| Student Name | : | Muhammad Dzaki Alfarrez |
| NIM | : | 200432619351 |
| Study Program | : | S1 Development Economics |
| Research Title | : | Analysis of the Effect of Regional Financial Management and Labor Force Participation on Economic Growth in East Java Province |
| Supervisor | : | Prof. Dr. Imam Mukhlis, S.E., M.Si |
Observation Results:
Figure 1: Website Supreme Audit Agency (BPK RI)
Source: Supreme Audit Agency of the Republic of Indonesia. 2020. Audit Report: Review Report on Fiscal Independence. Jakarta: BPK RI (https://bpk.go.id/.
The Central Government Financial Report (LKPP) is a financial report prepared by the Central Government in order to realize transparency and accountability for the implementation of the State Budget (APBN). LKPP is prepared based on Government Accounting Standards (SAP) and an accounting system that provides procedures for processing transactions into financial statements.
Table of Fiscal Independence Index of Regency/City Government Fiscal Year 2013-2020
Source: Supreme Audit Agency of the Republic of Indonesia. 2020. Audit Report: Review Report on Fiscal Independence. Jakarta: BPK RI (https://bpk.go.id/.
Table Description of Fiscal Independence Index
| No. |
IKF Value |
Fiscal Independence Condition |
|
1 |
0.00 ≤ IKF < 0.25 | Not yet Independent |
| 2 | 0.25 ≤ IKF < 0.50 | Towards Independence |
| 3 | 0.50 ≤ IKF < 0.75 | Independent |
| 4 | 0.75 ≤ IKF < 1.00 |
Very Independent |
From the results review based on the reality that there are still regions that have not reached the level of financial independence that is still classified as an area that is not yet independent. According to the results of the Supreme Audit Agency Report, only 25 local governments in Indonesia are categorized as independent. Meanwhile, 443 out of 503 local governments cannot be called independent. The condition of regional financial independence in the East Java region shows that it has not yet reached the level of financial autonomy. East Java Province indicates financial autonomy in the five-year period of 20%, this figure is still relatively low. Some regions in East Java are in a directive relationship pattern. This means that the region is still dependent on the central authority, which is why the role of local revenue is still low. Data contained on the website of the Directorate General of Financial Balance from 2018 to 2022, indicates that the proportion of balance is always higher than the role of regional own-source revenue at 75.71 billion for balance, while the average role of regional own-source revenue is 39.47 billion. This condition must have an impact on economic growth because it results in a decrease in the quality of the provision of economic activities such as the provision of public services. It can be concluded that city or district governments in East Java are still experiencing problems in realizing the Ability of Regional Independence (KKD). From this it can be concluded that the city or district government in East Java is still in a directive pattern, which means that it still depends on transfers by the center. From the observations made by researchers, the researchers were encouraged to conduct research to determine the effect or relationship of regional financial management which includes local revenue, special fund allocations, special fund allocations and other variables such as labor force participation on economic growth in East Java.