University of Wollongong Research Online University of Wollongong Thesis Collection University of Wollongong Thesis Collections 2014 Understanding the practice of accountability reporting: a case of Indonesian local government Muhammad Hudaya University of Wollongong Recommended Citation Hudaya, Muhammad, Understanding the practice of accountability reporting: a case of Indonesian local government, Doctor of Philosophy thesis, School of Accounting and Finance, University of Wollongong, 2014. http://ro.uow.edu.au/theses/4114 Research Online is the open access institutional repository for the University of Wollongong. For further information contact the UOW Library: [email protected] School of Accounting and Finance Faculty of Business Understanding the Practice of Accountability Reporting: A Case of Indonesian Local Government Muhammad Hudaya This thesis is presented as part of the requirements for the award of the Degree of Doctor of Philosophy The University of Wollongong May 2014 Certification I, Muhammad Hudaya, declare that this thesis, submitted in partial fulfilment of the requirements for the award of Doctor Philosophy, in the School of Accounting and Finance, University of Wollongong, is wholly my own work unless otherwise referenced or acknowledged. The document has not been submitted for qualifications at any other academic institution. Muhammad Hudaya May 2014 ii Table of Contents Certification................................................................................................................... ii Table of Contents ......................................................................................................... iii List of Figures ............................................................................................................. vii List of Tables.............................................................................................................. viii List of Abbreviations.................................................................................................... ix Abstract ......................................................................................................................... x Acknowledgments ...................................................................................................... xiii Chapter 1: Introduction ................................................................................................. 1 1.1. Statement of the Problem ............................................................................................ 1 1.2. Significance of the Study ............................................................................................ 3 1.3. The Aims and Scope of the Research .......................................................................... 5 1.4. Contributions of the Thesis ......................................................................................... 8 1.5. A Brief Research Methodology ................................................................................. 11 1.6. Organisation of the Thesis ......................................................................................... 13 Chapter 2: Literature Review ...................................................................................... 15 2.1. Introduction ............................................................................................................... 15 2.2. The Concept of Accountability ................................................................................. 15 2.3. Definitions of Accountability .................................................................................... 18 2.4. Accountability Framework in the Public Sector ....................................................... 23 2.4.1. Public-Organisation Characteristics ................................................................... 23 2.4.2. Accounting and Myth in the Public Organisations ............................................. 25 2.4.3. Accountability Framework ................................................................................. 27 2.5. Accountability: Some Critiques ................................................................................ 29 2.6. Annual Report as Medium of Accountability ........................................................... 32 2.7. The Local-Government Accountability System in the Indonesian Context .............. 36 2.7.1. Pre-Reform Era ................................................................................................... 37 iii 2.7.2. Reform Era .......................................................................................................... 39 2.7.3. Accountability Forum as Part of Accountability Mechanism ............................ 44 2.8. Conclusion ................................................................................................................. 45 Chapter 3: The History of Indonesia and Legacies of the Soeharto Regime .............. 47 3.1. Introduction ............................................................................................................... 47 3.2. The History of Indonesia ........................................................................................... 47 3.3. The Legacies of the Soeharto Regime ....................................................................... 50 3.3.1. Golkar: The Soeharto Regime-Sponsored Political Party .................................. 50 3.3.2. Self-Interested Behaviour of Members of Parliaments....................................... 52 3.3.3. Symbolic Display of Audit Bodies ..................................................................... 53 3.3.4. Keenness to Build “Good Impressions" ............................................................. 54 3.3.5. Politicised Bureaucracy ...................................................................................... 55 3.3.6. Corruption ........................................................................................................... 56 3.4. Conclusion ................................................................................................................. 57 Chapter 4: The South Kalimantan Provincial Government ........................................ 58 4.1. Introduction ............................................................................................................... 58 4.2. Indonesian Government Organisation in Brief ......................................................... 58 4.3. South Kalimantan Province ....................................................................................... 59 4.4. Banjarese Institutions ................................................................................................ 62 4.4.1. Current Governor of South Kalimantan Province .............................................. 65 4.5. The Practice of Accounting in the Socio-religious Context ...................................... 68 4.6. The Accountability System and Reporting under the Yudhoyono Administration .. 71 4.7. South Kalimantan Provincial Government ................................................................ 74 4.7.1. History of the SKPG ........................................................................................... 74 4.7.2. Organisational Culture of the SKPG .................................................................. 75 4.7.3. Structure of the SKPG ........................................................................................ 78 4.8. Conclusion ................................................................................................................. 79 Chapter 5: Theoretical Framework ............................................................................. 81 5.1. Introduction ............................................................................................................... 81 iv 5.2. Institutional Theory ................................................................................................... 81 5.3. Legitimacy as an Essential Concept .......................................................................... 84 5.4. Institutions and the Mechanism of Institutionalisation ............................................. 85 5.5. Strategic Responses to Institutional Processes .......................................................... 90 5.6. Institutional Theory: Some Shortcomings ................................................................. 94 5.7. The Problematic but Useful Concept of Decoupling ................................................ 97 5.8. Theory of Power as a Complementary Theory ......................................................... 99 5.9. Research Framework ............................................................................................... 103 5.10. Conclusion ............................................................................................................. 110 Chapter 6: Research Methodology ............................................................................ 111 6.1. Introduction ............................................................................................................. 111 6.2. Philosophical Basis .................................................................................................. 111 6.3. Case Study Research ............................................................................................... 113 6.4. The Case Study Research Design ...........................................................................