THE INFLUENCE OF ACCOUNTING UNDERSTANDING,
ACCOUNTING DIGITALIZATION.
AND HUMAN RESOURCE
COMPETENCE ON THE QUALITY OF FINANCIAL REPORTS IN
VILLAGE CREDIT INSTITUTIONS IN UBUD DISTRICT
Volume: 5 Number: 6 Page: 2034 - 2043 Article History:
Received: 2024-09-19 Revised: 2024-10-13 Accepted: 2024-11-17 Ni Putu Intan MELANI1.
Komang Adi Kurniawan SAPUTRA 2.
Ida Ayu
SURASMI3
1,2,3Faculty of Economics and Business.
Warmadewa University.
Indonesia Corresponding author: Komang Adi Kurniawan Saputra E-mail: kaksaputra12@gmail.
Abstract:
This research aims to determine the influence of accounting understanding, accounting digitalization, and human resource competence on the quality of financial reports at Village Credit Institutions in Ubud District.
This research uses a quantitative approach with a population of 32 Village Credit Institutions in the Ubud District.
The sampling technique used in this research is a saturated sampling technique .
, which aims to minimize and reduce the level of error in data collection so that the number of samples in this research is 32 Village Credit Institutions in the Ubud District area.
The unit of analysis for this research is the organization represented by the head of the Village Credit Institution.
The data collection method in this research uses a questionnaire method with multiple linear regression analysis techniques.
The research results show that understanding accounting, digitalization of accounting, and human resource competency each have a significant positive effect on the quality of financial reports at Village Credit Institutions in Ubud District.
Keywords: Accounting Understanding.
Accounting Digitalization.
Human Resource Competency.
Quality of Financial Reports.
INTRODUCTION
The role of financial institutions, both banks and non-banks, greatly influences Indonesia's economic growth rate.
In Bali, the Village Credit Institution (LPD) is a non-bank microfinance institution owned by traditional villages to improve the village economy.
Based on Regional Regulation No.
4 of 2012.
LPD manages the financial potential of traditional villages to improve people's standard of living.
However, along with the development of LPD, various problems have emerged, such as differences in development between LPDs and variations in their health levels.
Some even stopped operating.
Saputra et al.
stated that the quality of LPD financial reports in Indonesia is still a problem that requires further attention and research.
The current phenomenon shows that there are still many LPD financial reports that are presented and reported with inaccurate data and misuse of LPD funds by irresponsible parties for personal gain, resulting in losses for interested parties.
It has led to decreased public interest in saving money in LPDs, ultimately leading to LPD bankruptcy (Juniariani & Saputra, 2.
In 2022, the LPD of Kedewatan Traditional Village.
Ubud District, experienced problems with the quality of financial reports, including fictitious credit.
Although the assets had been sold, the funds could not be fully returned to customers, who demanded the return of their savings (Nusabali.
com, 2.
This problem emphasizes the importance of accurate and transparent financial reports in LPDs.
According to Utari et al.
, to overcome financial reporting problems, it is important to consider agency relationships and management control systems, as well as the integrity of human resources with technological innovations such as accounting digitalization.
According to agency theory, financial reports produced by LPD administrators as agents assure the principal .
esa This open-access article is distributed under a Creative Commons Attribution (CC-BY-NC) 4.
0 license pakrama.
that funds are being managed properly.
Quality financial reports are very important in making organizational and operational decisions and will increase public trust in LPD financial management, which in turn will attract more customers (Juniariani & Saputra, 2020.
Saputra.
Trisnadewi et al.
, 2.
Therefore, agents need to improve their understanding of accounting, utilize digitalization to increase transparency and accuracy, and encourage human resource competence for the quality of LPD financial reports.
The quality of financial reports can be improved through a good understanding of accounting, which helps avoid misinformation and produces more accurate reports.
According to the American Accounting Association .
, accounting is the process of identifying, measuring, and communicating economic information to support decision-making (Jans et al.
, 2.
In addition, accounting digitization also plays an important role in increasing the efficiency and accuracy of financial reports.
With the implementation of an accounting information system, routine tasks can be automated, reducing errors and increasing the accuracy and efficiency of administrative costs (Atmadja.
Adi, et al.
, 2.
Finally, human resource competence, which involves knowledge and skills acquired through education and training, also has a great influence on producing quality financial reports (Saputra.
Jayawarsa et al.
, 2.
Previous studies have shown that accounting understanding has a significant positive effect on the quality of financial reports (Ekayani et al.
, 2020.
Juniariani & Saputra, 2020.
Saputra.
Trisnadewi et al.
, 2.
, but Sara and Saputra .
stated otherwise.
Accounting digitalization also has a significant positive effect on the quality of financial reports, according to El-Shishini .
Garcia et al.
, and Saleem and Alzoubi .
found no significant effect.
In addition, human resource competence has a significant positive effect on the quality of financial reports, according to Kusumastuti et al.
Saputra .
Saputra.
Jayawarsa et al.
, although Ekayani et al.
stated otherwise.
This study aims to determine the contribution of LPD managers' accounting understanding to the quality of financial reports, measure the use of digital systems in accounting, and evaluate the influence of human resource competency, especially in the fields of accounting and financial management, on the quality of LPD financial reports.
Although research on the quality of financial reports has been conducted, none has specifically studied the influence of accounting understanding, accounting digitalization, and human resource competency on the quality of LPD financial reports in Ubud District.
Therefore, researchers are interested in studying this topic further.
Agency Theory.
Agency theory explains the relationship between two parties in a company, namely the principal who gives authority and the agent who receives authority.
According to Mardini and Lahyani .
, this theory arises when the principal gives authority to the agent to make decisions according to the principal's interests.
Kaplan and Ruland .
emphasize that agency theory overcomes problems in this relationship and is the basis for financial reporting, including in LPD.
In this context, the financial reports produced by LPD management aim to assure the principal that funds are being managed properly (Anggreni et al.
, 2.
This theory is closely related to the quality of financial reports, where accounting understanding, accounting digitalization, and human resource competence function as controls to reduce the risk of conflict between the principal and agent, as well as increase public trust in LPD.
Understanding of Accounting.
Accounting, according to the American Accounting Association .
, is the process of identifying, measuring, and communicating economic information to provide considerations for decision-makers (Saputra & Laksmi, 2.
Government Regulation Number 24 of 2005, accounting is defined as the process of recording, measuring, classifying, and reporting.
Juniariani and Saputra .
added that accounting theory This open-access article is distributed under a Creative Commons Attribution (CC-BY-NC) 4.
0 license aims to predict and explain accounting behavior and events.
Accounting understanding is a person's ability to recognize and understand the accounting process, which is very important in preparing financial statements.
A good understanding will avoid errors in presenting financial information.
The quality of financial statements depends on the accounting understanding of the parties involved in their preparation (Saputra & Paranoan, 2.
In this study, the accounting understanding indicator is seen through the accounting cycle, which, according to Arienata et al.
, consists of three stages.
The first stage is recording, which includes collecting and recording financial transactions in the general journal and ledger.
The second stage is summarizing, which includes preparing a trial balance, adjusting journal entries, and preparing a post-closing trial balance.
The last stage is reporting, which is the preparation of financial statements as the final result of the entire accounting process.
Digitalization of Accounting.
Digital accounting refers to the transformation of a company's financial management using an accounting information system that allows the presentation of financial information digitally (Mergel et al.
, 2.
This digitalization involves the use of computerbased software, automation, and technologies such as cloud computing to manage and present financial information, which is very useful in decision-making and monitoring financial reports (Saputra & Paranoan, 2.
According to Manita et al.
, accounting digitalization provides several main benefits, including increased efficiency and accuracy with automation of recording, cost savings due to reduced manual recording, and improved customer service through real-time transaction processing and report generation.
Calderon-Monge and Ribeiro-Soriano .
identified several indicators of accounting digitalization, including ease of use of the system, application features that support financial management, convenience in user interaction with the system, privacy security to protect personal data, and the usefulness of the system in providing added value to the organization.
Human Resources Competence.
Preparation of quality financial reports requires human resources who have an understanding of accounting.
Human resource competencies, which include abilities, skills, and knowledge gained through education and training, are very important in producing good financial reports (Mariyatni et al.
, 2.
These competencies support the effectiveness of LPD management, with managers having the abilities according to their positions and duties (Atmadja.
Saputra, et al.
, 2.
According to Darvishmotevali and Altinay .
, human resource competency indicators include Knowledge, namely information that employees have to carry out tasks effectively.
Skills that include the ability to carry out tasks well, such as communicating and motivating others.
Behavior/Attitude, namely employee behavior patterns that support organizational goals and are fully responsible for the tasks given.
Quality of Financial Reports.
Financial statements are a structured presentation of an entity's financial position and performance, which are considered qualified if the information presented is understandable, relevant, free from material errors, and reliable (Sari et al.
, 2.
Financial statements generally include income statements, statements of changes in equity, statements of financial position, cash flow statements, and notes to the financial statements.
According to Government Regulation Number 71 of 2010, financial statements are the final result of the accounting cycle that provides information on the financial condition and results of the company's operations, which are important for economic decision-making.
The characteristics of quality financial statements include relevance, which ensures that information can influence decisions, provides feedback and predictive benefits, is presented on time, and is complete.
Financial statements must also be reliable, meaning free from misleading notions, honest, and verifiable.
addition, financial statements must be comparable, both internally and externally, with previous This open-access article is distributed under a Creative Commons Attribution (CC-BY-NC) 4.
0 license periods or other entities (Priliandani et al.
, 2.
Finally, financial statements must be understandable to users, with information presented in a form that is easy to understand.
The Influence of Accounting Understanding on the Quality of Financial Reports.
Accounting understanding is a person's ability to recognize and understand the accounting process, such as recording transactions, grouping, summarizing, reporting, and interpreting financial data.
A good level of understanding is very important in preparing quality financial reports because it can reduce errors and manipulation.
The better the accounting understanding, the better the quality of the financial reports produced, providing confidence to the principal.
Research by Amos .
Hawkins and Karki .
, and Saputra and Paranoan .
shows that accounting understanding has a significant positive effect on the quality of financial reports.
Thus, the hypothesis of this study H1: Accounting understanding has a positive and significant effect on the quality of financial The Impact of Accounting Digitalization on the Quality of Financial Reports.
Digital accounting refers to the digital transformation in financial management and presentation of accounting information.
One way to digitize accounting is by implementing an accounting information system Lee et al.
Li & Juma'h .
Shahzad et al.
The use of quality digital accounting can increase the efficiency of financial management and facilitate supervision of financial reports, which has an impact on improving the quality of financial reports and providing confidence to the principal.
Research by Liu et al.
, tutka et al.
, and Ye et al.
shows that accounting digitalization has a significant positive effect on the quality of financial Based on this, the hypothesis of this study is:
H2: Accounting digitalization has a positive and significant effect on the quality of financial reports.
The Influence of Human Resource Competence on the Quality of Financial Reports.
Human resource competence is an individual's ability acquired through education, training, and work experience (Sara, 2.
Professional competence produces accurate and reliable financial reports.
The preparation of quality financial reports requires human resources who understand accounting because they are the ones who master the accounting standards that compile them (Utari et al.
, 2.
The better the competence of human resources in LPD, the better the quality of the financial reports produced, providing confidence to the principal.
Research by Sudiarti and Juliarsa .
Utari et .
, and Sara .
show that human resource competence has a positive effect on the quality of financial reports.
Therefore, the hypothesis of this study is:
H3: Human Resource Competence has a positive and significant effect on the Quality of Financial Reports.
METHODS
This research was conducted at the Village Credit Institution (LPD) in Ubud District.
Gianyar Regency.
The objects of this research are Accounting Understanding.
Accounting Digitalization.
Human Resource Competence, and Financial Report Quality.
The population in this study was LPD in Ubud District.
Gianyar Regency, totaling 32 LPDs.
The unit of analysis of this study was the organization represented by the head of LPD.
Sampling was carried out using the non-probability sampling method with saturated sampling techniques.
The data used were primary.
Primary data in this study were the answers given by respondents to questions in the questionnaire related to the The data collection method in this study used the questionnaire method.
Respondents were asked to fill out a questionnaire containing alternative answers that must be answered by respondents (Likert scal.
Data analysis was carried out by validity test, reliability test, classical This open-access article is distributed under a Creative Commons Attribution (CC-BY-NC) 4.
0 license assumption test, multiple linear regression analysis, determination coefficient test (RA), f statistical test, and t statistical test.
RESULT AND DISCUSSION
In this study, all tested variable indicators have a correlation coefficient greater than 0.
30 under the established validity criteria.
These results indicate that all indicators in this study are declared Each instrument's Cronbach's Alpha value showed a Cronbach Alpha value > 0.
These results prove that all instruments used in this study are declared reliable.
Classical Assumption Test.
Normality Test.
In this study, the significance level is 0.
200 > 0.
05, which indicates that the data used in this study is normally distributed, so it can be concluded that the model meets the normality assumption.
Multicollinearity Test.
In this study, the tolerance value of the accounting understanding variable (X.
was obtained as 0.
428 with a VIF of 2.
338, the accounting digitalization variable (X.
had a tolerance value of 0.
533 with a VIF of 1.
875, and the human resource competency variable (X.
had a tolerance value of 0.
387 with a VIF of 2.
The tolerance value of all independent variables is more than 0.
10, and the VIF value is less than 10.
it can be concluded that the regression model created does not have symptoms of multicollinearity.
Heteroscedasticity TestIn this study, the significance value of the accounting understanding variable (X.
086, the accounting digitalization variable (X.
554, and the human resource competency variable (X.
Thus, it can be concluded that the independent variable does not influence the absolute residual indicated by the significance value of each variable tested more than 0.
05, so the model created does not contain symptoms of heteroscedasticity and is suitable for use.
Multiple Linear Regression Analysis.
In this study, the regression equation obtained is as = 1X1 2X2 3X3 e = 4.
397 X 1 0.
248 X 2 0.
376 X 3
Based on the multiple linear regression model formed, it can be interpreted as follows: The constant value obtained is 4.
418, meaning that if the three variables, namely accounting understanding, accounting digitalization, and human resource competence, are considered constant .
ith a value of .
, then the dependent variable, namely the quality of financial reports, remains at The regression coefficient value for the accounting understanding variable is 0.
397, with a significance level of 0.
009 <0.
It means that if accounting understanding increases by one unit, the quality of financial reports will also increase by 0.
397 units assuming other variables are constant.
The regression coefficient value for the accounting digitalization variable is 0.
248, with a significance level of 0.
026 <0.
It means that if accounting digitalization increases by one unit, the quality of financial reports will also increase by 0.
248 units assuming other variables are constant.
The regression coefficient value for the human resource competency variable is 0.
376, with a significance level of 0.
043 <0.
It means that if human resource competency increases by one unit, the quality of financial reports will also increase by 0.
376 units assuming other variables are constant.
In this study, obtained an adjusted R square value (R.
743 or 74.
It shows that the quality of financial reports (Y) at LPD in Ubud District can be explained by accounting understanding (X.
, accounting digitalization (X.
, and human resource competence (X.
In comparison, other factors outside the research model explain the remaining 25.
This open-access article is distributed under a Creative Commons Attribution (CC-BY-NC) 4.
0 license In this study, the calculated F value was obtained as 30.
930 with a significance of 0.
000 <0.
which indicates that accounting understanding (X.
, accounting digitalization (X.
, and human resource competence (X.
simultaneously influence the quality of financial reports (Y) at LPD in Ubud District and the model is suitable for further testing.
This t-test is conducted to test the hypothesis and determine the significant influence of the independent variable partially or individually on the independent variable.
The test results show that the accounting understanding variable has a t count of 2.
788 with a significance level of 0.
009 <0.
It means that accounting understanding has a positive and significant effect on the quality of financial reports at LPDs in Ubud District, so H1 is accepted.
The test results show that the accounting digitalization variable has a t count of 2.
350 with a significance level of 0.
026 <0.
It means that accounting digitalization has a positive and significant effect on the quality of financial reports at LPD in Ubud District, so H2 is accepted.
The test results show that the human resource competency variable has a t count of 2.
with a significance level of 0.
043 <0.
05, which means that human resource competency has a positive and significant effect on the quality of financial reports at LPD in Ubud District, so H3 is accepted.
Accounting understanding has a positive and significant effect on the quality of financial reports at Village Credit Institutions (LPD) in Ubud District.
Accounting understanding includes the ability to record transactions, group, summarize, report, and interpret financial data.
Good understanding reduces the possibility of errors and manipulation in financial reports.
The better the accounting understanding, the better the quality of the financial reports produced, thereby increasing the confidence of the principal.
Research by Ekayani et al.
Juniariani and Saputra .
Saputra.
Trisnadewi, et al.
, and Sara and Saputra .
supports that accounting understanding has a positive effect on the quality of financial reports.
Accounting digitalization has a positive and significant impact on the quality of financial reports at Village Credit Institutions (LPD) in Ubud District.
Digital accounting includes the transformation of financial management and the presentation of accounting information digitally.
The implementation of an accounting information system can optimize operations and facilitate supervision, especially in financial reports (Stoica & Ionescu-FeleagE, 2.
Good utilization of accounting digitalization increases the efficiency of financial management and has an impact on the quality of financial reports.
Research by Betti and Sarens .
Calderon-Monge and RibeiroSoriano .
, and Nenkina .
supports that accounting digitalization has a positive impact on the quality of financial reports.
Human resource competence has a positive and significant effect on the quality of financial reports at Village Credit Institutions (LPD) in Ubud District.
Human resource competence includes abilities obtained from education, training, and work experience.
Professional competence produces accurate and reliable financial reports because the reports are prepared by individuals who have mastered accounting standards (Utari et al.
, 2.
The better the competence of the LPD, the better the quality of the financial reports produced, providing confidence to the principal.
Research by Androutsopoulou et al.
Mariyatni et al.
, and Sara et al.
support that human resource competence has a positive effect on the quality of financial reports.
CONCLUSION
Based on the research results, the following conclusions can be drawn:
Accounting understanding has a positive and significant effect on the quality of financial reports at the Village Credit Institution (LPD) in Ubud District.
The better the employee's accounting understanding, the better the quality of financial reports This open-access article is distributed under a Creative Commons Attribution (CC-BY-NC) 4.
0 license Accounting digitalization has a positive and significant effect on the quality of financial reports at LPD in Ubud District.
The better the accounting digitalization, the better the quality of financial reports.
Human resource competence has a positive and significant effect on the quality of financial reports at LPD in Ubud District.
The better the human resource competence, the better the quality of financial reports.
The limitations of this study are as follows:
The scope of the research is limited to Village Credit Institutions in Ubud District, but further research is hoped to expand the research objectives.
This research is limited to accounting digitalization, especially in LPD, so the existing literature does not cover all related aspects.
This limitation opens up opportunities for further research.
This study only tests the variables of accounting understanding, accounting digitalization, and human resource competency.
Many other variables, such as internal control, work experience, and education level, also affect the quality of financial reports.
REFERENCES