How to cite:
Eduar Baene. (2021) The Role of Accounting in Addressing the National
Economic Development. Journal Eduvest. 1(10): 1029-1035
E-ISSN:
2775-3727
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Eduvest – Journal of Universal Studies
Volume 1 Number 10, October 2021
p- ISSN 2775-3735 e-ISSN 2775-3727
THE ROLE OF ACCOUNTING IN ADDRESSING THE NATIONAL
ECONOMIC DEVELOPMENT
ARTICLE INFO ABSTRACT
Received:
September, 26
th
2021
Revised:
October, 11
st
2021
Approved:
October, 13
rd
2021
Along with economic developments in Indonesia,
accounting is expected to be able to follow these
developments. This is because accounting serves as a
provider of information for economic decision making.
This study aims to analyze the role of accounting in
advancing national economic development. The research
method used in this research is descriptive qualitative
method. The type of data used in this study is qualitative
data, which is categorized into two types, namely primary
data and secondary data. Sources of data obtained
through library research techniques (library studies) which
refers to sources available both online and offline such as:
scientific journals, books and news sourced from trusted
sources. These sources are collected based on discussion
and linked from one information to another. Data
collection techniques used in this study were observation,
interviews and documentation. This data is analyzed and
then drawn conclusions. Based on the description analysis
above, it can be concluded that the role of accounting in
the global economic development of the country cannot
be underestimated because it is related to public trust
both nationally and internationally. Therefore, accounting
has become a profession that is needed in the economic
world.
KEYWORDS
Accounting, Economic Development, National Development
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Eduar Baene
The Role of Accounting in Addressing the National Economic Development 1030
INTRODUCTION
With the development of the Indonesian economy, it is expected that accounting
can follow these developments. This is because accounting serves as a provider of
economic decision-making information. Accounting is the process of recording,
summarizing, and grouping financial transactions that are useful for making economic
decision-making processes (SUHENDI, 2017) (Hartati & Riady, n.d.) (Widiawati, Utary,
& Musviyanti, 2019). The role of accounting in the global economy cannot be
underestimated because it is related to stakeholder trust.
In the era of globalization, the Indonesian economy is becoming increasingly
complex. Accounting plays an important role in the economy, because every financial
decision must be based on accounting information (Christian & Rita, 2016). This
situation has caused accounting to become a required profession in the world of
economics. Economic globalization is characterized by the emergence of multinational
companies that conduct transactions between countries and are supported by comparable
global accounting standards (Budiarta, Ginting, & Simarmata, 2020).
Until now, the government is still working hard to achieve successful
development by restoring the Indonesian economy (Kennedy, 2019). If the development
and recovery of the Indonesian economy is related to accounting, then accountants can do
many things through their services to help accelerate the development and economic
recovery of our country (Jamal, 2009).
The role of accounting information produced by a good accounting system is
very helpful in determining and finding a way out in difficult times like today (Ikhsan &
Suprasto, 2008) (Mulyani, 2017). From accounting data, you can identify the economic
problems you face and help make decisions for successful development (Ranatarisza &
Noor, 2013). If accountability, transparency and technology continue, then development
can be said to be successful. The information generated by accounting contains indicators
of development success, namely accountability, transparency, and the use of appropriate
technology (Armel, Nasir, & Safitri, 2017) (Gunawan, 2016). This is why accounting can
be used as a benchmark to measure the success of a country's economic development
(Apriningsih, 2016).
According to Prof. Meier and Baldwin, economic development is a process in
which the actual national income of an economy increases over a long period of time
(Patta Rapanna & Zulfikry Sukarno SE, 2017). Another definition of economic
development is an effort to improve the standard of living of a country, which is usually
measured by the level of real income per capita (Siagian et al., 2020). According to
Robert Baldwin, economic development is the process of increasing total income and per
capita income along with fundamental changes in the economic structure of a country,
taking into account population growth (Iskandar, 2018).
Judging from the notion of economic development, it can be said that the
economic development of a country cannot be separated from economic growth, for
example a mutually beneficial relationship, namely the country's economic development
will encourage economic growth, and vice versa, economic growth will encourage
economic growth the country's economic development.
The role of accounting in the development of a country's global economy cannot
be underestimated, because it is related to national and international public trust.
Therefore, accounting has become an indispensable profession in economics. Based on
this, the authors are interested in conducting research that aims to analyze the role of
accounting in encouraging the development of the national economy.
Eduvest – Journal of Universal Studies
Volume 1 Number 10, October 2021
1031 http://eduvest.greenvest.co.id
RESEARCH METHOD
The research method used in this research is descriptive qualitative method. The
type of data used in this study is qualitative data, which is categorized into two types,
namely primary data and secondary data. Sources of data obtained through library
research techniques (library studies) which refers to sources available both online and
offline such as: scientific journals, books and news sourced from trusted sources. These
sources are collected based on discussion and linked from one information to another.
Data collection techniques used in this study were observation, interviews and research.
This data is analyzed and then conclusions are drawn.
RESULT AND DISCUSSION
A. The Role of Accounting in Economic Development in Indonesia
Accounting is the process of recording, summarizing, and classifying financial
transactions that are useful for making economic decision-making processes. The role of
accounting in the global economy cannot be underestimated because it is related to
stakeholder trust. In 2012, Indonesia implemented convergence with IFRS, which will
affect the financial statements of issuers that are affected by the accounting standards
adopted. From local GAAP to IFRS, though still not fully compliant. This also applies to
audits.
In the era of globalization, the Indonesian economy is becoming increasingly
complex. Accounting plays an important role in the economy, because every financial
decision must be based on accounting information. This situation has caused accounting
to become a required profession in the world of economics. Since 1985, the accounting
profession has grown rapidly in line with the development of the JSE. High bank interest
encourages people to invest. Competition between companies encourages entrepreneurs
to rack their brains to formulate the most effective marketing strategy to occupy the
market. Of course, entrepreneurs do need reliable, accurate and reliable accounting
information to make decisions.
Accounting is growing rapidly along with the development of securities, especially
capital market shares. In transactions, investors and potential investors use accounting
information to make predictions when making business decisions. Globalization demands
efficiency and competitiveness in the business world. Good corporate governance, good
corporate governance can overcome this. Good corporate governance focuses not only on
profits, but also on stakeholders. Therefore, both private and public sector organizations
need transparent, accountable, reliable and accurate accounting information.
The role of accounting in measuring the success of a country's economic
development, among others, is to act as;
1. Cost Control
In this case, accounting will be a means of controlling the costs of activities carried
out by the state. The government has many different departments, which are widely
distributed throughout Indonesia. Expenses incurred every day need to be recorded or
recorded. The costs incurred by each department also vary depending on the level of
importance.
From the results of the bookkeeping report, the government can assess which
activities need to be postponed or stopped, which activities should be continued, and
already knows how to allocate the necessary funds in the past, present and future. The
existence of cost control means taking action to direct activities so as not to deviate from
Eduar Baene
The Role of Accounting in Addressing the National Economic Development 1032
the previously set goals. Cost control can be done through budgeting, through analysis of
deviations that occur, and continuous monitoring, so that the causes of these deviations
can be known, then trace them, so that the losses incurred are relatively small.
The responsibility for controlling costs should be assigned to those who are also
responsible for preparing budgets for the costs they control. Everyone's work
performance should be measured by comparing actual costs with budgeted costs. Through
the accounting process, it can be known whether certain elements constitute fraud or
misuse of state finances. If such abuse is found, the government can determine the
corrective steps that need to be taken, and if necessary, the government can also provide
appropriate action. punishment for deliberately embezzling private state finances.
In this way, even in the era of globalization, the country's economic conditions can
remain stable, and cost controllers can minimize fraudulent activities by irresponsible
persons. The controlled economic condition of the country can encourage the overall
economic development of the country. Controlled economic conditions can also attract
investors to instill confidence in the state.
2. Operation
Every business activity carried out must have an economic value. The accounting
treatment of this economic value starts from collecting evidence and recording to
financial reports that support directed decision making. From these accounting reports,
the government can assess whether the country's business activities show a positive
impact on the country's economic development, and vice versa. Users of accounting
reports can also measure whether a country's economic development has experienced
significant growth from government operations. Because the economic value of business
activities in developing countries will be different from those in underdeveloped
countries.
Government activities as measured by economic value in accounting reports are
expected to be activities that prosper the people and make support the national economic
development plan. The economic reports provided by accounting for state operations are
usually also called government accounting or public sector accounting. budget and realize
the use of the budget in government activities that support the national economic
development process.
3. Reporting
Accounting is output in the form of periodic economic reports. This accounting
report is completed in a timely, complete and detailed manner to show the financial status
of an entity. The reports provided in government accounting formulate estimates that
record transactions that occur in government activities, and the reports made must be able
to show reliable government financial accountability and in accordance with the approved
budget classification. Estimates in government accounting reports are economic analysis
of financial data and classify the types of central and local government transactions in the
context of formulating national estimates. This government accounting report can assist
in the preparation of APBD and development strategies, as well as controlling activities
that are efficient, effective and economical.
4. Planning
Plans are a way for organizations to set organizational goals and objectives.
Planning includes strategies, tactics, and operations involving activities. In terms of
organizational planning, accounting plays a role in providing historical and forward-
looking information to facilitate planning. Accounting can be used as a benchmark for
making future plans. Usually, accounting data or reports are accumulated periodically to
make plans for the future. Because the economic value contained in the accounting
reports can describe the state and future state of an entity.
Eduvest – Journal of Universal Studies
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In government activities, the impact on the environment is very heterogeneous.
Political and economic factors are the dominant factors that affect the stability of the
country. This is where accounting information is needed to predict and forecast future
economic events related to current economic and political conditions. Periodic plans
require routine accounting information, such as monthly, quarterly, or semi-annual
financial reports. Accounting information used for planning can also be distinguished
based on the method of delivery. Delivering formally or informally. Formal mechanisms
for example through formal meetings.
In public sector organizations, information channels are more formal, while
informal channels are relatively few. This is due to the limitations of transparency and
public accountability that must be carried out by public institutions, so that planning
cannot be carried out by individuals or only involves a few people. Economists can also
predict and plan the direction of national economic development based on reports derived
from accounting.
B. Economic Development of Indonesia
Development is a very broad term, but the main goal of development is to improve
quality. The country's economic development also has the same goal, namely increasing
long-term real income per capita, as well as improving the institutional system,
transforming infrastructure, and supporting development facilities and infrastructure.
Prior to the pandemic, Indonesia was on a strong trend in economic growth and
prosperity. In 2020, the Indonesian economy grew by minus 2.1 percent. Indonesia's
relatively moderate economic growth contraction last year was supported by the hard
work of the state budget and accommodative fiscal policies. As a result of the Covid-19
pandemic, Indonesia experienced a decline in per capita income. Per capita income in
2020 was recorded at US$ 3,870, down from 2019 which was US$ 4,050.
Development is basically aimed at the prosperity of the country as a whole. As
stated in the Preamble to the 1945 Constitution, national development aims to achieve
prosperity for all the people of Indonesia, and the contents of the preamble are to put
power or the holder of government and sovereignty in the hands of the people. We can
see Indonesia today in the efforts of President Joko Widodo to advance national
development by improving facilities, infrastructure, infrastructure, and formulating
government plans to improve people's welfare (which we usually call the People's
Economic Plan).
The People's Economic Plan is used as a strategy to increase national income,
employment opportunities, stabilize the economy and the distribution of average income.
The concept of populist economy is a strategy to build prosperity by prioritizing
community empowerment.
Through this People's Economic Plan, the community will contribute to Indonesia's
economic development. On the other hand, people are increasingly confident to compete
with the results of business actors from other countries.
The government also makes it easier for the public to make it easier to obtain
additional funds to develop small and medium enterprises (SMEs) among those in need.
In the process of national economic development, accounting is an inseparable part of the
development order. Accounting becomes a monitoring system related to the use of funds
and budget realization, so that the transparency of the development process can be
measured and realized.
The role of accountants in providing information must be maintained
independently, information is fully communicated, and no information is hidden in this
popular economy. As providers of genuine information, accounting must ensure that the
Eduar Baene
The Role of Accounting in Addressing the National Economic Development 1034
national economy is at the best level of transparency and accountability. If necessary,
accountants as accounting managers must fully adapt to the current situation so that their
role in the economy remains optimal.
From the description above, it can be interpreted that accounting is expected to
bring transparency of information to the community and become a perfect influence for
efficient and sustainable economic development.
CONCLUSION
Based on the description analysis above, it can be concluded that the role of
accounting in the global economic development of the country cannot be underestimated
because it is related to public trust both nationally and internationally. Therefore,
accounting has become a profession that is needed in the economic world. Accounting is
expected to be able to bring transparency of information to the community and become a
perfect influence for efficient and sustainable economic development.
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