The Effect of Participatory Budgeting, Information Asymmetry, and Organizational Commitment on Budgetary Slack

This study aims to analyze budgetary slack at the management level. This budgetary slack is viewed from several independent variables consisting of participatory budgeting, information asymmetry, and organizational commitment by making managers spread across the city of Surabaya as the research samples. Participatory budgeting is budgeting that involves all levels of personnel in preparing the budget. The opportunity for employees to participate in preparing the budget is closely related to the level of budgetary slack. Information asymmetry is the difference in information held between the principal and the agent. Organizational commitment can be interpreted as a situation where the executives stay in an organization where they work and are committed to their work. This study uses a quantitative approach involving multiple linear regression analysis. The results show that participatory budgeting has no effect on budgetary slack, while information asymmetry and organizational commitment have an effect on budgetary slack.

Matching Cost Against Revenue at Royalty Expenses

The recording of royalty expenses must not only be consistent but also complied with the principle of matching costs against revenue, especially in calculating taxable income. If all accounting principles are not met in recording the royalty expense, the tax authority will correct it so that the royalty expenses cannot be deducted from taxable income. By using a case in a tax court in Indonesia, there is a taxpayer who does not meet the matching cost against revenue principle when recording royalty expenses. The taxpayer deducts these royalty expenses for the previous year in the current year because the amounts of these royalty expenses are known exactly in the current year. Even though the taxpayer's financial statements were audited and had an unqualified opinion, the Directorate General of Taxes (DGT) as the tax authority in Indonesia negated the royalty expenses as a deduction from taxable income. This paper finds that a net sales-based royalty fee scheme can be estimated at the end of the year and deducted from gross income without waiting for a certainty on the amount of royalty expense on invoices received in the coming year. The accounting records of the taxpayer are not proper so that some data or documents cannot be proven in the tax court. The method of recording in the financial statements with an unqualified opinion does not guarantee that the recording follows tax regulations, especially following Generally Accepted Accounting Principles (GAAP).

The Effect of Foreign Institutional Ownership, Foreign Directors and Foreign Commissioners on Profitability

In 2018, the banking world became a hot topic of conversation because several foreign companies announced their plans to own shares in local banks in Indonesia. Merger between local banks and foreign banks will allow foreign workers to work in Indonesia. This study aims to examine whether foreign institutional ownership, foreign directors and foreign commissioners have an effect on profitability. The sample used in this research is banking companies listed on the Indonesia Stock Exchange in 2014-2018. The research method used is multiple regression analysis. The results of this study indicate that foreign institutional ownership has an effect on profitability. Acquisitions by foreign parties are considered to be able to improve the performance of local banks. Foreign-owned banks are associated with increased profits. Meanwhile, both foreign directors and foreign commissioners have no effect on profitability. The low number of foreign directors and commissioners makes their performance unnoticeable.

Culture of Corruption and Symbolic Rationality of Accounting Information – Higher Education Implication

When corruption becomes daily and socially acceptable practices, the functions of financial accounting have shifted from the instrument of managerial responsibility to a symbolic rationality of actions. Professional organizations of accountants and educational institutions consider this phenomenon as an ethical issue and have made professional ethics a mandatory subject for accounting students. This study aim to gain a better understanding of the role of accounting information in a corrupt society. It also tries to gain a better understaning that the accounting higher education institutions should play their role in this context. This study uses an interpretive phenomenological approach for the analysis. It is noted that it stresses the need for higher education institutions to take additional action by criticizing accounting principles that are fundamentally very capitalistic, being more flexible to different schools of thought, and incorporating the values of divinity into all accounting subjects.

Valuing PSAK 64 in Reducing Conservatism in The Extractive Industry

In 2011, the Indonesian Institute of Accountants (IAI) issued PSAK 64, which adopted IFRS 6 concerning exploration for and evaluation of mineral resources. It is assumed that this adoption will improve the quality of financial reporting. This current study examines the impact of PSAK 64 implementation and other related factors on financial statement conservatism. The data were collected by using data from extractive industries listed on the IDX over the period 2009-2010 and 2013-2014 to represent before and after IFRS-based PSAK mandatory implementation respectively. This study develops two regression models to analyze first, factors influence on conservatism before implementing PSAK 64 and second, the influential factors after implementing PSAK 64 by interacting among conservatism factors. The study found that exploration aggressiveness has influenced conservatism and there are no influential factors on conservatism when they interact. Generally speaking, there is a no different level of conservatism before and after implementing PSAK 64. This finding adds a body of literature on the accounting of extractive industry in Indonesia and is prospective for countries having yet adopted IFRS.

Accounting Ethics in Financial Reporting in The Context of The Metaphor of ‘Lawang Sewu’ (thousands of doors, thousands of information, thousands of interests)

This study aims to improve the readability and understanding of financial statements through a conceptual framework of financial reporting and its derivatives. This study employed an analytical method as a conceptual framework, where financial accounting standards, financial reporting, and the results are described by the term "Lawang Sewu" as a reflection. The results show that the term 'Lawang Sewu' has similarities with accounting ethics in financial reporting, where "lawang" (Javanese) means door refers to "door of information" and "sewu" (Javanese) means a thousand or many refers to having many information and interest in accounting reporting performance. Accounting ethics in financial reporting also describes the strength of the 'Lawang Sewu' building which is not damaged despite its old age. Financial statements reflect the company's past, present and future values. Based on the conceptual framework of accounting, financial statements must meet two qualitative criteria: primary qualitative (relevant and in accordance with actual conditions) and secondary qualitative (comparable, testable, timely and understandable). Thus, financial reports are expected to be transparent so that users can use them appropriately.

Determinants of Carbon Emission Disclosure: An Empirical Study on Indonesian Manufacturing Companies

Due to the worsening environmental issues e.g, climate change, the stakeholders impose greater demand and pressure more towards the companies of caring about the environment. The emergence of carbon accounting is a supplement to the adoption of Kyoto Protocol. However, the government has not applied carbon accounting to all companies in Indonesia, because of non-explicit laws and low quality of human resources. Various studies have been conducted to find the determinant factors for companies to make carbon emission disclosure. This research aims at examining the influence of type of industry, profitability, company size, environmental performance, and audit firm reputation on the carbon emission disclosure of manufacturing companies listed on the Indonesia Stock Exchange years 2016-2019. It employed a purposive sampling technique and obtained 290 observations and the data were analyzed using Ordinary Least Square. The shows that type of industry, profitability and company size influence carbon emission disclosure. However, this research does not successfully show the influence of environmental performance and reputation of public accountant office on carbon emission disclosure.

Audit Expectation GAP in The Public Sector of The Gambia

In the private sector, the audit expectations deficit is a big concern. The audit expectations divide, on the other hand, is a new problem in the public sector that has received little attention from researchers. Just a few studies on the audit expectations deficit in the public sector have been conducted so far in the sense of financial audit. In the background of the above, this study centered on the audit expectations difference. The study was motivated by the importance of the financial audit feature in the Gambian public sector, as well as recent developments related to this type of audit in the country (such as rising expectations among users and associated problems in practice). As a result, the study aims to assess whether or not there is a difference in audit expectations in the Gambian public sector. According to the results of this report, there is an audit expectations deficit in the Gambian public sector when it comes to performance auditing. Interviews indicate that there is a broad gap in audit standards on several auditing topics. These include fraud detection exercises, management, executive and other parties' impact on auditors, audit report format, and widening the audit mandate to include policy merits.

Tax Compliance: Respectful Treatment and Institutional Image

This study aims to analyze the effect of respectful treatment and institutional image on tax compliance. This study used a survey method of individual non-employee taxpayers at the Primary Tax Office (KPP) in the Regional Office of the DJP I, East Java, totaling 304 respondents. The data were analyzed using Structural Equation Modeling (SEM). The research findings showed that the strength of Crowding Theory and Trust Theory, and that the extrinsic intervention in the form of reward and punishment cannot always increase taxpayer compliance. Instead, a respectful approach and goodwill, ability and integrity of tax authorities in solving tax problems of taxpayers can increase tax compliance. This is supported by the results of the study that: 1) respectful treatment can improve institutional image; 2) respectful treatment can increase tax compliance; 3) institutional image can increase tax compliance. The implication of research results, respectful treatment of tax officers can be used to improve the image of the DJP and taxpayer compliance.

Analysis of Earnings Management Practices Using the Modified Jones Model on the Industry Company Index Kompas 100

This study aimed to examine the issue of differences in earnings management patterns in companies listed on the Indonesia Stock Exchange (IDX). Earnings management can occur because company management wants to take advantage of accounting descriptions/policies under the character of the assets, existing in each of these industries. This study used a Modified Jones Model approach in determining earnings management proxies. Besides, it also used analysis of variance (ANOVA) to test whether there were differences in earnings management patterns. The data were consisted of 450 companies from 8 industrial sectors in the Kompas 100 Stock Index during 2015-2019. They were from various industries; essential and chemical industry; consumer goods; services; mining, oil, natural gas; plantation; property and real estate; and banking. The result shows that there are differences in earnings management patterns between industrial sectors. Therefore, company management practices earnings management following the characteristics of each industry. The research also suggests that the next study should analyze the comparison of earnings management with other models to determine the consistency of results.