Abstract:

This study aims to analyze the influence of Human Resource Competency (HRC) on the Quality of Regional Financial Reports (QFR) which is mediated by the use of the Financial System (UFS) and the quality of internal audit (QIA).

This research was conducted at the Regional Financial Agency in Indonesia with a sample of 200 respondents. The data collection method was carried out using a questionnaire and data analysis using Structural Equation Modeling (SEM).

The research results show that HRC has a positive and significant effect on the use of UFS and internal audit quality. Apart from that, the use of UFS also has a positive and significant effect on internal audit quality. Internal audit quality also has a positive and significant effect on QFR. However, the influence of HRC on QFR only occurs indirectly through the use of UFS and internal audit quality.

Based on the research results, it can be concluded that HRC, use of UFS, and internal audit quality play an important role in improving the quality of regional financial reports. By improving HRC, regional financial bodies can increase the use of UFS and the quality of internal audits, which in turn will improve the quality of regional financial reports. The theoretical implications of this research indicate that agency theory can be applied to explain the relationship between HRC, use of UFS, internal audit quality, and financial report quality. The managerial implication of this research is that Regional Financial Agencies in Indonesia must pay attention to important aspects in improving the quality of regional financial reports, namely increasing human resource competency, effective use of financial systems, and good internal audit quality.