Corresponding Author: Umi
Kulsum
E-mail: [email protected]
INTRODUCTION
The town, in light of Regulation No. 6 of 2014
concerning Towns, is a lawful local area unit with regional limits approved to
direct and oversee administration undertakings, nearby local area intrigues
given local area drives, tribal freedoms, or potentially perceived and regarded
conventional privileges inside the administration arrangement of the Unitary
Condition of the Republic of Indonesia. The advancement of towns fills in as
the establishment of the headway of a country (Soleh &
Rohmansjah, 2014). Therefore, village governance needs to be organized
according to the principle of the Unity of the Indonesian State to assist the
progress of Indonesia.
In carrying out its governance, the village needs to
develop a strategic plan to achieve a goal, including village finances. The
town government has the right and commitment to deal with the assets and
resources claimed by the town. Town finance is characterized in Guideline of
the Priest of Home Undertakings No. 20 of 2018 as all freedoms and commitments
of the town that can be esteemed in cash and everything as cash and products
connected with the execution of town privileges and commitments. Village finances
must be managed from planning, implementation, recording, and reporting to
accountability stages by applicable regulations.
Villages have several sources of income that need to
be managed and allocated according to the needs and priority scale of village
expenditures to benefit and improve the welfare of their people effectively.
One source of village income comes from transfers from the central and regional
governments through the local city or district budget, known as town reserves.
The reason for dispensing town reserves is expressed in the Pastor of Towns
Guideline No. 7 of 2023 concerning the Subtleties of the Need Utilization of
Town Assets, which is to help the funding of administration, advancement
execution, local area strengthening, and local area improvement. By Unofficial
law No. 60 of 2014, the town should be overseen in an organized, consistent
with legitimate arrangements, productive, conservative, prosperous,
straightforward, and responsible way, taking into account a feeling of equity
and propriety and focusing on the interests of the neighbourhood local area.
Village finances with village authority correlate with
the principle of money (Mustangin & Rani,
2020). The distribution of funds from the central and
regional governments is a form of material support provided to enhance village
development. In other words, village governments face the challenge of
conducting their governance independently to the best of their abilities. The
independence of village communities in managing their governance is an
essential aspect of village financial management. These challenges require
village governments to be accountable and transparent to stakeholders,
including the central government, regional government, and community.
Issues related to village financial management also
arise in line with challenges and developments. For example, in Magelang
Regency, Central Java. The study by Mustangin and Rani suggests that problems
often faced by village governments in Magelang Regency include low quality of
human resources, misallocation of tasks, lack of guidance or guidance on
village financial management, and lack of supervision (Mustangin & Rani,
2020). The study by Sukmawati and Nurfitriani found that in
the Garut Regency, the suitable and high-quality human resources available in
villages mustmust be improved, often leading to administrative problems (Sukmawati &
Nurfitriani, 2019).
Village governments often face various challenges and
issues in managing village finances. These challenges and issues may vary
depending on the capabilities of the respective villages. One of the main
problems often encountered is the low quality of human resources, resulting in
less than optimal administrative capacity and skills. Additionally, problems
may arise when the financial resources and infrastructure of the respective
villages are limited. Complex regulations and lack of access to information can
also be hindrances. Therefore, village governments should seriously consider
village financial management to promote inclusive and sustainable development.
This research aims to conduct an in-depth analysis of
the factors influencing village financial management. The article identifies
various aspects that can contribute to the performance of village financial
management, including but not limited to external factors such as government
regulations and financial support from government institutions, as well as
internal factors such as the competence of village officials, transparency, and
accountability in financial management. This analysis aims to foster a deeper
comprehension of the interplay between these factors and their impact on the
efficiency of village financial management, thereby offering valuable insights
to enhance its overall performance and accountability.
METHOD
In this reserach
article, the approach employed is a qualitative descriptive approach. As
elucidated by Yusuf, the qualitative approach refers to interpreting research
objects and their outcomes by generating in-depth descriptions without relying
on numbers or statistical processes (Yusuf, 2016). The selection of a qualitative descriptive approach in
this scholarly article is based on the need to delve into the actual context
and conditions faced by village governments in managing their finances. The
informants for this study were selected based on their roles and involvement in
village financial management. These included village officials, community
leaders, and relevant stakeholders who have a direct or indirect influence on
financial management practices within the villages. A purposive sampling
technique was employed in this research. This method was chosen to ensure that
the informants selected had the necessary experience and knowledge to provide
valuable insights into the factors influencing village financial management. By
focusing on specific individuals who are actively engaged in financial
activities, the study aims to obtain rich, detailed data. Data for this study
were collected through a comprehensive literature review. Relevant sources,
including academic journals, government reports, and previous research studies,
were reviewed to gather information on the factors affecting village financial
management. This method allowed for an in-depth exploration of the existing
body of knowledge and identification of key themes and patterns.
RESULTS AND DISCUSSION
Internal Factors
Human Resource Quality
Research by Basri, Marianti, and Rofika found that the
nature of HR influences town monetary administration. This shows that the
higher the nature of HR, the better the town's monetary administration (Basri et al., 2021). Research by Rulyanti, Sularso, and Sayekti found that
HR affects town monetary administration and government performance (Rulyanti et al., 2018). Exploration by Latif, Savitri, and Susilatri likewise
found that the nature of HR influences town monetary administration (Latif et al., 2021).
The nature of HR, particularly town authorities
straightforwardly associated with town monetary administration, is the primary
resource in completing regulatory and administrative undertakings connected
with town monetary administration. A profound comprehension and abilities in
monetary administration are critical determinants of the viability of town
monetary administration. A solid and good understanding of basic principles of
financial management and accounting, such as budget planning, expenditure control,
and financial reporting, are crucial for village officials as they enable them
to make informed decisions in allocating village funds for development programs
and public services. Skills in financial administration management, including
recording financial transactions, preparing financial reports, and evaluating
financial performance, are also necessary to ensure that village financial
management runs smoothly and orderly. These skills help village officials
ensure compliance with applicable financial regulations and enhance
accountability in financial management.
Rusby says they need to obtain high-quality human
resources, training, and education. Someone from an accounting or financial
management background will be highly needed to manage village finances because
high-quality financial reports can only be prepared by people with knowledge in
these fields. The higher the competency of human resources possessed by village
governments, the better the quality of financial reports produced.
Transparency and Accountability
Research by Latif, Savitri, and Susilatri found that
transparency and accountability affect village financial management (Latif et al., 2021). Basri, Marianti, and Rofika's research also found that
transparency and accountability influence village financial management (Basri et al., 2021). Transparency and accountability are two crucial pillars
in village financial management. According to Sukmawati and Nurfitriani from
their research, transparency and accountability simultaneously influence
village financial management (Sukmawati &
Nurfitriani, 2019).
A high level of openness in all aspects of village
financial management, from fund allocation to utilization, will provide a clear
window for the public and the government to understand how village finances are
managed. With good transparency, the public will have better access to village
financial information, enabling them to understand how village funds are used
directly and for what purposes. When transparency is applied in village
financial management, it allows for oversight and control by authorized parties,
as this transparency is based on the right to obtain information openly (Mardiasmo, 2009).
High levels of accountability are also crucial to
building trust. When village governments are clearly and openly responsible for
village financial management, it can increase public confidence that village
funds are used correctly and efficiently according to community needs and
interests. The public will feel more confident that the village government acts
with integrity and transparency in every financial decision made for the common
good. Additionally, the high level of trust from the central government,
provincial government, and district/city government in the performance of
village financial management is also greatly influenced by transparency and
accountability. With a transparent and accountable village financial management
system, the central and regional governments will be more confident and
motivated to provide more significant financial support to villages.
Community Participation
Research by Basri, Marianti, and Rofika found that
community participation affects village financial management (Basri et al., 2021). Julianto's study also found that community
participation significantly positively influences village financial management (Julianto & Dewi,
2019). Indriani et al.'s research revealed that there is a
positive relationship between the level of community participation and the
quality of village financial management (Indriani et al., 2019). It means that the higher the level of community
participation, the better the quality of village financial management.
Rakhmawati, Sriningsih, and Suhaedi stated in their research that community
participation in planning can create a sense of ownership, which will foster a
sense of responsibility so that the community will also strive to achieve the
success of the planned programs (Rakhmawati et al., 2020). Thus, community participation will help village
governments maximize and optimize the management of their finances.
The community's high level of participation and
involvement in decision-making processes related to village financial
management can significantly impact the transparency and accountability of the
use of village funds. Community participation allows villagers to provide their
input and opinions regarding allocating village funds. Through participatory
mechanisms such as village meetings or community forums, the community can
directly contribute to determining development priorities and services they deem
essential. Thus, community participation opens up direct communication channels
between the village government and its residents, enhancing transparency in
decision-making processes.
Community participation also plays a role in monitoring
and overseeing the use of village funds. An effective social control mechanism
is established with active involvement from the community in monitoring the
implementation of development programs and using village budgets. The community
can ensure that village funds are used by established regulations and for the
public interest and report any deviations or misuse of funds.
Community participation also increases the level of
accountability of the village government. Knowing that decisions related to
village financial management are based on consensus and mutual agreement
between the village government and the community can strengthen the village
government's sense of responsibility in transparently and accountably
fulfilling its duties. Actively engaged communities also tend to have more
trust in and support the policies adopted by the village government. Thus,
community participation is crucial in creating a transparent and accountable
environment in village financial management. Through active community
involvement, village financial management can become more effective, efficient,
and oriented towards the community's overall interests.
External Factors
Government Regulations and Policies
Fahri's research found that the existence of policies
related to Village Funds showed a positive influence on village financial
management and the effectiveness of its management (Fahri, 2017). Khoiriah and Meylina, in their research, revealed that
Indonesia already has regulations regarding village funds which are pretty
significant from the initial stages, namely the management of village funds to
the monitoring system so that it will have the opportunity to have a positive
impact on the implementation of village financial management, especially on the
accountability of village government administration (Siti & Utia, 2017). Thus, government regulations and policies relating to
village financial management significantly impact various aspects of village
financial management processes and practices.
Regulations and policies establish a framework that
governs how village financial management should be conducted through
procedures, standards, and principles that the village government must follow
in planning, implementing, and controlling village financial components. With a
clear framework of regulations and policies, the village government has strong
guidelines to carry out its duties in village financial management, thereby
minimizing errors.
Government regulations and policies also guide the
allocation and use of village funds. These regulations and policies govern the
requirements and priorities for using village funds, as well as the mechanisms
for monitoring and controlling their use. Thus, these regulations and policies
play a role in ensuring that village financial management is carried out with
full accountability and transparency and in accordance with the community's
needs and interests.
Government regulations and policies can also provide
incentives or sanctions for the performance of village financial management.
Forms of recognition, such as incentives, can be given to village governments
that achieve specific targets in village financial management. On the other
hand, regulations and policies are also binding. They can, therefore, impose
sanctions on village governments that violate established provisions, such as
withholding or delaying village funds. Overall, government regulations and
policies related to village financial management play an essential role in
shaping an environment conducive to effective, efficient, and accountable
village financial management.
Economic and Social Conditions of
Rural Communities
The economic and social conditions
of rural communities significantly impact the village financial management
process, including the priorities and allocation of budgets by the village
government. The poverty level in rural communities is a crucial factor
influencing the allocation of village budgets. Villages with high levels of
poverty tend to have more urgent needs regarding essential services such as
health, education, sanitation, and infrastructure. Therefore, the village
government must allocate significant funds to meet these urgent needs,
prioritizing programs that can reduce poverty and improve community welfare.
Infrastructure
conditions also play a crucial role in decision-making related to village
budget allocation. Villages with underdeveloped or damaged infrastructure
require significant investment in essential infrastructure development such as
roads, bridges, water channels, and electricity. Therefore, the village
government must allocate a significant portion of the village funds to repair
and improve existing infrastructure to enhance community accessibility and
mobility and support local economic growth. The level of education also becomes
a significant consideration in village budget allocation. Villages with low
levels of education may require more significant investments in education, such
as school construction or renovation, teacher training, and non-formal
education programs. The village government must prioritize fund allocation to
improve access and quality of education in the village to enhance human
resources quality and create better economic opportunities for rural
communities.
Available Technology and
Infrastructure
Information technology
and adequate infrastructure are essential factors that can positively impact
village financial management and strengthen transparency and accountability.
The availability of information technology, such as accounting software information
systems, can enhance efficiency in village financial management processes.
There is a Village Financial System Application (SISKEUDES) designed by the
Financial and Development Supervisory Agency (BPKP), intended to improve the
quality of financial governance in village governments. With this technology,
financial transaction recording can be done more quickly and accurately,
enabling village governments to manage budgets more efficiently. Financial
information systems can also provide real-time financial reports, allowing
village governments to conduct faster and more accurate analysis and
decision-making.
Sulina, Wahyuni, and
Kurniawan in their research revealed that the implementation of SISKEUDES had a
positive impact on employee performance because SISKEUDES helped village
government employees in carrying out their work, especially regarding village
financial management (Sulina et al., 2017). Mega, Kalangi, and Kapojos' research found that the
existence of SISKEUDES had a positive influence on village financial management
because it increased accountability. It means that the better the use and
utilization of SISKEUDES, the more accountable the village's financial
management will be (Mega et al., 2022). Arfiansyah found a similar thing: SISKEUDES impacted
village financial management regarding accountability (Arfiansyah, 2020).
Furthermore, adequate
infrastructure, such as internet networks and stable electricity, is crucial in
supporting the use of information technology in village financial management.
With good infrastructure, the village government can access information technology
more quickly and without disruption, thus maximizing the potential use of
technology in improving financial management efficiency. Through online
platforms or specialized applications, the village government can publish
financial information openly to the public. It allows the community to monitor
the use of village funds directly, enhancing transparency in village financial
management. Additionally, with digital traces of every financial transaction,
accountability in the use of village funds can also be strengthened because
every financial activity can be easily tracked and verified. Thus, the
availability of information technology and adequate infrastructure improves
efficiency in village financial management and enhances transparency and accountability
in the process.
CONCLUSION
Based on the results and discussions,
various factors affect village financial management. These factors are divided
into internal and external factors. Internal factors include several essential
aspects: the quality of human resources, especially village officials and their
knowledge of financial management or accounting, dramatically affects the
effectiveness of village financial management. Transparency and accountability
in village financial management also play crucial roles. Additionally, the level
of community participation and involvement in the village financial management
process is another critical factor. External factors that affect village
financial management include regulations and policies from the central and
regional governments, which greatly determine how village finances are managed.
The local village community's economic and social conditions also significantly
impact village financial management. Furthermore, the availability of
technology and infrastructure affects the ability of villages to manage their
finances effectively.
This study's findings have important
implications for village governance and policy-making. Understanding the
critical internal and external factors influencing village financial management
can help village officials and policymakers design and implement more effective
financial management strategies. Improving the quality of human resources
through training and education, enhancing transparency and accountability
mechanisms, and encouraging community participation can significantly boost the
effectiveness of village financial management. Additionally, supportive
government regulations, improved economic and social conditions, and better
technological and infrastructural support are essential for optimal village
financial management. These efforts collectively contribute to sustainable and
inclusive village development.
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