Factors Affecting The Internal Control Weaknesses of Local Governments

This research aims to empirically analyze the influence of locally-generated revenue, complexity, capital expenditure, size of government and growth on internal control weaknesses of local governments. Internal control weaknesses is the dependent variable in this research were measured by percentage of number of internal control weaknesses findings by the State Audit Board (Badan Pemeriksa Keuangan/BPK) divided by the highest number of findings. The secondary data used in this study is the form of the State Audit Board (BPK) Examination Report, Report of the Districts/Cities budget realization in West Java from year 2011–2013, the Central Statistics Agency (Biro Pusat Statistik/BPS) and Data Center website and Development Analysis (PUSDALITBANG). The purposive sampling method used in this study which is overall 26 sample have been selected. The hypothesis was tested by using multiple linear regression with coefficient of determination, t test and F test results by SPSS computer program showed that locally-generated revenue has positive influence on internal control weaknesses, complexity has no significant influence on internal control weaknesses, capital expenditures has negative influence on internal control weaknesses, size has no significant influence on internal control weaknesses while growth has negative influence on internal control weaknesses. The conclusions is important for local governments to improve the supervision and internal control over locally-generated revenue, capital expenditures, size of government and growth in the region to avoid the occurrence of fraud and irregularities.