The Effect of Size, Growth, and Complexity on Internal Control of Local Governments

This study discusses how the influence of local government size, growth rate, share of local governement revenue (PAD), number of districts, and population toward internal control weaknesses in local government financial reporting. The weakness of internal control consists of three major groups namely weakness of accounting and reporting systems, weakness of APBD (local government income and expenditure budget) execution control system, and weakness on control structure. Results from multiple regression tests on 229 local governments indicate that the size of local government and the population have significant negative effect to the level of internal control weakness. The growth rate and the local governement revenue have significant positive effect toward the level of internal control weakness, while the number of districts from the local governments has no significant effect.