THE EFFECT OF FINANCIAL PERFORMANCE OF SOPPENG REGENCY GOVERNMENT ON COMMUNITY PROSPERITY LEVEL.

Darmawati Aras 1 , Abdu Hamid Habbe 2 and Arifuddin 2 . 1. Master of Accounting Depatrtment, Faculty of Economics and Bussiness, HasanuddinUniversity. 2. Faculty of Economics and Bussiness,Hasanuddin University. ...................................................................................................................... Manuscript Info Abstract ......................... ........................................................................ Manuscript History Received: 14 December 2018 Final Accepted: 16 January 2019 Published: February 2019

The research aimed to perceive the regional autonomy implementation at Soppeng Regency by investigating: 1) whether the financial independence level through the expenditure compatibility and budget absorption could improve the community prosperity; 2) whether the effectiveness level of the Regional Original Revenue (ROR) through the expenditure compatibility and budget absorption could improve the community prosperity. The research used the quantitative approach the time series as the secondary data for ten years (from 2007 to 2016). Data were analysed using the path analysis to find out the effect of the independent variable on the dependent variabel with the significance level of 5%. The research data were analysed using Eviews. The research result indicates that the financial independence throught the expenditure compatibility and budget absorption has the positive and significant relationship with IPM, however, the effectiveness of ROR through the expenditure compatibility and budget absorption has the positive and insignificant relationship with IPM. This also indicates that the regional autonomy implementation at Soppeng Regency has not fully fulfilled the mandate of autonomy acts which is expected to be able to optimize the economic potentials in order to improve the community prosperity.

…………………………………………………………………………………………………….... Introduction:-
Indonesia changed their policy into regional autonomy when Act 22 of 1999 changed to Act 32 of 2004, later changed to Act 23 of 2014 on Regional Government, and Act 25 on 1999 later changed to Act 33 of 2004 on Monetary Balancing between Central and Regional Government. With the enactment of regional autonomy, regional developments need to be carefully planned. This can be achieved by a careful development budgeting planning and supported with a well-managed regional income. Regional autonomy and fiscal decentralization are enacted by considering that regional governments are more aware with the needs and standards of service of their peoples. Therefore, regional autonomy is hoped to improve people' welfare through the improvements of local economy as reflected in ProdukDomestik Regional Bruto (PDRB).
One of few measurement means that could analyze governments' performance in managing their regional budget is by employing monetary ratio analysis on the specified and implemented APBD (Halim, 2007:231). Some monetary 994 ratios used to measure the accountability of regional government are independent ratio, regional income effectiveness ratio, regional budget efficiency ratio, and expenditure conformity ratio. In addition, United Nations Development Program (UNDP) measure people' welfare comprehensively by calculating income per capita, life  expectancy, educational level which are constructed into Human Development Index. Empiric studies on regional monetary performance is common in Indonesia, some are intended to evaluate the monetary performance of regional government. This indicated a huge concern on the quality of regional institution performance, especially in their service.
Analysis of Hendarmin (2012) in Kalimantan Barat on the influence of capital expenditure and private investment on economic growth, work opportunities, people welfare concluded that generally welfare could be improved by improving capital expenditure, that broaden work opportunities and eventually improving people welfare.
Study conducted by Swandewi (2014) proved that regional monetary independency indirectly have a significant effect on people welfare through budget conformity. Regional government independency ratio reflected regional autonomy capability that is measured by the amount of PendapatanAsli Daerah (PAD) compared to total regional income. This result is problematic; independent regency could improve their capital expenditure in exchange for public service. Ardhini (2012) proved that regional income effectiveness ratio positively influencing capital expenditure allocation addressed to public service. Therefore, if regional monetary tends to be effective, it would affect capital expenditure spend on public service. Study conducted by Wahyudi and Rejekiningsih (2013) found that government spending on healthcare and education affect economic growth and poverty. However, Vegirawati (2012) found that direct spending could not predict Human Development Index. Mirza (2012) proved that capital expenditure could improve Human Development Index. Capital expenditure conformity on APBD realization showed that government is concerned with regional development. Regional government monetary performance is hoped to be more concerned with people needs.
From the statement above, the researcher is interested to explore how monetary performance of KabupatenSoppeng affects people welfare. This study is intended to measure the achievement level of KabupatenSoppeng government in fulfilling the main objective of regional autonomy that is to ensure the wellbeing of people through an effective and efficient APBD management.

Research Planning
This study employed quantitative approach. This study is a hypothesis testing, intended to analyze the correlation between regional monetary performance and people welfare. This study is a case study. During observation, a timeseries secondary data was employed.

Location and Time
This study was conducted in KabupatenSoppeng, specifically at Regional Government of KabupatenSoppeng and focused to Monetary Report. Study time was scheduled based on situation and condition of study location.

Population and Sample
The population of this study is regional monetary report audited by BPK and it was enacted as PerdaKabupatenSoppeng. Monetary report used is APBD realization report of 2007-2016. HDI data is also taken from similar timespan.

Data Source and Type
Quantitative data is used in this research. The source of data is secondary data collected from Accountancy Board of Regional Equipment and Finance Office of KabupatenSoppeng. Data on people welfare is collected from BPS KabupatenSoppeng and Regional Development Planning Board (Bappeda) KabupatenSoppeng as cited in "Soppeng in Angka" book.

Data Collection Method
Methods employed in this research are documentation and literature. Data collected are thos related with regional monetary performance ratio calculation and welfare available in BPS office and Bappeda.

Research Variables
This study is comprised of two independent variables, two intervening variables, and one dependent variable. Monetary performance is reflected on independent variables that are Monetary Independency Ratio, PAD Effectiveness Ratio. Intervening variables are Budget Absorption Ratio, Expenditure Conformity Ratio. Dependent variables consisted of People Welfare reflected on IPM (Income per Capita, Education and Healthcare Indicator)

Data Analysis Technique:-
Path analysis is employed in this study, with regression equation as follows: First Analysis, to test the influence of independent variables (X 1 and X 2 ) on intervening variables (X 3 and X 4 ), illustrated as: Figure 4.

Effect of Independent Variables on Intervening Variables
Information: a = the constant effect X 1 and X 2 on X 3 a 1 = the effect X 1 on X 3 a 2 = the effect X 2 on X 3 b = the effect constant X 1 and X 2 on X 4 b 1 = the effect X 1 on X 4 b 2 = the effect X 2 on X 4 e 1 = standard error of effect of X 1 and X 2 on X 3 e 2 = standard error of effect of X 1 and X 2 on X 4 Second Analysis, to understand the influence of intervening variables (X 3 and X 4 ) on dependent variable (Y), illustrated as:

Discussion:-The Influence of Independency Ratio through Expenditure Conformity on People Welfare
This study found that correlation coefficient of Independency Ratio (X1) through Expenditure Conformity Ratio (X3) on HDI (Y) showed positive and significant influence, meaning that H1 is accepted. The result strengthens 1000 Mirza's (2012) findings that economic growth has positive and significant impact on Human Development Index (HDI) of Government of Jawa Tengah. Moreover, Swandesi (2014) proved that regional monetary independency indirectly have positive and significant influence on people welfare through expenditure conformity in Bali. However, this study differs with study conducted in Sumatera Selatan by Vegirawati (2012) that found that expenditure could not predict Human Development Index.

The Influence of Independency Ratio through Budget Absorption on People Welfare
Correlation coefficient of Independency Ratio (X1) through Budget Absorption Ratio (X4) on HDI (Y) showed positive and significant influence, meaning that H2 is accepted. The result strengthens Mirza's (2012) findings that economic growth has positive and significant impact on Human Development Index (HDI) in Jawa Tengah. However, the findings are different compared to Vegirawati (2012) who found that expenditure could not predict Human Development Index.

The Influence of PAD Effectiveness through Expenditure Conformity on People Welfare
Correlation coefficient of Effectiveness Ratio (X2) through Expenditure Conformity (X3) on HDI (Y) showed positive but insignificant influence, meaning that H3 is rejected. The result generally showed that PAD effectiveness through expenditure conformity could not increase people welfare. Regional capability to optimize regional monetary potency is low therefore PAD targets set on APBD are still far from realization. Therefore, even if PAD realization peaked at 100% or more, it did not show the real performance. As conducted by Saputra (2014) in Sumatera Barat, PAD realization effectiveness tends to improve annually, yet it could not reduce the financial transfer from central government. This showed that regional monetary performance as measured by PAD realization effectiveness did not illustrate regional capabilities in managing their economic activity sources. Ideally, PAD targets draw the real potential and therefore PAD realization could picture the ongoing economic activities.

The Influence of PAD Effectiveness through Budget Absorption on People Welfare
Correlation coefficient of Effectiveness Ratio through Budget Absorption Ratio on HDI showed positive but insignificant influence, meaning that H4 is rejected. The result showed that regional monetary independency through budget absorption could improve people welfare. This discovery is against what Adrhini and Handayani (2012) found that PAD Effectiveness Ratio in regional monetary management had positive and significant influence on capital expenditure allocated to people welfare. Therefore, if regional monetary effectiveness tends to be effective, it could influence the amount of capital expenditure spend on people welfare. Mirza (2012) proved that capital expenditure enacted by government had positive and significant influence on HDI.