PUBLI

CSECTORACCOUNTI
NG

ConceptofSt
ateandRegi
onal
Finance

LECTURERS:

Sat
ri
aTr
iNandaSE,
M.Si

ARRANGEBY:

Aul
i
aRonaAndi
ra(2062201150)

Del
i
anaEr
ica(
2062201129)

Kar
ti
kaAf
eli
naYohanaMal
au(2062201066)

Put
riSar
i(2062201063)

Sr
iRi
zki
(2062201053)

Economi
cFacul
tyofLancangKuni
ng

FY2021/
2022
 FOREWORD

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 TABLEOFCONTENTS

FOREWORD
TABLEOFCONTENTS
CHAPTERII
NTRODUCTI
ON
1.
1Backgr
ound 1
1.
2Pr
obl
em For
mul
ati
on 2
1.
3Pur
poseofWr
it
ing 2
CHAPTERI
IDI
SCUSSI
ON
2.
1Def
ini
ti
onofSt
ateFi
nanceandRegi
onal
Finance 3
2.
2ScopeofSt
ateFi
nanceandRegi
onal
Finance 3
2.
3St
ateandRegi
onal
Financi
alManagement 4
2.
4Powerov
erSt
ateandRegi
onal
Financi
alManagement 5
2.
5Pr
epar
ati
onandDet
ermi
nat
ionofAPBNandAPBD 6
CHAPTERI
IICLOSI
NG
3.
1CONCLUSI
ON 11
BI
BLI
OGRAPHY
 CHAPTER I

BACKGROUND

1.1 Background

It is undeniable that the administration of the State and the government will definitely
require no small amount of funds. For this reason, the procedures and processes for receiving
and disbursing money are regulated for the benefit of the running of the state and government.
One of the provisions governing this issue of state financial management is as regulated in Article
23.

According to the provisions of Article 23 paragraph (2) of the 1945 Constitution, every
year the Government is required to prepare a Draft State Revenue and Expenditure Budget, to be
discussed together and subsequently approved by the House of Representatives, taking into
account the considerations of the Regional Representatives Council, as a guideline for the
administration of government. in the financial sector. As stated in the Elucidation of the Law of
the Republic of Indonesia Number 17 of 2003 concerning State Finances that the general
principle of managing state finances in order to support the realization of good governance in the
administration of the state, the management of state finances needs to be carried out in a
professional, open, and responsible manner in accordance with the basic rules. which has been
stipulated in the Constitution.

In accordance with the mandate of the 1945 Constitution, Article 23 C concerning State
Finance has outlined the basic rules stipulated by the Constitution into general principles in
managing state finances, such as the annual principle, general principle, unity principle, and
specialization principle as well as principles as a reflection of best practices. (application of good
principles) in the management of state finances.

In addition to the State, each Region also has special rights. The current reform era
provides an opportunity for a change in the national development paradigm from a growth
paradigm to a more equitable and balanced development distribution paradigm. Changes in this
paradigm, among others, are realized through the policy of regional autonomy and the balance
of central and regional finance which is regulated in one package of laws, namely Law no. 22 of
1999 concerning Regional Government and Law no. 25 of 1999 concerning the Balance between
the Central and Regional Governments.

1
1.2 Problem Formulation

1. What is the concept of state finance?

2. What is the concept of regional finance?

1.3 Purpose of Writing

1. To find out how the concept of state finances

2. To find out how the concept of regional finance

2
 CHAPTER II

DISCUSSION

2.1 Definition of State Finance and Regional Finance

The approach used in formulating the definition of State Finance is in terms of objects,
subjects, processes, and objectives, namely:

a. From the object side, what is meant by State Finance includes all rights and obligations of the
state that can be valued in money, including policies and activities in the fiscal, monetary and
management of separated state assets, as well as everything in the form of money or goods
that can be used as state property. related to the implementation of these rights and
obligations. (Law No. 17 of 2003)
b. In terms of subjects, what is meant by State Finance includes all objects as mentioned above
which are owned by the state, and/or controlled by the Central Government, Regional
Governments, State/Regional Companies, and other bodies related to state finances.
c. From the process side, State Finance covers the entire series of activities related to the
management of objects as mentioned above, starting from policy formulation and decision
making to accountability.
d. In terms of objectives, State Finance includes all policies, activities and legal relations related
to ownership and/or control of objects in the context of administering state government.

While the definition of regional finance as contained in the explanation of article 156
paragraph (1) of Law Number 32 of 2004 concerning Regional Government is all regional rights and
obligations that can be valued in money and everything in the form of money and goods that can be
used as regional property related to implementation of these rights and obligations.

2.2 Scope of State Finance and Regional Finance

The scope of state finance includes:

1. The right of the state to collect taxes, issue and circulate money, and make loans.
2. The state's obligation to carry out public service tasks for the state government and pay third
party bills.
3. State revenue.
4. State output.

3
 5. Regional reception.
6. Regional output.
7. State assets/regional assets managed by themselves or by other parties in the form of money,
securities, receivables, goods, and other rights that can be valued in money, including assets
separated from state/regional companies.
8. The wealth of other parties controlled by the government in the context of carrying out
government duties and/or public interests.
9. The wealth of other parties obtained by using facilities provided by the government.
10. The assets of other parties as referred to include assets managed by other people or entities
based on government policies, foundations within the state ministries/agencies, or
state/regional companies.
11. The wealth of other parties obtained by using facilities provided by the government.

The scope of regional finance includes:

1. The right of the region to collect regional taxes and levies and make loans.
2. Regional obligations to carry out regional government affairs and pay third party bills.
3. Regional reception.
4. Regional output.
5. Regional assets managed by themselves or by other parties in the form of money, securities,
receivables, goods, and other rights that can be valued in money, including assets separated
from regional companies.
6. The assets of other parties controlled by the regional government in the context of carrying
out the tasks of the regional government and/or the public interest.

2.3 State and Regional Financial Management

Management of State and Regional Finances are all activities that include planning,
implementation, administration, reporting, accountability, and supervision of state and regional
finances. The activities carried out in the management of state and regional finances are as follows:

1. Planning

2. Implementation

3. Administration

4
4. Accountability

5. Supervision

Basic principles of State and Regional financial management:

• Results-oriented accountability
• Professionality
• Proportionality
• Openness in state management
• Financial audit by a free and independent audit body

2.4 Power over State and Regional Financial Management

Legal basis for state financial management:

1. 1945 Constitution Amendment IV Chapter VIII Article 28 C

2. UU No. 17 of 2003 concerning State Finance
3. UU No. 1 of 2004 concerning the State Treasury
4. UU No. 15 of 2005 concerning Audit of State Finance Management and Accountability
5. PP No. 71 of 2010 concerning Government Accounting Standards

The state's financial power is held by the President as the Head of Government and as part of
the government's power. The powers in question are as follows:

1. Authorized to the Minister of Finance, as the fiscal manager and Government Representative
in the ownership of separated state assets.
2. Authorized to the minister/head of institution as Budget User/User of goods of the state
ministry/institution he leads.
3. It is submitted to the governor/regent/mayor as the head of the regional government to
manage regional finances and represent the regional government in the ownership of
separated regional assets.
4. Regional financial power is exercised by the head of the regional financial management work
unit as the APBD managing official and the head of the regional work unit as the official user
of regional budget/goods.

Regional financial management institutions:

5
 1. The regional head as the holder of regional financial management power
2. Regional Secretary as coordinator of regional financial management
3. Head of the Regional Financial Management Work Unit (SKPKD) as the official managing state
finances
4. Head of the Village Apparatus Work Unit (SKPD) as the official Budget User/Local Goods User

Regional financial management foundation:

1. 1945 Constitution Amendment IV Chapter VIII

2. UU No. 17 of 2003 concerning State Finance
3. UU No. 1 of 2004 concerning the State Treasury
4. UU No. 15 of 2005 concerning Audit of State Finance Management and Accountability
5. UU No. 33 of 2004 concerning Regional Government
6. UU No. 34 of 2004 concerning Financial Balance between Central and Regional Governments
7. PP No. 58 of 2005 concerning State Financial Management
8. Permendagri No. 13 of 2006 and Permendagri No. 59 of 2007 concerning Guidelines for
Regional Financial Management
9. PP No. 71 of 2010 concerning Government Accounting Standards
10. Related Regional Regulations

2.5 Preparation and Determination of the State Revenue and Expenditure Budget (APBN) and
Regional Revenue and Expenditure Budget (APBD)

Preparation and Determination of the State Revenue and Expenditure Budget (APBN)

The State Revenue and Expenditure Budget (APBN), is the annual financial plan of the
Indonesian state government approved by the House of Representatives. The APBN contains a
systematic and detailed list that contains plans for state revenues and expenditures for one fiscal
year (1 January - 31 December).

The preparation of the State Revenue and Expenditure Budget (APBN) is based on the
provisions of Article 23 paragraph (1) of the 1945 Constitution which has been amended into Article
23 Paragraph (1), (2) and (3) Amendment to the 1945 Constitution which reads “(1) The State
Revenue and Expenditure Budget as a manifestation of the management of State finances is
determined annually by law and is carried out openly and responsibly for the greatest prosperity of
the people; (2) The draft law on the State Revenue and Expenditure Budget is proposed by the

6
President for discussion with the House of Representatives by taking into account the considerations
of the Regional Representative Council; (3) If the House of Representatives does not approve the
draft of the State Revenue and Expenditure Budget proposed by the President, the Government shall
implement the last year's State Revenue and Expenditure Budget".

Structure of the State Revenue and Expenditure Budget, including:

1. State Expenditure, consists of two types:

• Central Government Expenditures are expenditures used to finance development activities

of the Central Government, both those carried out at the center and in the regions
(deconcentration and assistance tasks). Central Government Expenditures can be grouped
into: Personnel Expenditures, Goods Expenditures, Capital Expenditures, Debt Interest
Financing, Fuel Subsidies and Non-BBM Subsidies, Grant Expenditures, Social Expenditures
(including Disaster Management), and Other Expenditures.
• Regional Expenditures are expenditures that are distributed to the Regional Government, to
then be included in the relevant regional APBD revenues. Regional Expenditures include:
a) Profit Sharing Fund
b) General Allocation Fund
c) Special Allocation Fund
d) Special Autonomy Fund

2. Financing, including:

• Domestic Financing, including Banking Financing, Privatization, Government Debt

Instruments, as well as state equity participation.
• Foreign Financing, including:
a) Withdrawal of Foreign Loans, consisting of Program Loans and Project Loans
b) Payment of Principal Foreign Debt, consisting of Maturity and Moratorium.

The functions of the State Budget are:

1. The authorization function means that the state budget becomes the basis for carrying out
revenues and expenditures for the year concerned.
2. The planning function means that the state budget becomes a guideline for management in
planning activities for the year concerned.

7
 3. The supervisory function means that the state budget is a guideline for assessing whether the
activities of implementing state government are in accordance with the provisions that have
been set.
4. The allocation function means that the state budget must be directed to reduce
unemployment and wasting resources, as well as to increase efficiency and effectiveness of
the economy.
5. The distribution function implies that state budget policies must pay attention to a sense of
justice and propriety.

Preparation and Determination of Regional Revenue and Expenditure Budget (APBD)

Based on Law no. 25 of 2004 concerning the National Development planning system and
taking into account Law no. 32 of 2004 concerning Regional Government and Law no. 17 of 2003
concerning State Finances, the regional development plan documents that must be prepared are as
follows:

1. The stage of the budget preparation process in accordance with Law no. 25 of 2004
concerning the national development planning system, starting from the process of preparing
the Regional RPJP which contains the vision, mission and direction of regional development
and is stipulated by Regional Regulation.
2. After the Regional RPJP is established, the next task is for the Regional Government to
determine the description and elaboration of the vision, mission and program of the regional
head by taking into account the Regional RPJP and the National RPJM by containing matters
concerning the direction of general regional policies, programs and activities of SKPD as
outlined in the Strategic Plan with reference indicative ceiling framework.
3. The Regional RPJM is stipulated by a Regional Regulation no later than 3 (three) months after
the regional head is sworn in based on Law no. 25 of 2004 article 19 paragraph (3). After that,
it is continued with the determination of the RKPD which is determined annually based on
the reference of the RPJMD, Renstra, Renja and taking into account the RKP with the Regional
Head Regulation as the basis for the preparation of the APBD. The planning process from the
Regional RPJP, Regional RPJM, to the Regional RKP in accordance with Law no. 25 of 2005
was in BAPPEDA.

Components of Regional Budget

8
The components that make up the APBD above consist of 4 parts, namely a summary of income,
expenditure, surplus/deficit and financing.

1. Income

This section looks at changes in the various components of income. For local governments in
Indonesia, the main revenue comes from three sources: Regional Original Revenue (PAD) through
taxes and levies Transfers from the center, and other income. Considering that the average source of
local government revenue is dominated by balancing funds, which is around 80-90%, the source of
local government revenue is in a dependent condition.

2. Expenditure

This section shows the development of total expenditure in a period of 3 (three) years. In addition,
changes in the type of expenditure will also be shown so that it can be seen if one component has
changed relative to other components.

For local governments in Indonesia, the economic classification of spending is divided into 10 (ten)
types, namely: Personnel Expenditures, Goods and Services Expenditures, Capital Expenditures,
Interest Expenditures, Subsidies Expenditures, Grants Expenditures, Social Assistance Expenditures,
Revenue Sharing Expenditures to Prov/District/City and Village Government Assistance
Expenditures Finance to Prov/District/City and Village Government Assistance Unexpected
expenditure.

3. Surplus or Deficit

This section shows the actual income, expenditure, and surplus/deficit in a period of 3 (three) years.
Basically, from this section it can be seen “surplus/deficit” nationally. However, unlike the private
sector, a large surplus is not expected as this may indicate that the local government is not providing
optimal public services in several respects.

4. Financing

This post describes local government financial transactions that are intended to cover the difference
between Regional Revenue and Expenditure, if the Income is smaller then a deficit occurs and will be
covered by financing receipts, and vice versa.

The functions of the APBD include:

9
1. The function of the authority, the APBD becomes the basis for carrying out revenues and
expenditures for the year.
2. The planning function, APBD becomes a guideline for management in planning activities for
the year.
3. The supervisory function serves as a guide to assess whether government administration
activities are in accordance with the stipulated provisions.
4. The allocation function, the APBD must be directed at creating job opportunities/reducing
unemployment and wasting resources as well as increasing efficiency and the economy.
5. Distribution function, APBD policies must pay attention to a sense of justice and propriety.
6. The stability function is a tool to maintain and seek to balance the fundamentals of the
regional economy.

10
 CHAPTER III

CLOSING

Conclusion

State financial management is an important aspect to realize good governance. There

are three laws and regulations in the field of state finance which are important milestones in
the reform of state financial management, namely, Law no. 17 of 2003, Law no. 1 of 2004,
and Law no. 15 of 2005. State finances are reflected in the APBN and APBD. State finances
include all rights and obligations of the state/region that can be valued in money, as well as
everything in the form of money or goods that can be used as property of the state/region in
connection with the implementation of these rights and obligations. Management of state
finances must be based on annual principles, universalism, unity, specialty, results-oriented
accountability, professionalism, proportionality, openness, and supervision.

11
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