Evaluation of Local Government Financial Performance through Cash Flow Statements: A Case Study of Deli Serdang Regency in Fiscal Year 2022

Abstrak

Purpose – This study aims to evaluate the financial performance of the Deli Serdang Regency Government during the 2022 fiscal year through an in-depth analysis of its cash flow statement. It addresses a critical gap in the literature on how regional governments in Indonesia apply Government Accounting Standards (SAP) to assess liquidity, solvency, and fiscal accountability, thereby contributing to a deeper understanding of transparency and performance in local public finance.

Design/Methodology/Approach – The research adopts a qualitative descriptive approach, analyzing secondary data obtained from the audited financial statements of the Deli Serdang Regency Government for Fiscal Year 2022. The analysis follows the framework of Government Regulation No. 71 of 2010 and Ministry of Home Affairs Regulation No. 64 of 2013, focusing on cash flows from operating, investing, financing, and transitory activities to assess overall financial health and managerial effectiveness.

Findings – The study reveals that Deli Serdang Regency experienced a decline in total cash balance from Rp192.42 billion in 2021 to Rp175.82 billion in 2022, representing an 8.63% decrease. The reduction was mainly caused by increased operational and investment expenditures alongside relatively stagnant revenues. However, the local government maintained positive cash flow in financing and transitory activities and prioritized infrastructure investments to support post-pandemic recovery. These findings suggest that, while liquidity weakened, fiscal management remained prudent and aligned with SAP principles.

Originality/Value – This research offers new empirical evidence on the practical application of cash flow statement analysis in evaluating regional government performance under Indonesia’s accrual-based accounting system. The findings highlight the importance of effective cash management, regulatory compliance, and transparency as key factors in strengthening public trust and fiscal sustainability. The study provides valuable insights for policymakers, auditors, and scholars interested in improving the accountability and performance evaluation of local government finances.