With the passing of Law Number 22 Year 1999 regarding, Regional and Law No. 25 of 1999 on Financial Balance of the Central Government and the Regions, and the rules for its implementation in particular Regulation Number 105 Year 2000 on the Financial Management and Accountability of the starting fiscal year 2001, there has been a renewal in financial management area. With this autonomy, the area is given broad authority to take care of their own household with minimal government intervention. Local governments have the right and authority to use the vast financial resources in accordance with its needs and aspirations of communities that developed in the area. However, with broad authority, it is not meant that local governments can use the financial resources they have at will, without a clear direction and purpose. Extensive rights and powers granted to the region, in essence a mandate that must be accounted for in an accountable and transparent, both to the people in the region and the central government has been distributing the balance funds to all regions in Indonesia. Renewal of local financial management in the era of regional autonomy, characterized by a very fundamental change, ranging from the budgeting system, treasury up to the responsibilities financial statements. Before the passing of autonomy, accountability regional financial reports to be prepared by the Local Government Budget Calculation just a report and Calculation Memorandum and the system used to generate the report is MAKUDA (Regional Financial Administration Manual) in force since 1981. Full implementation of regional autonomy in the form of implementation of the logical consequences of governance and development based on sound financial management. In accordance with Government Regulation No. 105 of 2001, governments at district has the authority to establish financial management systems and procedures in the form of local regulation area. Such a system is needed to meet the obligations of local governments in the financial reporting area. With the passing of local autonomy, the financial statements to be made by the Head of the Region is in the form of Reports Budget Calculation, Calculation Memorandum, Statement of Cash Flow and Balance Sheet Areas. The obligation to submit financial statements since the area is in force January 1, 2001, until in the end the government already has a government accounting standards that can be used as a reference for local governments at the building in the area of financial accounting system, as stipulated in Government Regulation No. 24 of 2005.
RENEWAL IN THE LOCAL FINANCIAL ACCOUNTING SYSTEM
Balance sheet and cash flow statement is a report of the new government and it is necessary to arrange accounting standards. Financial accounting system of government in place since the nation became independent 59 years ago based on the Law of Treasury Indonesia (ICW) Staatblads 1928, which is not directed or intended to produce a balance sheet and statement of cash flows. With the reform or renewal in the area of financial accountability system, the old system used by governments at both the provincial government and district / city governments are Regional Financial Administration Manual (MAKUDA) implemented since 1981 can no longer support the government needs to produce financial statements in the form balance sheet and cash flow statement. To be able to produce financial statements required an accounting system based on the area of government accounting standards. The old system (MAKUDA) with characteristics such as Single Entry (books only), Incremental Budgeting (traditional budgeting) are: a. Not being able to provide information on the property owned by the county. or in other words can not provide a balance sheet. b. Not being able to provide information regarding the statement of cash flows so that management or the public can not know what factors lead to an...
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