The Effect of Accounting Understanding, Accounting System Utilization, Internal Audit, and Internal Control System on The Quality of Hospital Financial Statements: A Study at PT XYZ

Abstract

This study investigates the impact of accounting comprehension, the accounting systems utilization, internal audit, and internal control systems on the quality of financial statements at PT XYZ, a state-owned enterprise managing four hospitals and five clinics in East Java. A quantitative research design with an associative approach was employed, with purposive sampling to select respondents. The final samples comprised 35 respondents consisting of accounting and finance staff directly involved in preparing financial statements. Data were collected using questionnaires and analyzed through multiple linear regression. The findings simultaneously indicate that the four independent variables significantly affect the quality of financial statements, with a coefficient of determination (R²) of 0.845. Thus, 84.5% of the variation in financial statement quality can be explained by the research model. Partially, accounting comprehension and the accounting systems utilization exert positive but insignificant effects. While internal audit and internal control systems have positive and significant effects, with internal control systems being the most dominant variable. These results underscore that the reliability of hospital financial reporting is more strongly determined by the effectiveness of organizational control and oversight mechanisms than by individual competence alone. This research is perceived to serve as an evaluation material for PT XYZ’s management in strengthening internal control systems and internal audit functions to improve the quality of financial statements sustainably.