The Effect of Audit Competence on Regional Financial Performance Moderated by the Internal Control System

Abstract

The low quality of financial performance is often found in local governments with limited budgets and income. This contrasts with those who have sufficient income and budgets for services, where public interests are more accommodated than individual and political interests. The purpose of this research is to examine the effect of competence and internal control systems on financial performance. The sample taken in this research includes all Regional Work Units (SKPD) in Indonesia, with an analysis tool in the form of the Structural Equation Model (SEM) program through Smart PLS software. The results show that competence does not have a significant impact on financial performance but has a significant effect on the internal control system. The internal control system has a positive and significant effect on financial reporting performance and can also mediate the influence of competence on financial performance.