosed in the notes to the financial
statements. Fixed assets that were suspended from active use of government not
included in fixed assets, but must be transferred or reclassified to the other assets
in accordance with its carrying value. Fixed assets must also be disclosed in the
Notes to Financial Statements (CaLK).

2.4 Previous Study

Dewi (2012) stated that BPK RIs audit results on financial report of
ministry/institution in 2008 2010 showed many problems in fixed assets
auditing. Handayani (2013) found that the presentation of fixed activa reporting
that existed in Central Government from SIMAK has not accommodate auditors
need. Hilmah (2013) found that fixed assets administration in Government of
Padang City has not effective yet. Mulalinda and Tangkuman (2014), stated that

655
fixed assets accounting sistem and procedure at PPKAD office of Sitaro Regency
has not been effectively operated. Ardianto (2013) examined some important
issues on assets depreciation of governmental sector, and many problems in assets
management of local assets management system

3. Research Methods
The analytical method used in this research is descriptive. This study uses
secondary data from Local Government Finance Report (LKPD) Bondowoso at
the year of 2014 and 2015 which have been audited by BPK-RI. Literature study
or documentation is used as a way to data collection without doing field
observations.

4. Result and Discussion

Based on audit report of BPK RI, LKPD of Bondowoso government in
year of 2014 and 2015 obtained an unqualified opinion (WTP). But there are some
problems related to fixed assets that need to be addressed in an effort to maintain
an unqualified opinion qualification.

4.1 Administration of Fixed Assets

Audit report of BPK on LKPD of Bondowoso regency in 2014 stated that
the administration of fixed assets or BMD is not orderly (BPK RI; 2015), in case:
a. Bookkeeping / Recording in any fixed assets still uninformative
Bondowoso government has assets bookkeeping which is recording the
regencys property into the list of goods of the user and inventarization card.
Goods users registration and recording has been appropriate with Format Card
Inventarization Items (Kartu Inventaris Barang/KIB), but in 2014 the presentation
KIB A of land there is a part of information in location /address of land presented
not completely, no information in which street, village or districts the land was
addressed, and there are 8 land which its width is 0 m2.

656
 This shows that Bondowoso Government in the bookkeeping of regencys
property is not fully in accordance with Regulation of Home Affairs Minister
(Permendagri) No. 17 of 2006.
b. Inventarization (census) of the fixed assets is not optimal
Since 2013 the Bondowoso government has carried out censuses through
the inventarization of fixed assets in accordance wit Regulation of Home Affairs
Minister No. 17 of 2007 which states that the regencys goods users must carry
out a census of BMD every five years, and the manager of regencys goods take
inventarization of BMD (BPK, 2015). The census conducted by the PPA section
of Regional Secretariat which form an Executive Team of Financial
Optimization. The census is doing by comparing KIB with the real data/condition
of the assets in the working units (SKPD). The results of the census show that
there are problems that can be effects the reliability of financial statements, i.e.
there are land and building assets which is newly discovered, assets are recorded
double in KIB, assets that have been removed and has been granted are still
recorded in KIB, and assets transferred between SKPD (BPK RI, 2015).
c. Reporting
Bondowoso government has implemented BMD reporting in accordance
with PP No 27 of 2014, in which the regency goods user have been delivered
goods reports quarterly and annually to the Regent through BMD manager. PPA
section of the Regional Secretariat as supporting sector to the BMD manager
gather all reports from goods user quarterly and annually from each SKPD, on
quantity and value of the fixed assets and make its recapitulation as a source for
preparing the balance sheet (BPK,2015).

4.2 Fixed Assets Accounting

Bondowoso government was applying Government Regulation (PP) No.
71 of 2010 on SAP, by setting the decree No. 59 of 2015 concerning the regency
government's accrual-based accounting policy since 2015. Fixed asset accounting
policy set out in PKA No. 14. The implementation of the accrual-based
accounting of fixed assets at the Bondowoso Government are as follows:

657
a. Recognition
Fixed asset is recognized by Bondowoso government when its future
economic benefits is obtained and its value can be measured reliably. To be
recognized as Bondowosos fixed asset an item must meet the criteria of tangible,
have a useful life of more than twelve (12) months, acquisition cost of the item
can be measured reliably, it is not intended for sale in the normal operation of the
entity, acquired or constructedwith intention to be used, and the value of the fixed
assets expenditures is higher than minimum limit of its capitalization
(capitalization treshold). Bondowoso government has set a capitalization
threshold of fixed assets as follows (Bag.Hukum Kab. Bondowoso,2015):
a) Cost expenditure for every unit of equipment, machines, and sports equipment
is equal to or more than Rp.300,000, - (three hundred thousand rupiahs), and
b) Cost expenditure for warehouse and construction is equal to or more than
Rp.10.000.000, - (ten million rupiahs).
In short, it can be said that the recognition of fixed assets done by
Bondowoso government is suitable in accordance with Government Regulation
(PP) No. 71 of 2010 on SAP.
b. Measurement / Assessment
Measurement of fixed assets at Bondowoso government is rated at
acquisition cost. Spending after the initial acquisition of a fixed asset is
capitalized to the asset and treated as capital expenditure if of such expenditures
resulting in increased useful life of the assets, and/or these expenditures resulted
in an increasing capacity, the quality and volume of the assets that have been held,
and the value of cost expenditure on the maintenance of fixed assets has more
than the minimum capitalization limit of determined fixed assets.
Bondowoso government issued a depreciation of fixed assets in 2015. The
method used in the depreciation process is the straight-line method. Calculation of
fixed assets depreciation that were acquired in the mid-year is by annual approach,
in case depreciation can be calculated in one year after the obtaining time of the
fixed assets. acquired mid-year annual approach, that depreciation can be
calculated one year from the time of obtaining the fixed assets (Bag. Hukum

658
Pemkab Bondowoso, 2015). In short, it can be said that the measurement of fixed
assets by Bondowoso government is suitable in accordance to Government
Regulation (PP) No. 71 of 2010.
c. Presentation and Disclosure
Assessment from BPK RI at LKPD of Bondowoso government in 2015
showed that the presentation of the assets are not reliably in case there were assets
in damaged condition is still recorded as fixed assets on the balance sheet in spite
of it has not proposed to be deletied by SKPD. Census at KIB B finds that there
are goods which has not been found. The goods are still in search and will be
validated, and or proposed to be removed. These descriptions indicate that the
presentation of fixed assets is not fully suitable in accordance ti PASP no. 7 on the
fixed assets which stated that fixed assets suspended from active using by
government does not meet the qualification of fixed assets and must be moved to
another post of assets. Due to its unsignificant value, this problem has not impact
on BPKs opinion.
Notes to the Financial Statements (CaLK) of Bondowoso government has
stated some matters related to fixed assets, namely (BPK RI, 2016):
a. Assessment / measurement base of fixed assets used in the preparation of
financial statements.
b. Reconciliation of the carrying amount at the beginning and end of the period
c. Depreciation information
d. The accounting policy on the minimum limit of asset capitalization
In short, it can be said that the disclosure of fixed assets in the financial
statement of Bondowoso Government is suitable in accordance with Government
Regulation (PP) no 71 on SAP.

5. Conclusions, Recommendations and Limitations

5.1 Conclusion
The conclusions that can be drawn from the discussion of accrual-based
accounting of fixed assets and fixed assets administration in Bondowoso
government are as follows:

659
1. The management of fixed assets in 2014 is not fully in accordance with the
regulations as if bookkeeping / recording in any fixed assets still
uninformative, inventarization (census) of the fixed assets is not optimal.
2. There are many problems in implementing accrual accounting fixed assets,
damaged assets were still recorded as fixed assets, and fixed assets that have
not been discovered its existence. But these problems do not affect the BPK
opinion that at overall the management of fixed assets in Bondowoso at 2014
is assessed in accordance with Government Regulation (PP) No. 71 of 2010
concerning the Government Accounting Standards.

5.2 Recommendations
There are many suggestion to the Government of Bondowoso Regency:
1. Doing an orderly administration of fixed assets, as it is essential to the balance
sheet preparation of Bondowoso governments annually.
2. Reclassifying damaged fixed assets into other assets account and immediately
searching its assets that have not been found so that the presentation of fixed
assets in the financial statements is reliable.

5.3 Limitation
This study is only based on a literature study, audit report of BPK RI on
LKPD of Bondowoso regency and other relevant documents, without observation
and interview due to the time constraints of this study. It is only focused on the
problems of fixed asset administration and accounting in accrual basis. The next
study should add the techniques used in data collection.

REFERENCES

Ardianto, 2013. Akuntansi Akrual terkait Aset Tetap (disesuaikan untuk

Memahami PP 71 Tahun 2010. Modul BPKP.
Bagian Hukum Pemerintah Kabupaten Bondowoso, 2015. Peraturan Bupati
Bondowoso Nomor 59 Tahun 2015 tentang Kebijakan Akuntansi
Pemerintah Kabupaten Bondowoso

660
BPK RI, 2015. Laporan hasil Pemeriksaan BPK RI atas Laporan Keuangan
Pemerintah Daerah Kabupaten Bondowoso Nomor :
80.B/LHP/XVIII/05/2015.
BPK RI, 2016. Laporan Hasil Pemeriksaan BPK RI atas Laporan Keuangan
Pemerintah daerah Kabupaten Bondowoso Nomor :
53.B/LHP/XVIII/05/2016.
BPK RI, 2016. Ikhtisar Hasil Pemeriksaan Semester II Tahun 2015. Jakarta.
Diakses dari www.bpk.go.id ( diunduh tanggal 20 September 2016)
Depdagri. 2007. Peraturan Menteri Dalam Negeri Nomor 17 Tahun 2007 tentang
Pedoman Teknis pengelolaan Barang Milik Daerah diakses dari
www.depdagri.go.id (22 September 2016)
Dewi, Hilda Gustrina, 2012. Analisis Hasil Audit BPK RI atas Aset Tetap pada
Laporan keuangan Kementerian/Lembaga. Tesis. Universitas Indonesia
(tidak dipublikasikan)
Direktorat Jendral Perimbangan Keuangan Kementerian Keuangan RI, 2014.
Modul Pengelolaan Keuangan Daerah.
Halim, A dan Kusyufi, M.S. 2014. Akuntansi Keuangan Daerah. Jakarta :
Salemba Empat.
Handayani, Meity. 2013. Evaluasi Penyajian Pelaporan Aktiva Tetap untuk
Meningkatkan Pengawasan Kelembagaan Pemerintah. Jurnal Bina
Praja, Vol. 5/3, hal 189-196.
Hilmah KH, Fairoza, 2013. Analisis Pelaksanaan Penatausahaan dan Akuntansi
Asset Tetap pada DPKA Kota Padang. Skripsi. Universitas Negeri
Padang (tidak dipublikasikan).
Mulalinda, Veronika dan Tangkuman, SJ. 2014. Efektifitas Penerapan Sistem dan
Prosedur Akuntansi Asset Tetap pada DPKA Kabuapten Sitaro. Jurnal
Emba, Vol.2(1) hal. 521-531
Pemerintah Republik Indonesia. 2003. Undang-Undang Nomor 17 Tahun 2003
tentang Keuangan Negara
Pemerintah Republik Indonesia. 2004. Undang-Undang Nomor 1 Tahun 2004
tentang Perbendaharaan Negara.
Pemerintah Republik Indonesia. 2005. Undang-Undang Nomor 15 Tahun 2005
tentang Pemeriksaan dan Tanggungjawab Pengelolaan Keuangan
Negara.
Sekretariat Negara Republik Indonesia (Setneg RI). 2010. Peraturan Pemrintah
Nomor 71 tahun 2010 tentang Standar Akuntansi Pemerintahan .
Jakarta. BP. Cipta Jaya.
Sekretariat Negara Republik Indonesia. 2014. Peraturan Pemerintah Nomor 27
tahun 2014 tentang Pengelolaan Barang Milik Negara/Daerah

661
TPS-04

DETECTORS VOLUNTARY COMPLIANCE

IN TAX AMNESTY PROGRAM

Diyah Probowulan
University of Muhammadiyah Jember
probowulan@gmail.com

ABSTRACT

In the implementation of the tax amnesty program, the government has sought to
increase tax revenues. However, in practice a lot of contact with the increase in
tax compliance or voluntary compliance. Basically, the policy is expected to
increase the number of taxpayers, and the tax subject to tax while increasing
source of state funds parked overseas. In fact, experience shows that Indonesia
had done some sort of tax amnesty several times but is less effective and
successful because of the level of tax compliance is still very low. If the program
is implemented again at the present time is more important how to improve the
level of taxpayer compliance with voluntary compliance strategy detector, so that
targeted tax amnesty program.

Keywords: Detector, Voluntary Compliance, Tax Amnesty

1. Introduction
Achieve tax target. 1,294.25867 billion within a period of one fiscal year
be a challenge in itself for the DGT. The realization of tax revenue in 2014, which
only reached 984.90321 billion must be raised more than 30% this year, with the
extra effort. One of the policies that are expected to support the achievement of
tax revenue through tax amnesty.
Table 1
Realization of Revenue October 31, 2015 (billions)
Tax type Realization APBN-P Target % 2014 2015 %
2014 2015 2014-2015 2014-2015
Non Oil Tax 458.69228 629.83535 37.31 360.62827 397.8899 10.25
VAT&Luxury Tax 408.99574 576.46917 40.95 318.07987 309.33168 (2.75)
Property Tax 23.47571 26.68988 13.69 14.77029 13.79714 (6.59)
Other Tax 6.29313 11.72949 86.39 4.85915 4.37474 (9.97)
Oil & Gas Tax 87.44635 49.53479 (43.35) 74.51462 43.76493 (41.27)
TOTAL 984.90321 1,294.25867 31.41 772.85289 768.95747 (0.59)
Source: Directorate General of Taxes, Ministry of Finance December 16, 2015

662
In the context of taxation, tax amnesty or forgiveness involves giving tax relief tax
rates are much lower than the general rate of the tax is not / underpayment
previous and tax payers exemption of criminal tax guidance. Tax amnesty is a
policy that use to raise state revenue in quick time. Tax amnesty is usually done
for four reasons: the rise of underground economy activity or tax evasion, capital
flight abroad, engineering financial transactions, as well as the politics of
budgeting for the pace of contraction of the state budget is going.
Although able to be a source of state revenue in the short term, tax amnesty gives
a negative effect in the long term with regard to tax compliance.Wardiyanto
(2007) states that although the tax amnesty able to increase state revenue, it turns
out tax amnesty raises tax inequities between receiving facility with taxpayers
pass pay an honest and timely. This is reinforced by the analysis of Rahayu (2009)
that the tax amnesty may cause a decrease in voluntary compliance and create
moral hazard for the tax payments that will to delay tax payments, and expect the
next tax amnesty.

2. Literature Review
Voluntary Compliance of the Taxpayer. According to the Indonesian
General Dictionary, the term compliance is: "Compliance means submission or
obedience to the teachings of the taxation we can give the sense that tax
compliance is obedience, submission, and obedient, and to implement tax
provisions. Thus, the taxpayer is obliged to tax so obedient obey and comply with
tax obligations and to implement appropriate legislation taxation regulation.
Rahayu (2009), tax compliance can be defined as "a situation where the taxpayer
meets all tax obligations and the exercise of the right of taxation. "There are two
kinds of tax compliance, the formal compliance and adherence material. Formal
compliance is a state where the taxpayer can fulfill tax obligations formally with
the existing provisions in the tax laws. For example, statutes of limitation for
filing. If the taxpayer has reported a Notice of Income Tax (Income Tax Return)
Annual before the deadline, it can be said that the taxpayer has complied with the
formal, but its contents have not been complied with material. Compliance

663
material is a situation where the taxpayer is substantively meets all material
provisions of the tax, which according to the contents and spirit of tax laws.
Taxpayers who meet taxpayer compliance is a material that fills with honest,
complete, and correct Tax (SPT) in accordance with and deliver to the SPT
before the deadline expires.
Tax Amnesty. is a limited time opportunity to the specific taxpayer groups
to pay a certain amount and within tertentuberupa remission of tax liability
(including interest and penalties) relating denganmasa previous tax or a certain
period without fear of criminal prosecution. Tax policy was never conducted.
Amnesty Indonesia in 1984.
The tax amnesty granted on taxes which have never been or have not been
fully charged or levied in accordance with the legislation in force. The form of
remission imposed a ransom with the tariff: (1) 1% (one percent) of the amount of
wealth that is used as the basis for calculating the amount of tax sought
forgiveness, for taxpayers who on the date of enactment of this Presidential
Decree has incorporated Notice of Income Tax Wealth Tax in 1983 and 1984; (2)
10% (ten percent) of the amount of wealth that is used as the basis for calculating
the amount of tax sought forgiveness, for taxpayers who on the date of enactment
of this Presidential Decree has not entered a Notice of Income Tax in 1983 and
the Property Tax in 1984.
Based on research (Enste and Schneider, 2000), that the percentage of
activity underground economy, in developed countries can reach 14-16 percent of
the Gross Domestic Product (GDP), while in the developing country reached 35-
44 percent of GDP , Underground economic activity is never reported as income
in the form annual notification letter (SPT) Income Tax, so it qualifies as
smuggling of tax (tax evasion). Tax smuggling resulted in the tax burden to be
borne by taxpayers who honestly pay taxes become heavier, and this has resulted
in injustice is high. Increased economic activity underground coupled with tax
smuggling is very detrimental to the state because it means the loss of tax revenue
that is needed to funding education programs, health programs and other poverty
alleviation. Therefore, the thought of putting on unpaid taxes from the

664
underground economic activity through a special program that remission of taxes
(tax amnesty).

3. Research Method
Qualitative methods used in this study to explore a better understanding of
the phenomenon. The advantage of qualitative methods is the ability to analyze
natural environment. Data dokumentatif in the form of literature research facts
stated by the sentence. Therefore, the discussion and analysis priority objective
interpretations, namely in the form of an in-depth study of the problem. The
research data were described by a content analysis (content analysis), descriptive
analysis (descriptive analysis) inter-text analysis (analysis or other types of
analysis relevant to the focus of his research.

4. Results And Discussion

The expected benefits when tax amnesty implemented policies that will
encourage the influx of funds from abroad that term is used as a long investment
which in turn is beneficial to stimulate the national economy. On the other hand
weakness when applied to tax forgiveness is not necessarily guarantee improved
performance of tax payments to the state treasury. This could otherwise
potentially to fraud, manipulation moral hazard and other actions. The
entrepreneurs who obtained tax will be bleaching embezzled tax obligations.
Unless imposed conditional tax amnesty. Examples of conditional tax amnesty,
taxpayers must be transparent to the assets and their income. This is to avoid the
same mistake does not happen again in 1984, namely the lack of access to public
information and the lack of openness / transparency and dissemination of this
policy. When the tax amnesty program is successfully implemented, the
government has several advantages, among others, the government can
concentrate or focus on efforts to combat corruption. Likewise, the tax amnesty
implemented its asset recovery easier because it does not need to conduct an
investigation, investigation, prosecution and other legal proceedings to retrieve
corrupt assets. Asset recovery is the ratio between the amount of loss of state

665
indicted by the confiscation of assets or return on assets of corruption. During this
time the percentage of asset recovery is still relatively small. Percentage of asset
recovery can be used as the basis of determining tax amnesty rates.
To that end, the necessary institutional reforms also DJP simultaneously to detect
taxpayer fraud after the imposition of tax amnesty. In addition, to establish
voluntary compliance to pay taxes after the tax amnesty are required to their
transparency in the use of tax money (budget) as well as the allocation of targeted
and fair.
The government has issued a policy requiring government agencies,
institutions, associations, and others to provide data and information relating to
taxation to the Directorate General of Taxation. The policy is outlined in the
Government Regulation No. 31 of 2012 with effect from 27 February 2012. Data
and information is the data and information referred to private persons or entities
that may describe activities or business, circulation of business, income and / or
assets in question, including information on debtors, financial transaction data and
the traffic of foreign exchange, credit cards, as well as the financial statements and
/ or business activity report submitted to other agencies outside the Directorate
General of Taxation.
This policy strongly supports the implementation of self-assessment
system in a pure and consistent. Because the data and information gathered, the
Directorate General of Taxation will have an infrastructure that can be used to
detect quickly and accurately against possible non-compliance in fulfilling
taxpayers taxation liabilities. The empirical experiences of developed countries
are successfully implementing this system of voluntary is key. In a self-
assessment, the taxpayer is believed to calculate tax . Because, taxpayer himself
who knows how much revenue it receives and counts of tax payable, as well as
assets and debts. That obligation is poured and reported in the tax return. What
was reported by SPT is essentially a tax assessment made by the taxpayer. Tax
administration only carry out the functions of supervision over taxpayer
compliance. With this system, all the data was found not to deviate, then the
authority of the determination of the amount of tax payable has been shifted to the

666
taxpayer. The ideal conditions are overshadowed by the tax other wise. Payment
condition is not an act that is as easy and simple as paying to get something
(consumption), but in actual filled with things that are emotional. Potent for not
paying taxes has become tax payers behavior. (Sony Devano et al, 2006).
Finding the right detector on the behavior of Taxpayers in tax compliance
becomes important. Some studies indicate that the effect of threats and legal
correction sometimes be counter productive. In the moral theory of tax (tax
morale theory), Frisher (1997) suggests that the intrinsic motivation of individuals
to act to pay taxes will appear as a good treatment response from the government.
The Internal Revenue Services (IRS) indicates that the projected level of
non-compliance in the USA in 1998 was 15%, or $ 275 billion, and of that
number through law enforcement efforts only $ 50 billion only ultimately be
collected. Taxpayer compliance behavior is varied and every level of compliance
can be responded to by a compliance strategy that is different. Appointment of
Account Representive for each taxpayer and data collection through the profiling
of taxpayers since 2002 can be explained that the policy is implemented
Directorate General of Taxation began to shift towards the importance of data and
information from third parties. Data and information resulting from financial
transactions are processed and are in the hands of others outside the Directorate
General of Taxes became an early detector for the opportunity taxpayer
noncompliance. Moreover, in doing research material reporting taxpayer, data and
comparative information can seal off debate because the difference in perception
between the tax authorities to the taxpayer, because the fiscal correction is
performed not only based on the analysis of financial statements but is supported
by valid data from third parties ,
Treatment is more soft and friendlier to the taxpayer, is also seen by the
issuance of Directorate General Tax Regulation No. PER-170 / PJ / 2007, which
regulates the implementation of counseling as a follow-up call. The appeal is the
request for clarification to the taxpayer if the results of the internal investigation
are alleged unfulfilled tax obligations in accordance with the provisions of tax
legislation while counseling is the means provided for the taxpayer to clarify the

667
validity of such data. This counseling should be closed to the minutes with the
suggestions / recommendations can be either (1) the case is completed (case
closed) in the case of the taxpayer can prove that the data is incorrect or has been
reported, (2) the proposal examined in the case were uncertain clarity of such data,
or according to the analysis necessary for the examination, or (3) shall supervise
the implementation of rectification in terms of taxpayer data that clarified
recognize the truth and willing to do repairs.
In this context, the taxpayer is understood as equal partners and reducing
the intensity of tax audits. Hence the existence of the data and information from
third parties to be important, including the information and data related to the
potential irregularities tax rules (Deter by detection). Accurate information or data
found will be a tool to improve tax compliance. Utilization data bank as one of
three strategies for improving tax compliance, the fight against non-compliance
Implementation of this regulation for important. First, left two notes,
government regulations, was born to fill the void rules for the implementation of
Section 35A of the Act KUP. Although it took more than four years, minimum
has been proved that the government has the political will to make the tax
authorities and independent professionals and make tax as the backbone of state
revenues. In addition to in order to establish taxation data as the basis for
monitoring compliance fulfillment of tax obligations undertaken by the
community, this policy is also expected to minimize contact with the taxpayer's
taxation apparatus, and increasing the professionalism of officials like taxation
and taxpayers. Secondly, this regulation is expected to become a national habit
(national behavior) for each owner of the data and tax information to convey to
the Directorate General of Taxation, the data and information so that they can
"speak" in order to fill the pockets of the state budget. And the owners of valuable
data and information is spread in government departments, agencies, associations
or other parties from Sabang to Merauke. Directorate General of Taxation has
prepared itself well in the system, such as surveillance DJP Multimedia Super
Corridor, the profile of the taxpayer, and bank data. If the data and this
information can be systematically accepted by the Directorate General of Taxes,

668
the effort to detect non-compliance in the form of expansion and intensification of
taxation and law enforcement (law enforcement) will be easily done and state
revenues as well as the tax ratio will automatically rise.

5. Conclusion
In the tax amnesty program is certainly a lot of overlap with efforts to
improve tax compliance or voluntary compliance. So as to limit the moral hazard
the government must do the right strategy to detectors level of non-compliance of
taxpayers, among others: (1) Short-term: the design of incentives to taxpayers, the
pressure of a sense of comfort to taxpayers who are not willing to follow the
program tax amnesty, their tax audit. (2) Long-term: the guarantee of public trust
in government, the institutional reforms the DGT, transparency of the use of tax
money (budget) and the allocation of targeted and fair, designation account
representative for each taxpayers in collecting data through profiles and
counseling taxpayer more tax soft, link data from parties outside the Directorate
General of tax to simplify data search.

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Bako, R. (2015, Juny 2003) , Tax Amnesti Bisa Tarik Dana WNI di Singapura
Besar-Besaran, Berita Satu, A4.
Brotodiharjo, R. S. (2010), Pengantar Ilmu Hukum Pajak (22nd ed.), Refika
Aditama.
Devano, S., & Rahayu, S.K. (2010), Perpajakan: Konsep, Teori dan Isu,
Kencana.
Enste, H. D., Schendik, Frederick. (2000). Shadow Economies: Size, Causes and
Consequences, Journal of Economic Literature, 38, 50-51.
Fisher, I. (1977), Constructive Income Taxation. A Proposal for Reform, 33, 1-5.
Gunadi. (2004), Kepatuhan Perpajakan, Airlangga.
Keputusan Presiden No.26 tahun 1984, Tentang Pengampunan Pajak.
Kriyantono. (2009), Metode Penelitian, Kencana Prenada Media Group.
Mardiasmo. (2009), Perpajakan (2nd ed.). Andi.
Marks, Murphy (2003), Personal Income Taxation in Indonesia. Journal Revenue
Potential and Distribution of the Burden, 2, 1-20.
Messere, K. C. (1993), Tax Policy OECD Countries: Choices and Conflics,
International Bureau of Fiscal Documentation Publications BV

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Natsir, M. (2003), Metode Penelitian, Ghalia Indonesia.
S.K, Rahayu. (2010), Perpajakan Indonesia, Salemba Empat.
Santoso, U., & Setiawan, J. (2009), Pengampunan Pajak Tax amnesty dan
Pelaksanaanya di Beberapa Negara, Jurnal Perspektif Bagi Pebisnis
Indonesia 11, 1-2.
Silitonga, E. (2012, Juni 30), Pengampunan Pajak. Ekonomi bawah Tanah,
Pengampunan Pajak dan Referandum, 1-2. http:// www.pajak.go.id/
content/ ekonomi-bawah-tanah-pengampunan-pajak-dan-referendum.
Subiyantoro, Heru dan Riphat, Singgih (2004), Kebijakan, Fiskal, Pemikiran Konsep dan
Implementasi, Penerbit Buku Kompas.
Subiyantoro, Heru, Riphat, Singgih. (2004), Kebijakan, Fiskal, Pemikiran Konsep
dan Implementasi, Kompas.
Umar, H. (2007), Peneltian Kualitatif, Gunung Agung.
Undang-Undang Nomor 36 Tahun 2008, Tentang Pajak Penghasilan.
Undang-UndangNomor 28 Tahun 2007, Ketentuan Umum Dan Tata Cara
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Wardiyanto. (2007), Penelitian Pengampunan Pajak. Potensi Penerimaan Pajak,
22.

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TPS-05

ANALYSIS OF PERFORMANCE MEASUREMENT

DISTRICT GOVERNMENT BONDOWOSO
IN THE PERIOD 2010-2014
USING THE PRINCIPLES OF VALUE FOR MONEY

Ninit Dyah Pramarta Siwi

University of Jember
Email : ninit.dyah@gmail.com

ABSTRACT

This Research concerning measurement of performance local government of sub-

province of bondowoso done to know about value of efisiensi,efektifitas, and
economic the than revenue plan and expense at local government of sub-province
of Bondowoso by using principle of value relied on money for three ratio that is
economic ratio, efficiency ratio and ratio of efektifitas. Result of research indicate
that performance local government of Sub-Province of Bondowoso period of year
2010-2014 as a whole is goodness

Keywords: Value for money, economy, efficiency, effectiveness

1. Introduction
The development of public sector accounting in Indonesia made progress
in line with the implementation of regional autonomy. Rights of autonomy to each
region or district in Indonesia, including in the regency will give you the freedom
to cultivate and increase sources of income, for the sake of people's welfare and
progress of the region . The higher revenue achieved, should be able to reflect the
better performance of local governments in accordance with the results achieved.
Therefore, more people are required to think critically on the performance of local
government, the need for transparency and public accountability by public sector
institutions. Accountability is not just the ability of public sector institutions show
how public money is used, but also includes the ability to provide a guarantee of
the use of sources of public funds, including the allocation of resources

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economically, efficiently and effectively through the implementation of good
public management.
The financial management of local government by the Indonesian
Government Regulation No. 58 of 2005 changes become Minister Regulation
No.13 of 2006 on Regional Financial Management states that local finance is
managed in an orderly manner, abide by the laws and regulations, efficient,
economical, effective, transparent and responsibly with regard to the principle of
fairness, decency and the benefit to the community and implemented in an
integrated system that is embodied in the budget. Indonesian Government
Regulation No. 71 of 2010 concerning the Government Accounting Standards
(SAP) of the accounting principles applied in preparing and presenting the
financial statements of the government through the local government accounting
system.
Value for money is the concept of the management of public sector
organizations are based on three main elements, namely: economy, efficiency, and
effectiveness (Mardiasmo, 2002: 4). The principle of value for money in the
context of performance measurement is influenced by the ability of local
governments to implement government management mechanism which is based
on the planning, implementation and control of the well. Communities need good
public services with a balance between the powers possessed by (accountability)
responsibilities given to the community it serves.
Management PAD Bondowoso make improvements to the system of
planning, implementation and monitoring. Total budget revenues growing
facilitate the provision of the budget, both indirect expenditures and direct
spending. In 2014, regional spending needs Rp. 1,536,840,017,761.18 with the
composition of indirect spending of Rp. 875,308,858,004.65 and immediate
expenditure of Rp. 661,531,159,756.53 With so implementation of the budget
should be more attention to budget discipline, both during implementation and
will begin at the end of the implementation period. Budget discipline is one way
to avoid the boom to disbursement and completion objectives to be achieved in
accordance with a predetermined time. Management of the budget must be

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planned well in accordance with the cash budget and time schedule
implementation in order to carry out the task of governance, development and
public services with economic, efficiency and effectiveness.

2. Literature Review
2.1 Performance in Local Government
Performance is a description of the achievement of the implementation of
an activity in realizing the goals, objectives, mission and vision of the
organization (Indra Bastian, 2006: 274). According to Moh Mahsun (2006)
performance (performance) is an overview of the level of achievement of the
implementation of an activity / program / policy in achieving the goals, objectives,
mission and vision of the organization as stated in the strategic planning of an
organization. The term is often used to refer to the performance or achievements
of the success rate of individuals and groups of individuals. Performance can be
known only when an individual or group of individuals that have a predetermined
success criteria. The success criteria in the form of goals to be achieved. Without
any goals or targets, the performance of a person or organization may not be
known because there is no criterion. From some of these definitions can be
concluded, the performance is a condition that must be known to certain parties to
determine the level of achievement of an agency or organization associated with
the vision carried by an organization.
According to the Decree of the Head of the Institute of Public
Administration no. 239 / K / 6/8/2003 Government Performance is an overview of
the level of achievement of the goals / objectives of government agencies as a
translation of the vision, mission indicate the level of government strategy and
policies established success.
In Article 31, paragraph 2 of Law No. 17 of 2003 mandates the local work
unit needs to make the Budget Realization Report in order to assess the
achievement of performance. Similarly, in Government Regulation No. 108 of
2000 which shows the need for the achievement of regional heads, namely to hold
accountable the regional head at each end of the fiscal year to submit

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accountability reports comprising Calculation Report Budgets, Norma Calculation
Budgets, Cash Flow and Balance Sheet The area is equipped with votes
performance.

2.3 Budget Revenue and Expenditure

The budget as a planning tool public activity is expressed in monetary
units once used as a tool of control. In order for planning and monitoring
functions can be run with either the budget system and records of receipts and
expenditures must be done carefully and systematically. The government uses the
budget as a tool for designing work programs or measures to be undertaken
setiapa activity can be directed and controlled. Public sector budget into control
and benchmarks for each activity. As a system, the public sector budget planning
has undergone much development. Public sector budget planning system evolve
and change according to the dynamics of public sector management and
development of the emerging demands of society.
According Mardiasmo (2002) public sector budget has several major
functions: first, as a planning tool; second, as a means of control, the third, as a
tool of fiscal policy, the fourth, as a political tool, the fifth, as a means of
coordination and communication, the sixth, as a performance assessment tool, the
seventh, as a motivational tool, and the eighth, as a means of creating a public
space.
Budget (APBD) is one of the plan documents the performance of the
financial aspects, where the budget that is to be used by local government as a
basis for regional development. The structure of the budget is a unit consisting of
revenues, shopping areas, financing and transfer. Based on Law No. 17 of 2003
and the Government Accounting Standards, the structure of the budget is one unit
consisting of (1) budget revenues, (2) the budget, (3) transfer, and (4) financing.

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2.4 Value For Money
Value for money is the concept of the management of public sector
organizations are based on three main elements, namely: economy, efficiency, and
effectiveness.
1. Economical
is input to the acquisition of certain quality and quantity at the lowest price.
Economical is the ratio of input to input values are expressed in monetary
units. Economical with respect to the extent to which public sector
organizations can minimize the input of resources used by avoiding wasteful
spending and unproductive.
2. Efficiency
is the achievement of maximum output with a particular input or input use is
the lowest to achieve a certain output. Efficiency is the ratio of output or input
associated with performance standards or targets that have been set.
3. Effectiveness
is the level of achievement of program outcomes with the targets set. Simply
put, the effectiveness of the outcome comparison with the output.
Purposes of conducting value for money is the economy: saving / careful
in the procurement and allocation of resources; efficiency: efficient resource use;
effectiveness: effective in terms of achieving the goals and objectives; equity:
fairness in obtaining public services and equality: equality in the use of resources.

2.5 Performance measurements based Concept Value For Money

Value for money is at the core of performance measurement in
government and public sector organizations. Government performance can not be
judged in terms of output produced, but an integrated manner should consider the
inputs, outputs, and outcomes together. The problem that often arises is the
difficulty of measuring output for output generated government is not always a
tangible output (tangible output), but most also be output intangible (intangible
outputs). Performance measures are essentially different performance indicators.

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2.6 Steps Measurement Value For Money
According Mardiasmo (2009: 133) measures the measurement value for
money are as follows:
1. Measurement of Economic
Economical ratio can be calculated by the formula:
Expenditures
Economical ratio = Budget Expenditure X 100%

2. Measurement of Efficiency
Efficiency ratio formula is:
Expenditures
Efficiency ratio = Realized Revenue X 100%

3. Measuring Effectiveness
Effectiveness ratio is calculated by:

Realized Revenue
Effectiveness ratio= Revenue budget X 100%

Information :
If> 100% means effective
If <100% means ineffective
If = 100% means the effectiveness of the Balanced

3. Research Method
3.1 Objects and Types of Research
The research location is on the Bondowoso Local Government regency.
The object of research is the regency local government performance during the
period 2010-2014. This type of research is qualitative descriptive study With the
focus of research on local government performance measurement analysis using
the principle of Value For Money in the regency 2010-2014.

3.2 Sources and Types of Data

Data is a reality that is studied. The data used is secondary data. Secondary
data sources are a source of research data obtained by researchers indirectly

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through an intermediary medium .. Secondary data sources used in this study is
the report the calculation of budget revenues and expenditures (budget)
Government Bondowoso obtained from the Regional Planning Agency
Bondowoso and website Local government regency.
3.3. Data Collection And Analysis
Data collection techniques used in this study are Study Library and
Documentation . Document used in this study is the Regional Budget (APBD) the
regency government in 2010-2014.Data analysis in qualitative research carried out
at the time of data collection took place and after the collection of data within a
certain period. The collection of data used in this research is secondary data
obtained from the Regional Planning Agency Bondowoso and Local Government
website regency.

4. Result and Discussion

This study uses reports Revenue and Expenditure Budget and Actual
Revenue and Expenditure Budget the regency in the period 2010 to 2014 to
measure the performance of local governments using the principle of value for
money is by using economic ratio, the ratio of the efficiency and effectiveness
ratio. Details of budget data and Local Government RAPBD the regency that has
been processed by researchers are as follows:

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 Table 1
Details of Local Budget (APBD) and Bondowoso Local Budget Planning
(RAPBD) on 2010
YEAR
NO DESCRIPTION
BUDGET REALIZATION
1 Income 787.577.483.000,00 818.542.099.884,39
1.1 Locally-generated 45.781.983.200,00 49.663.941.019,39
revenue or PAD
1.2 Balance fund 578.462.856.000,00 586.797.254.286,00
1.3 Other Local Revenue 163.332.643.800,00 182.080.904.579,00
Legal
2 Regional spending 830.993.200.420,68 765.513.977.031,58
2.1 Indirect Expenditures 553.545.358.871,51 536.082.961.739,50
2.2 Direct expenditure 277.447.841.549,17 229.431.015.292,08
Surplus / ( Defisit) -43.415.717.420,68 53.028.122.852,81
3 Financing
3.1 Acceptance Regional 44.182.944.220,68 42.643.553.898,27
Funding
3.2 Expenditure Regional 767.226.800,00 767.226.800,00
Funding
Netto Financing 43.415.717.420,68 41.867.327.098,27
Surplus Budget 0,00 94.895.449.951,08
Financing regard Year
Source : Regional Planning Agency Bondowoso,2010, be treated data

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 Table 2
Details of Local Budget (APBD) and Bondowoso Local Budget Planning
(RAPBD) on 2011
YEAR
NO DESCRIPTION
BUDGET REALIZATION
1 Income 945.583.204.323,00 966.956.040.944,09
1.1 Locally-generated 60.582.172.950,00 66.816.392.275,09
revenue or PAD
1.2 Balance fund 650.347.255.973,00 660.619.810.828,00
1.3 Other Local Revenue 234.653.775.400,00 239.519.837.841,00
Legal
2 Regional spending 1.035.811.127.474,08 950.958.157.445,49
2.1 Indirect Expenditures 634.173.929.364,08 618.371.248.673,15
2.2 Direct expenditure 401.637.198.110,00 332.586.908.772,34
Surplus / ( Defisit) -90.227.923.151,08 15.997.883.498,60
3 Financing
3.1 Acceptance Regional 95.995.149.951,08 95.186.839.947,68
Funding
3.2 Expenditure Regional 5.767.226.800,00 5.767.226.800,00
Funding
Netto Financing 90.227.923.151,08 89.419.613.417,68
Surplus Budget 0,00 105.417.496.646,28
Financing regard
Year
Source : Regional Planning Agency Bondowoso,201, be treated data

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 Table 3
Details of Local Budget (APBD) and Bondowoso Local Budget Planning
(RAPBD) on 2012
YEAR
NO DESCRIPTION
BUDGET
1 Income 1.047.175.047.000,00 1.073.390.149.430,73
1.1 Locally-generated 68.082.147.300,00 77.846.177.656,73
revenue or PAD
1.2 Balance fund 780.378.962.100,00 796.616.595.915,00
1.3 Other Local Revenue 198.713.937.600,00 198.927.375.859,00
Legal
2 Regional spending 1.122.663.670.246,28 1.074.126.371.921,77
2.1 Indirect Expenditures 690.352.064.505,46 675.963.349.693,62
2.2 Direct expenditure 423.311.605.740,82 398.163.022.288,15
Surplus / ( Defisit) -75.488.623.246,28 -736.222.491,04
3 Financing
3.1 Acceptance Regional 105.417.496.646,28 105.531.870.746,28
Funding
3.2 Expenditure Regional 30.028.873.400,00 30.028.871.400,00
Funding
Netto Financing 75.488.623.246,28 75.502.999.346,28
Surplus Budget 0,00 74.766.766.855,24
Financing regard
Year
Source: Regional Planning Agency Bondowoso,2012, be treated data

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 Table 4
Details of Local Budget (APBD) and Bondowoso Local Budget Planning
(RAPBD) on 2013
TAHUN
NO URAIAN
ANGGARAN REALISASI
1 Income 1.253.542.466.235,00 1.266.838.813.992,13
1.1 Locally-generated 77.480.709.250,00 79.559.587.884,13
revenue or PAD
1.2 Balance fund 888.983.583.585,00 897.073.140.840,00
1.3 Other Local Revenue 287.078.173.400,00 290.206.085.268,00
Legal
2 Regional spending 1.348.289.811.090,24 1.266.305.195.495,25
2.1 Indirect Expenditures 821.656.959.371,74 776.251.182.533,00
2.2 Direct expenditure 526.632.851.718,50 490.054.012.962,25
Surplus / ( Defisit) -94.747.344.855,24 533.618.496,88
3 Financing
3.1 Acceptance Regional 94.866.776.855,24 96.211.476.951,30
Funding
3.2 Expenditure Regional 119.432.000,00 119.432.000,00
Funding
Netto Financing 94.747.344.855,24 96.092.044.951,30
Surplus Budget 0,00 96.625.663.448,18
Financing regard
Year
Source : Regional Planning Agency Bondowoso,2013, be treated data

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 Table 5
Details of Local Budget (APBD) dan Bondowoso Local Budget Planning
(RAPBD) on 2014
TAHUN
NO URAIAN
ANGGARAN REALISASI
1 Income 1.441.714.354.313,00 1.534.483.291.061,68
1.1 Locally-generated 127.504.215.467,00 134.684.701.401,68
revenue or PAD
1.2 Balance fund 960.896.289.210,00 979.336.957.137,00
1.3 Other Local Revenue 353.313.849.636,00 420.461.632.523,00
Legal
2 Regional spending 1.536.840.017.761,18 1.471.104.168.997,53
2.1 Indirect Expenditures 875.308.858.004,65 833.125.691.307,00
2.2 Direct expenditure 661.531.159.756,53 637.978.477.690,53
Surplus / ( Defisit) -95.125.663.448,18 63.379.122.064,15
3 Financing
3.1 Acceptance Regional 96.625.663.448,18 96.721.772.448,18
Funding
3.2 Expenditure Regional 1.500.000.000,00 500.000.000,00
Funding
Netto Financing 95.125.663.448,18 96.221.772.448,18
Surplus Budget 0,00 159.600.894.512,33
Financing regard
Year
Source : Regional Planning Agency Bondowoso,2014, be treated data

1. Economical Ratio
The ratio of economically as the level of costs incurred public sector to carry
out a public service. The ratio of economically Bondowoso years 2010 - 2014 are
as follows:
Table 6
Bondowoso Economical Ratio on period 2010-2014
Year Percent (%)
2010 92,12%
2011 91,81%
2012 95,68%
2013 93,92%
2014 95,72%
Source : Regional Planning Agency Bondowoso,2014, be treated data

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 From the table above, the development of economical ratio of the regency
of the 2010-2014 quite consistently in the economic category, despite the
fluctuations in the percentage in 2010 to the year 2011 decreased 0:31%, from
92.12% to 91.81%. In 2012 increased to 95.68% and in 2013 fell back by 1.76
93.92% .And be increased again in 2014 to be 95.2% .Pemerintah Bondowoso
area using the system at the time of budget discipline will start implementation of
the government program and at the end of implementation. Budget discipline one
way to avoid the boom to disbursement and can reduce costs so as to achieve the
desired objectives economically.

2. Efficiency Ratio
Efficiency is the achievement of maximum output with given inputs for
the use of the lowest input to achieve a certain output.
Table 7
Bondowoso Efficiency Ratio on period 2010-2014
Year Percent (%)
2010 93,52%
2011 98,35%
2012 100,07%
2013 99,96%
2014 95,87%
Source : Regional Planning Agency Bondowoso,2014, be treated data
The efficiency ratio in the regency period of 2010 to 2014 are in the
economic category only in 2010,2011,2013 and 2014 in spite of the fluctuation of
the percentage in 2012 to the year 2013 decreased 0:11%, from 100.07% to
99.96% and 4:09% decline in the year 2013 to the year 2014.Sedangkan
efficiency ratio in the regency period in 2010 can be categorized not economical
with the percentage of 100.07%. Government Bondowoso do the construction and
development of infrastructure and human resources to manage natural resources in
the region are the City Bondowoso
3. Effectiveness Ratio
Effectiveness is the level of achievement of program outcomes with the
targets set.

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 Table 8
Bondowoso Effectiveness Ratio on period 2010-2014
Year Percent (%)
2010 103,93%
2011 102,26%
2012 102,50%
2013 101,06%
2014 106,43%
Source : Regional Planning Agency Bondowoso,2014, be treated data

From the above table the development of local government performance

when seen from the increased effectiveness ratio. Although in the year 2010 to the
year 2011 decreased by 1.67% from 103.93% to 102.26%, and a decrease of
1.44% from 102.50% to 101.06% in 2012 to 2013. However, in 2014 increased
the government's performance and that are in the category of effective that is
equal to 106.43%. This means that local governments Bondowoso managed to
improve his government's performance effectively .

5. Conclusion
Based on the method of value for money of local government performance
Bondowoso in 2010-2014, using the techniques economical ratio calculation
shows the performance of local governments are in economic category, which
amounted to 92.12%, 91.81%, 95.68%, 93.92 % and 95.72%. The efficiency ratio
in the regency period 2010-2014 is 93.52%, 98.35%, 100.07%, 99.96% and 95.87
still be categorized efficiently although in 2012 reached 100.07% percentage goes
into category inefficient. While the ratio of the effectiveness of the regency
government's performance in the year 2010-2014 can be considered effective, that
is equal to 103.93%, 102.26%, 102.50%, 101.06% and 106.43%, which means
that local governments can improve the performance of government effectively. It
can be concluded that the performance of the Regional Government of the
regency period 2010-2014 using the principle of value for money is good, because
the ratio calculation results from year to year tends to be in the category of
economical, efficient and effective.
The results of local government performance measurement the regency
period from 2010 until 2014 that researchers do indicate that the performance of

684
local governments in terms of value for money measurement technique should be
repaired again. The local government should be able to maintain and improve its
performance for the following years, in order to create good govermant and
success in building the region economically, efficiently and effectively.

REFERENCES

Andriani, Sri. 2010. Pengukuran Kinerja Dengan Prinsip Value For Money
Pemerintah Kota Batu.Universitas Islam Negeri Maulana Malik Ibrahim
Malang.
Bastian, Indra. 2001. Akuntansi Sektor di Indonesia. BPFE: Yogyakarta.
Badan Perencanaan Daerah Kabupaten Bondowoso
Ellitan, L. 2001. Strategi Mendongkrak Kuailtas Pelayanan. Jurnal Ekonomi
STEI,No.15/Th.X/Januari-Maret.
Halim,Abdul. 2007. Akuntansi Sektor Publik: Akuntansi Keuangan Daerah.
Salemba Empat: Jakarta.
Kurrohman, Taufik. 2013. Evaluasi Penganggaran Berbasis Kinerja Melalui
Kinerja Keuangan Yang Berbasis Value For Money Di Kabupaten/Kota
Di Jawa Timur. Universitas Jember.
Lembaga Administrasi Negara Republik Indonesia, (2003), Modul Sistem
Akuntabilitas Kinerja Instansi Pemerintah, LAN, Jakarta
Mardiasmo, Prof. DR. Mba, AK. 2009. Akuntansi Sektor Publik. ANDI:
Yogyakarta.
Moh. Mahsun. (2006). Penilaian Kinerja Sektor Publik. Edisi Pertama.
Yogyakarta: BPFE.
Purnama, I Desak made Ita, Dkk. 2014. Analisis Kinerja Dinas Pendapatan
Daerah Kabupaten Berdasarkan Value For Money Audit Atas
Penerimaan Pendapatan Asli Daerah (Pad) Tahun 2007-2011.
Universitas Pendidikan Ganesha.
Peraturan Pemerintah No. 108 Tahun 2000 tentang tata cara pertanggungjawaban
kepala daerah
Peraturan Menteri Dalam Negeri No.13 Tahun 2006 tentang Pengelolaan
Keuangan Daerah
Peraturan Pemerintah Republik Indonesia Nomor 71 tahun 2010 tentang Standar
Akuntansi Pemerintahan (SAP)
Undang-undang Nomor 17 Tahun 2003 tentang keuangan negara
Widiana, Hestina Hari.2005. Pengukuran Kinerja Organisasi Sektor Publik
Dengan Menggunakan Pendekatan Balanced Scorecard. Universitas
Brawijaya Malang.

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Yuanda, Angel. 2007. Pengukuran Kinerja Organisasi Sektor PublikMenggunakan
Pendekatan Value For Money (Studi Kasus PadaPemerintah Kota
Blitar). Universitas Muhammadiyah Malang.

Website
http://www.djpk.depkeu.go.id
http://www.Bondowoso.go.id

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TPS-07
THE TREND OF NATIONAL
GOVERNMENT DURING THE REIGN OF JEMBER
M.Z.A. JALAL IN 2010 2014

Donie Setyawan
dhoenkrek_84@yahoo.co.id

ABSTRACT
Analysis of Government Trends MZA Djalal Jember Regency Government is
very important information for decision making in the field of economic and
financial development so as to assess whether the government MZA Djalal
successfully manage the government well, as well as a positive impact on public
welfare Jember. One measure that can be used to analyze the performance of the
government in managing the district of Jember. Jember district government is
looking at revenue trends and absorption of various sector funds. The aim of this
study was to determine a figure leader during a period of leadership can advance
the district / city budget by looking at trends over the years 2010 to 2014. This
research is a descriptive research, data has been collected, then compiled,
interpreted, and analyzed so that provide complete information or a true picture of
trends in local government budgets Jember. Based on the results, it can be
explained that the financial performance of local governments in Jember still
showed an average absorption and budget revenues experienced a good value.
Where the calculation results in each year still increased number of which is
measured in the area of financial management.
Keywords: Jember Government, Trends Goverment, MZA Djalal, Figure Leader.

1. Introduction
The Budget Revenue and Expenditure (APBD) annual financial plan areas
defined by local regulations. Budget revenue and Expenditure was one of the
driving engines of economic growth in the region, which in the end also affects
the growth of the national economy. Budget revenue and Expenditure role as the
catalyst and one of the defining achievement of business targets and objectives in
economic macro areas directed to overcome the various obstacles and problems
which is a challenge in realizing a prosperous society agenda and independent.
Target to be achieved is the increasing proportion of Income The Original
Regional Revenue (PAD) significantly in the financing for development and

687
community service activities. Based on Law No. 23 of 2014 article 285 of the
regional government, the regional source of income used to finance various
activities of the autonomous region consists of: (1) the Original Regional
Revenue, (2) Income transfers, (3) other revenue.
The proportion of the income of the original regional revenue (PAD)
against the total income of the area became a benchmark level of independence of
an area. The higher the shopping needs of the areas that can be financed from the
Revenues of the original Area, it will be the better quality of the autonomous
region. In addition to the original Income sourced from the area, a region also
income sourced from income or funds transfer. Income transfers consist of
equalization funds, special autonomy funds, funds of privileges and funds of the
village. Equalization Fund is part of the Budget of the State Expenditures and
Revenues (APBN) is allocated to the Central Government to local governments.
The area of the financing of the fund balances his area shopping with a larger
share of Revenue than the Original Area, indicating that the area could not be said
to be independent because it is still dependent on the Central Government. This is
the reason why the the original regional revenue and the balance funds becomes
the most highlighted in the implementation of regional autonomy.
The difference of potentials and resources that belong to each area will
cause the difference in level between the independence of the region. This
required a good integration between the Central Government and local
Governments via equalization funds. Patterns of organizing the granting of
equalization funding should be adjusted with the financial capability of the region.
Financial performance the area can be seen from the management of the revenues
of the region. Jember, one of the counties in the area of East Java province, has
also been implementing the policy of regional autonomy. As an autonomous area,
Jember had a responsibility to empower regional potential according to its own
initiative based on the principles of transparency, public participation, and
accountability to the community in order to create good governance (good
governance). (Sinaga, 2014).

688
 Graph 1.1

Total revenue, PAD, and Equalization Funds Region Jember

Year 2011 - 2014
(in millions of rupiahs)

Source: BPKA Kab. Jember, processed

Jember Regency income year 2011-2014 is always increasing. Increased

income areas in Jember Regency are always accompanied by an increase in
Income of the original regional revenue (PAD) and fund balances consist of
General Allocation Fund (DAU), Special Allocation Fund (DAK), and funds for
Tax/Tax Not Result (BPHPBP). The post portion of other legitimate income
having enough, even higher than the PAD in the formation of regional income
Jember. The contribution of the PAD against the total income of Jember Regency
area has a smaller portion than equalization funds contribution to the total income
of the region. This indicates that the Jember yet can be said as an independent
region.

2. Literature Review
2.1 Budget Revenue and Expenditure

Based on the number 33 year 2004 jo Law Number 23 of 2014 is the

Budget of Revenue and Expenditure (APBD) is the local Government annual
financial plan set out by regulation. The structure consists of a Budget of income
and Expenditure area budget revenue, budget, and financing.

2.2 Regional Income

Income is all the reception area of a particular fiscal year period who
became a recognized area of rights to supplement the value of net worth. Budget

689
revenues derived Income Native area (PAD), fund balances, and other legitimate
income.

2.3 Expenditure Area

According to the regulation of the Minister of Home Affairs number 13
Year 2006 about Regional Financial Management Guidelines, as amended by
Permendagri Number 59 in 2007 and the second amendment by regulation of the
Minister of Home Affairs Number 21 in 2011 about the changes to both the
Expenditure area. The Expenditure area was defined as the obligation of local
governments are recognized as deduction on the value of net worth. Classification
of shopping area consists of:

Direct Expenditure : budgeted expenditures directly associated with the

program and activities.
Indirect Expenditures : budgeted expenditure is not directly related to the
implementation of programs and activities.

2.4 The Original Regional Revenue (PAD)

According to law No. 3 of 2004, revenue of the original Region is
defined as the area earned income from sources within its territory its own loading
based on local regulations (Local Regulations) in accordance with the legislation
in force, consisting of: local tax, a levy on wealth management result areas, areas
that were separated, and the other Original Areas of legitimate Income.

Warsito (2001:128) States "the original regional Revenue (PAD) is

income that is sourced and collected by local governments. The original source of
income Area consisting of: local tax, restribusi areas, profit from regional-owned
enterprises (BUMD), and other areas of the original income ".

Meanwhile, according to Rahman (2005:38) the income is income of the

region's original area sourced from local tax results, wealth management results
distribution results areas are separated and other legitimate areas of original

690
income in digging the funding in the implementation of the otoda as the
embodiment of the principle of decentralization.

Native sources of income include:

a. Local Tax
Local Taxes, hereinafter called the tax is obligatory contribution to the
regions that are owed by individuals or entities that are enforceable under the
Act, by not getting the rewards directly and used for the purposes of the area
for the greatest prosperity of the people (Article 1 of Law No. 28 of 2009).

b. The Results Of The Regional Levy

Levy Area, hereinafter called levy, levy is the area as payment for services or
granting certain specific permissions are provided and/or provided by local
governments for the benefit of a private person or body (article 1 of Law No.
28 in 2009).
c. Wealth Management Result Areas Separated
For areas that have Corporately-owned areas, such as Regional Water
Company (PDAM), the regional development Bank (BPD), a credit agency
districts, markets, entertainment/recreation, villa, building, and other perks is
the income from the region concerned. (Nurcholis, 2007:184). According to
Yani, (2004:40) wealth management result areas are separated among others
part of profits, dividends, and the sale of shares belonging to the area.
d. Other legitimate areas of Original Income
According to Article 6 of Law No. 33 of 2004 Concerning the Financial
Equalization between the Central Government and the regions, other legal
PAD covers: the proceeds of wealth areas not separated, giro services, interest
income, profit is the difference in the exchange rate of rupiah against foreign
currencies, and commissions, piece, or other forms as a result of the sale
and/or the procurement of goods and/or services by area.

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2.5 Equalization Fund

In accordance with Law No. 33 of 2004 article 1 paragraph 6 of Financial

Equalization between the Central Government and the regional Government and
in line with the Government Regulation Number 55 in 2005, the Fund balance of
the Fund is sourced from Budgetary National income and Expenditure (APBN) is
allocated to regions to fund the needs of the region in the framework of the
implementation of decentralization.

2.5.1 General Allocation Fund (DAU)

By definition the General Allocation Fund (DAU) is defined as follows
(Sidik in Kuncoro, 2004 : 30 in Enceng 2012):
a. One of the components of the balance of Funds in the national income and
Expenditure Budget (APBN) that pengalokasiannya is based on the concept
of fiscal gaps or voids fiscal (fiscal gap), i.e. the difference between the fiscal
needs with fiscal capacity.
b. Instrument to result horizon imbalance, is allocated with the goal of equitable
financial capability between areas where its use is defined entirely by the
region.
c. Equalization grant, that serves to neutralize the ability of financial
imbalances with the Native Revenue (PAD), the tax for the results, and for
the results obtained by the natural resources of the region.

2.5.2 Special Allocation Fund (DAK)

According to Law No. 33 of 2004 article 1 paragraph 23 Special

Allocation Fund (DAK) is part of the equalization funds, i.e. funds sourced from
the national income and Expenditure Budget (APBN) is allocated to the region in
order to finance a specific need. In line with Act No. 33 of 2004, according to the
Government Regulation Number 55 in 2005 about the Equalization Fund stated
that the Special Allocation Fund (DAK) used to fund special activities into the
Affairs of the region and is a national priority, in accordance with the function as
an embodiment of the task to the Government in specific areas in particular in

692
efforts the fulfillment of the needs of basic services and infrastructure of the
community.

2.5.3 Tax Revenue

In accordance with Law No. 33 of 2004 Article 1, paragraph 20, explains
Fund (DBH) are the funds coming from the budget of the National (APBN)
allocated to the regions based on the percentage to finance the needs of the region
in the implementation of decentralization. Accordingly, a general explanation of
Law No. 23 of 2014 implies that the allocation of funds (DBH) in the Budget
(APBN) is the income earned from the resources of national residing in the area in
the form of taxes and resources natural.

3. Research Method
This research is a descriptive analysis of research that aims to find out an
overview of the financial area as well as the trend of income and expenditure of
local government area during the reign of Jember Regency M.Z.A. Jalal period in
2011-2014. This study uses secondary data obtained from various sources, such as
books, thesis/theses, and other reference sources. This research was conducted in
the District of Jember in East Java province. The subject of this research is the
reign of M.Z.A. Jalal in the reign period of the years 2010 to 2014 (II). Whereas
the object of this research is the figure of a leader of the M.Z.A. Jalal for lead in
Jember Regency second-year Period 2010 to 2014.

4. Results and Discussion

4.1 Financial Region Jember years 2011-2014
Trends in income and expenditure budget Jember regency in general has
increased from year to year during the period 2011-2014. The average income of
Jember regency during the period 2011-2014 amounted to Rp.2,298 billion per
year and average spending by Rp.2,012 billion per year. In general, financial
Jember during the 2011-2014 period can be said to be stable because after over 3
years starting in 2011-2014 realization of the budget had a surplus.

693
4.2 Trend of regional Income, Revenue Equalization Fund regional, Original,
and other legitimate Income Jember Regency in 2011-2014
Revenue sources Counties Jember is not only derived from the posts of
regional income only. The Central Government allocated relief funds in the form
of equalization funds and other legitimate income for Counties to help regional
financing Jember in the framework of fiscal decentralization.

Graph 1.2
Jember Regency Income trend in 2011-2014
(in millions rupiahs)

Source: BPKA Reg. Jember, processed

Jember Regency revenue trend during the last 4 years is generally always
has increased, both for Income Regional Revenue, Equalization Fund, except
other legitimate areas of Original Income decline in 2012. Significant
improvement occurred in 2012 on Equalization Funds in the event of the transfer
of the Government can note that the biggest contribution in postal revenue in
Budget revenues and Expenditures District Jember is funding which includes
Equalization Fund General Allocations (DAU), Special Allocation Fund (DAK),
and for the results of the tax is not a tax (BHPBP). The average equalization funds
allocated during the period 2011-2014 Rp 1,517 billion per year. As for the other
post legitimate income is at second place after equalization funds with an average
over the period 2011-2014 Rp 483 billion per year. The original income Area
occupies third position with an average over the period 2011-2014 Rp 297 billion
per year.
In the framework of fiscal decentralization, fiscal independence for each
of the autonomous regions to be the most crucial. Each autonomous regions
through control of local government is expected to optimize the sources of income
derived from their respective regions for the purposes of local financing. An area

694
can be said to be independent if the area is not dependent on grants from the
central government. Revenue Daeraah in each area can be sourced from local
taxes, levies, profits of companies belonging to the region, and other regional
revenue legitimate.
Graph 1.3
Trend Local Revenue Jember in 2011-2014
(in millions rupiahs)

Source: BPKA Reg. Jember and DJPK, Kemenkeu, processed

Jember Regency of income sources of income of the original Area during

the period 2011-2014 include local tax, a levy on wealth management result areas,
areas separated/profit regional Corporation, and other legitimate areas of Original
Income. Jember Regency area during the tax year 2011 to 2014 has increased
continuously with an average income of Rp. 78 billion.
As for the income levies, generally graphed quite volatile over the last 4
years with an average income of Rp.38 billion. To post Results separated
management of state assets amounted to Rp.12 billion a year and, Other Local
Revenue valid from 2011-2014 in fourth place with an average income of Rp.164
billion annually occupy the largest income sources Regional District Jember after
tax, retribution and results management of state assets set aside. In 2014, other
legitimate regional revenue increased significantly and reached its peak in 2014
amounting to Rp.274 billion exceeds local taxes and levies. At the post the results
of management of state assets separated decreasing every year as a result of the
wealth management area separated / profit company owned by the region
accounted for an average of about Rp.12 billion during the period 2011-2014.
Apart from the regional revenue, revenue also comes from the Jember Regency
Balance Fund, which includes the General Allocation Fund (DAU), Special

695
Allocation Fund (DAK), and the Revenue Sharing Fund Taxes Non-Tax
(BHPBP). Jember Regency Equalization Fund trend period 2011-2014 are
presented in the following graph.
Graph 1.4
Trend Balance Fund Jember in 2011-2014
(in millions rupiahs)

Source: BPKA Reg. Jember and DJPK, Kemenkeu, processed

Jember Regency equalization funding trends in the last 4 years the

balance of funds in Kabupaten Jember is the highest the Fund General Allocations
reached an average of Rp 1,323 billion per year. The second position is occupied
by a special Allocation Fund changes tend to be volatile, with the average
reaching Rp 104 billion per year. As for funds for Tax/Tax instead of Results, the
average reached Rp 90 billion per year.

4.3 Trend Regional Expenditure Jember Regency Year 2011-2014

In General, regional expenditure are classified into direct expenditure and
indirect expenditure. The expend cart has a large enough portion of revenues and
Spending in the budget area (APBD) is the direct expenditures include employee
expend, expend for goods and services, and capital expenditures. Trend regional
expenditure Jember Regency presented in the following graph.

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 Graph 1.5
Trend Regional Expenditure Jember Regency year 2011-2014
(in millions rupiahs)

Source: BPKA Reg. Jember, processed

Based on the above graph Jember Regency expenditure always has
increased continuously. Average Jember Regency expend during the last 4 years
reaching Rp 2,228 billion per year. Personnel expenditure is the largest source of
expenditure for the period 2011-2014. Average capital expenditure in the last 4
years amounting to Rp 399 billion annually. The second largest expenditure after
capital expenditures is expend goods and services amounting to Rp. 365 billion
annually while the employee expenditures amounting to Rp 75 billion. Shopping
trends are likely to increase, but in 2012 employee expenditures decreased by
4.56%.

Graph 1.6
Trend Expenditures Direct Jember Regency year 2011-2014
(in millions rupiahs)

Source: BPKA Reg. Jember, processed

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5. Conclusion
Reception areas in Jember Regency Finance most of their funds are still
sourced from the Central Government in the allocation of equalization funds, with
the average reaching 66.29% per annum of the total income of the region. While
the source of income of the PAD reaching only 12.6% per annum of the total
income of the region. For other legitimate income earned on average 21.10% per
annum of the total income of the region. Based on this information it can be
concluded that the Kabupaten Jember hasn't been able to become an independent
area.

REFERENCES

Bupati Jember. 2011, 2012, 2013, 2014. Pertanggungjawaban Pelaksanaan

Anggaran Pendapatan dan Belanja Daerah Kabupaten Jember Tahun
Anggaran 2012, 2012, 2013, 2014. Jember: Sekretariat Kab. Jember.
Direktorat Jenderal Perimbangan Keuangan (DJPK). 2011. Deskripsi dan Analisis
APBD TA 2011. Jakarta: DJPK.
Enceng, Liestyodono B Irianto, dan Purwaningdyah MW. 2014. Desentralisasi
Fiskal Pendapatan Keuangan Daerah. Jurnal Ilmu Administrasi Negara,
Volume 12, Nomor 1, Juli 2014: 1 73. Tangerang.
Fadila, Savira. 2011. Analisis APBD Kabupaten Cilacap Tahun 2001-2012.
Semarang: UNDIP.
Hanif Nurcholis. 2007. Teori dan Praktik Pemerintahan dan Otonomi Daerah.
Jakarta, Grasindo,
Herlina, Rahman, 2005 Pendapatan Asli Daerah,Jakarta: Arifgosita.
Sasana, Hadi. 2009. Otonomi Daerah dan Desentralisasi Fiskal (Membangun
Kemandirian Daerah). Semarang: Fakultas Ekonomi Universitas
Diponegoro.
Warsito. 2001. Manajemen Stratejik. Konsep, Kasus dan Implementasi. Jakarta:
PT. Gramedia.

698
TPS-08

FACTORS AFFECTING ON THE BUDGET ABSORBTION AT

HEALTH DEPARTMENT OF BONDOWOSO REGENCY

Anton Asmara
University of Jember
Email : antonasmarase@gmail.com

ABSTRACT

This study aims to investigate and examine the effect of public

accountability, budget goal clarity, planning budgets for the managerial
performance of the SKPD in the regency health office. Research type used was
explanatory research. The population were all employees of the SKPD the
regency health office budget section. Total population of 92 employees of the
Local Health Government Department of Bondowoso regency. Sample were 50
employees. The research variables were public accountability, clarity of
budget targets and budget planning, bound or dependent variable was
managerial performance. Analysis methods is used include multiple linear
regression analysis. The results showed public accountability budget had
significant effect on managerial performance, goal clarity had significant effect
on managerial performance in the Health Government Department of
Bondowoso regency. Budget planning had significant effect on SKPS
Managerial performance in the regency health office

Keywords: public accountability, budget goal clarity, budgeting and managerial

performance

1. Introduction
The budget was very crucial to the sustainability of a country.
Shopping is used as a tool of fiscal policy in the field next to function in
financing government activities. When the economy is sluggish and the private
sector is not able to walk properly, government spending is used as Boost the
economy in aggregate. Government spending is contained in the State Budget and
Revenue (APBN).

699
 The purpose of the state budget to guide spending and revenues for a
balance that is dynamic in order to carry out the activities of the state in order
to achieve increased production, increased employment opportunities, determining
the direction and priorities of general development, economic growth is high
enough and ultimately aimed at reaching a society just and prosperous society
based on the material and spiritual precepts 5th of Pancasila and the 1945
Constitution.
Budget is also an instrument of fiscal policy and serves as a form of
government intervention that directly or indirectly affect the economic
development. Each year the budget was drafted by the government with the
approval of the House of Representatives (DPR). The budget, once approved by
Parliament, are translated again into the budget document called Budget
Implementation List (DIPA). DIPA is the budget implementation document
prepared by each working unit in the Ministry / Agency and endorsed by the
Director General of the Treasury or the Head Office of the Directorate General of
Treasury on behalf of the Minister of Finance as General Treasurer (BUN).
On the other hand the demands of transparency in government systems is
increasing in the current era of reform, not least of transparency in the
financial management of Local Government. The government is obliged to
make accountability reports that use accounting system regulated by the central
government in the form of laws and government regulations that are binding
throughout the Local Government. In the system of government there are two
subsystems, namely the Regional Finance Management Task Force (SKPKD) and
the regional work units (SKPD). Financial Statements on education is a source
for preparing financial statements SKPKD, therefore every SKPD should
prepare the Financial Statements as possible. Work Units (SKPD) is part of the
Government which carry out the functions of government and public services,
either directly or indirectly. The purpose of this study were: to find and
examine the effect of public accountability to the managerial performance of
the SKPD in the regency health office: to know and test the effect on the budget
goal clarity on the managerial performance of the SKPD in the regency

700
health office: to know and test the effect on the budget planning SKPS
Managerial performance in the regency health office.

2. Research Method
Research type used was explanatory research or research explanation,
which is a type of research that highlights the relationship of this research
variables and test hypotheses that have been formulated previously. The
population used in this study were all employees of the SKPD Health
Department budget section regency. This study using purposive sampling with
criteria therein are the leaders at different levels of the organization is subject to
the right to provide information under consideration, the knowledge, the
experience they have. The sampling criteria are based on the following criteria.
The head of the Regional Work Units The District Bondowoso that reason the
sample is official, the head of the body, the head office and the head of
planning for heads of departments, heads of agencies, head office and head of
the planning department in charge of activities / programs covering planning to
source control power that is therein, and as a leader in determining the direction
that reflects the performance of the institution he leads. While the head of the
planning department as part of the budget and asset managers and staffs members
/ employees as well as executors responsibility of making financial reports that
reflect the agency's performance report.
This study was not conducted at the Government office for the
implementation of the budget comes at SKPDs report just submitted to the
offices of the Agency's financial management. That means SKPD spearheaded
the organization of government activities primarily related to the budget and
performance. Based on these criteria, the managerial performance is only
focused on the performance of the SKPD leaders and the head of the budget
planning so that the sample size of 50 people. The variables were variable
accountability variable, budget goal clarity (and budget planning and
dependent variable that was managerial performance. Methods of data analysis

701
using multiple linear regression whereas hypothesis testing using t test and F
test.

3. Result And Discussion

The result showed that BLUE assumptions that must be addressed include:
the normality, no multikolinieritas, their homoskedastisitas and no autocorrelation.
Tests carried out on the assumption of the classical linear regression models are
described as follows: normality test models indicate that the data is spread
around the diagonal line and follow the direction of the diagonal line so that
the regression model to meet the assumption of normality. Multicolinearity test
results show that there is no multicollinearity between the independent
variables because it shows VIF value of less than 5. Heteroscedasticity test
indicates that the test heteroskedastisitas Scatter Plot chart shows there is no
clear pattern as well as the points spread above and below zero on the Y
axis then the regression model is not the case heterokedastisitas.
Multiple regression analysis is concerned with the study of a
dependent variable dependence on one or more independent variables in order to
determine how much influence the independent variable on the dependent
variable. The results of multiple linear regression analysis between the
independent variables are public accountability, clarity of budget targets and
budget planning and performance dependent variables. The regression equation
that can be established are:

Y = 0.226 + 0,206X1 + 0,212X2 -

0.122 X3 + 0, 316X4 + 0,199X5

Having performed classical assumption, the next step is to test t to interpret

the results of multiple regression analysis. This test is performed to determine
whether the independent variables affect the dependent variable significantly
partially. Hypothesis testing is done by the F test is intended to determine the
effect of public accountability, clarity of budget targets and budget planning to
the dependent variable (performance) simultaneously. If Ho: b1: b2: bk = o; then

702
Ho is accepted and Ha rejected meaning that simultaneous public accountability,
clarity of budget targets and budget planning has no effect on managerial
performance at SKPD Bondowoso regency. These results the
simultaneous performance of managerial Bondowoso regency SKPD effect on
Managerial performance at SKPD of Bondowoso regency.
To know the proportion of / contributions influence of independent variables
on the dependent variable on the whole, it can be determined by testing multiple
coefficient of determination. Judging from the coefficient of multiple
determination, the analysis results showed that the influence of independent
variables public accountability, budget goal clarity and budget planning
simultaneously on the performance seen from the value of Adjusted R Square
(R2) shows the percentage effect of all independent variables on the
dependent variable, which is getting closer a value of 1, the greater the influence
of all independent variables on the dependent variable. Based on the results of
multiple regression analysis can know the value of adjusted R Square

(R2) of 0,512. This shows that 51.2% of performance variables can be explained
by the independent variables are public accountability, clarity of budget targets
and budget planning direct and indirect. While the remaining 49.9% is influenced
by other variables outside variables used.
Based on the test results showed that the public accountability had positive
significant effect on managerial performance. It shows that the higher public
accountability, the better managerial performance. Accountability is the principle
of accountability means that the budgeting process starts from the planning,
preparation, execution should bear reportable and accountable to Parliament and
the public. Public accountability in improving managerial performance, due to the
lack of accountability to the public, people are not only aware of the budget but
also mngetahui implementation of budgeted activities that local governments
strive well in implementing all existing planning because it will be assessed
and monitored by the government. Public accountability, local governments
pertaggungjawaban to all the activities carried out so kenerja local governments
can be judged either by internal or external parties, thereby affecting the

703
performance increase public accountability of local governments. The results of
this study are consistent with the Son (2012) which shows that accountability
positive effect on managerial performance.
Based on the test results indicate that the budget goal clarity had positive
significant effect on managerial performance. It shows that the higher the
budget goal clarity, the better managerial performance. Budget goal clarity is the
extent to which the budget objectives set out clearly and specifically with the
aim that the budget was understood by those who are responsible for the
budget. Their budget goal is clear, the implementing agency budget will also be
aided in perealisasinya, indirectly affecting the health authorities. Budget goal
clarity has implications for the apparatus, for preparing the budget in
accordance with the objectives to be achieved in previous research budget goal
clarity effect on managerial performance. It is also consistent with the theory of
positive accounting used by users of budget information. In addition, the results
of this study in accordance with the Son (2012) and Annie (2013) which states
that the budget goal clarity positive effect on performance
Budget planning hadnot positive significant effect on managerial
performance. It shows that the higher the implementation of the budget planning
will not improve managerial performance. Budget planning is the process of
determining the activity, the determination of value, the determination of those in
charge of programs and activities, prioritize programs and activities. Although the
budget planning will indicate the level of autonomy that is delegated to SKPD so
it have more responsibilities more information is great for the planning and
control of operating activities and require a lot more information, but sometimes
the budget planning gives less active movement of the leadership in the decision
due many bureaucratic restrictions of the center that must be faced. The results of
this study were in consistent with Annisa (2013) about the budget goal clarity
and budget planning of local government performance. The results showed
budget goal clarity and budget planning had positive significant effect on
performance.

704
4. CONCLUSIONS AND RECOMMENDATIONS
Based on the analysis of data shows the results the following conclusions.
a. Public accountability had significant effect on SKPS Managerial performance
in the regency health office. Budget goal clarity had significant effect managerial
performance Work Unit in the Health Government Department of Bondowoso
Regency. Managerial budget planning had not significant effect on the
performance of regional work units in the Department of Health regency.
Suggestions can be submitted in this research are: (1) Further research
should be carried out at another office or another agency just so there is no
comparison of research results; (2) Future studies are expected in addition to
applying the method of the survey by questionnaire can also conduct interviews
with managers in order to obtain the respondents and a response is expected:
3) for further research adds to other variables such as budget participation,
motivation and satisfaction that can affect onmanagerial performance.

REFERENCES

Astika, I. B. Putra. 2010. Konsep- konsep Dasar Akuntansi Keuangan. Denpasar:

Udayana University Press
Dwiyanto, Agus. 2014. Mewujudkan Good Governance Melalui
Pelayanan Publik. Cetakan keempat. Gadjah Mada University Press
Ghazali, Imam. 2002. Aplikasi Analisis Multivariate dengan program SPSS.
Badan Penerbit UNDIP Semarang
Indriantoro, Nur dan Supomo. B.
2002. Methodologi Penelitian Bisnis untuk Akuntansi dan Manajemen. Edisi I.
Yogyakarta : BPFE
Putra, Deki. 2012. Pengaruh Akuntabilitas dan Kejelasan Sasaran Angaran
terhadap Kinerja Manajerial Satuan Kerja Perangkat Daerah (Study
Empiris pada Satuan Kerja Perangkat Daerah Kota Padang). Jurnal
Supranto, J. 2008. Statistik Teori dan Aplikasi. Jakarta : Penerbit Erlangga
Permendagri Nomor 64 Tahun 2013. Tentang Penerapan Standar Akuntansi
Pemerintahan Berbasis Akrual Pada Pemerintah Daerah.
UU No. 32 Tahun 2004. Tentang Pemerintahan Daerah

705
TPS-09

TAX PLANNING THROUGH A METHOD OF

DEPRECIATION AND ADJUSTMENT FISCAL TO
MINIMIZE THE TAX EXPENSE
(CASE STUDIES ON PT. DWIJAYA GASINDO
MAKMUR)

Zainal Arifin
Jember University
aanzainalarifin@gmail.com

ABSTRACT

The purpose of this article is to find planning through the tax shrinkage fixed
assets and adjustments fiscal in order to minimize the tax charges PT. Dwijaya
Gasindo Makmur . A method of writing this article use deskriftif research
.Writing this article facts and identification collect data talk about problems tax
planning through the method shrinkage fixed assets and adjustments fiscal tax on
the borne by the company .Simple research is expected to provide input on the
management in doing shrinkage fixed assets and adjustments fiscal to optimize of
income tax charges allowed according to the of taxation conducted by the
company. PT. Dwijaya Gasindo Makmur need to consider in really about profit
and loss that will be suffered due to a method of using depreciation and fiscal
adjustment .The conclusion of this research PT .Dwijaya gasindo prosperous in
menetukan depreciation method was accurate , but companies are not yet fully
understand about fiscal adjustment for the purpose of tax minimize the burden that
will be owed

Keywords : Tax Planning, Depreciation Fixed Asset , Fiscal Adjustment

I. Introduction
The existence of a entity is features of a economic environment which in
are long term meant to hold on survival company ( going concern ), survival an
effort is always associated menajemen firm in pengelolaanya to survive when the
economy experienced instability2 ( Praptitorini & Januarti , 2007 )

2
Praptitorini, M. D., & Januarti, I. (2007). Analisis pengaruh kualitas audit, debt default dan opinion shopping
terhadap penerimaan opini going concern

706
 Assets remain very has the status very important as a component
operational in the effort to maintain the survival to order to support their efforts to
obtain advantage . For the company tax is the burden on the losers will reduce
profit , for business entity tax be imposed on the income received or obtained may
be regarded as a burden or the cost (expense) so that it will reduce the number of
the profit be accepted .
Based on the background above writer interested to have a simple research
on the tax planning through a method of depreciation and adjustment fiscal to
minimize the tax charges to PT.Dwijaya Gasindo Makmur.

1.1 Research Purposes

To know how contributed greatly to PT .Dwijaya Gasindo Makmur in
make the tax planning. Through a method of depreciation and the adjustment of
fiscal for the purpose of minimize the tax charges or thrift income tax owed for
the company.

2. Literature Review
2.1 The Meaning Of Tax
Tax is contribution must against the country that owned by a private
person or body is force based on regulation, by not be of those directly and used
for countries for of the size of the welfare of the people (Republik Indonesia,
2009).
Based on the meaning of understanding mentioned above can be
concluded that tax is as follows ( Sambodo , 2015 ):
1. Contributed to from the community to the state
2. Without receiving of profits directly
3. Collected by the central and regional governments
4. Based on the legislation in terms of its implementation, so very firm and can
be forced
5. Used to fund budget of government administration and welfare of the people

707
6. Having the function of financing the implementation of government and as an
instrument for regulating or implement a policy the state

2.2 Tax Planning

Tax planning is the first step in the management of tax. In this stage
collection was done and research to rules taxation in order to were selected kind
of the act of saving tax to be performed.
According to ( Tjahjono and Husein , 2005 in ( Husparini , 2013 ) step in
the tax planning is as follows :
1. Maximize income tax Business maximize income of being excluded is a
maximize income not tax object
2. Maximize of Fiscal Costs The act of it will be done with increasing the cost
of the cost of that could be credited.
3. Maximize of tax rates The act of it can be carried out with the effort to the
imposition of taxes with the Lowest tax rate.

2.3 The Meaning Fixed Assets

Statement accounting standard number 16 ( revision of 2011 ): tangible
assets held for use in the production or supply of goods and services for
direntalkan to other parties or for the purpose of subsisting expected to use during
more than one periode.

2.3.1 Assets Fixed Types

Fixed asset types can be grouped into two, namely:
1. Assets remains cannot be depreciated
The fixed assets cannot depreciated is assets have age and the benefits infinite
.For example , land for building office , or to factory buildings .The price of
the over the land was not need to depreciated because the benefits not limited.
2. Assets could still depreciated
The fixed assets can depreciated is assets aged or the benefits limited.

708
2.3.2 Depreciation Method
According to ( suandy , 2011 ) in penelitianya ( mardjani et al . , 2015 )
define some distinct method to calculate the burden shrinkage , several methods is
:
1. Based on the criteria time that is
- Straight line method
- Declining balance method :
1) Sum of the year digit method
2) Double declining balance method
2. Based on the use of
- Service hours method
- Productive output method

2.3.3 Depreciation Based on the Regulation Taxation

The depreciation according to the tax perundang-undangan as stipulated in
article 11 income tax3:
1. Straight line method For fixed assets intangible not building
2. Straight line method to the fixed assets of building tangible
Table 1.
A group the benefits and depreciation rates treasure intangible

The benefits The depreciation as referred to in

Group tangible Tresure
period
Subsection (1) Subsection (2)
I. Not Building
Group 1 4 Year 25 % 50 %
Group 2 8 Year 12,5 % 25 %
Group 3 16 Year 6,25 % 12,5 %
Group 4 20 Year 5% 10 %
II. Building
Permanent 20 Year 5%
Impermanent 10 Year 10 %
Source: law PPh No.36 year 2008

3
law number 36 years 2008 on income tax

709
 To facilitate taxpayer in giving uniformity in menetukan grouping fixed
asset intangible so the ministry of finance republic of indonesia set regulation no
96 / KMK.03 / 20094.

2.4 Fiscal Correction

According to Muljono and Wicaksono (2009) in his research (Mardjani et
al . , 2015) fiscal correction is the calculation of tax a result of differences in
according to the calculation of profit commercially with the calculation of profit
according to fiscal.
1. Positive Correction Fiscal Correction resulting in the expense reduction that
has been in admit in the earnings report commercially
2. Negative correction Correction fiscal resulting in of expense increased that has
been in admit in the earnings report / losers commercially.

2.5 Taxable Income Rates

a. Income tax rate for article 17 paragraph (1) the b
A rates applied for taxpayers of bodies in the land and the form of business
fixed, is as much as 28 % . Rates of the since 2010 to 25 percent.
b. Income tax rate for article 31 e
Tax payers of bodies in the country by gross turnover of up to 50 billion got
facility such as rates reduction of 50 % imposed on income taxable of the
gross turnover of up to 4,8 billion

2.6 Previous Research

1. Ratag (2013) Planning tax through a method of depreciation to count income
tax agency to PT. Bank Sulut. Knowing tax planning through a method of
depreciation to count income tax agency, Deskriftif.
2. Katuuk, (2013) Analysis perencanan tax through revluasi assets fixed on PT.
Angkasa Pura I (persero) Airport Sam Ratulangi., To know the influence of

4
Type of fixed assets are group tangible 1, a group of 2, a group of 3, 4 group can be seen in
annex the minister for finance number 96 / kmk.03 / 2009 that is part of this regulation.

710
 planning a tax on PT. Angkasa Pura I (Persero) through revaluasi assets fixed,
Deskriftif Kuantitatif

3. Research Methodology
3.1 The Kinds of Research
This research use descriptive approach so that this research collect facts
and identification data that discusses planning tax problems in the fields of
shrinkage fixed assets and fiscal adjustment against tax burden borne by the
company.

3.2 Type of Data

Types of data on in this research is:
1. Quantitative data is the kind of data of financial reports , the depreciation
assets fixed firm , the list of fixed assets from the company.
2. Qualitative data is in the form of a description of the company, history and
structure organization in company and arguments written of the authorities in
the company

3.3 Data Source

Data sources used to support this research is primary and secondary data
1. The primary data is data obtained through direct observation and research on
the company , which includes the interview against the authorities.
2. Secondary data is the data collected by gatherer data and published to users
data , covering a brief history company , and the structure of the organization.

3.4 The Place and Time Research

The study is done in PT .Dwijaya Gasindo Makmur located in Jl. Ambulu
No. 157 village balung lor kecamatan balung district jember , moving business in
agent the lpg tube one 3kg largest balung district. The research was done in
September 2016 .

711
3.5 Methods of Analysis
In this research using analysis descriptive data. With the this analysis
researchers will gather, composing, processing and analyzed data, in order to
provide an overview of a state of being set and a conclusion can be drawn to
answer to the matter is.

3.6 Operational Definition

The operational definition of this research is.
1. Calculations in calculating depreciation expense of fixed assets owned by the
company using the method of depreciation in accordance with GAAP and tax
regulations.
2. Depreciation is a reduction uses fixed asset value for use , age , and so on ,
which can encumber as a charge in a financial companies.
3. Financial statements is a note financial information corporations on a period
of accounting that can be used to describe the company.
4. Fiscal adjustment is adjustments to net income commercial fiscal to net
income in counting order taxable income based on law income tax and
regulations and the implementation as a basis of tax owed

4. Research Results and Discussion

But PT.Dwijaya Gasindo Makmur not make the planning through fiscal
tax adjustment positive or negative on adjustment fiscal income tax object not
according to the number of income tax 36 years 2008 that will result in income
tax will be paid too big.

712
 Table 3.
Depreciation fixed asset years tax 2015 a straight line method

The
Acquisition Acquisition Depreciatio
Type Assets benefits Fare
year cost n 2015
period
Group 1
CCTV 2010 4 Year 25% 10.500.000 -
Komputer Kantor 2009 4 Year 25% 5.300.000 -
Printer Epson L210 2015 4 Year 25% 4.100.000 1.025.000
Laptop Thosiba 2015 4 Year 25% 4.800.000 1.200.000
Printer Epson LX 310 2010 4 Year 25% 500.000 125.000
Pompa Air 2015 4 Year 25% 380.000 95.000
Lemari File 2015 4 Year 25% 2.130.000 -
Meja Kantor 2014 4 Year 25% 750.000 187.500
Group 2
Genset 2011 8 Year 12,5% 41.775.000 5.221.875
Pick Up Grandmax 2015 8 Year 12,5% 207.800.000 25.975.000
Pick Up Mitsubishi L 300 2010 8 Year 12,5% 241.750.000 30.218.750
Pick Up Mitsubishi T 120 2009 8 Year 12,5% 445.650.000 55.706.000
Pick Up Mitsubishi T 120 2011 8 Year 12,5% 235.500.000 29.437.500
Pick Up Mitsubishi T 120 2013 8 Year 12,5% 161.500.000 20.187.500
Pick Up Mitsubishi T 120 2015 8 Year 12,5% 356.500.000 44.562.500
Roda Tiga Triseda Long 2010 8 Year 12,5% 51.000.000 6.375.000
Toyota Dyna 110 ST 2011 8 Year 12,5% 889.200.000 111.150.000
Toyota Dyna 110 ST 2013 8 Year 12,5% 455.200.000 56.900.000
Toyota Dyna 110 FT 2009 8 Year 12,5% 439.500.000 54.937.500
Toyota Dyna 110 FT 2009 8 Year 12,5% 1.188.000.000 148.500.000
amount - - - 4.741.835.000 591.804.375
Source: a list of shrinkage fixed asset 2015
From Income Statement made by the company still there are income that
have not yet done fiscal adjustment namely on income from the sale of gas
cylinders 3 kg as much as Rp36.131.008.642,- so the profit will be the basis for
calculating income tax also too great .

713
 Table 4.
Income Statement 2015 PT. Dwijya Gasindo Makmur

Circulation of
Exspense Income
Enterprises
Sales the LPG tube 3 kg 36.131.008.642,-
Transport Fee 3.498.466.858,-
Total income 39.629.475.500,-
cost of goods sold 35.326.804.752,-
Gross profit 35.326.804.752,-
General and Administrative Expenses
Salary expense 728.560.161,-
Fuel Costs 616.682.819,-
of spare part costs 711.060.000,-
costs Plastic Wrap 89.239.680,-
Oil Costs 94.761.820,-
Electricity cost 7.272.000,-
Cost of Service Vehicles 89.011.251,-
Cost Phone 11.126.123,-
The cost of stationery 9.517.800,-
official travel expenses 28.657.000,-
Cost Speedy 5.472.000,-
Cost Driver 129.600.000,-
Depreciation Cost Fixed
591.804.375,-
Assets
Cost PBB 150.000,-
Total Cost 3.112.915.029,-
Profit / Loss Before Tax 1.189.755.719,-
Source : Income Statement 2015

4.1 Discussion
The results of research conducted to pt.Dwijaya gasindo prosperous
uses the method depreciation a straight line to a kind of fixed asset tangible
group 1 and a group of 2 good in the commercial report as well as the fiscal
reports burden depreciation fixed asset for 2015 Rp591.804.375,- to report
fiscal. If done calculation to use depreciation fixed asset by using the
method balance declining so will produce burden depreciation
Rp431.453.242,-.

714
 Table 5.
Depreciation fixed asset years tax 2015 Declining balance method

The
Acquisition Acquisition Depreciation
Type Assets benefits Fare
year cost 2015
period
Group 1
CCTV 2010 4 Year 50% 10.500.000 -
Komputer Kantor 2009 4 Year 50% 5.300.000 -
Printer Epson L210 2015 4 Year 50% 4.100.000 2.050.000
Laptop Thosiba 2015 4 Year 50% 4.800.000 2.400.000
Printer Epson LX 310 2010 4 Year 50% 2.310.000 -
Pompa Air 2015 4 Year 50% 380.000 190.000
Lemari File 2015 4 Year 50% 500.000 250.000
Meja Kantor 2014 4 Year 50% 750.000 187.500
Group 2
Genset 2011 8 Year 25% 41.775.000 3.304.468
Pick Up Grandmax 2015 8 Year 25% 207.800.000 51.950.000
Pick Up Mitsubishi L
2010 8 Year 25% 241.750.000 14.342.102
300
Pick Up Mitsubishi T
2009 8 Year 25% 445.650.000 19.829.031
120
Pick Up Mitsubishi T
2011 8 Year 25% 235.500.000 18.628.418
120
Pick Up Mitsubishi T
2013 8 Year 25% 161.500.000 22.710.938
120
Pick Up Mitsubishi T
2015 8 Year 25% 356.500.000 89.125.000
120
Roda Tiga Triseda Long 2010 8 Year 25% 51.000.000 3.025.635
Toyota Dyna 110 ST 2011 8 Year 25% 889.200.000 70.337.109
Toyota Dyna 110 ST 2013 8 Year 25% 455.200.000 64.012.500
Toyota Dyna 110 FT 2009 8 Year 25% 439.500.000 19.555.389
Toyota Dyna 110 FT 2009 8 Year 25% 1.188.000.000 52.859.619
Amount - - - 4.741.835.000,- 431.453.242,-
Source: Data of processed in 2015
The result of a report loss in 2015 through planning through fiscal tax
adjustment positive or negative adjustment fiscal using the method encumbering
shrinkage a straight line, it will look like below:

715
 Table 6.
Income Statement 2015 After The Fiscal Adjustment

Circulation of
Exspense Income
Enterprises
Sales the LPG tube 3 kg 36.131.008.642,-
Transport Fee 3.498.466.858,-
Total income 39.629.475.500,-
Cost of goods sold 35.326.804.752,-
Gross profit 35.326.804.752,-
General and Administrative Expenses
Salary expense 728.560.161,-
Fuel Costs 616.682.819,-
of spare part costs 711.060.000,-
costs Plastic Wrap 89.239.680,-
Oil Costs 94.761.820,-
Electricity cost 7.272.000,-
Cost of Service Vehicles 89.011.251,-
Cost Phone 11.126.123,-
The cost of stationery 9.517.800,-
official travel expenses 28.657.000,-
Cost Speedy 5.472.000,-
Cost Driver 129.600.000,-
Depreciation Cost Fixed
591.804.375,-
Assets
Cost PBB 150.000,-
Total Cost 3.112.915.029,-
Profit / Loss Net Commercial 1.189.755.719,-
Fiscal correction Negative
Sales of LPG 3 kg (Characteristically Final) 36.131.008.642,-
Income Cost the from acquisition is Final (Deductible) (35.326.804.752,-)
Total income (not taxable object) 804.203.890.-
Profit / Loss Net Fiscal 385.551.829,-
Source: Data Processed in 2015
Table 7.
Comparison Straight Line Method and Declining Balance Method Before and
After Fiscal Adjustment

Straight line Declining

Before Fiscal After Fiscal
Gloss method balance Difference
Adjustment Adjustment
method
depreciation
fixed asset 591.804.375 431.453.242 591.804.375 591.804.375 -
Cost

Taxable
1.189.755.719 1.350.106.852 1.189.755.719 385.551.829 (804.203.890)
profit
income tax - - 279.475.691 90.566.796 (188.908.895)
Source: Data Processed in 2015

716
 Table 5 , shows evident that encumbering method shrinkage a straight line
in use by PT .Dwijaya Gasindo Makmur prosperous more efficient to make the
planning tax as much as Rp591.804.375. Compared with the balance of decreased
used by Rp431.453.242, - because if corporate in a straight line Method to reduce
taxable profit Rp160.351.133, -,
While efficiency can be obtained from planning tax of the application of
Law income tax number 36 2008 article 22 adjustment fiscal of income sales tube
gas cylinders 3 kg Not a taxable object. Because income tax article 22 transactions
from the sale of gas tube is income be final , so, when income is reported is
income not tax object. So companies should make any fiscal adjusment the
negative on income Rp36.131.008.642.

5. Closing
5.1 Conclusion
Based on the research and analysis that has been carried by research of PT
.Dwijaya Gasindo Makmur , the author concluded that by planning tax through a
method of depreciation fixed asset and apply fiscal adjusment to her income to
minimize the tax charges in the company. So that the burden of tax are going to be
covered by the company are still too high compared to after research companies to
save tax charges around Rp188.908.895,-

5.2 Suggestions
Advice want delivered writer namely in determining methods shrinkage
fixed asset and make corrections of income nor any imposition from any cost
incurred indeed not required or choice optional and not necessity, then PT
.Dwijaya Gasindo Makmur need to consider in really - really and with mature
about profit and loss that will be experienced.
Part of taxation PT. Dwijaya Gasindo Makmur should always follow the
development of rules the rules of a tax whose effect so as Company make the
planning there is no disadvantage to companies and especially the state.

717
 REFERENCES
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Pelaporan Pajak Penghasilan Pasal 21 Pada PT. Bagus Perkasa
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Penghasilan. Lembaran Negara Republik Indonesia Tahun.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial
behavior, agency costs and ownership structure. Journal of financial
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Mardjani, A. C., Kalangi, L., & Lambey, R. (2015). Perhitungan Penyusutan Aset
Tetap Menurut Standar Akuntansi Keuangan Dan Peraturan Perpajakan
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default dan opinion shopping terhadap penerimaan opini going concern.
Pusparini, I. A. (2013). Implementasi Tax Planning Dalam Upaya Penghematan
Pajak Penghasilan (Pph) Badan (Studi Kasus Pada Pt. Citra Perdana
Kendedes Malang). Jurnal Administrasi Bisnis, 5(1).
Ratag, G. A. (2013). Perencanaan Pajak Melalui Metode Penyusutan Aktiva tetap
Untuk Menghitung PPh Badan Pada PT. Bank Sulut. JURNAL RISET
EKONOMI, MANAJEMEN, BISNIS DAN AKUNTANSI, 1(3).
Republik Indonesia, U.-U. N. T. (2009). Tahun 2009 tentang Ketentuan Umum
dan Tata Cara Perpajakan. 2009. Jakarta: Kementerian Keuangan
Republik Indonesia.
Sambodo, A. (2015). Pajak Dalam Entitas Bisnis. Salemba Empat, Jakarta.
Vitasari, E. N. (2014). Perencanaan Pajak Atas Kepemilikan Aktiva Tetap
Dengan Metode Finance Lease.

Katuuk, Y. C. (2013). Analisis Perencanaan Pajak Melalui Revaluasi Aktiva

Tetap Pada Pt. Angkasa Pura I (Persero) Bandara Sam Ratulangi. Jurnal
Riset Ekonomi, Manajemen, Bisnis Dan Akuntansi, 1(3).
Indonesia, I. A. (2011). Standar Akuntansi Keuangan: Per 1 Januari 2012
Kementerian Keuangan Republik Indonesia, Direktorat Jenderal Pajak., Petunjuk
Pengisian Surat Pemberitahuan Tahunan Pajak Penghasilan Wajib
Pajak Badan., Edisi Tahun 2010
Peraturan Menteri Keuangan Republik Indonesia (2015). Nomor 96/PMK.
03/2009 Tentang Jenis-Jenis Harta Yang Termasuk Dalam Kelompok
Harta Berwujud Bukan Bangunan Untuk Keperluan
Penyusutan. Ditetapkan pada Tanggal, 15.
Nomor, P. P. (46). Tahun 2013 tentang Pajak Penghasilan atas Penghasilan dari
Usaha yang Diterima atau Diperoleh Wajib Pajak yang Memiliki
Peredaran Bruto Tertentu.

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TPS-10

THE RULE OF E-CATALOGUE IN PROCUREMENT

OF GOVERNMENT'S GOODS/SERVICES

Agus Heri Purnomo

University of Jember, Indonesia
Email: gus.hape77@gmail.com

ABSTRACT

This research aims to provide an overview of procurement of governments

goods/services, especially to Electronic Government Procurement (EGP), or
commonly abbreviated as E-Procurement. The advantages of e-procurement
through electronic tendering (e-Tendering) that is able to overcome obstacles and
constraints in the conventional procurement of governments goods/services still
considered not able to overcome the problem of the length of time on the process
of procurement of governments goods/services. Therefore, the government has
conducted a new breakthrough innovation in the form of electronically purchases
or e-Purchasing by electronic catalogs or e-Catalogue. This research is descriptive
study using the approach the study of literature or literature review. This research
shows that e-catalog has a very important role and become a new trend in
convenience, comfort and security in the procurement of Government goods and
services that high frequency, nature is not complex and already available in the
market.

Keywords: Procurement of Governments Goods/Services, E-Procurement, E-

Tendering, and E-Catalogue.

1. Introduction
One of the tasks of government is to provide public goods (such as
hospitals, roads, bridges, etc.) and organize public services (such as public
administration, security, education, health, etc.) in order to achieve prosperity for
its citizens. In order to realize the fulfillment and delivery of public
goods/services that people need, then we need a process of procurement of
governments goods/services that good governance, effective, efficient, fast,
transparent and accountable.

719
 In Article 1 of Presidential Regulation No. 54 Year 2010 about
Procurement of Governments Goods/Services, noted that the procurement of
governments goods/services is an activity to obtain goods/services by the
Ministry/Agency/Local Work Units/Other Institutions (Kementerian
/Lembaga/Satuan Kerja Perangkat Daerah/Institusi lainnya K/L/D/I) that the
process starts from the planning needs until completion of all activities to obtain
governments goods/services. Thus the stages in the process of procurement of
governments goods/services include budgeting, planning, procurement, provider
selection, contract exucution, and the final form of the handover of goods or work.
The process of procurement governments goods/services that conducted
by conventional, generally is a long process and a lot of complaints from the
governments goods and services vendors and even complaints from its own
procurement committee. Not to mention that they (the procurement committee)
must do the tender attrition and extra time in case of failed tenders. Therefore, the
government has made innovation in the procurement of governments
goods/services of the application of Electronic Procurement System (Sistem
Pengadaan Secara Elektronik - SPSE) or known as the Electronic Government
Procurement (EGP), or commonly abbreviated as E-Procurement. According to
Article 1 of Presidential Regulation 54/2010, E-Procurement is defined as
procurement of goods and services conducted using information technology and
electronic transactions in accordance with the statutory provisions. E-Procurement
can be done by e-Tendering or e-Purchasing.
E-Tendering or electronic tendering in this implementation is able to
support inter-operability and assurance of data security, increasing transparency
and accountability, and encourage healthy competition, fair and non-
discriminatory between businesses or vendors. Thus, e-procurement by e-
Tendering is expected to address a variety of complaints in the process of
conventional procurement governments goods/services of mentioned above.
However, the methode of e-Tendering still takes provider selection is not
short though administrative costs have been reduced by the utilization of
information and communication technology. Not to mention the case of failed

720
tenders, the tenders should be re-tender processes which of course takes more
additional time. In addition, e-Tendering is appropriate for the procurement of
governments goods/services with great value but a low frequency. But what
about the procurement of governments goods/services with a low value or a small
value, but high frequency? Therefore, it is necessary to find a procedure for the
selection vendors that more efficient in addition to electronic tendering (e-
Tendering) without sacrificing the principle of competition itself.
To cope with the foregoing, the government in the Presidential Regulation
No. 54/2010 also has to provide a solution through the mechanism of e-
Purchasing or e-Catalogue. E-Purchasing is the procedure for the purchase of
goods/services by an electronic catalog system.
Based on the description of the background of the above, the formulation
of the issues to be discussed in this article are :
a. How an overview of the electronic procurement of governments
goods/services (e-Procurement) through by the mechanism of e-Purchasing
by e-Catalogue?
b. How is the role of e-Purchasing by e-Catalogue in the electronic procurement
of governments goods and services (e-Procurument)?

2. Review of Literature
2.1. E-Procurement
In the Presidential Regulation number 54 of 2010, the generally
fullfillment the needs of governments goods/services can be met through two (2)
ways that are supplied in self-managed and supplied by vendor of goods/services
(supplier). In the case of procurement of governments goods/services through a
supplier can be done through tender and non-tender mechanism. Especially for the
procurement of governments goods/services through a supplier that is done
through an tender mechanism then there are two (2) how to implement it is
through conventional tender and electronic tender (e-Tendering). To date, the
government has imposed a policy of electronic procurement (e-procurement) for
all government institutions.

721
 Procurement of governments goods/services by electronic (e-
Procurement) can through electronic tender (e-Tendering) or without going
through the tender by using the e-Purchasing by e-Catalogue. Based on the
Presidential Regulation number 54 of 2010, an electronic procurement (e-
procurement) is the procurement of goods/services that are implemented using
information technology and electronic transactions in accordance with the
statutory provisions. In order to organize the electronic procurement of
goods/services system then formed the Electronic Procurement Service (Layanan
Pengadaan Secara Elektronik - LPSE). Head of Regulation of National Public
Procurement Agency (Lembaga Kebijakan Pengadaan Barang/Jasa Pemerintah
LKPP) in Regulation No. 2 Year 2010 about Electronic Procurement Service,
LPSE established by the Governor/Regent/Mayor and Chairman of K/L/D/I in
order to facilitate ULP/Procurement Officer in carrying out the procurement of
goods/services electronically. (Indro, 2011)

2.2. E-Tendering
Presidential Regulation No. 54 of 2010 defines the e-Tendering as the
procedures for the selection of suppliers of goods/services conducted openly and
can be followed by all suppliers of goods/services listed on the electronic
procurement system by means of submitting 1 (one) time offers within the have
been determined. Furthermore, in Article 109 of these regulations was also
mentioned that the scope of e-Tendering process since the announcement of the
package of procurement of goods/services until the announcement of the winning
bidder is implemented using an electronic procurement system (SPSE) and
organized by LPSE.

2.3. E-Purcashing by E-Catalogue

Based on Presidential Regulation No. 54/2010, E-Purchasing is the
procedure for the purchase of goods/services by an electronic catalog system.
Electronic catalogs or e-Catalogue is an electronic information system that
contains the list, type, technical specifications and prices of goods/services from
various providers of goods/services of the government. Further, Article 110

722
Paragraph 2.a. Presidential Regulation No. 70/2012 about the Second Amendment
to the Presidential Regulation No. 54/ 2010 about Procurement of Governments
Goods/Services, submitted that the goods/services that can be inserted into the e-
Catalogue is the goods/services that are already available and already be
competition in the market, among others motor vehicles, heavy equipment, IT
equipment, medical equipment, medicines, rent lodging/hotel/meeting rooms,
airline tickets, and procurement of seeds.
Head of LKPP in Regulation No. 14 of 2015 about E-Purchasing,
proposed the inclusion of goods/services at Electronic Catalog (e-Catalogue) can
be carried out by the Local Government, Ministry/Agency/Institution; or
Suppliers of Goods/ Services. While the process of selecting suppliers of
goods/services listed in E-Catalogue conducted by LKPP through Catalog Team
established by Head of LKPP; or by Local Government through Catalog Team
established by Regional Head/Officer appointed by the Regional Head. The
process of selecting suppliers of goods/services listed in the Electronic Catalogue
(e-Catalogue) can be done through tender method; or non-tender. Furthermore,
based on the results of the election process, LKPP create Determination Letter of
Goods/Services that will be included in the Electronic Catalog with the website
address: https://e-katalog.lkpp.go.id. Furthermore, K/L/D/I shall do e-Purchasing
of the goods/services that are already loaded in the system of electronic catalog in
accordance with the needs of K/L/D/I, except for certain items or obstacles as
elaborated in Form Letter of Head of LKPP No. 3 Year 2015 on Procurement of
Goods/Services Through E-Purchasing.

3. Research Methods
This research is descriptive study using the approach the study of literature
or literature review. The research library is observing the activities of the literature
dealing with the issues raised either in the form of books, papers or writings that
are helping so it can be used as guidelines in the research process. According to
Kartini Kartono (1986: 28), library research purposes is to collect data and

723
information with the help of a variety of materials in the library, the results can be
used as the basic functions and a major tool for research practice in the field.

4. Discussion
4.1 Role of E-Purchasing by E-Catalogue in Procurement of Goods/Services
Based on a literature review on the previous discussion, one mechanism or
system of procurement of goods/services that use the role of information and
communication technologies in addition to e-Tendering is an e-Purchasing. E-
Purchasing is the way to shop electronically conducted by government agencies to
choose the goods/services of the electronic register on the e-Catalogue. E-
Catalogue can be defined as the repository of electronic information about goods,
products, or services.
As part of the e-Procurement, e-Catalogue plays an important role because
it contains a list of items, specifications and price becomes a reference in the
comparison of various similar products. Through e-Catalogue, customers (the
government institutions) can ensure that the bids submitted by the suppliers
(vendor) has met or has not meet the standards set. In the application system, e-
Catalogue can set detailed information about products and services offered,
classify, categorize and distribute product information can be utilized properly for
its users (buyers, sellers or others) in accordance with the role and importance.
Head of Sub Management Catalog on LKPP, Dwi Satrianto in the event a
working visit DPRD South Sumatra and DPRD Surabaya City some time ago
(reported on https://e-katalog.lkpp.go.id dated August 12, 2015) said that the e-
Purchasing is a way of shopping that is done by the K/L/D/I to choose the
goods/services of the e-Catalogue and through catalogs in fact we can all be faced
the best choice of goods/services. This is because e-Purchasing by e-Catalogue
launched in order to accommodate the need to obtain goods/services quickly,
precisely at a reasonable price or even a competitive price. In addition, He said,
according to different with e-Tendering, the procurement of governments goods
and services by e-purchasing is no longer limited by the amount of the transaction
value.

724
 Dwi Satrianto also said, in determining the price of the product e-catalog,
LKPP has negotiated or tender supplier where the supplier also not allowed to sell
goods/services to the government that are more expensive than to the non-
government with the condition, time, place, technical specifications, and the same
volume. If this is the case or in the future is known to occur, then the
corresponding Head of LKPP in Regulation No. 14 of 2015 about the e-
Purchasing, the supplier will be liable to a fine of five (5) times the difference in
transactions that originated between the values listed in the e-Catalogue and the
values listed in the other e-Catalogue, for example, listed on online web shop
supplier concerned. To avoid this, one of LKPP strategy is to partner with
manufacturers, sole agent, or at least far distributor in order to get the lowest price
and in an effort to to cut the supply chain to reduce the possibility of additional
costs without an increase in value-added products.
Data LKPP mention (reported on https://e katalog.lkpp.go.id dated August
12, 2015), until early August 2015, the number of e-purchasing transactions
throughout the K/L/D/I reached more than Rp 12 trillion. This represents a major
advance for the amount equaling the overall number of transactions in 2014 which
amounted to Rp 15 trillion. In addition, the number of items that display items in
the e-Catalogue system also will continue to grow, already among the more than
40,000 items of products. Meanwhile, to encourage the business climate remains
good, LKPP has also developed a catalog locally as a place for providers and
Micro, Small and Medium Enterprises (SMEs) locally to contribute and
participate in meeting the needs of the procurement of government goods/services
by registering the goods/services to included in the e-Catalogue system. As
measures to encourage this policy, LKPP may delegate the selection of local
suppliers to local governments.
Separately, Head of Monitoring and Evaluation Cipto Nugroho Prasetyo
when implementing an inter-ministerial coordination meeting and institutions for
the implementation of Presidential Instruction No. 7 of 2015 on Action Prevention
and Combating Corruption in LKPPs office (reported at https: //e-katalog.lkpp
.go.id dated August 31, 2015), explains that one of the ways of corruption

725
prevention actions by LKPP is to catalog the product. Because, through the
delivery of products into e-catalogs, price information and specifications of items
to be very transparent.
Director of Catalog System Development of LKPP, Emin Adhy
Muhaemin, at the time of socialization LKPP with Belitung Regency Tanjung
(reported in https://e-katalog.lkpp.go.id dated May 5, 2015) revealed LKPP
encourage local authorities (Government of District Belitung) to build local
catalog, which will be filled local suppliers and local products. Cataloging process
will be done by local governments, but the views made nationally. Local products
are shown in the national expected to be bought elsewhere. Thus, local catalogs
can be a promotional event for in other areas.
Based on the description above, some of the benefits or role with the
implementation of e-Purchasing by e-Catalogue as electronic procurement of
governments goods/services system are as follows:
1. E-Catalogue makes the procurement process of goods/services in the public
sector is much more efficient. Time is short and the procurement of quality
specifications and price competition is healthy among providers of goods
would benefit the government in getting the goods/services at the best price
and the best quality.
2. E-Catalogue can improve transparency so that expected to reduce the
potential for fraud. Thus the risk of procurement officials lodged cases of
violations of the law can also be minimized.
3. E-Catalogue can encourage businesses, especially Small and Medium
Enterprises (SMEs) to participate in the local supply of goods/services
primarily on local e-Catalogue.
4. E-catalog can be used as promotion of goods/services for local businesses,
especially Small and Medium Enterprises (SMEs) locally so that it can be
used by government institutions outside in territory.

4.2. Weaknesses/Constraints Implementation of E-Purchasing by E-Catalogue

726
 Of the various roles or benefits of e-Catalogue mentioned above,
particularly in terms of simplification and ease of procedures or processes when
compared to E-Tendering system that tends to old and vulnerable failed tender,
certainly still has weaknesses in its implementation. The weaknesses include :
1. A list of items, prices, and product details are shown on the web provider of
e-catalog still cant be aggregated was automatically with a list of items,
prices, and product details are contained in the web shop or online shop such
providers. This leads to the possibility of a provider of products prices on
different e-catalog or still are not updated with the provider of the product
price in the online store or online web shop these providers.
2. E-Catalogue is already quite easy and user friendly for use in search and
ordering of goods/services desired government agencies. However, at the
time of payment of goods/services that have been ordered are still
experiencing problems because although it has adopted a system of online
payment, to date, the provision of government spending do not allow
payment for goods/services in the beginning before the goods are sent or
received (e-Payment) as is typically done when shopping online (online
shop).
To overcome the disadvantages of e-Catalogue products include obstacles
aggregation of data from online web shop to the web provider automatically e-
Catalogue mentioned above, is currently LKPP cooperating with Bhinneka.com
Online Store to be one of the aggregates in the electronic catalog. According
LKPP, data aggregation process of Bhinneka.com into e-Catalogue LKPP not
done manually but is already generated through an aggregator, so the products
have been aggregated in the e-catalog can be updated automatically at regular
intervals. (Https://e-katalog.lkpp.go.id reported on April 16, 2015).
Meanwhile, to overcome the disadvantages of e-Catalogue of the payment,
the Ministry of Finance is built on the payment scheme that state spending can
directly be paid before the goods/services ordered is sent or received. This is to
facilitate the procurement process once the payment process, especially in terms
of the implementation of e-Catalogue. Where the future is expected to government

727
work unit to purchasing goods online can make payment in advance before the
goods are received (certain with provisions of the limit values) and payments can
be made online banking with authorization rights melting layered in an effort to
check and balancing.
5. Conclusion
Achievement of the efficiency of the procurement of governments
goods/services was not only be measured by simply getting the lowest price of the
goods as commonly done through the tender mechanism. But no less important is
how to order the goods/services of the government also walk easily, quickly and
safely. Implementation of e-Purchasing by e-Catalogue in the e-Procurement to
the type of goods/services can improve the efficiency of the goods/services and
make procurement easier, faster and safer. With the tag line "Quick shopping on
the right way" that listed on the web e-Catalogue, use e-Purchasing by e-
Catalogue is also an important step in achieving efficient procurement of
goods/services.
As was stated in the description section discussion, the role of e-Catalogue
is so important in realizing the procurement of goods and services that are not
only transparent and competitive but also to be more efficient, a little procedure
and easy execution. However, after the current procurement system for
governments goods/services through the e-Catalogue still have many
weaknesses, particularly related to data aggregation and payment systems. Slowly
but surely the weakness is currently being addressed by the Ministry of Finance
and LKPP gradually. Now living goodwill of the parties involved in the
procurement of governments goods/services, either from the government
(K/L/D/I) as well as from the private sector/business/businesses as suppliers of
goods/services to governments can take advantage of the E-Catalogue system with
optimal and in accordance with applicable regulations. Hopefully for procurement
of governments goods/services of the future government is getting fast, accurate,
accountable and increasingly sophisticated and modern for the sake of the
requirement for the implementation of public goods/services to a better society.

728
 REFERENCES

Indro Bawono. 2011. "On the Evaluation of Implementation of Procurement of

Goods / Services Electronic (E-Procurement) In the Environment
Ministry of Finance". University of Indonesia.
Kartini Kartono. 1980. Introduction to Social Research Methodology. Alumni.
Bandung.
___________ The Presidential Regulation Number 54 Year 2010 about
Procurement
of Government Goods / Services
___________The President Regulation Number 70 Year 2012 about Second
Amendment on the Procurement of Government Goods / Services
___________ Head of Regulation of National Public Procurement Agency in
Regulation Number 2 Year 2010 about Electronic Procurement Service
___________ Head of Regulation of National Public Procurement Agency in
Regulation Number 18 Year 2012 about Electronic Tendering
___________ Head of Regulation of National Public Procurement Agency in
Regulation Number 14 Year 2015 about Electronic Purchasing
___________ Head of Regulation of National Public Procurement Agency in
From Letter Number 3 Year 2015 about Procurement of Goods/Services
Through E- Purchasing
https://e-katalog.lkpp.go.id
http://inaproc.lkpp.go.id
www.lkpp.go.id
www.lpse.kemenkeu.go.id

729
TPS-11

EFFECT OF APPLICATION OF ACCOUNTING

STANDARDS ADMINISTRATION AND GOOD
GOVERNANCE OF THE QUALITY OF FINANCIAL
STATEMENTS (CASE STUDY ON LOCAL
GOVERNMENTS BANYUWANGI)
Broto Judono
University of Jember, Indonesia
Email: brotoyudhono@gmail.com

ABSTRACT

This study is a replication of an earlier study conducted by Daniel KartikaAdhi

and John Suhardjo, tenured faculty and university AKA STIE Semarang (2013),
entitled Effect of Government Accounting Standards and Regional Government
Agencies Kualaitas on the Quality of Financial Statements. This study population
is 33 SKPD environment Banyuwangi represented by two people, the Secretary
SKPD and KDP (Committing Officer). In analyzing the research data, used
multiple linear regression analysis with variables Implementation of Government
Accounting Standards (SAP) and the implementation of Good Governance. The
data collected was processed using SPSS Statistics ver.22. The results of the study
provide evidence that the adoption of Government Accounting Standards (SAP) to
give effect to the quality of financial statements. Through the F test known that
the application of good governance also affect the quality of the report kuangan.
The determination of 0,95,7 may mean that regression models were constructed
able to explain the effect of the variability of quality 95,7 % Financial Statement.

Keywords: Application of the Government Accounting Standards, Implementation

of Good Governance, and Quality of Financial Statements.

1. Introduction
Good governance requires a paradigm shift underlying the new
government and demanding a system capable of empowering the regions to be
able to compete regional, national or international is not only the local
government who constantly rely on the central government.

730
 In realizing a system of good governance, the need for a change in
accounting for government accounting processes generated through the financial
information for the various parties. Changes in accounting should be based on a
solid foundation that is the presence of SAP.
The general objective of financial statements is to present information
about the financial position, the realization of the budget, cash flow and financial
performance of a reporting entity that is useful to users in making and evaluating
decisions about the allocation of resources. Peraturan Pemerintah No. 71 Year
2010 concerning the Standar Akuntansi Pemerintahan state that the financial
statements are a structured report on the financial position and transactions
undertaken by a reporting entity. This is confirmed in the Standar Akuntansi
Pemerintahan No. 1 paragraph 9. The financial statements of the government is
essentially a form of government accountable to the people on the management of
public funds either from taxes, charges or other transactions (Mahmudi, 2003).
Government financial statements should present information that is useful
for users in assessing accountability and make a good decision making of
economic, social, and political. This is consistent with the descriptions in the
Government Accounting Standards, namely:
1. Provide information about the adequacy of the reception period for
cover all the expenses.
2. Provide information regarding the suitability of obtaining economic
resources and allocations within the given budgets and legislation.
3. Providing information on the amount of economic resources that are
used in the activities of the reporting entity and the results that have
been achieved.
4. Providing information on how the reporting entity to fund its operations
and meet its cash needs.
5. Provide information regarding the financial position and the conditions
relating to the reporting entity's sources of revenues, both short term
and long term, including those derived from taxation and borrowing.

731
 6. Provides information about changes to the reporting entity's financial
position, whether an increase or decrease, as a result of activities
undertaken during the reporting period.
For local government becomes a necessity to prepare quality financial
statements. The quality of local government financial statements reflect the
orderly management of local government finances, which includes order
administration and principles. Indicators that the financial statements of quality
that local governments have an unqualified opinion given the Audit Board of the
Local Government Finance Report.
Results of previous studies show that implementation of Government
Accounting Standards (SAP) had a significant effect on the quality of financial
reporting. Research conducted Kartika Adhi Daniel and John Suhardjo (2013),
Purwaniati Nugraheni and Imam Subaweh (2008) showed that the application of
SAP significantly influence the quality of financial reporting. Similarly, research
conducted by Arif Ardi Kusuma (2012), the research results show that the
implementation of SAP significantly influence the quality of financial reporting.
The Ikin Solikin and Memen Kustiawan (2012) asserts that the empowerment of
government officials is an important factor in realizing the quality of financial
reporting.
From the results of the study as described earlier, then this research which
is a replication study with development regression model of simple regression into
a multiple regression that is adding good governance as an independent variable.

1.1 Statement of Problem

From the above discussion, the issues to be examined are: Is the
Government Accounting Standards implementation and application of the Good
Governance partially and simultaneously influence the quality of financial
reporting.

732
1.2 Research Purposes
The purpose of this study is to investigate the implementation of Standar
Akauntansi Pemerintahan (PP No. 71 Th. 2010) and the application of good
governance will generate qualified Government Financial Statements.

1.3 Review of Related Litelatur

Regulatory guidelines must be adhered to by each Autonomous District /
Municipal and Provincial in presenting the financial statements in their local
government. In this case the financial statements as a form of accountability for
the implementation of the appropriate authority of the PP No. 71 Th. 2010 and
Permendagri 64 Th. 2013 concerning the implementation of government
accounting standards.

2. Literature Review
2.1 Implementation of the Government Accounting Standards
Government Accounting Standards regulate financial statement for general
purpose (general-purpose financial statements) in order to improve comparability
of financial reports on the budget, between periods, or between entities. General
purpose financial statements are the financial statements are intended to meet the
common needs of most users report. To achieve this objective, this standard sets
the entire consideration in the framework of the presentation of financial
statements, guidance on the structure of financial statements and minimum
requirements of the contents of the financial statements.
Based on Government Regulation No. 71 Th. 2010, in order to produce
financial statements that are beneficial for the users, the information contained in
the report should be qualified and useful in decision making. Quality is reflected
in the financial statements of the qualitative characteristics. Normative
prerequisites necessary for the government's financial statements can meet the
desired quality that is relevant, reliable, comparable and understandable.
Implementation of Government Accounting Standards (SAP) should refer
to the applicable government regulation, in this case the PP No. 71 Th. 2010

733
concerning Governmental Accounting Standards which is a replacement of PP
No. 24 Th 2005 concerning the Government Accounting Standards. Until the year
2013 budget, the local government is still implementing SAP based on
Government Regulation No. 24 Th. 2005 concerning the Government Accounting
Standards. Fundamental differences of PP No. 71 Th. 2010 with PP No. 24 Th
2005 is located at the base of the recording of transactions and types of financial
reports.
In PP No. 71 of 2010 states that, SAP-based Accrual is SAP recognizes
revenue, expenses, assets, debt, and equity in the financial reporting of accrual, as
well as recognizing revenue, expenditure and financing in the reporting of budget
execution on the basis of the amended budget / APBD. Towards Cash Accrual
Based SAP SAP is recognizing revenue, expenditure, and cash-based financing,
and recognizes the assets, debt, and equity funds accrual basis. Basic financial
statements consist of: (a) Realized Budget Report; (b) a balance sheet; (c)
Statement of Cash Flows; (d) Notes to Financial Statements. In addition to the
basic financial statements, the reporting entity allowed to present the Financial
Performance Report and Statement of Changes in Equity (PSAP, KK; 2010).

2.2 Implementation of Good Governance

Good governance is essentially a concept that refers to the process of
decision making and implementation, which can be accounted for together. As a
consensus reached by the government, citizens and the private sector for the
implementation of governance in a country.
Definition of good governance is often interpreted as good governance.
(Sumodiningrat, 1999: 251) said good governance is governance that attempts to
create good governance and the rule needs to be decentralized in line with the
rules of governance that is clean and free of corruption, collusion and nepotism.
World Bank defines good governance as an implementation of
development management of solid and responsible in line with democratic
principles and an efficient market, the avoidance of misallocation of investment
funds, and the prevention of corruption both political and administrative, run

734
budget discipline and the creation of legal and political framework for the growth
of business activity (Mardiasmo, 2002: 18).

2.3 Quality of Financial Statements

Statement of Government Accounting Standards (PSAP) No. 1 paragraph
9 as contained in PP No. 71 Th. 2010 concerning the Government Accounting
Standards state that the financial statements are a structured report on the financial
position and transactions undertaken by a reporting entity. The general objective
of financial statements is to present information about the financial position, the
realization of the budget, cash flow and financial performance of a reporting entity
that is useful to users in making and evaluating decisions about the allocation of
resources. Basically, the government's financial statements is the assertion of the
government management that provides information that is useful for decision-
making and to demonstrate accountability reporting entity for the resources
entrusted to it.
The financial statements are primarily used to compare actual revenues,
expenditures, transfers, and financing with a set budget, assess the financial
condition, evaluate the effectiveness and efficiency of a reporting entity, and help
determine the compliance of the legislation. According Mardiasmo (2004) in
general, the purpose and function of public sector financial statements are: 1)
Compliance and management ; 2) Accountability and reporting retrospective; 3)
Planning and authorization information ; 4) Continuity of organization (viability);
5) Public relations ; and 6) Source facts and figures. The financial statements play
an important role to fulfill the government's obligation to the public in a
democratic society.
Government financial statements should present information that is useful
for users in assessing accountability and make a good decision-making of
economic, social, and political. The financial statements are useful has the
meaning of those statements contain information content. The financial statements
will be useful if the financial statements meet the qualitative standards. In the

735
Government Accounting Standards explained that the qualitative characteristics of
financial statements are:
1. Relevant, namely the information contained in it may affect decisions users
by helping them evaluate the events of the past or the present and predict the
future, as well as correcting the results of their evaluation in the past.
Relevant information has the following elements:
a. Feedback value
Information allows users to define their expectations correcting tool in the
past.
b. Predictive value
The information can help users to predict the future based on the results of
past and present events.
c. Timeliness
The information presented in a timely manner can be influential and useful
in decision making.
d. Complete.
The information presented includes all the accounting information that
may influence the decision. Background information of each item key
information contained in the financial statements disclosed clearly that
mistakes in the use of such information can be prevented.
2. Reliable, the information in the financial statements are free from the notion
of misleading and material errors, presenting any facts honestly, and can be
verified. The information that reliably meets the following characteristics:
a. Presentation honest
Information honestly describe transactions and other events should be
presented or may reasonably be expected to be presented.
b. Verifiability
The information presented in the financial statements can be tested, and if
the test is done more than once by different parties, the results still indicate
a conclusion that does not vary much.

736
 c. Neutrality.
Information directed at the general needs and not in favor of the needs
of a particular party.
3. Compared, namely the information contained in the financial statements
would be more useful if it can be compared with prior year financial
statements or other reporting entity's financial statements in general.
4. Understandable information presented in the financial statements can be
understood by users and is expressed in the form and terms that are adapted to
the understanding of the users.

3. Research Methods
To examine the effect of implementation of Government Accounting
Standards and Implementation of Good Governance of the quality of financial
statements is built models of multiple regression model as follows:

Pict 1:
Multiple Regression Model

Implementation
Goverment Accounting
Standards
Quality of Financial
Statements
Implementation Good
Governance

3.1 Population Research

The study population was all the institutions / agencies that includes
offices, government offices and agencies in Banyuwangi. Subdistrict excluded
from decision on the assumption that the population is not included as a technical
agency of Local Government. Thus consists of 33 SKPD and for each SKPD will
be the respondent as much as 2 persons, the SKPD Secretary, Committing Officer
(PPK).

737
3.2 Data collection technique
Data collection techniques in this study were collected using a survey
technique that is by spreading the questionnaire to the respondent. Data or
questionnaires given directly to respondents using items questions which have
been restricted in giving answers. For each statement in the questionnaire given a
weight of 1 to 5 on the level of approval or disapproval.

3.3 Analysis Method

The data was analyzed using quantitative methods, where the
questionnaire that was collected was processed in tabular form to give weight to
the answers on each statement. From the tabulation of the data generated which
outputs a number that is analyzed by SPSS ver. 22 (Statistical Package for Social
Science).
Analysis of data using regression analysis. The regression equation as
follows:

Y = + 1X1 + 2 X2 + e
Annotation:

: Konstanta
Y : Quality of Financial Statement
Implementation of Goverment Accounting
X1 :
Standart
X2 : Implementation ofGood Governance
1, 2 : Regression coefficient
E : Error

After the questionnaires collected to analyze the data necessary to test the
validity and reliability testing. The second test is performed to determine whether
the measuring instruments used in accordance with the measured and also the
consistency of the data collected.

738
4. Result and Discussion

4.1 Validity and Reliability Test

a. Validity Test is done is to measure the validity indicator or instrument

questionnaire of each variable. Testing is done by comparing the count r
and r table. Values count r is the correlation results of respondents'
answers to each question with a total answer for each variable of each
item question / instrument is valid if r count larger than r table. Validity
test results questionnaire shown in Table 1.
b. Reliability Test is aimed at whether the measuring instruments used to
show the level of precision, accuracy, stability or consistency in
revealing certain symptoms of a group of individuals, although done at
different times. This test is performed on statements that are valid. These
variables will be said to be reliable if the Cronbach alpha of its own
values greater than 0.60 sekaran (2003: 257). In general, the reliability
of its r-value of less than 0.6 is said to be less reliable, from 0.6 to 0.8 is
quite reliable, and above 0.8 is said to be a good instrument. Cronbach's
Alpha Value of Variable Application of Government Accounting
Standards (X1) of 0.794, Variable Application of Good Governance
(X2) is 0.824 and the variable quality of the Financial Statements (Y) of
0.791. All variables have a value of Cronbach's Alpha () is greater than
0.60, so it can be concluded indicator or intsrumen questionnaire reliable
or trustworthy as a measurement variable. Depicted in Table 1.

739
 Table 1
Validity of Test Results Table
Uraian r Count r Tabel Annotation
Variabel Implementation SAP:
- Item 1 0,453 0,3202 Valid
- Item 2 0,467 0,3202 Valid
- Item 3 0,345 0,3202 Valid
- Item 4 0,374 0,3202 Valid
- Item 5 0,707 0,3202 Valid

Variabel ImplementationGood
Governance:
- Item 1 0,593 0,3202 Valid
- Item 2 0,328 0,3202 Valid
- Item 3 0,651 0,3202 Valid
- Item 4Statement:
Variabel QualityFinancial 0,453 0,3202 Valid
-- Item
Item 51 0,784
0,630 0,3202
0,3202 Valid
Valid
- Item 2 0,508 0,320 Valid
- Item 3 0,557 0,3202 Valid
- Item 4 0,540 0,3202 Valid
- Item 5 0,873 0,3202 Valid

Sources: Primary data are processed SPSS, 2016

Table 2
Reliability Test Results
Variabel Cronbachs Alpha Annotation
ImplementationSAP 0,79 Reliabel
Implementation Good Governance 0,782
4 Reliabel
Quality Financial Statement 0,79
4 Reliabel
Sources: Primary data are processed SPSS, 2016
1

740
4.2 Classic Assumption Test
a. Normality Test
Normality test aims to test whether the data collected to be analyzed has a
normal distribution or not. Through the One Sample Kolmogorov Smirnov test is
known that the significance of unstandardized residual value of 0.741 or greater
than 0.05, which means insignificant, thus it can be concluded normally
distributed data for the independent variables and the dependent variable.
Normality test results are shown in Table 3 :
Table 3
Results Table Normality Test
Signifikansi Annotat
0,741 Normal distribution of data
ion
Sources: Primary data are processed SPSS, 2016

b. Heteroskidastity Test
Heterokedastisitas test used to determine whether the regression model
occurred inequality variants of residuals of the observations to other observations.
Heteroskedastititas test using test Glesjer by way mengabsolutkan residual value.
Absolut from the residual value are taken as the dependent variable and then
regressed. Heterokedastisitas test results showed that the significant value of
regression between the Government Accounting Standards Application of
variables with absolute residuals greater than 0.05 is equal to 0,478 which means
insignificant, thus it can be concluded that there is no heteroscedasticity. Also
value the significance of regression between variables Application of Good
Govennance heterokedastisitas Test is used to determine whether the regression
model occurred inequality variants of residuals of the observations to other
observations. Heteroskedastititas test using test Glesjer by way mengabsolutkan
residual value. Absolut from the residual value are taken as the dependent variable
and then regressed. Heterokedastisitas test results showed that the significant
value of regression between the Government Accounting Standards Application
of variables with absolute residuals greater than 0.05 is equal to 0,478 which
means insignificant, thus it can be concluded that there is no heteroscedasticity.

741
Also value the significance of regression between variables Implementation of
Good Governance. Table 4 shows the results Heteroskidastitytest:
Table 4
Heteroskidastity Test

Variabel tCount Signifikan Annotation

ImplementationSAP 0,717 s 0,478 No Heteroskidastity
Quality Financial Statement -0,857 0,397 No Heteroskidastity
Sources: Primary data are processed SPSS, 2016

4.3 Hypothesis Testing

Table 5
Multiple Linear Regression Analysis Table

Unstandardized Standardized
Coefficients Coefficients
Model t Sig.
B Std. Error Beta
1 (Constant) 1.211 .741 1.634 .111
Tot.SAP .577 .090 .550 6.396 .000
Tot.Implem Good .391 .075 .450 5.233 .000
Governance
a. Dependent Variable:Tot.Quality Financial Statement

Sources: Primary data are processed SPSS, 2016

a. Hypothesis 1
From table 5 it is known that the numbers of significance for the
implementation of SAP variable of 0.000 or less than 0.05, which
means significant. This means first hypothesis is accepted. It can be
concluded that the application of the Government Accounting Standards
influence the quality of financial statements.
b. Hypothesis 2
From Table 6 it is known that the numbers of significance to the
variable quality of local government officials of 0.000 or less than 0.05,
which means significant. This means the second hypothesis is accepted.

742
 It can be concluded that the implementation of Good Governance affect
the quality of financial statements.

4.4 Test Model

The result shows F value of 412.972 with a significance of 0.000 or less than
0.05 level of significance. It can be concluded that the Government
Accounting Standards Application Variables and Variable Application of
Good Governance jointly affect the quality of financial statements. F test
results are shown in Table 6.
Tabel 6. T test mode

Sum of
Squares
Model df Mean Square F Sig.

1 Regression 204.593 2 102.297 412.972 .000a

Residual 8.670 35 .248

Total 213.263 37

a. Predictors: (Constant),Tot.SAP,Tot.Impl. Good Governance

b. Dependent Variable:Tot.Qual Fin Statement
Sources: Primary data are processed SPSS, 2016

4.5 Determenation Test (R2)

From the results of the regression calculation can be known coefficient of
determination. The coefficient of determination (adjusted R-square) indicates at
0.957. This means Variable Governmental Accounting Standards Implementation
and Application of Good Governance variables can explain 95.7% of the
variability of the variable quality of financial statements, while the remaining
4.3% is explained by other variables that are not included in the research model.

743
Table 7 below shows the results of calculation of the coefficient of determination
(R):
Tabel 7.
Koefisien Determinationi (R)

Adjusted R Std. Errorof

Model R R Square Square theEstimate Durbin-Watson
1 .979a .959 .957 .49770 2.318
a. Predictors: (Constant), Tot.SAP, Tot.Impl. Good Governance b.
Dependent Variable: Tot.Qualitas Financial Statement
Sources: Primary data are processed SPSS, 2016

4.6 Discussion
4.61 Influence of Government Accounting Standard Implementation of the
Quality of Financial Statements
The test statistic provides evidence that the application of the Government
Accounting Standards (SAP) significantly affects the quality of financial
reporting. This means that there is influence between the SAP application to the
quality of financial statements Banyuwangil District Government. From the
results of the study provide evidence that the lack of clarity in government
accounting standards are used, it will produce quality financial statements.
Government accounting standards become SKPD references used in preparing the
financial statements of government Banyuwangi. With the issuance of
Government Regulation No. 24 Th. 2005 concerning Government Accounting
Standard which has been replaced by PP No. 71 Th. 2010 concerning the
Government Accounting Standards clarity and firmness that there is a standard
that can be used Banyuwangi government. And there is no excuse for not
implementing SAP. Implementation of SAP becomes a necessity that the
government's financial statements can be qualified Banyuwangi means qualified
information useful.

744
4.6.2 Influence of Application of Good Governance on the Quality of
Financial Statements.
The test statistic provides evidence that the implementation of Good
Governance significantly influence the quality of financial statements. This means
that there is influence between the variable quality of government apparatus
Banyuwangi on the quality of Government Financial Statements Banyuwangi.
SKPD who understand and have competence in accounting (financial) required by
the Government of Banyuwangi to be able to prepare the Financial Statements
Government of Banyuwangi quality.
Financial Statements of the Government of Banyuwangi obtain WTP opinion
(unqualified) of the BPK. This means SKPD Banyuwangi capable of and
competence in the field of accounting (bookkeeping) so as to prepare financial
statements which meet the criteria for WTP opinion.

5. Involucre
5.1 Conclusion
From the discussions that have been described, it can be concluded as follows:
a. Implementation of the Government Accounting Standards significantly
influence the quality of financial statements.
b. Implementation of Good Governance significantly influence the quality of
financial statements.

5.2 Recommendation
Banyuwangi regency government retains the implementation of good
governance to produce financial statements in accordance with the rules of the PP
No. 71 in 2010, so that the examination conducted by BPKP always get an
unqualified opinion.

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 REFERENCES

Nugraheni,PurwaniatidanSubaweh,Imam.2008. Pengaruh Penerapan Standar

Akuntansi Pemerintahan Terhadap Kualitas Laporan Keuangan.
JurnalEkonomiBisnis No.1 Vol. 13, April 2008.
Pemerintah Republik Indonesia. Peraturan Pemerintah Nomor 71 tahun 2010
tentang Standar Akuntansi Pemerintahan
Zeyn, Elvira. 2011. Pengaruh Good Governance dan Standar Akuntansi
Pemerintahan Terhadap Akuntabilitas Keuangan dengan Komitmen
Organisasi Sebagai Pemoderasi. Jurnal Akuntansi. Universitas Pasundan
Bandung, JawaBarat.
Mardiasmo. 2004. Akuntansi Sektor Publik (Edisi Kedua). Yogyakarta: Andi.
Solikin,Ikin dan Kustiawan, Memen. 2012. Meningkatkan Kualitas Informasi
Akuntansi Melalui Pemberdayan Aparatur Pemerintah dalam
Mewujudkan Good Governance. Jurnal Ekonomi Akuntansi.
Mahmudi. 2003. Laporan Keuangan Sektor Publik, antara Konsep dan Praktek.
JurnalAkuntansi dan Keuangan Sektor Publik, Volume3 nomor1
Kusumah,ArifArdi.2012. Pengaruh Penerapan Standar Akuntansi Pemerintahan
Terhadap Kualitas Laporan Keuangan (Surveipada SKPD/OPD
Pemerintahan Kota Tasikmalaya). Tasikmalaya: FE Universitas
Siliwangi.

746
TPS-12

OPTIMIZATION OF IDLE STATE ASSET:

A FRAMEWORK

Aan Kurniyanta
University of Jember
aan.kurniyanta@students.unej.ac.id

ABSTRACT

There still alot of idle state asset and under utilize that need a strategic of asset
management for better asset optimization. It can be identified with the
management information system. One of the strategy that can be done is by the
highest and best use analysis of the idle assets. It also needs the right strategy
formulated in managing assets. Thus optimizing assets will bring impacts such as
efficiency and even provides a source of income for the Government. The study
aims to formulate a strategy for management of idle state assets, primarily through
the analysis of the highest and best use in order to idle asset optimization.
This research uses descriptive analysis method with literature review technique.
The results of this research concluded a framework for optimize idle asset that can
be done with the following strategy: 1) indentifying idle asset with better
management information system; 2) perform data reconciliation and internal
control system; 3) analysis of the highest and best use idle assets to determine the
proper use of idle assets, so as to improve the efficiency and income; and 4)
increase the competence of human resources through education and training to
improve performance on managing the idle asset.

Keywords: idle asset, asset management, asset optimization, strategy, highest and
best use.

1. Introduction
Ministry of Finance of Republic Indonesia as central government agencies
had a high commitment in running the government performance, not just in
finance but also state asset area. One of the vertical instances of Ministry of
finance of Republic Indonesia who runs the function in the state asset area is the
Directorate General of State Asset Management (DGSAM). DGSAM has a vision
to become the manager of the state asset area of professional and accountable as
much as to the people's prosperity. There is a fairly heavy duty for the DGSAM in

747
the future, because the institutional transformation program in the Ministry of
Finance, DGSAM in addition to improve the administration of the state asset data
and ensures clear and complete state asset, DGSAM should also be a revenue
center. Revenue center may require DGSAM to move harder as well as
innovative. There are still a lot of current state asset that idle, under utilize and not
used effectively (https://www.djkn.kemenkeu.go.id/berita/detail/menkeu-djkn-
harus-menjadi-reve-nue-center).
Based on Examination Results Summary of Semester I (ERSS I) In 2015,
the Indonesian Supreme Audit Institution (SAI) said that the administration and
fixed assets management of state property in 56 Ministries / Institutions (M/I)
inadequate. Government land and property assets can be very important for many
public management objectives, such as: spatial development of cites, infrastructure
finance, local economic development, local housing policies, and efforts to curb
corruption (Kaganova, 2011). Property assets management as part of public
management, often are the least visible or unrecognizable in government system.
Even in developed countries, such as Indonesia, in many district or minicipal
administration, not have an accurate, complete and available information on the
amount and value of property assets they owned.
Assets management having an important impact in the implementation of
asset optimization, which can support the operations of the public sector in the
context of efficiency, it can even generate revenue and provide maximum service
to the service users. Aira (2014) argues that one of the keys of the regional
economy management successfulness is the asset management. The importance of
proper asset management and efficient, with management based on the principles
of efficient and effective, is expected to give strength to the government's ability
to finance the development of the region. The government can create a source of
income by doing the strategic steps to optimize the government-owned assets.
With the rapid advancement of technology and information systems at the
present time, the government is constantly working to improve the performance in
order to provide better quality service to the public one of them through the
development of e-government program. E-government is government program

748
with the use of information technology in providing public services, business and
other matters related to government affairs. DGSAM is one example of an
institution that has been put forward service-based applications in most all lines of
its business. Three of them were appreciated by Bryan Holford, AIPEG (Australia
Indonesia Partnership of Economics Governance) Institutional Reform Adviser,
among other things: SIMAN, SMART and e-Auction (electronic Auction).
SIMAN (Management Information System of State Assets) is a web-based
application that is built to support state asset management based on Government
Regulation No. 27/2015 about State/Regional Assets Management. SIMAN can be
used to support the activities of state asset management, from planning, use,
maintenance, administration, utilization, alienation, destruction, disposal, to the
supervision and control of state assets.
It is a concrete example of DGSAM to improve their performance to
continuously provide maximum service quality to the users and society. Moreover,
in order to provide the best services, government agencies are equipped with
supporting facilities including adequate assets. The management of these assets
should also be done with a good management system. Not only financial
management but also the operational management of assets in the form of owned
state assets to support the basic tasks and functions of DGSAM. SIMAN an asset
management system that capable to cover all activities of the state asset
management. With the database of SIMAN, idle assets will be identified.
When the idle asset can be identified, the next step is to analyze the highest
and best use (HBU) to determine the best use for the idle assets in order to utilize
idle assets optimally. Manojkumar and Manjunatha (2016), argues that highest and
best usage analysis plays vital role to predict the property performance to get
maximum revenue (asset optimization). HBU analysis is defined as resonably
probable, legal use of vacant land and its other improvement, that is phisically
possible, appropriately supported and financially feasible, that results in the
highest value of the asset.
With the good asset management, will certainly generate good
performance. But somehow, in the implementation of asset management is not

749
only needed better asset management system and proper HBU analysis, but also
depend on the Government Internal Control System (SPIP) and reconciliation to
be able to monitor that the implementation went well and according to the rules.
When asset management run efficiently and effectively, organizations can
encourage better performance and spur asset optimization in the usage or
utilization.

1.1 Research Purpose

The purpose of this research is to uderstanding how the state asset
management on the public real property assets, especially idle state asset and
under utilize with the high and best use concept for the better optimization of the
asset. Moreover, this study aim to make a framework of asset optimization for the
better understanding.

2. Literature Review
2.1 State Asset Management
Asset management is one of the determinants factor of healthy business
performance, so it is necessary to optimization analysis in the valuation of assets,
namely: inventarization, identification, legal audits and valuation that carried out
properly and accurately. Today, Management Information System of State Assets
(SIMAN) is an effective means to improve performance, so that the transparency
in the management of assets is guaranteed, without any fear of weak supervision
and control (Siregar, 2004).
Adequate asset management will help provide information about the
regional assets so that the financial statements avoided the disclaimer opinion.
According to Siregar (2004), asset inventarization consists of two aspects, namely
the physical and the juridical / legal inventarization. The physical aspect consists
of the shape, size, location, volume / quantity, type, address and others, while the
juridical aspect is domination state, owned legal issues, the domination
equifinality.

750
 Mardiasmo (2004) explains that local governments need to know the
number and value of its regional assets, both currently controlled by or is still a
potential that has not been occupied or utilized. This is an attempt to obtain
accurate information on area properties that owned or controlled by the local
government.
Definition of asset management by Stoner (Handoko, 1995), the
management is the process of planning, organizing, directing, and monitoring
efforts of the members of the organization and the use of other organizational
resources in order to achieve organizational goals that have been set.
The management process to achieve the stated goals of the organization. In
this case, the management of state / regional assets as stipulated in Government
Regulation No. 27/2015 should be supported by the effectiveness of the
organization, resources and executive personnel rules and practices of dynamic
management. Based on the fundamental theory that has been mentioned before
that the management process is influenced by the critical factors or variables that
can inhibit and expedite the process of management activities.
Asset management is a systematic and structured process that covers the
entire life cycle of an asset. The main essence of the two regulations last writer
mentioned above is the fulfillment of the principle of efficiency in the state asset
management which is directed to comply with the limits of the requirement
standard which is needed to support the implementation of government tasks and
functions optimally. Stages in the asset management process includes: a)
planning, b) acquisition, c) operation and maintenance, and d) disposal.
Better asset management is needed in the management of idle assets. Idle
assets are assets that are not used or used in accordance with the purpose and
functions. To be able to manage better of idle assets which required high and best
use analysis, so that the utilization of these assets can be performed optimally.
According Aira (2014), asset management can provide transparency and
accountability in the management, monitoring, control, identify the economic
potential of the region, including local own source revenue. This also applies to
the state assets managed by the central government.

751
2.2 Asset Optimization
In order to support the optimization of existing assets and improved
performance, needs to be supported by good asset management, the reliable and
accountable SPIP, as well as the necessary verification and validation
(reconciliation) accurately. According to Indonesian dictionary, optimization is an
act, process or methodology to make something (as a design, system, or decision)
to become more or fully perfect, functional, or more effective. According to
Nugent (2010), optimizing asset utilization can produce benefits and revenue.
Based on these opinions, it can be concluded that the asset optimization is an
optimization of the potential benefits of an asset which can produce a greater
benefit can even generate revenue. Asset optimization is the process of work in
the use and utilization of assets.
According to Siregar (2004), optimization of asset management must
maximize asset availability, maximize asset utilization and minimize the cost of
ownership. To optimize an asset could be done with high and best use analysis.
This can be done by minimizing or even eliminating the barriers or threats to the
asset management, so that the optimization of the idle state of an asset can be
done.

3. Methodology
This research use descriptive analysis method with literature review
technique. In literature review, data collecting is done via the data written, many
obtained from books and internet. This study uses secondary data i.e. data source
that does not provide information directly to the data gatherer (researcher). The
secondary data sources in this research are books, documents, literature, articles,
journals, scientific papers, as well as internet sites that are trustworthy and with
regard to the research conducted.

752
4. Discussion
4.1 Idle Assets Optimization Strategy
ERSS I in 2015, the Indonesian SAI mentioned that there are efforts that
have been made by the Ministries / Institutions in terms of assets administration.
First, fixing the recording and presentation of accounts inventories and fixed
assets which is part of asset management. Second, improve data SIMAK BMN
(Management-Accountancy Information System of State Assets). And now, with
the the rapid advancement of technology and information systems, there is an
applications which support management information system with internet-based
application (SIMAN). As mentioned before, SIMAN can be used to support the
activities of state asset management, from planning to the supervision and control
of state assets. Moreover, SIMAN capable to cover all activities of the state asset
management. With the database of SIMAN, idle assets will be identified.
According Inarto Research (2013) on a working unit in the working area
of The State Assets and Auction Service Office (KPKNL) Surabaya, that the
majority of respondents know how to treat the idle assets, but still quite a lot of
respondents who do not understand how to treat the assets that are idle. Inarto
recommend to each work unit to optimize the use of assets through: (1)
verification and validation of the data (reconciliation) on a regular basis. So that
each business unit can identify the existence of idle assets and its potential to be
privatized. It is Necessary to Prevent dissipation of the annual budget for the
maintenance of idle assets and, at the same time, encouraging an increasing
number of asset privatization. According to Crowe (1996), data reconciliation is a
procedure that optimally adjust the measured data so that the adjusted value obey
conservation laws and other restrictions. Data reconciliation is a minimization of
limited problem. Reconciliation according to Minister of Finance Regulation No.
102/PMK.05/2009 on Procedures for State Assets Reconciliation in the Context of
Financial Statements of the Central Government is the process of matching
financial transaction data which are processed in multiple different systems / sub-
systems based on the same source document. If SPIP an internal oversight, then
reconciliation is an external oversight. In the state asset management,

753
reconciliation is intended to match the financial transaction data between the
lower level of asset user with the higher level of asset user, or between asset users
with asset manager. Reconciliation besides to match the data, can also be used for
monitoring of implementation of financial transactions. (2) optimizing the
reconciliation activities that have been routinely implemented by having each
working unit to actually comply with the schedule and peocedures.
According to Kaganova (2011), financial solutions is related to
government real estate. For Financial decision making, governmant assets should
be considered from two view point. First, there are potential budgetary gains that
can be obtained through better asset management. Second, government property
should be considered is that of the balance sheet. Rebalancing the asset portfolio
through disposing surplus land and reinvesting in public infrastructure, can be a
way of funding infrastucture, replacing borrowed funds. In this case, asset
management also can be a tools for financial efficiency.

4.2 HBU Analysis and Asset Optimization Framework

When the idle asset can be identified with the management information
system (SIMAN), the next step is to determine the best usage of the asset with
HBU analysis. Manojkumar and Manjunatha (2016), Peebles (2005), HBU
analysis plays vital role to predict the performance of the property to get
maximum revenue or the greatest return for capital invested in real estate. There
are for test in the HBU analysis, as follows:
1) Legally permisible, is what alternative uses are physically possible for the
idle asset, given constraints of property size, terrain, soils, drainage, etc.;
2) Physically possible, is which uses are legally permissible, usually define by
local zoning and land use that set by government;
3) Financially feasible, is which use are financially feasible or return a net profit
to the investor owner;
4) Maximum productivity, is which uses will be the most or greatest profitable.

754
With the HBU analysis, idle asset can be determine its most proper function or
usage to gain efficiency or profit. So, based on the discussion before, the
framework to optimize idle asset is as follow in figure 5.1
Figure 5.1
Idle Asset Optimization Framework

.
5. Conclusion
5.1 Implication
The implications of this research is that DJKN in managing the idle assets,
first have to be able to identify which ones are the idle assets from the total assets
under its management. This things can be conducted through data reconciliation
between asset users level with asset manager level to ensures clear and complete
data of idle state asset. Second, perform HBU analysis to determine the best and
maximum use of the idle assets that have an impact to idle assets optimization.
Implementation in each stages need to be monitored through SPIP. Increased
competence of employees is also important to improve the performance of asset
management.

755
5.2 Limitations and Future Research
The results of this study has limitations that should be considered in this
study, among other things:
1. The framework in this research only means for real property asset such as:
land and its other improvement, building, etc. For future research, it would be
better if future researcher could mapping a framework for all kind of asset;
2. This research is a literature study, so it does not do testing of the framework.
For the future research, it should also tested the framework with hypothesis
testing.

REFERENCES

Aira, Aras. 2014. Peran Manajemen Aset Dalam Pembangunan Daerah. Jurnal
Penelitian Sosial Keagamaan, Vol.17 Januari-Juni 2014.
Badan Pemeriksa Keuangan Republik Indonesia. 2015. Ikhtisar Hasil
Pemeriksaan Semester I Tahun 2015. Jakarta: Badan Pemeriksa
Keuangan Republik Indonesia.
Crowe, Cameron M.. 1996. Data reconciliation progress and challenges. J. Proc.
Cont. Vol.6, No.2/3, pp.89-98, 1996.
Handoko, T. Hani. 1995. Manajemen Personalia dan Sumber Daya Manusia.
Yogyakarta: BPFE.
https://www.djkn.kemenkeu.go.id/berita/detail/menkeu-djkn-harus-menjadi-reve-
nue-center.
https://www.djkn.kemenkeu.go.id/berita/detail/aipeg-apresiasi-proses-bisnis-djkn.
Inarto, Koko. 2013. Analyzing Implementation of State Asset Management Reform
Policy in Indonesia (A Case Study on Surabaya State Asset and Auction
Service Office, East Java Province). Master Thesis. Linkage Master
Program Faculty of Administration Science, Brawijaya University -
Ritsumeikan University Graduate Schools).
John Peebles. 2005. Highest and Best Use: What Real Estate Prefessionals Need
to Kow. The Scrivener, Volume 14 Number 4 Winter 2005.
Kaganova, Olga. 2011. Government Property Assets in the Wake of Dual Crisis in
Public Finance and Real Estate: An Opportunity to Do Better Going
Forward?. Real Estate Issues Volume 35, Number 3, 2010/2011.
Manojkumar B R and Manjunatha M. 2016. Highest and Best Usage (HABU)
analysis on vacant land. International Journal of Innovative Research in
Science, Engineering and Technology, Vol.5, Special Issue 9, May 2016,
pp 101-106.

756
Mardiasmo. 2004. Otonomi dan Manajemen Keuangan Daerah. Yogyakarta:
Andi.
Nugent, Sally. 2010. The Aset Journal. Management Council Inc. Journal of
Management Asset, Vol. 4.
Peraturan Menteri Keuangan Nomor 102/PMK.05/2009 tentang Tata Cara
Rekonsiliasi Barang Milik Negara Dalam Rangka Penyusunan Laporan
Keuangan Pemerintah Pusat.
Peraturan Pemerintah Republik Indonesia Nomor 27 Tahun 2015 tentang
Pengelolaan Barang Milik Negara/Daerah.
Siregar, Doli D. 2004. Manajemen Aset: Strategi Penataan Konsep Pembangunan
Berkelanjutan secara Nasional dalam Konteks Kepala Daerah sebagai
Ceos. Jakarta: Gramedia.

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TPS-13

MICROFINANCE INSTITUTION AND HOUSEHOLD

INSTITUTION IN JEMBER REGENCY
FOR FINANCE INCLUSIVE
Lucik,
Hadi Naim,
Samsudin
University of Jember
Email: lucik.soka@gmail.com

ABSTRACT

The Increased of economic activity micro scale, motivated by the work done by
housewife in Jember look more massive. This phenomenon is also followed by a
growing number of microfinance institutions that provide small-scale loans for
capital. The number of financial institutions that ultimately forced the housewife
choosing a financial institution in its favor. The aim of this study was to patterns
of institutional microfinance institutions as an adjustment on housewife
preferences. Analyzing the preferences influence the dynamics of household
income in Jember. This study is a qualitative research with primary data
housewives small businesses that once the service user microfinance institutions
in Jember. The analytical method used was Interpretative Phenomenological
Analysis through six stages of analysis: 1) Reading and re-reading; 2) Initial
noting; 3) Developing Emergent themes; 4) Searching for connections across
emergent themes; 5) Moving the next cases; and 6) Looking for patterns across
cases. The results showed that the productive activities carried out housewife
embolden them to borrow capital in financial institutions. There are three
preconditions, finally forcing financial institutions institutional change for
adjustment and to give freedom to housewives to gain access to credit. This study
explains that there are differences in well-being before and after borrowing or
raising capital to start his business. The conclusion from this study confirms that
they recognize the benefits of the presence of financial institutions with varied
these advantages.

Keywords: Microfinance Institutions, Household Institutions, Income dynamic.

758
1. Introduction
Households activities dominated by housewives as supporting agents to
profit improvement becomes significant in Indonesia. This phenomenon is clearly
seen in middle-ranking to low ranking family. Aggarwal et.al. (2013) explains
that the trust in female who apply for a loan emerge because of the mindset of
society and particular local culture. This means that the level of trust in female
who apply for a loan is different from one area to others. Such phenomenon has
been a culture in some areas in Indonesia. This makes housewives have an
influential role in affecting the economics condition of their family. In 2010, a
survey conducted by World Bank showed an interesting fact that only 49% of the
total number of households in Indonesia that have access to formal financial
institutions. While in 2011, a survey conducted by BI showed that only 48% of
the total number of households in Indonesia save their money in formal or
informal financial institutions. It means that 52% of the total number of
households in Indonesia are still unable to utilize the financial institutions.
Jember has 2.588 financial institutions consisting of 1.822 cooperatives,
61 public banks, 24 rural banks, and 681 financial institutions owned by local
government and it is very potential to grant funds for productive entrepreneurs in
household level in order to help entrepreneurs in household level increase profits
through that productive activity. However, with the development of their home
business, housewives appear to be forced to decide to choose one financial
institution that can grant them with loans so that they can expand their business
and get profit from it. However, it is necessary for housewives to be very selective
in choosing the right financial institution because once they choose the wrong
one, the dynamic of their income will be affected. Therefore, this research is
aimed to know the benchmark of female preference and institutional pattern
within micro finance institution in Jember and to analyze the effect of preference
on the households income dynamic on micro finance institution in Jember.

759
2. Literature Review
Anderson et.al. (2002) showed that joint responsibility microcredit system
could improve the welfare of poor family and educate them to become
entrepreneurs. This system can also be a means of communication, so that it can
preserve the social funds of the society. Whereas, Okten and Osili (2004) said that
network of family and society can influence individual access to the credit
institutions. The network of family and society also have big impact on the
awareness of returning the loan to the microfinance institutions. Interestingly,
those among-families networks are mostly dominated by housewife
communication.
Furthermore Asadul et.al (2015) explain that joint responsibility
microcredit system could reduce the societies loans to the money lenders. But for
two decades (1987-2008) this system is still unable to generate new business
sectors. In line with Asadul et.al (2015), Togba (2012) explain that the geographic
factor of where the households live, their primary job, and also the amount of
microcredit greatly influence the success of the joint responsibility microcredit
system. Housewives who live in countryside, especially in agricultural area,
cannot be forced to change to become entrepreneurs because of their living area
background. They mostly help their husband go gardening and farming because
those activities have been their habitual actions since their childhood. It means
that the micro credit that should be distributed to them is agricultural credits with
big amount of funds and with variety of interest which allow them to repay the
loans right after their harvest season. In the other hand, housewives who live in
town still have the possibility to become entrepreneurs in order to support their
family needs.

3. Research Method
Jember, the area of this research, was chosen by using purposive method.
The sources of the data in this research used qualitative approach. Lofland, as
quoted by Moleong (2000) explains that words and actions are the primary data
source of qualitative analysis, while documents and so forth are only supporting

760
data. The primary data of this research was obtained from the result of the
interview with the interviewee about the housewives preference on micro finance
institution in Jember. While secondary data used in this research is data in the
form of records from the Department of Cooperatives Jember
The methods used in collecting the research data were interview, focus
group discussion, observation, and documentation. Interpretative
Phenomenological Analysis method (Smith: 2003) was used to analyze the
research data. This method covered the following stages of analysis, they were: 1)
Reading and Re-reading, 2) Initial Noting, 3) Developing Emergent Themes, 4)
Searching for Connections across Emergent Themes, 5) Moving the next Cases,
6) Looking for Patterns across Cases. The researcher also implemented the data
triangulation that consisted of checking activity, re-checking activity, and cross-
checking activity to ensure whether the obtained data were valid.

4. Discussion
4.1 Changes in Pattern Against Domestic Institutional Economics Business
World
When the economy is based on the formal institutions only, it is concerned
that there is an imbalance in economy. Therefore, nowadays, people need to
develop institutional economics, since good and bad economic and political
systems in the community is depend on institutional order. That is the reason why
economic institutionals occupy important position in economics because of its
function as a social machine is very basic (Rachbini, 2001). In the context of
economic, institutional, are the backbone of the economic system. The
weaknesses and economic strength of a community can be seen directly from the
existence of economic and political institutions that underpin it.
The existence of a housewife who plays a role as an alternative to the
family breadwinner, it has become a new institutional patterns in the family,
especially adherents of patriarchy. So that it can rise the position or value of fresh
homemakers. They are not only as a wife who take care of children and serve the
husband, but also become part of the family breadwinner. Social norms

761
potentially establish authority over resource ownership by gender. This is in line
with the expression of Irianto (2004; 62) that the need for attention to the problem
of access of women and men to the control and management of resources, for
gender equality and justice are the values embodied in human rights. Besides, it is
needed for active measures that are concrete actions to improve the form of
gender discrimination in households and communities.
Institutional pattern is that by the feminists called gender mainstreaming.
As expressed by mrs. EL as follow:
Kalau suami saya kerjaannya sebagai sopir truk mas, sehingga kadang-
kadang mendapat uang, kadang-kadang juga pulang dengan tangan
kosong. Makanya saya memberanikan diri untuk ikut berusaha mencari
uang juga dengan jualan LPG ini. Kalau sekarang penghasilan saya lebih
banyak jika dibandingkan dengan suami, tuturnya.
Similar expression also came from bu WR stating that its position in the
household is not like it used to be. Now she can develop their potential as a tailor.
Who can earn their own income and not only depend on the husband's business.
Then, it is said by North (1996) making the institutional system of informal
sector is also getting stronger. North (1996) gives the view that there are five (5)
assumptions that affect change in an institution, they are; First, the ongoing
interaction between institutions and organizations in the economic situation are
limited, and therefore the competition is the key to institutional change; Second,
the competition encourages organizations to continually invest in the skills and
knowledge to survive. A wide variety of expertise and knowledge of the
individual and the organization will develop a perception of opportunities, and
therefore the choice will add changes to the organization; Third, the institutional
framework will provide the maximum incentive to those who have the skills and
knowledge; Fourth, the perception is formed from an individual's mental
behavior; Fifth, economic environment, which are complementary in cooperation
with other institutions are expected to make the institutional changes of mutual
benefit and mutual dependence.
In society itself has evolved mechanisms of financial services that benefit
the poor, such as rotating savings and credit association (ROSCAs), gathering,
pawnshops, and the bank or daily financial services, managed as befits by bank or

762
cooperative. Financial services institutions and mechanisms is not always efficient
and be a nice option for the poor. But its presence indicates that the financial
needs of the poor is already quite developed in many variations, from the
individual to the group, from the very friendly and empathy for the difficulties of
the poor to exploitative of the poor people.
Economic activity undertaken by poor women who obtain micro finance
services is expected to provide a wide range of positive impacts. Based on the
concept AIMS Conceptual Framework (Sebtad, et.al., 1999), the impact is
measured from the level of families, small businesses are run, the individual level,
the community level, social networks, and social participation. Schematically the
impact of microfinance services can be described as in the following chart.
Figure 1.
Impact of Microfinance Services for Economic Activities Conducted by the Poor
Women (Source: Sebtad, et.al., 1999)

It can be explained that the existence of a business community will

increase employment and income network. Even, it increases social networking
and community participation. So with that increase also resulted in a household
increase income in expenditure at the same time. It happened because of the
increased economies of scale increase in commodity / business types and it makes
income or expenditure increases. While, individually, the empowerment of
women makes them hold the control over resources and decision-making.

763
 It is ultimately in line with what is said by Fakih (2006: 145), that a
collection of thoughts, feminist theory departs from consciousness, assumptions,
and concern for the injustice, inequality, oppression of women, as well as a
motion to stop all forms of discrimination. That is why gender analysis is used to
find practical needs and strategic gender needs in the development process
towards a society more dynamic.
Changing patterns of institutional households with entrepreneurial
interests of the mothers become a new thing that we can take as a fact. The pattern
of this dynamic institution, became an antithesis to the old institutional household,
ie adherents of the patriarchal system. Freedom of speech and women trying to
make them more competitive and have skills that can develop family economy.
Figure 2.
Comparison of Old Domestic Institutional Pattern and New Domestic
Institutional Patterns

Old pattern
husband wife

New pattern
husband wife

It can be explained that the old domestic institutional patterns, the husband
has full authority to regulate the wife, so it is indicated by the line instructive.
While the institutional pattern of new household associated with entrepreneurial
interests, between husband and wife relationships relate or interact and help each
other.

4.2 The Changes of Institutional Patterns of MFIs in Jember

Not only occurs in the informal sector operators, it is housewives,
institutional pattern changes also occur in microfinance institutions. As an
institution that provides access to capital to the informal sector, the institute
eventually also to adjust their institutions. It occurs both in existing cooperatives,

764
rural banks, BRI, Bank micro, and even some local governments made programs
such as PNPM and also Bank Gakin.According to new institutional economics of
market, failure caused by economic activity was given totally to market
mechanism without the intervention of government agencies so that the
experience 1930 provides a lesson that an institutional mechanism is needed to
avoid market failure. The institutional failure by Bardhan (1989) refers to the
structure of the contract and the law, and the regulation of third-party enforcement
(rules of third party enforcement) is weak, but it should be strengthened to carry
out market transactions (Yustika, 2006). Based on this case, the government also
has a program result from policies that also help SMEs, by forming MFI.
It should be realized that the institutions are not static, but dynamic in
accordance with economic interactions that that meet the similar interests. Beyond
that, the dynamic nature of the institution are also caused by changes in the values
and culture of the society in line with the changing times. By doing so, institutions
will change in accordance with the challenges of age or condition. At this point,
the institutional changes has two dimensions. First, the configuration changes
between actors economy will trigger a change in the institutional (institutional
change). In this approach, the institutional changes considered as the impact of
changes (interest/ configuration) economic actors. Second, institutional change is
designed to deliberately influence (regulate) economic activity. In this position,
institutional placed actively as an instrument to regulate economic activity
(including the actors involved in it). From both of The spectrum, it could be
believed that institutional change is as important as the institutional design itself.
In terms of institutional micro finance institutions (microfinance
institution) theory was finally running. If, in the previous time, customers who are
looking for financial institutions for borrowing capital, the current relationship is
different. Financial institutions such as cooperatives, rural banks and micro-bank
private pick up the ball, offered the women workers in the informal sector to lend
credit. Even some innovative financial products in peddling in order to influence
the customer to take stock of that particular financial institution. As said by DN
(32 years) as a marketing of micro finance State Savings Bank (BTPN) that today,

765
banks need customers in order to use the money as working capital. This reversed
a few years ago where the customer needs the bank to borrow capital. Even with
the new terminology, the Bank did the maximum services which are easier for
customers to not have to go anywhere if you want to repay the credit. They just
give a short message via mobile phone, which further cashier Bank will come to
the customer.
Kalau sistem yang lama, setiap peminjam diharuskan untuk
mengembalikan atau mengangsur kreditnya ke kantor bank yang
dipinjami. Hal ini akan memakan waktu, apalagi jika mereka adalah pada
wirausahawan yang setiap saat harus melayani pembeli. Sehingga inovasi
pelayanan dari setiap microfinance dilakukan salah satunya seperti yang
dilakukan oleh BTPN dengan menggunakan kasir pick up.
The same statement also expressed by SG Capital employees Nasional
Madani (PT. PNM Persero). The boy from Patrang who worked in the campus
area PNM admitted, if many vendors in the campus area are our customers. So
with a flurry of these traders, the billing system is done by separate worker who
came to the customer after the customer confirmed it will repay its bills.
Kayaknya semua perbankkan mikro melakukan hal itu, karena itu bagian
dari pelayanan supaya bisa memuaskan nasabah. Jika harus ke kantor bank
pemberi kredit, banyak nasabah yang tidak bisa karena keterbatasan
waktu, lebih baik dilakukan pick up atau penjemputan atas pembayaran
mereka, sehingga resiko menunggak menjadi kecil.
Meanwhile, according to RK, KSP employees Makmur Jaya is located at
Mangli, micro-credit market every day around the town of Jember got Sumbersari
region. He claimed if the loan process from KSP its management is quite simple,
which only requires a photo copy of ID cards only, the money can be disbursed
directly on the spot. With a quick process that, then if there is a sudden need of
housewives who want to borrow, it will be quickly resolved
...Ya setiap hari di daerah sini mas, kalo kantor saya di Mangli dekat
lampu merah perempatan Mangli. Kita nawarkan kredit kecil-kecilan saja,
kalau ada tempat usahanya gini ini, bisa kita pinjami sampai 1 juta, tetapi
kalau tidak ada tempat usahanya ya hanya ratusan ribu saja.
Pembayarannya seminggu sekali, sampai 10 kali angsuran.

766
 Figure 3.
The old Process of Credit Loan Flow (Source: Research Findings processed)

People borrowing money To MFIs To administration

Installments to the bank Making money Survey Bank

From Figure 3 can be presented that, the process of borrowing money by

the community done by the people came to MFIs in the region. Post received
information about the requirements that must be met, then the community should
set up a requirement that for later in the survey by the bank concerned. Having to
say good and deserving of credit, the bank will call the customer and withdraw the
amount of money loaned. New in the next month, customers will repay gradually
to the office of the banks that lent capital.
Figure 4.
The new Process of Credit Loan Flow (Source: Research Findings processed)

banks offer credit public borrowing to administration

Persyaratan

bank pick installment Making money survey Bank

From Figure 4, shows that micro-finance is to provide convenience and

good service. it makes financial institutions will be close to the people.
institutional change is very significant financial institutions in society.
Based on the findings above, the researcher categorized changes on
institutional patterns that occur in institutional households and institutional
financial institutions as a dynamic pattern where in fact the changes on the pattern
itself is the result of adjustment on the better interaction environment. It means
that changes on pattern in institutional households encourages changes on pattern
in institutional financial institutions and this pattern can result entrepreneurship

767
success. While the success of entrepreneurship will, again, result changes on
institutional households and financial institutions. In short scheme, institutional
patterns can be drawn as follows:
Picture 5.
Relationship Households Institutions and Microfinance Institutions (Source:
research of result)

Success of
entrepreneurs

Households Microfinance
institutions institutions

There are a variety of dynamics as the result of loans received by

housewives in Jember. Some feel better after getting additional funds, but some
do not or even feel worse. The existing institutional of the microfinance
institutions do affect them to get profit or loss. Loans or credits system with great
interest present a number of complaints from housewives even this system
provides a better service such as deleting collateral as the requirement to get a
loan and providing the loans faster. While the pattern that is programmed by the
government like Gakin Bank is still unable to provide a large amount of funds,
and is still limited to a number of particular people.
The problem above should be figured out so that the access to low interest
loans with a better system and a stronger institutions that relies on social funds
can be redeveloped even there are some aspects that should be refined.
Housewives complains about high interest loans should also be a correction
whether the financial system a financial institution runs corresponds to the rules.
The following scheme, obtained from the result of the research, is presented in
order to clarify the presence of several factors and the impact on clients.

768
5. Conclusion
The number of housewives who run their entrepreneurship program which
is increasing finally affect the institutional pattern that microfinance institutions in
Jember run. Some financial institutions, both formal and informal, use different
type of strategies to keep the housewives as their loyal customers. Some give easy
requirements for loan application, some efface collateral as one of the
requirements to get a loan, and some grant the loans faster. The lack of
information that the housewives have about financial institutions lead them to
choose the wrong financial institution and it will finally affect their profit.
Recently, the emergence of financial institutions formed by both local
government and central government become new trend in financial system that is
inclusive. With different institutional pattern that relies more on high social
principle, financial institutions like PNPM and Gakin Bank become financial
institutions that housewives prefer to choose. There are as many as 433 Gakin
Bank with more than 29.169 memberships in Jember. PNPM itself grants loans to
over 1000 people. However, it is necessary for those institutions to have a strong
and comprehensive assistance strategy because they deal with people in poverty
and they may be easily bankrupt anytime. The comprehensive assistance is still
not seen in Gakin Bank because the assistance pattern of this financial institution
only refines the group administration system and this makes many of its members
stop to be its member.

REFERENCES

Aggarwal and Goodell and Selleck. 2013. Lending to Women in Micronance:

Inuence of Social Trust and National Culture. Working Paper 13-17.
Anderson and Locker and Nugent. 2002. Microcredit, Social Capital, and
Common Pool Resources. World Development, Volume 30, Issue 1,
January 2002, Pages 95-105
Asadul and Nguyen and Russell. 2015. Does microfinance change informal
lending in village economies? Evidence from Bangladesh. Journal of
Banking & Finance, Volume 50, January 2015, Pages 141-156.

769
Erol, C. and El-Bdour. 1989. Attitudes, behavior, and patronage factors of bank
customers toward Islamic banks. International Banking & Marketing
Vol. 7, No. 6:31-7.
Moleong, L.J. 2000, Metode Penelitian Kualitatif. Bandung: Remaja Rosdakarya.
Okten and Osili. 2004. Social Networks and Credit Access in Indonesia. World
Development, Volume 32, Issue 7, July 2004, Pages 1225-1246.
Smith, J.A. 2003. Qualitative Psychology A Practical Guide to Research Method.
Sage Publications Ltd. London, Thousand Oaks, New Delhi.
Togba, E.L. 2012. Microfinance and households access to credit: Evidence from
Cte dIvoire. Structural Change and Economic Dynamics, Volume 23,
Issue 4, December 2012, Pages 473-486.
Wijesiri and Vigan and Meoli. 2015. Efficiency of microfinance institutions in
Sri Lanka: a two-stage double bootstrap DEA approach. Economic
Modelling Volume 47, June 2014, Pages 7483.

770
TPS-14

THE MAPPING OF AUDIT OPINIONS, THE FINDING

OF THE AUDIT BY BPK, LOCAL GOVERNMENT
FINANCIAL CAPABILITY, AND INCENTIVE FUNDS
OF DISTRICT IN INDONESIA

Trisna Ayu Oktavia, Taufik Kurrohman

University of Jember
Email: trisnaoktavia16@gmail.com

ABSTRACT
Local Government Finance Report (LKPD) as a manifestation of the commitment
of accountability and transparency that reflects how the financial condition of the
area along with its resources. This study aims to see how the distribution and
condition of local financial capability as well as the quality LKPD 'opinions,
findings of BPK (Supreme Audit Board of the Republic of Indonesia) were
identified during the period of 2014, knowing equalization DID (Dana Intensive
Region) in 2014 on the performance achieved in Indonesia. Research conducted
using descriptive method intepretif and presentation of data using GIS
(Geographic Information Systems). Mapping results showed no quality
equalization opinion, BPK's findings, local financial capability, and the
acquisition of DID in Indonesia. In Indonesia is still concentrated in Java that
discipline in public finance management.
Keywords: LKPD, Opinions, findings of BPK, local government financial
capability, tincentie funds of district

1. Introduction
Government Regulation No. 71 Year 2010 on SAP states that every BLU
obliged to account for public money being used for development. This is in
accordance with Law No. 32 of 2004 on Regional Government and Law No. 33 of
2004 on Financial Balance between Central and Local Government, where each
region is authorized to administer all the affairs of government, from the planning,
implementation, monitoring, control, and evaluation unless the authority of the
foreign affairs, defense and security, justice, monetary, fiscal, religion, and other
authorities stipulated regulations. UU no. 28 of 1999 confirms that the public is
entitled to obtain information about government including financial information.

771
Accountability as one form of accountability for budgets that have been realized
in the form of Local Government Finance Report (LKPD). Transparent
presentation should be in accordance with GAAP, SAP, applicable legislation,
may affect decisions (economic, social, and political) users. Financial reports can
be used as an analytical tool to measure the performance, financial capability,
efficiency, effectiveness in meralisasikan revenue, and the extent to which local
government to spend its local income (Halim, 2013). However, this analysis is
rarely carried out by the public because of the financial statements which are
private (Among, 2014). LKPD distributed to users, previously had are reported to
the BPK to obtain opinions and no later than 3 months after the fiscal year ends
(PP No. 8 of 2006), hereinafter siserahkan Parliament meeting (Act No. 15 of
2004). Implications of late reporting is not able to issue local bonds, saknsi
writing from the Minister of Finance (DJPK, 2015), and the delay in disbursement
of funds in the current year, and did not obtain local incentive funds (PP No. 8,
2006). BPK has the authority to conduct financial audit aims to provide
reasonable assurance on the fair presentation of financial information in all
matters metrial and sesai with applicable regulations.
Since the issuance of PP on Revenue Allocation Regional Incentive Fund,
this program is able to improve the achievements of the area and to motivate its
main achievements optimal performance (DJKD-KDN, 2015). According Tjahyo
Kumolo (Minister of Interior), LKPD considered optimal, yet accountable and
transparent, even more so in 2015 using the accrual system which is much more
detailed and will have an impact on public services. Local Government in
Indonesia has 416 districts, 98 cities, and 38 provinces in 2014 (CBS, 2015). The
potential of the area is not the same, and therefore the demand for local financial
management and accountability increasingly into the public spotlight. Kurrohman
2011 examines the opinions mapping and self-sufficiency ratio in East Java using
GIS approach. While Septariana 2012 examines the mapping BPK audit opinion
in East Java with the presentation of tabular data. Based on this research institute,
and are attracted to but do distinction where the object of this study is the
financial area in Indonesia 2014 with the approach of the Geographic Information

772
System (GIS). With GIS-based pemetan will illustrate clearly the region's
financial condition in Indonesia as a whole and used as an evaluation in the
application of accrual basis in the year 2015.

2. Research Methods

This research was descriptive intepretif, where the methods used by

researchers is collecting, preparing, and analyzing the data so that it can provide a
fairly clear picture of the object under study (Nazir, 2005 in Septariana, 2012).
Intepretif approach (Neuman, 2003 in Efferin, 2004), considered that the
understanding of social phenomena obtained obtained by studying a detailed text,
where the text here can be interpreted as a speech, writing, or drawing. The data
used in this research is secondary data. Sources of data obtained from BPK RI to
get opinions and findings, the Minister of Finance to update DID receiver, and
DJPK to update the LRA. Methods of data analysis using descriptive statistics,
where the results of this race on the results of GIS-based mapping. In this study,
for staining opinions and findings that raced on LHP BPK, but for the
measurement findings using a minimum size and minimum. Local financial
capability using PAD formula divided by the total acceptance of external aid,
pengkategoriannya referring to the R & D team MOHA-UGM, coloring refers
Kurrohman. As for DID is based only on the area receives DID or not.
Researchers conducted steps to resolve problems ranging from the selection of
topics, determine the formulation of the problem will have been formulated within
the framework of the formulation of the problem, collecting data with relevant
information, data analysis aided with GIS mapping to map LHP, local financial
capability, and DID. After mapping, the researchers describe the results of the
mapping. Once the data analysis is complete, the researchers began a discussion
of the results and research reports.

773
3. Results and Discussion
3.1 Opinion on LKPD in Indonesia
Pict. 1.
Opinion LKPD Indonesia

Mapping Opinion in Indonesia mapping results above are opinions

mapping Indonesian Government Financial Statements in Indonesia using GIS
software. The total area of the region 252 attained WTP opinion, WDP as many as
229, TW much as 4 areas, as many as 19 areas TMP. Mapping shows equalization
above overall quality LKPD opinion contained in
Indonesia is still not good. Seems that the Indonesian eastern region
(province of Maluku, Papua and West Papua) is still a lot that gets WDP and TW,
and not a few who get the opinion of TMP when getting opinions TMP is not
autonomous regions newly reported LPKD to the BPK. For the eastern region
dominated acquisition and TMP WDP opinion, this is because the human
resources not yet fully understand and comply with the legislation in force, and
does not implement the recommendations of the BPK.

774
 Pict. 2.
Opinion LKPD Indonesia

3.2 BPK RI on identification LKPD

Mapping BPK RI mapping results above are mapping BPK findings on the
identification LKPD in Indonesia using GIS software. Mapping above shows that
the area has attained the highest finding was DKI Jakarta (48 findings) and Riau
Province (49 findings). Areas that finding little sebnayak 4 findings, some of
which Trenggalek, Kediri, and Kupang regency. This finding is the result of the
identification LK conducted by BPK RI. These findings consist of SPI problems
and issues of non-compliance with environmental legislation. SPI problems found
as many as 5978 were scattered in various areas. Problems while for non-
compliance with environmental legislation as much as 5993 which consisted of a
loss of area (2422), the potential losses (324), lack of reception (892),
irregularities in the administration (2355). The problem of non-compliance was
found in the management of revenues, expenditures, fixed assets, danpiutang. This
is caused by the responsible officials negligent in carrying out their duties in
accordance duties, weak watchdogs and control, not careful in preparing LKPD,
not optimal coordination efforts with the related parties, less proactive in asking
for accountability. Mapping the findings can dilitah in the image below;

775
3.3 Regional Incentive Fund in Indonesia the norm of the Minister of Finance
Number 8 / PMK.07 / 2014 describes the allocation of DID in Indonesia.

Did receiver is an area that meets the criteria that have been established in
accordance with such regulations and can be categorized as areas of discipline in
terms of financial management. There are 90 areas are receiving DID in
Indonesia, which consists of provinces, districts and cities. Can be seen in Figure
3 below:

Figure 3
Mapping DID in Indonesia

3.4 Regional financial capability in Indonesia independence of the region

show the regional power in its own financing, to say how much the level of
dependence of local governments on the funding of the external.

Independence ratio is shown by how much revenue that can be produced

by the region in comparison with the assistance received from the center.
Independence ratio also illustrates the level of community participation in local
development. Data showed 261 area category is very less self-dominated areas of
Kalimantan, Sumatra and Papua, 143 area less dependent dominated by the island
of Bali West Nusa Tenggara, East Java, 35 regions were self-dominated province
of West Kalimantan, Central Java Province, 9 areas quite independently obtained
Kab , Banten etc., 11 area well / self-dominated cities in Java, 40 area is excellent
/ very independent-dominated provinces in Indonesia. Seen from the results

776
shown in Figure 4 mapping, local financial capability in Indonesia is still not
evenly distributed, the average area is still very less independent. This means that
there are still many areas in Indonesia that rely on government funding assistance
in performing activities of government, da low community participation in
regional development. This is reflected in the PAD which is smaller than a bunch
of total external assistance.

Figure 4.
Mapping Regional financial capability in Indonesia

Regional WTP opinion that acquiring more discipline in the preparation

and reporting of financial statements due to the aim to obtain a DID, but the
tendency of local financial capability is lacking. Areas that acquiring DID only
18% of the 504 areas that timely report to the BPK, 18% is comprised of 20
regions excellent financial capability area, 6 good area financial capability
regions, three regions sufficient financial capability regions, 11 regions was the
financial capability regions, 24 regions lacking local financial capability, and the
rest is very less (35 regions). Mapping above shows that the 252 area is ready to
be the application of accrual basis and will challenge the accountability and
transparency of information to the public. It is powered with 252 regions in
Indonesia memeroleh WTP opinion. Regional orderly financial pengelolaaan
State only 18% of all LKPD recorded in the BPK the first half of 2014, because
he had timely reporting to the BPK, timely determination in terms of the budget in
the House of Representatives, as well as the acquisition of opinions WTP / WDP.

777
Java Island in Indonesia only happens equal distribution of quality financial
reports evidenced by the many opinions over the acquisition of WDP.
Equalization of local financial capability is supported by less criteria that
dominate and only a few areas are very less. Java became the island orderly
financial management supported by the acquisition of State DID evenly in Java.
On the basis of these results seen from across the mapping results on opinions,
findings of BPK, the financial capability of local and regional incentive fund in
Indonesia in 2014, the eastern part of Indonesia is still a minority compared to
other areas. This shows that the equalization of the quality of financial reports,
equalization independence, local financial as well as an orderly in the area of
financial management of the State still has not happened. The impact of this
phenomenon will bring welfare gap and social inequality, which in turn will affect
the quality of its people. We recommend that the government should immediately
tackle this phenomenon by conducting special emphasis conjunction with
increased community resources found in eastern Indonesia in order to balance out/
reduce the welfare gap.

4. Conclusions and Limitations

4.1 Conclusion
Based on the identification data and the discussion that has been described,
the researchers came to the conclusion that: a. Results of mapping an opinion on
the financial statements of regions in Indonesia showed that the equalization of
the quality of regional financial reports based on opinions still uneven and is still
concentrated in Java, Sumatra, Bali and NTB with the acquisition of 50% WTP
opinion, 45% WDP is concentrated on the island of Borneo , 1% TW opinion in
four districts and the City, and 4% TMP opinion in New Guinea;
a. The results of the mapping findings of BPK BPK identification results
showed that the average amount of the principal findings of 11- 20, which
is consistent with the opinion acquisition. The key findings is comprised of

778
 5978 and 5993 issues SPI problems ketidakatuhan against legislation Rp.
3.20 Trillion;
b. DID mapping results in Indonesia showed the uneven results DID
recipient, is concentrated in Java and Sulawesi, the results of this mapping
can be known only 18% area of discipline in financial management;
c. The results of the mapping of local financial capability in Indonesia
showed an average yield of local financial capability ratio from 0.00 to
10.00% with very less categories and regions in Indonesia is still not fully
independent. In Indonesia regions that have better financial capability is
Java and Bali with 10,01- ratio of 20%;

4.2 Limitations
The limitations and weaknesses in this study is to describe / mapping only
the opinions, findings of BPK, local financial capability, and financial incentives
area so that the phenomenon is generated only by the data. Not to test the effect of
the acquisition of opinions based on the number of BPK RI and county incentive
funds to local financial capability. As well as the period of study in a period that is
in 2014 with reporting under Regulation No. 24 of 2005, so can not compare with
the adoption of Regulation No. 71 Year 2010. So suggestions can be submitted as
follows: to test the effect of the acquisition of opinions based on the number of
BPK RI and county incentive funds to local financial capability; b. Add the period
after the application of Regulation No. 71 Year 2010 which LKPD Year 2015. In
order to compare the quality equalization opinion, local financial capability before
and after implementation of Government Regulation No. 71 Year 2010.

REFERENCES

BPK. 2015. IHSP. http://www.bpk.go.id/ihps [January 3, 2016] BPK. 2016. IHSP.

http://www.bpk.go.id/ihps [January 3, 2016] The Central Bureau of
Statistics. 2015. Population Data Indonesia. Https: //www.bps.
go.id/Subjek/view/id/12#subjekViewTab3|accordion-daftar-subjek1
[December 6, 2015] Directorate General of Regional Financial
Development. 2013. Artikel.http: // keuda.

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[January 2, 2016] General DG Fiscal Balance at MoF. 2015. Regional
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approach. Poor; Bayumedia Publishing. Halim, A, 2013. Theories,
Concepts and Applications Public Sector Accounting. Jakarta. Salemba
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General of Treasury. 2011. Government Regulation No. 71 Year 2010
About theStandards.
Government Accounting Jakarta: Directorate of Accounting and Financial
Reporting. Kurrohman, T. 2011. Mapping Opinions Audit Reports and
Regional financial capability in East Java. Journal of Economics. Vol 6
(3)
Pages 407-418. Regulation of the Minister of Finance of the Republic of
Indonesia Number 8 / PMK.07 / 2014 on General Guidelines and
Allocation Regional Incentive Fund Fiscal Year
2014 Government Regulation No. 8 of 2006: About the Financial Reporting and
Performance Septariana Government Agencies, N. 2012. "Mapping
Audit Opinion on districts and Cities in East Java Province ".
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Management and Financial Responsibility State. Act - Act No. 28 of
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Corruption, Collusion and Nepotism. Act - Act No. 33 of 2004 on
Financial Balance between Central and Local Government.

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781