Human Resource Competence as a Moderator of the Influence of State Property Administration on the Quality of Government Agencies' Financial Statements

Abstract

Reliable government financial statements are essential for promoting transparency and accountability; however, weaknesses in state property administration and variations in employee competence may compromise financial reporting quality. This study examined the association between state property administration and financial statement quality and assessed human resource competence as both a direct predictor and a moderator within the Audit Board of the Republic of Indonesia. A quantitative survey design with purposive sampling was used to recruit 70 employees involved in state property management. Questionnaire data were analyzed using partial least squares structural equation modeling (PLS-SEM) with a two-stage higher-order construct approach and bootstrapping with 5,000 subsamples. State property administration, encompassing bookkeeping, inventory, and reporting, was positively and significantly associated with financial statement quality (B = 0.824, p < 0.001). Human resource competence showed neither a significant direct association with financial statement quality (B = 0.027, p = 0.716) nor a significant moderating effect on the relationship between state property administration and financial statement quality (B = 0.072, p = 0.315). The model explained 73.1% of the variance in financial statement quality. These findings highlighted the importance of consistent state property administration; however, potential construct overlap, as indicated by a heterotrait-monotrait ratio (HTMT) of 0.917, warrants cautious interpretation. The study concluded that systematic state property administration was associated with higher financial reporting quality, whereas the role of human resource competence requires further investigation across different institutional settings using refined measurement instruments.