Thesis: Analysis of the Internal Control System for Recording Fixed Assets (Government-Owned Assets) in the City Government of Tual.

Introduction

Until the 2016 fiscal year, the City Government of Tual received a Qualified Opinion with Exceptions from the Supreme Audit Agency of the Republic of Indonesia. The exceptions highlighted by the Auditor of the Supreme Audit Agency of the Republic of Indonesia were related to the fixed assets (government property) that were not adequately recorded and disclosed in the government's financial statements.

Research Objective

This study aims to provide a solution to the City Government of Tual regarding the implementation of the Accounting Policy for Fixed Assets (Government Property) which continues to be a problem in terms of weaknesses in the internal control system for the recording of fixed assets or government property of the City Government of Tual. It aims to provide valuable input for the City Government of Tual in enhancing internal control over the recording of fixed assets or government property, which has been a recurring issue during audits. Additionally, this research is expected to assist the City Government of Tual, particularly the Financial and Asset Management Agency of Tual, as the control unit, in optimizing fixed asset management.

Literature Review and Theory

This research has not been conducted in the City Government of Tual but has been carried out by other researchers in different locations using different patterns and methods. In this study, the researcher refers to several theories, namely Freeman Shoulder, Governmental and Non-Profit Accounting, Prentice Hall Publishing, 7th edition, 2003, Gustrina Dewi Hilda (2012). Analysis of the Audit Results of the Supreme Audit Agency of the Republic of Indonesia on Fixed Assets in the Financial Statements of Ministries/Agencies, and Fitri Ainul (2017). Evaluation of the Internal Control System of the Government in the Management of Social Assistance Expenditures (A Study in the City Government of Bandar Lampung) (Thesis), Gadjah Mada University. Additionally, the researcher obtained information from the reports of the Supreme Audit Agency of the Republic of Indonesia regarding the Internal Control System of the City Government of Tual from 2014 to 2017.

Methodology

This research focuses on the City Government of Tual in the Maluku Province and adopts a qualitative research approach. The key informants for this study include the Head of the Financial and Asset Management Agency of Tual, Head of the Asset Management Division, Head of the Accounting and Reporting Division, Head of the Budgeting Division, and Head of the Procurement Analysis Sub-Division. The research instruments involve interview techniques, observation, and data collection related to internal control and fixed assets or government property.

Findings

The internal control system of the government is regulated by Government Regulation No. 60 of 2008, which is an integral process of continuous actions and activities carried out by the leaders and employees to provide adequate assurance regarding the achievement of organizational objectives through effective and efficient activities, reliable financial reporting, safeguarding state assets, and compliance with laws and regulations. The government's internal control system refers to the Committee of Sponsoring Organizations of the Treadway Commission (COSO), which consists of five elements: control environment, risk assessment, control activities, information and communication, and monitoring.

Based on interviews, observations, procedural walkthroughs, triangulation, and supporting documents, it was found that the City Government of Tual still has several weaknesses. These include inadequate recording of fixed assets, which is partly caused by discrepancies between the documents or proofs of ownership transferred by the Southeast Maluku Regency Government and the physical assets on the field. There are also missing fixed assets whose whereabouts are unknown, resulting in losses for the local government. Additionally, the City Government of Tual does not have regulations regarding minimum standards for infrastructure and facilities for government property, leading to a lack of legal certainty and control in the procurement of fixed assets. These issues have resulted in the Supreme Audit Agency of the Republic of Indonesia continuing to provide a Qualified Opinion with Exceptions on the financial statements of the City Government of Tual, specifically concerning the management of fixed assets or government property.

Conclusion

Based on interviews, observations, inspections, procedural walkthroughs, triangulation, and other supporting documents, the conclusion regarding the Internal Control System of the Government for the recording of Fixed Assets or Government Property in the City Government of Tual includes the following: inadequate control environment for planning and budgeting for the acquisition of fixed assets or government property, suboptimal risk assessment for the acquisition of fixed assets or government property, inadequate control activities for recording and administration due to insufficient human resources, information and communication in accordance with procedures, and lastly, monitoring of internal control through follow-up actions on audit results that are still ongoing.

Recommendations

Based on the analysis and identification of the issues found in the field, the following weaknesses, and deficiencies in the internal control process for the management of fixed assets or government property were identified:

The City Government of Tual should regularly conduct training or workshops for Civil Servants with tasks and functions related to government property (fixed assets).
The City Government of Tual should re-evaluate the system of planning and budgeting for capital expenditures on government property.
The documents or proofs of ownership for fixed assets or government property transferred by the Southeast Maluku Regency cannot be traced to their physical assets. It is recommended to conduct a re-inventory process and proceed with disposal if the whereabouts of government property are still unknown.
The City Government of Tual should initiate compensation claims against users who are negligent and cause losses to the local government due to the loss or unknown whereabouts of various fixed assets or government property acquired.
The City Government of Tual should promptly develop regulations related to the control of government property in the form of Minimum Standards for the facilities and infrastructure of government property.

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