Perceived Audit-Related Oversight as an Intervening Mechanism between Fiscal-Economic Conditions and Regional Development: Evidence from North Sumatra

Cipta Dwi Sastra; Satia Negara Lubis

doi:10.58421/misro.v5i3.2025

DOI:

https://doi.org/10.58421/misro.v5i3.2025

Authors

Cipta Dwi Sastra Universitas Sumatera Utara
Satia Negara Lubis Universitas Sumatera Utara

Keywords:

Audit intensity, Compliance burden, Local government, Mediation analysis, Public financial management, Regional development

Abstract

Background: Public-sector audits are expected to strengthen accountability and fiscal management, but their relationship with regional development remains unclear, particularly when audit intensity is positioned as an intervening construct. This study examines whether perceived audit intensity mediates the associations between fiscal-economic conditions and regional development in North Sumatra, Indonesia. Methods: A cross-sectional survey was conducted among 539 officials purposively selected from 26 provincial, district, and municipal government entities. Data were collected using an 81-item five-point Likert questionnaire and analysed using partial least squares structural equation modelling. Specific indirect effects were assessed using the delta method. Results: Economic growth was positively associated with regional development (β = 0.709, p < 0.001). Economic growth (β = 0.280, p = 0.001), local revenue (β = 0.294, p < 0.001), investment (β = 0.134, p = 0.036), and accountability and effectiveness (β = 0.562, p < 0.001) were positively associated with perceived audit intensity. Conversely, perceived audit intensity was negatively associated with regional development (β = −0.261, p = 0.008). Significant negative indirect associations were observed for economic growth, local revenue, and accountability and effectiveness, but not for investment. The model explained 71.4% of the variance in regional development. Conclusion: Perceived audit intensity did not constitute a positive pathway between fiscal-economic conditions and regional development. Its developmental value may depend on whether audit findings are translated into corrective action and integrated into planning and budgeting. Given the cross-sectional design, purposive sampling, and perceptual measures, the indirect effects represent concurrent statistical associations rather than causal mediation.

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