This journal
discusses the innovation in the public financial reporting system to enhance
accountability and transparency. In the digital era, technological innovations
such as Fintech, e-procurement, e-budgeting, and e-audit have influenced the
public financial reporting system, making it more accessible and
understandable. The journal emphasizes the importance of transparency and
accountability in the public financial reporting system, and how innovation can
help achieve these goals. This research uses a qualitative approach and
collects data from various credible online sources.
Keywords:
Innovation, Public Financial Reporting System, Accountability,
Transparency.
INTRODUCTION
The
government, which is the highest authority, especially in Indonesia, always
tries to regulate the course of government properly and harmoniously so that
there are minimal conflicts and divisions. One way the government stays alive
is by collecting dues to its citizens from various aspects such as buildings,
food, to education. As good citizens, people will obey and pay the dues so that
they too will be labeled good people. As obedient and good citizens, they are
eager to see where their money is allocated so that they will remain obedient
to the government.
One problem
also arises where the financial reporting system to the public is sometimes not
so easy to access. This is why sometimes many people do not want to pay these
dues because they do not understand where their money "runs". On this
basis, the public financial reporting system is finally required to make
innovation for innovation so that the wider community can access information
related to financial reporting more easily and quickly. The impact of this
convenience is to increase public trust in this financial management
institution. This is why they need to be accountable and transparent.
RESEARCH METHOD
The
research published in this journal uses a qualitative approach. If studied in
detail, qualitative research is a type of research where the focus of this
research is to explain new perspectives (perspectives) which can certainly
provide a new understanding with new points of view as well (Creswell et al.,
2014). By using this research, the author hopes to examine how financial
reporting systems innovate to increase accountability and transparency so that
they are more easily known by the public at large.
The study
was based on a literature review. Literature review or what is often called literature
study is a type of research methodology that requires examination, assessment,
and synthesis of previous research related to the research subject (Jesson et
al., 2014). Data for this study will be collected from various credible online
sources, including leading national media (if any) as well as online academic
journals.
The
selection of journals and information from national media will be based on the
reliability of the academic field and the relevance of the material to the
topic of study. To understand the conclusions and arguments made, any
information obtained will be examined and studied in more depth. Any
information from national media will be carefully investigated to ensure
accuracy. After ascertaining about the information, then the data will be the
basis for answering questions and advancing the objectives of this research.
This study
aims to explain the innovations that occur in the public financial reporting
system in order to increase accountability and
transparency.
RESULTS AND DISCUSSION
Innovation
Innovation
is the introduction of new, more useful concepts, products, services and
methods. The
word "innovation" comes from the verb "innovation", which
means to change or introduce something new (Suyatno, 2010). Although innovation
and invention are sometimes used interchangeably, innovation differs from
inventor because it refers to invention.
Innovation
consists of positive as well as negative innovations. Positive innovation is
the process of providing something new that offers more value to the client
while making changes to an existing product or service. Customers who
experience negative innovation are less likely to take advantage of the product
because they believe it degrades taste, provides no added value, and betrays
their confidence.
Innovation can be
divided into 5 categories, which are as follows (Suyatno, 2010):
1.
Product innovation, which is the introduction
of new, much better products and services involves making things easier to use,
more technically capable, and more functional. For example: cars, laptops, cell
phones, etc.
2.
Process innovation, which includes the
introduction of new product quality improvements or improved delivery methods.
3.
Marketing innovation, which creates strategies
to seize new market share by improving advertising, packaging, and design
standards.
4.
Organizational innovation, which refers to the
development of new business models, organizational structures, organizational
behavior, or business practices.
5.
Business model innovation, that is, modifying
operations in accordance with the principles adhered to.
There are 5 types of
innovation according to experts, namely:
1.
Product innovation; which involves the
introduction of new goods, substantially improved new services. Involves
improving the characteristics of the functions as well, the capabilities of
technicians, easy to use. For example: mobile phones, computers, motor
vehicles, etc.;
2.
Process innovation; involves the
implementation of new product quality improvement or delivery of goods;
3.
Marketing innovation; develop methods of
finding new market share by improving the quality of design, packaging,
promotion;
4.
Organizational innovation; creation of new
organizations, business practices, ways of running organizations or
organizational behavior;
5.
Business model innovation; change the way you
do business based on your values.
Even with
innovation, a company needs to create communication to "tell" their
latest product as well as promote it so that people will be more familiar with
it and understand the innovation (Lestari et al., 2024).
System
A system
can be defined as a collection of small things that are interconnected and create a form of synergy from that
Collection. Based on the Big Dictionary Indonesian, the system has the
following meanings:
1.
"a set of elements that are regularly
interrelated so as to form a totality"
2.
"organized arrangement of views,
theories, foundations, etc."
Based on
the definition of KBBI above, it is very clear that this system is certainly in
the form of several things that become one where each of these things is
related to each other so as to form a strong and solid system.
The system
has a number of inputs that go through several processes to produce different
outputs, all of which work together to achieve the overall system goals
(Namara, 2017). Therefore, a system often consists of many smaller systems,
often called subsystems. An organization, for example, consists of various
groups, individuals, goods, services, as well as administrative and management
tasks. The nature of the system as a whole changes when one of its components
is changed.
There are
many different types of systems. Some examples of such systems are as follows:
biological (such as the heart), mechanical (such as a thermostat),
human/mechanical (such as riding a bicycle), ecological (such as
predators/prey), and social (such as friendships, groups, and supply and
demand).
Many
subsystems form a complex system, including social systems. The overall goal of
the system is achieved through the integration and hierarchical arrangement of
these components. Each subsystem has a set of constraints and consists of
various inputs, processes, outputs, and outcomes that are all intended to help
the subsystem achieve its ultimate goal. Because complex systems usually
interact with their environment, they are open systems. A well-functioning
system will continuously provide input to all its components to ensure they are
all focused on the same thing achieving system goals.
Public
Finance
Public
finance is a combination of two words, namely finance and public. Finance has
the meaning of "intricacies of money, money affairs" while the public
itself has the meaning of "many (general)". Thus, public finance
means that it is a financial affair that is related to a lot of people so that
access is not only private, but becomes public.
Autonomous
regions require financial support from the public sector to fulfill their
authority and duty to serve the public interest. In more detail, public finance
is defined as funding originating from the general public, obtained using
authority given by the general public, and used either directly or indirectly
to promote general welfare (Wasistiono, 2002). In
general, there are two perspectives on public finance:
1.
Income or income
2.
Leverage or buy
Government spending, infrastructure funding, and allocating funds to initiatives
such as poverty alleviation, healthcare, and education are examples of public
sector activities related to public finance. PP. Number 12 of 2019 concerning
Regional Financial Management has many regulations governing these financial
transactions. Regional financial management is defined as the culmination of
all operations related to planning, budgeting, implementation, administration, reporting, accountability, and
supervision of regional finances in PP. Number 12 of 2019 Article 1 Paragraph 2
The regional head as an element of regional government administration is a
person who supervises the implementation of government affairs which are the
authority of the autonomous region, based on Law Number 23 of 2014, Article 1
Paragraph 3 (Ma'ani, 2009).
Accountability
Accountability is
things related to responsibility to the public or the public for things done
where the public can see the activity.
Accountability
is viewed
by the American Accounting Association as an entity that can be categorized
into four distinct divisions based on its accounting approach. These groups
include accountability for (Arja, n.d):
1.
Monetary assets
2.
Compliance with laws and administrative
guidelines
3.
Economy and efficiency of an activity
4.
Achievement of goals, benefits that are
indicators of the results of government initiatives and actions.
But functionally,
accountability is seen as a five-step process that starts with a stage that
requires more objective action (legal compliance) and ends with a stage that
requires more subjective metrics. The phases consist of (Arja, n.d):
1.
Probity and legality accountability Relating
to the acumen of the use of funds in accordance with applicable legal
regulations as well as approved estimates.
2.
In this case, certain tasks are implemented
using processes, procedures, or actions (planning, allocating, and managing).
3.
Performance accountability can determine
whether the operation is effective at this level (effective and economical).
4.
Program accountability emphasis is on
persistence and achievement of predefined goals (results and effectiveness).
5.
Policy accountability, the policy is selected
at this time, whether to apply or not (value).
The accountability
system has various main features, which are viewed from its point of view, which are as follows:
1.
Emphasis on outcomes
2.
Measure performance using a variety of
carefully selected indicators
3.
Produce data that helps in decision making
regarding a policy or program.
4.
Generate data continuously over time.
5.
Publish and report findings periodically.
Transparency
When all aspects of
the service delivery process are visible and easily accessible to consumers,
the public and/or stakeholders who need it, it is called transparent. High
transparency can be applied to service delivery practices if all elements of
the process including requirements, costs and time required, service methods,
and rights and obligations of service providers and users are publicly
available and easily understood by the public. However, service delivery does
not comply with transparency standards if one or all process doors are closed
and information is difficult to obtain by users and other stakeholders.
Public service
transparency can be measured using three different indicators:
1.
Measure the transparency of the process of
delivering public services. This level of openness evaluation covers all
aspects of the public service process, including the time, cost, and resources
required, as well as any service methods or procedures to be followed.
2.
Ease of users and other stakeholders in
understanding the rules and procedures of the service. Understanding in this
context not only refers to taking rules and procedures literally but also
understanding all things.
3.
Service, is how simple it is to get
information on various aspects of public service provision. Transparency
correlates with how easily users access information about various aspects of
public service delivery. For example, a public service is said to have high transparency
if users can easily obtain information regarding the cost and time required to
complete the service.
Public Financial Reporting System Innovation in Increasing
Accountability and Transparency
Public finance is
something that should be accessible to the wider community, because this is
related to the community itself. In addition, anything that has a relationship
with money is usually sensitive. If it is not conveyed properly, sometimes it
is very vulnerable to KKN practices where this is not monitored by the
community or office holders. Two points that should exist and should not be
lost in the financial reporting system are accountability and transparency.
Accountability in
relation to financial management includes various interconnected dimensions
related to internal control, such as fiscal responsibility, where local
governments are required to provide reports on the use of public funds to the
public and other stakeholders with the aim of preventing financial
misappropriation (Arni et al., 2023).
Accountability depends
on the capacity to respond to questions from various stakeholders, and this
capacity also depends on the effectiveness of internal control in facilitating
easy and fast access to related data and information (Darin &; Abdul,
2023). There are so many things done by several institutions related to finance
and the public, one of which is to make infrastructure in the form of the right
roads and can be enjoyed by every community. The budget related to making this
infrastructure must be accountable for its value on paper accurately and not
just written down.
In addition,
transparency here refers to how the wider public can access information related
to spending from these financial institutions anywhere and anytime. This must
be done so that people can understand and understand the money they spend, such
as which sector tax money will go to and be used for what things. If the public
financial media cannot show its transparency then surely the public will stop
paying taxes.
Activities related to
financial reporting are getting easier along with the development of science
and technology. One of the innovations applied in the public financial
reporting system is the use of information technology that allows the
collection, processing, and reporting of financial data so that it becomes
faster and more precise. In addition, the possibility of human error in the
reporting process is reduced by the use of sophisticated accounting software
(Darin &; Abdul, 2023).
The trend of
digitalization is encouraging public financial reporting systems and changing
them to be more accessible. Fintech, e-procurement, e-budgeting, and e-audit
are some of the changes that have occurred in the public financial reporting
system. The efficiency, accountability, and transparency of public financial
systems have improved as a result of the effective implementation of these
technologies in a number of countries, including Indonesia.
The above has actually
proven effective in providing financial reporting information for the wider
community so that these innovations directly help humans, especially humans in
the 2000s. As the name suggests, innovation itself demands an original update
where maybe in the next 10 to 20 years the
financial reporting system itself will be more transparent where humans can
access it like using Google Glass (if you look at Elon Musk's ambition
to create an E-ID card in the form of a chip).
CONCLUSION
The financial
reporting system is a very crucial system, because this system is related to
finance where matters related to finance must be transparent and accountable.
If these two things do not exist, bad things can happen in the financial
reporting system. Technological advances encourage digitalization so that this
financial reporting system also changes to be more digital. Some of the
products of digital reporting systems that are useful to this day are Fintech,
e-procurement, e-budgeting, and e-audit. Innovations related to reporting will
continue to grow as the digitization process continues to develop so that in
the future, financial reporting will be more transparent and accountable.
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