Improving Business Process and Quality of Local Financial Data through Integrated Self-Verification System

Caption: Screenshot of the self-verification APBD’s module.

Establishing an integrated and transparent subnational budget (APBD) data management is critical for gaining public trust, promoting good governance, and encouraging data-driven policy. The Directorate General of Fiscal Balance (DJPK) of the Ministry of Finance has taken a significant step towards this goal by enhancing the implementation of the Subnational Financial Information System (SIKD). The system aims to increase the quality of APBD data submitted by subnational governments (provincial and local) through data verification and validation.

Prior to USAID ERAT support, verifying and validating APBD data accuracy often involved impractical, resource-intensive, and time-consuming clerical and manual processes. On the other hand, the subnational governments were often unaware of the data quality they submitted, assuming DJPK was solely responsible for verifying and validating budget data.

The Subnational Information Finance Center (PIKD) of DJPK is responsible for verifying and validating the APBD data. The communication channel between the PIKD team and subnational governments was mainly WhatsApp. The PIKD team manually reviewed the submitted data through WhatsApp groups. While interconnected regional systems existed for data submission to DJPK’s national SIKD database, most subnational governments relied on manual WhatsApp entry. Due to the number of regional data to be verified, this verification process by PIKD often took four to five months.

In November 2023, USAID ERAT facilitated a boot camp with DJPK’s data analysts and programmer team to develop a self-verification budget reporting module in the existing SIKD platform. Based on the boot camp results, DJPK issued a regulation on the business process of submission of subnational financial information through SIKD and transaction data interconnection as a basis for implementing the self-verification module. This module helps the subnational governments self-verify their APBD data while they annually submit it to the SIKD – due at the end of January every year.

The APBD’s self-verification module aims to decentralize and streamline this process, allowing mindset changes in the subnational governments to proactively identify discrepancies within their budget data. This not only enhances data accuracy but also promotes a sense of ownership and accountability among subnational governments to follow the guidelines from the Minister of Home Affairs Decree on Verification Results, Validation, and Inventory Updates for Classification, Codification, and Nomenclature of Subnational Development and Financial Planning.

To promote the module to the subnational governments, USAID ERAT supported DJPK to develop a video tutorial demonstrating the practical steps for operating the self-verification module in mid-January 2024. Currently, the video has been viewed over 3,800 times on DJPK’s YouTube channel (https://www.youtube.com/watch?v=z1iLiAWW8QI).  The video socialization complemented online and offline training and technical assistance for the subnational governments provided by DJPK. These led to good results. Most of the subnational governments are now able to operate the module independently and self-verify their budget data on time. The DJPK’s self-verification module is a highlighted feature in the overall SIKD platform. This module has been enhanced further for verifying budget realization and annual financial reporting.

The responses from subnational governments have been positive, as they can discover whether their APBD data is valid and accepted as official data for the central government. They can also efficiently authorize the data prior to submission in a short time period. This process reverses the business process. Previously, the data was considered valid only when DJPK’s PIKD have verified it. Now, DJPK can focus on using the quality data for further analysis, such as budget tagging for the central government’s priority programs.

USAID ERAT continues to support DJPK in strengthening its capacity in data analysis through technical assistance in developing the thematic budget tagging instrument, including middle classification tagging for the education sector, climate change, and other strategic issues. This will lead to the development of a thematic budgeting dashboard, which is expected to be publicly accessible. In the long run, this will contribute to encouraging regional financial transparency, which is one of the main objectives of SIKD. 

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