DAMPAK PENGENDALIAN APARAT PENGAWAS INTERNAL PEMERINTAH (APIP) TERHADAP KINERJA KEUANGAN PEMERINTAH DAERAH DI INDONESIA

abstract. The financial performance of an organization, be it public or private, is a
critical indicator for evaluating its sustainability. This study aims to investigate the extent
to which the capacity of the Government Internal Supervisory Apparatus (APIP) affects
the financial performance of local governments in Indonesia. The analysis uses data from
542 local governments, including provinces, districts, and cities, employing a purposive
sampling method with a final sample of 2,710 observations. The results shows that APIP
considerably influences financial performance, specifically in the areas of fiscal
independence, financial flexibility, and service solvency. The implications of this
research emphasize the necessity of enhancing APIP's capabilities to encourage improved
governance, particularly in local financial management. Nonetheless, this study is
constrained by its dependence on secondary data and the variability present in regional
data, which may limit the generalizability of the results. Therefore, future research
should explore wider datasets and incorporate additional variables to provide a more
comprehensive understanding of APIP's role in regional financial performance.

Keywords: Internal control, financial performance, local government, fiscal
independence, financial flexibility, service solvency.