MANAGING FINANCIAL QUALITY IN THE LOCAL GOVERNMENT GRANT SYSTEM

MANAGING FINANCIAL QUALITY IN THE LOCAL GOVERNMENT GRANT SYSTEM INTRODUCTION In recent developments, efforts to improve public welfare through development are also faced with conditions of poor quality democratization and economic growth that is not included in it. In addition, the increasing transfer of funds from the central government to local governments has not been followed by real improvements in development indicators in most provinces and districts/cities. As a manifestation of the government's seriousness in implementing development programs in the field of public welfare, the government has issued a policy through the Regulation of the Minister of Home Affairs Number 32 of 2011 concerning Guidelines for Granting Grants and Social Assistance Sourced from the Regional Budget and Revenue as amended by the Regulation of the Minister of Home Affairs Number 39 of 2012. The word Hibah comes from Arabic which has been adopted, this word is a masdar of the word "wahaba" which means giving. A grant is a legal process of transferring ownership rights from one person to another, carried out when the person who grants it is still alive and free to be sold, lent or given back to others for free (Khosyi'ah 2010, 244). Meanwhile, according to the Ministry of Finance's DJPPR (2019), in accordance with PP Number 10 of 2011, it is explained that the definition of a grant is any receipt of the Central Government in the form of money, goods, services and/or securities originating either domestically or from abroad. In order to encourage improvements in the management of grant funds and social assistance, various regulations for the management of grants and social assistance have changed. Government Regulation Number 58 of 2005 concerning Regional Financial Management (PP No. 58 of 2005) regulates in general the provisions for regional financial management related to grants and social assistance. In line with the stipulation of PP No. 58 of 2005, the Regulation of the Minister of Home Affairs Number 13 of 2006 concerning Guidelines for Regional Financial Management (Permendagri No. 13 of 2006) has also been issued, which comprehensively contains regulations on planning and budgeting, administration, accounting, reporting and accountability of regional finances that are aligned with state financial management. One of the programs and activities in the implementation of government functions is by budgeting regional spending in the form of grants and social assistance. The purpose of regional spending on grants and social assistance is a program that aims to support the improvement of the implementation of government functions in the regions, support the improvement of services to the community, support the improvement of the implementation of regional government and basic public services, and increase participation in the implementation of regional development. The grant and social assistance expenditure is determined through regulations, namely the Regional Regulation (Perda) concerning the APBD. The budget set out in the APBD used in the implementation of government aims to plan activities and programs to be implemented. Financial Management of Grant Funds by Regional Governments The preparation is based on the 1945 Constitution which is the basic principles of state financial management. The rules are outlined in the form of general principles of state financial management, stated in Law No. 17 of 2003. The basis for compiling administrative rules for state financial management refers to the law on state financial administration as stated in Law No. 1 of 2004 concerning State Treasury (Law No. 1 of 2004). The financial management system is a subsystem of the government administration system. In the government administration system, what is meant is a subsystem of the government system itself. In the implementation of government functions in the regions, rights and obligations arise that can be assessed with money that need to be managed in a state financial management system. Regional financial management in the government consists of accountability for resources and recording, one of which is government grant funds sourced from the APBD (Regional Revenue and Expenditure Budget). A grant is a gift of money or goods or services from the regional government to the government or other regional governments, regional companies, communities and community organizations, which have been specifically designated, are not mandatory and not binding, and are not continuous, which aims to support the implementation of Regional Government affairs (Regent of Bengkalis 2017). A grant is a legal process of transferring ownership rights from one person to another, carried out when the person who grants it is still alive and free to be sold, loaned or given back to others for free (Khosyi'ah 2010, 240). Grant funds if budgeted in the form of money are categorized as indirect spending (not directly related to regional government (Pemda) activities), or can also be budgeted in direct spending (directly related to regional government activities) if budgeted directly in the form of purchasing goods or activities in the form of services. According to Article 1 number 14 and number 15 of Permendagri Number 14 of 2016, what is meant by a grant is the provision of money or goods or services from the regional government to the central government or other regional governments, State-Owned Enterprises or Regional-Owned Enterprises, Agencies, Institutions and community organizations that are legal entities in Indonesia. Based on Article 3 paragraph (1) of Law No. 17 of 2003, State/regional financial management is one of the most important things for the economic life of a country, because it is closely related to the ability or inability of the state to realize the goals and ideals of the state and create prosperity. In order to achieve the effectiveness of regional financial management in grant funds for development and improve the welfare of citizens, the principle of decentralization is applied in the form of the transfer of authority from the central government to the regional government to run an autonomous government and be responsible for carrying out development and other government tasks in their respective regions. The transfer of authority by the central government to the regions is carried out in order to run the wheels of government properly through programs or policies to improve the welfare of the people. The process and management of grant funds should be carried out based on laws and regulations, because the position of grant funds is one of the government's efforts to minimize or reduce the level of poverty in a region. Therefore, the management and use of grant funds must be able to realize their benefits in society.