Other revenues that are considered valid

Oct 13, 2025 by magicalceylontours.com 54 views

Effect of General Allocation Funds (DAU), Regional Original Revenue (PAD) and Other Income that are Considered Valid for Local Government Expenditure: Case Study of Regency/Cities in North Sumatra Province

Introduction

The importance of regional finances in supporting the development and welfare of the community cannot be denied. In North Sumatra, as with other regions in Indonesia, the source of regional income comes from three main sources: General Allocation Funds (DAU), Regional Original Revenues (PAD), and other income that are considered valid. This study aims to analyze the influence of the three sources of income on local government spending in regencies/cities in North Sumatra.

Background

Regional finances play a crucial role in supporting the development and welfare of the community. In Indonesia, regional finances are sourced from three main sources: General Allocation Funds (DAU), Regional Original Revenues (PAD), and other income that are considered valid. DAU is a transfer of funds from the central government to the regional government, while PAD is the revenue generated by the regional government from its own sources. Other income includes grants, assistance, and other sources of revenue.

Methodology

This study uses a causal research design with data collected from district/city annual financial statements in North Sumatra. Data were analyzed using multiple linear regression to test the simultaneous and partial effects of the three sources of revenue on regional expenditure.

Results

The results of the study showed that the three sources of income had a significant effect on regional expenditure.

*** General Allocation Fund (DAU) has a positive and significant influence on regional expenditure. This shows that Dau becomes an important backbone in sustaining regional spending. However, high dependence on DAU can cause problems in the future.

*** Regional Original Revenue (PAD) also has a positive and significant influence on regional expenditure. This shows that the higher the PAD, the higher the ability of the region in financing its programs and activities.

*** Other revenues that are considered valid show positive and significant effects on regional spending. This source of income comes from various sources such as grants, assistance, and so forth.

Deeper Analysis

It is important to observe that the influence of the three sources of income on regional expenditure is not always linear. Other factors such as the efficiency of regional financial management, regional fiscal policies, and regional economic conditions can affect the magnitude of these influences.

Recommendation

Based on the findings of this study, the following recommendations are made:

*** Increasing PAD: Local governments in North Sumatra need to focus on increasing PAD by exploring regional potential and creating a conducive investment climate.

*** Managing DAU effectively: Utilization of DAU must be directed to support priority and sustainable development programs that not only focus on operational expenditure.

*** Increasing transparency and accountability: The application of the principle of good governance in regional financial management is very important to increase public confidence and minimize the potential of corruption.

Conclusion

This study provides an overview of regional spending dependence in North Sumatra on various sources of income. Avoiding excessive dependence on DAU and encouraging increased PAD is an important step to develop an independent and sustainable area.

Limitations of the Study

This study has several limitations. Firstly, the study only focuses on regencies/cities in North Sumatra, and the findings may not be generalizable to other regions in Indonesia. Secondly, the study only analyzes the influence of DAU, PAD, and other income on regional expenditure, and does not consider other factors that may affect regional expenditure.

Future Research Directions

Future research should focus on exploring other factors that may affect regional expenditure, such as the efficiency of regional financial management, regional fiscal policies, and regional economic conditions. Additionally, future research should focus on developing a more comprehensive model of regional expenditure that takes into account the complex relationships between DAU, PAD, and other income.

References

[List of references cited in the study]

Appendix

[Appendix includes additional tables, figures, and data that support the findings of the study]

Abstract

This study analyzes the influence of General Allocation Funds (DAU), Regional Original Revenues (PAD), and other income on local government spending in regencies/cities in North Sumatra. The study uses a causal research design with data collected from district/city annual financial statements in North Sumatra. The results show that the three sources of income have a significant effect on regional expenditure. The study recommends increasing PAD, managing DAU effectively, and increasing transparency and accountability in regional financial management.
Frequently Asked Questions (FAQs) about the Effect of General Allocation Funds (DAU), Regional Original Revenue (PAD) and Other Income on Local Government Expenditure

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the influence of General Allocation Funds (DAU), Regional Original Revenues (PAD), and other income on local government spending in regencies/cities in North Sumatra.

Q: What are the three main sources of regional income?

A: The three main sources of regional income are General Allocation Funds (DAU), Regional Original Revenues (PAD), and other income that are considered valid.

Q: What is the significance of DAU in regional expenditure?

A: DAU is a transfer of funds from the central government to the regional government, and it has a positive and significant influence on regional expenditure. However, high dependence on DAU can cause problems in the future.

Q: What is the significance of PAD in regional expenditure?

A: PAD is the revenue generated by the regional government from its own sources, and it also has a positive and significant influence on regional expenditure. The higher the PAD, the higher the ability of the region in financing its programs and activities.

Q: What are other revenues that are considered valid?

A: Other revenues that are considered valid include grants, assistance, and other sources of revenue that are not included in DAU and PAD.

Q: What are the limitations of this study?

A: This study has several limitations, including the fact that it only focuses on regencies/cities in North Sumatra, and the findings may not be generalizable to other regions in Indonesia. Additionally, the study only analyzes the influence of DAU, PAD, and other income on regional expenditure, and does not consider other factors that may affect regional expenditure.

Q: What are the recommendations of this study?

A: The recommendations of this study include increasing PAD, managing DAU effectively, and increasing transparency and accountability in regional financial management.

Q: What are the implications of this study for regional financial management?

A: The implications of this study for regional financial management are that regional governments should focus on increasing PAD, managing DAU effectively, and increasing transparency and accountability in regional financial management.

Q: What are the future research directions of this study?

A: Future research should focus on exploring other factors that may affect regional expenditure, such as the efficiency of regional financial management, regional fiscal policies, and regional economic conditions. Additionally, future research should focus on developing a more comprehensive model of regional expenditure that takes into account the complex relationships between DAU, PAD, and other income.

Q: What are the policy implications of this study?

A: The policy implications of this study are that regional governments should prioritize increasing PAD, managing DAU effectively, and increasing transparency and accountability in regional financial management.

Q: What are the implications of this study for regional development?

A: The implications of this study for regional development are that regional governments should focus on developing a more sustainable and independent regional economy, and that regional financial management should be more transparent and accountable.

Q: What are the implications of this study for regional fiscal policy?

A: The implications of this study for regional fiscal policy are that regional governments should prioritize increasing PAD, managing DAU effectively, and increasing transparency and accountability in regional financial management.

Q: What are the implications of this study for regional economic development?

A: The implications of this study for regional economic development are that regional governments should focus on developing a more sustainable and independent regional economy, and that regional financial management should be more transparent and accountable.