* Corresponding author: anyeliza@radenintan.ac.id
Does SAK Online Enhance The Quality of Financial Reporting?
ANY ELIZA*
DINDA FALI RIFAN RAHMAT FAJAR RAMDANI
Islamic State University of Raden Intan, Indonesia
Abstract: The study aimed to explore the financial reporting quality of Indonesia's sharia commercial banks before and after applying SAK Online using a paired sample t-test. The qualitative characteristics measurement developed by Nijmegen Center for Economics (NiCE) was adopted to assess the financial reporting quality. The qualitative measurement comprises relevance, timeliness, comparability, faithful representation, and understandability. The finding showed an α=5% significant difference in financial reporting quality before and after applying SAK Online. However, this study was limited to 14 of Indonesia's sharia commercial banks, indicating the results could not be generalized to all industries. Since SAK Online was launched in early May 2019, there has been no study on this subject. Therefore, there is a need for further studies to describe the effectiveness of this application.
Keywords: SAK Online, Financial Reporting Quality, Sharia Commercial Banks
Abstrak: Penelitian ini bertujuan untuk mengetahui kualitas pelaporan keuangan bank umum syariah Indonesia sebelum dan sesudah penerapan SAK Online dengan menggunakan uji paired sample t-test. Pengukuran karakteristik kualitatif yang dikembangkan oleh Nijmegen Center for Economics (NiCE) diadopsi untuk menilai kualitas pelaporan keuangan. Pengukuran kualitatif terdiri dari relevansi, ketepatan waktu, keterbandingan, representasi yang tepat, serta keterpahaman. Hasil penelitian menunjukkan adanya perbedaan kualitas pelaporan keuangan yang signifikan =5%
sebelum dan sesudah penerapan SAK Online. Namun, penelitian ini terbatas pada 14 bank umum syariah di Indonesia, menunjukkan hasil yang tidak dapat digeneralisasi untuk semua industri. Sejak SAK Online diluncurkan pada awal Mei 2019, belum ada kajian mengenai hal ini. Oleh karena itu, perlu adanya penelitian lebih lanjut untuk menggambarkan keefektivan aplikasi ini.
Kata kunci: SAK Online, Kualitas Pelaporan Keuangan, Bank Umum Syariah
1. Introduction
Producing high-quality financial reporting has obtained great global attention because it positively affects stakeholders' investment decisions, credit, and resource allocation decisions to improve market efficiency (IASB, 2008). IASB reveals that beneficial information about corporations is crucial for financial reporting quality. It is regarding the fulfillment of objectivity and the financial reporting information's qualitative attributes, which refer to the features that make financial information valuable. The characteristics contain relevance, timeliness, comparability, faithful representation, verifiability, and understandability. Based on the developers' perspective of accounting standards, relevance and reliability become the primary financial reporting quality indicators valuable for decision-makers. Based on the Financial Reporting Conceptual Framework in Indonesia, financial report quality refers to qualitative characteristics of useful information. It is divided into fundamental and enhancer qualitative characteristics. The fundamentals include relevance, materiality, as well as precise representation. Meanwhile, the enhancer includes comparability, verification, timeliness, and understanding (Dewan Standar Akuntansi Keuangan IAI, 2019).
Previous studies on finance and accounting showed the benefits of financial reporting quality. The studies investigate the association between investment decisions and financial reporting quality Jaballah et al. (2014) measure: (1) the content qualities of financial reports; (2) the form of financial reports; (3) the influence of content and form of financial reports toward investors' decisions, particularly on stock prices. The results showed that content qualities are more effective than decision-making decisions.
N et al. (2016) show a positive correlation between financial reporting quality and investors' decisions, and inefficient financial reporting might negatively affect economic decisions and business performance. In other words, financial reporting quality might affect the willingness of managers to minimize nonvalue-added activities.
The quality of financial reporting can facilitate investors to control investment decisions; hence wasting and excessive investments can be reduced (Biddle et al., 2009).
301 Considering the importance of financial reporting quality, various efforts have been made by related parties. In Indonesia, the Institute of Indonesia Chartered Accountants (IAI) launched Online Financial Accounting Standards (SAK Online) in early May 2019 to improve financial reporting quality while accelerating SAK literacy for business and financial stakeholders. SAK contains guidelines for preparing financial reports, including The Statements of Financial Accounting Standards (PSAK) as well as Interpretation of Financial Accounting Standards (ISAK) by the Financial Accounting Standards Board (DSAK IAI) as well as the Sharia Accounting Standard Board (DSAS IAI). Currently, this application-based SAK Online can be obtained via the Android or IOS platforms and accessed via Laptop/Desktop. SAK Online is a component of developing digital technology IAI Lounge Phase 3, launched during the IAI XIII Congress in December 2018. The Institute of Indonesia Chartered Accountants (IAI) issued the SAK Online application. It contains the latest updating, comprising IFRS, Entity SAK without Public Accountability (ETAP), SAK for MSMEs, and Sharia. With this ease of access, SAK Online helps active IAI members to be more facilitated in accessing all SAK issued by IAI (IAI, 2019).
There is a lack of studies on the utilization of application-based Financial Accounting Standards (SAK). Previous studies in various countries primarily focused on: (1) financial reporting quality elements; (2) financial reporting quality influences;
(3) approaches to estimating and evaluating accounting quality. Further research has also been carried out, particularly concerning information technology and the quality of financial reporting. Information technology use refers to the optimal utilization of mainframe, mini, and micro-computers, accounting software, databases, internet and intranet networks, and electronic commerce. Trying to assess the effectiveness of using SAK Online after one year of being launched by IAI, this study wants to empirically assess whether there are enhancements in the financial reporting quality of sharia commercial banks in Indonesia before and after applying SAK Online.
The banking industry, including Islamic Banking, is a highly regulated industry faced with very competitive conditions. Following the regulations issued by the Bank Indonesia authority, sharia banks should prepare and present financial reports according
to the relevant Financial Accounting Standards (SAK) for Islamic Banks and Indonesia Sharia Banking Accounting Guidelines (PAPSI). Other determinants are the provisions stipulated by Bank Indonesia to increase the transparency of Islamic banks' financial conditions. SAK Online can be utilized by all stakeholders of Islamic bank financial statements, which follow two standards: Sharia Financial Accounting Standard (SAK Syariah) and Financial Accounting Standard (SAK). This study adopted the measurement of the qualitative characteristics designed by the Nijmegen Center for Economics (NiCE) to estimate the financial reporting quality.
2. Theoretical Framework and Hypothesis Development
Numerous researchers in various countries have conducted and measured financial reporting quality studies. Previous studies provide evidence that financial reporting quality is correlated to many factors. Mahboub (2017) revealed the potential factors that can determine the financial reporting quality of 22 Lebanese banks in the 2012-2015 period. The results show that higher quality annual reports in the banking sector are gained by having higher ownership by the shareholders, a higher proportion of debts, and a larger board size.
Herath & Albarqi (2017) performed a literature review that focused on approaches to estimate and evaluate accounting quality and the factors that could influence it. This study reviews existing literature from some references: official accounting associations, accounting journals, and published papers from 2009 to 2015. Furthermore, this article summarizes several approaches to measure and assess financial reporting quality:
standardized score, Beneish model's "M-Score," accrual-based models, the degree of accounting conservatism, and indices (or scores) method of internal control.
Hope et al. (2013) analyzed the financial reporting quality for private and public firms in the U.S. The results showed that the financial information of public firms has greater demand, and public firms have greater and more conservative accrual quality.
Al-Dmour et al. (2018) empirically examined the proposed relationship between financial reporting quality and non-financial business performance for Jordan-listed corporations. Based on the results, financial reporting significantly affects non-financial
303 business performance. The corporations' financial reporting quality variations were significantly related to their size, experience, and business types.
Eng et al. (2019); Yurisandi & Puspitasari (2015); Gajevszky (2015); Arum (2013);
Wardhani et al. (2012) assess whether there are any enhancements in the financial reporting quality after IFRS convergence. Applying qualitative characteristics measurement created by NiCE, Yurisandi & Puspitasari (2015) proved IFRS application increased the financial reporting quality of recorded companies on the Indonesian Stock Exchange (IDX) after conducting several tests.
The concept of quality and financial information quality was performed by Renkas et al. (2015). This study also defines criteria and indicators of financial reporting quality.
The financial reporting quality was divided into entity results and structured reflection.
Therefore, the quality of financial information presentation could be considered a set of components.
In the country-level financial reporting quality, Tang et al. (2016) explored the presence or absence of an association between the financial reporting quality and the country's ownership concentration in a cross-country setting. Using six auditing and accounting indicators to make a comprehensive index for measuring the financial reporting quality. Then, this study found a non-linear nature of the national ownership structure relationship with national financial reporting quality.
A historical review of financial reporting in Australia was performed by Cheung et al. (2010). However, the terms of elements in financial reporting quality have been debated for over 40 years and could be represented by relevance, reliability, comparability, and understandability. The study showed that the meanings of those elements are unresolved, although their application by the AASB Framework (2004) as the qualitative accounting data elements.
Furthermore, the financial reporting quality is connected with information technology use. The growing information technology innovations have facilitated time efficiency, removed place limitations, and made it more accessible to all users. An effective, as well as a useful financial report should be reliable, understandable, comparable, and relevant.
The new technology in financial services streamlines and improves the reporting process. Technology innovation accelerates the analysts' better access to reports, meaning that reports are developed quickly with less margin of error. Technological innovations have benefited many entities in the financial industry. Data analytics allows auditors to work efficiently as well as give higher-quality reporting. By using more latest financial technology, investors obtain more insightful and faster investigation in real- time. It improves forecasting analysis that helps the companies, as well as investors, understand the next steps. The enhanced analyses allow investors to create higher- quality decisions that positively impact the market. Therefore, regulators and policymakers should understand current events to improve society. The many technological limitations made lawmakers only use outdated reports for months, even years. However, current advancements allow data extracted rapidly to enhance policymakers' understanding of social situations (Don Q. Dao, 2018).
The vastly growing information technology affects accounting and financial reporting. This is seen in the various new software programs that enhance accounting processes and make user-friendly and interactive reports. The reports differ from simple profit and loss statements to forecasts, complicated funding, and "what if" analyses.
Automation processes make these programs easy to be used worldwide. However, heavy reliance on automation increases the importance of data controls and sabotages data integrity. Although information technology has enhanced financial reporting, it is necessary to review the information correctly. Relying upon inaccurate information to make a business decision could be catastrophic for a corporation and the community.
Haouam (2020) investigated the effect of information technology governance (COBIT) on financial reporting quality. The descriptive-analytical approach was used to explore the practical and theoretical studies of the main results as well as presentation to improve the financial reporting quality. The result revealed a correlation between IT governance with the COBIT framework, whose four dimensions positively relate to financial reporting quality.
Financial reporting could be affected by information technology (IT) control deficiencies. Grant et al. (2008) used quantitative analysis to analyze 278 companies
305 reporting IT to control deficiencies of the SOX 404 requirements from 2004 to 2006.
The study also specified significant differences between the companies reporting IT deficiencies and those that do not. The findings showed four general financial reporting issues in corporations informing weak IT controls. The four errors include receivables, investments, cash, revenue recognition, vendor and sales cost, footnote, US GAAP, financial statement, and segment disclosure cases. Moreover, companies experiencing these problems usually convey more internal control (IC) deficiencies, pay higher audit prices, and are smaller and audited by smaller accounting firms. These results indicated how deficient IT controls impact a business' IC structure.
This study developed hypotheses to expand Ze et al.(1996) contingency theory of organizations (CTO). The theory assumes that IT’s impact on Corporate Financial Reporting is contingent upon organizational, environmental, and managerial characteristics, avoids much-criticized problems, but ameliorates other pitfalls.
Kusuma Wardani & Pulung Nugroho (2018) analyzed information technology's effect on financial statement quality. The study used IC as a moderating variable to examine 60 village-owned enterprises in Kulon Progo with a total of 120 respondents and moderated regression analysis (MRA). Thus, information technology's effect on the financial statement quality was strengthened by IC. Therefore, village-owned enterprises could improve their financial statement quality using information technology.
Based on previous studies, it is believed that information technology correlates with financial reporting quality. The use of information technology can contribute to improving financial statement quality. Using SAK Online as an application-based Financial Accounting Standard (SAK), this research intends to assess the financial reporting quality of sharia commercial banks in Indonesia before and after the application of SAK Online. Using this application, SAK Online can be accessed via mobile phones or smartphones anywhere, as long as they are connected to an internet network. The flexibility for accessing Financial Accounting Standards (SAK) can help accountants find references related to financial reporting standards according to their field conditions. Because of this ease of technology, the financial reporting quality is
hoped to be higher. According to the concept as well as previous research, the following hypothesis is proposed to answer the question research:
Ha: There are significant differences between financial reporting quality before and after applying SAK Online.
3. Research Method
This study aimed to assess the financial reporting quality before and after applying SAK Online in Indonesia. The significant difference in financial reporting quality of 14 sharia commercial banks before and after launching SAK Online was assessed using paired sample t-test. At the same time, SPSS 22 was employed in data analysis. This study used secondary data collected from each company’s website and Bursa Efek Indonesia (IDX), and the annual report was used as primary data.
This study used operationalized qualitative characteristics as an indicator of financial reporting quality. The qualitative characteristics measurement developed by Nijmegen Center for Economics (NiCE) was applied to estimate the financial reporting quality because it was the only model measurement specifically designed to measure and analyze qualitative characteristics in the financial report. The Nijmegen Center for Economics (NiCE) offers a comprehensive financial reporting quality measurement design based on the required qualitative characteristics of financial reporting defined by FASB dan IASB (Beest & Boelens, 2009). This measurement method updates the methods used in prior studies and becomes a reference for further studies. The measurement comprises relevance, understandability, faithful representation, timeliness, as well as Comparability (Beest & Boelens, 2009), as shown in Table 1.
Based on the measurement of the qualitative characteristics in Table 1, this study computes standardized scores on the fundamental and enhancing qualitative characteristics. The fundamental qualitative characteristics comprise relevance and faithful representation. The enhancing qualitative characteristics comprise understandability, comparability, and timeliness. The standardized scores for each qualitative characteristic are as follow: score 1 indicates a poor score, while score 5 implies an excellent score.
307 Table 1.
The Qualitative Characteristics Measurement of Financial Statement Quality
No. Questions Operationalization Concepts
Relevance R 1 To what extent do the reported
results give feedback to the annual report users as to how diverse market events and significant transactions affect the company
1=no forward-looking information; 2=forward looking information not an apart subsection; 3=apart subsection; 4=extensive predictions; 5=extensive predictions useful for developing expectations
Predictive value
R2 To what extent do the reported results give feedback to the annual report users as to how various market events and significant transactions affect the company
1=no non-financial information; 2=little non- financial information;
3=useful non-financial information; 4=useful non- financial information, helpful for making expectations
Predictive value
R3 To what extent do the results give feedback to the annual report users as to how various market events and significant transactions affect the company
1=only historical cost (HC); 2= Most HC;
3=Balance fair value (FV)/HC; 4=Most FV;
5=Only FV
Predictive value
R4 To what extent do the results give feedback to the annual report users as to how various market events and significant transactions affect the company
1=no feedback; 2=little feedback on the past;
3=feedback is available;
4=feedback helps comprehend how events and transactions affect the company;
5=comprehensive feedback
Confirmatory value
Faithful Representation F1 To what extent are accurate
arguments given to reinforce the determination for certain hypotheses and estimations in the annual report
1=only explained estimations; 2=general explanations; 3=specific explanation, formulas described, etc.;
5=comprehensive argumentation
Verifiability
F2 To what extent does the company base its preference for certain accounting principles on accurate arguments
1=changes not described;
2=minimum explanations;
3=described why;
4=described why + consequences; 5=no changes or comprehensive explanation
Verification
F3 To what extent does the company, in the discussion of its annual results, emphasize the positive and negative events
1=negative events only stated in footnotes;
2=emphasize positive events; 3=emphasizes on
Neutrality
positive events, but negative events are stated, no negative events occurred; 4=balance positive/negative events;
5=impact of
positive/negative events are also described F4 Which type of auditors' report is
contained in the annual report
1=adverse opinion;
2=disclaimer opinion;
3=qualified opinion;
4=unqualified opinion:
financial figure; 5=
unqualified opinion:
financial figure + internal control
Free from material error, neutrality, verification, as well
as completion
F5 To what extent does the company give data on governance business
1=no description CG; 2=
information on CG limited, not in apart subsection;
3=apart subsection;
4=extra attention given to information about CG;
5=comprehensive description about CG
Completeness, free from material error,
as well as verifiability
Understandability U1 To what extent is the annual
report shown in a well-organized manner
Judgment based on: - complete table of contents;
-headings; -order of components; -
summary/conclusion at the each subsection
Understandability
U2 To what extent are the notes to the balance sheet and income statement sufficiently clear
1=no explanation; 2=very short description, difficult to be understood;
3=explanation that describes what happens;
4=terms are explained (which assumptions);
5=everything that might be difficult to understand is explained
Understandability
U3 To what extent do the graphs and tables explain the presented information
1=no graphs; 2=1-2 graphs; 3=3-5 graphs; 4=6- 10 graphs; 5=>10 graphs
Understandability
U4 To what extent is the language and technical judgment in the annual report easy to be followed
1=much jargon (industry), not described; 2=much jargon, minimal explanation; 4=not much jargon or well described;
5=no jargon or
extraordinary explanation
Understandability
U5 What is the size of the glossary 1=no glossary; 2=less than 1 page; 3=approximately
Understandability
309
one page; 4=1-2 pages;
5=>2 pages Comparability C1 To what extent do the notes to
change in accounting policies described in the information of the change
1=changes not described;
2=minimum explanation;
3=described why;
4=described why + consequences; 5=no changes or comprehensive explanation
Consistency
C2 To what extent do the notes to revisions in accounting estimates and judgments describe the implications of the revision
1=revisions without notes;
2=revisions with few notes; 3=no revision/clear notes; 4=clear notes + implications (past);
5=comprehensive notes
Consistency
C3 To what extent does the business adjust the previous accounting period's figures for the implementing change effect in accounting policy or revisions in accounting calculations
1=no adjustments;
2=explained adjustments;
3=actual adjustments (one year); 4=2 years; 5=>2 years + notes
Consistency
C4 To what extent does the company give a comparison of the current accounting period with the previous one
1=no comparison; 2=only with previous year; 3=with 5 years; 4=5 years + description of implications;
5=10 years + implications
Consistency
C5 To what extent is the data in the annual report comparable to the information given by the other organizations
Judgment is based on accounting policies, structure, and explanations of events; in other words, an overall conclusion of comparability compared to annual reports of other organizations.
Comparability
C6 To what extent does the company show the financial index numbers and ratios in the annual reports
1=no ratios; 2=1-2 ratios;
3=3-5 ratios; 4=6-10 ratios;
5=> 10 ratios
Comparability
Timeliness T1 How many days for the auditor to
sign the auditors' report after the end of the financial year
Natural logarithm for the number of days
1=1-1.99; 2=2-2.99; 3=3- 3.99; 4=4-4.99; 5=5-5.99
Timeliness
4. Results and Discussion
The descriptive statistical analysis results show that the qualitative characteristics in relevance during 2018 and 2019 have the same minimum and maximum. The scores:
are 16 for the minimum score, 18 for the maximum score, and 16.79 for the mean. The
qualitative characteristics of Faithful Representation during 2018 and 2019 have the same minimum, maximum, and mean scores: 20 for the minimum score, 22 for the maximum score, and 20.21 for the mean score. Qualitative characteristics understandability during 2018 and 2019 has constant minimum and maximum scores of the same mean, 19. Qualitative characteristics Comparability in 2018 and 2019 have the same minimum score, 16. The maximum score in 2018 is 20, and in 2019 is 21; the mean score in 2018 is 17.86, and in 2019 is 18.21. The qualitative characteristics of the timeliness of the minimum score in 2018 are 3. For 2019 it is 2, while the maximum score for 2018 and 2019 has the same value, 4. The mean score for 2018 is 3.36 and for 2019 is 3.21.
Table 2.
The Result of Descriptive Statistics
Qualitative Minimum Maximum Mean
Characteristics 2018 2019 2018 2019 2018 2019
Relevance 16 16 18 18 16.79 16.79
Faithful
Representation 20 20 22 22 20.21 20.21
Understandability 19 19 19 19 19 19
Comparability 16 16 20 21 17.86 18.21
Timeliness 3 2 4 4 3.36 3.21
The results in the table 3 show that 14 banks have no change in the score values in the past period (2018) and after applying SAK Online (2019) on three qualitative characteristics of relevant, faithful representation, and understandability in financial reporting. The changes in the scoring are seen from the two qualitative characteristics, comparability, and timeliness. In the qualitative characteristics of comparability, there was an increase in the scores in five banks, namely PT Bank Aceh Syari'ah, BNI Syari'ah, BRI Syari'ah, BPD NTB Syari'ah, and BJB Syari'ah. There is an interesting thing that happened to PT Bank BPD NTB Syari'ah. The bank's inauguration to be Bank NTB Syariah was just inaugurated on September 13, 2018, but PT Bank BPD NTB Syari'ah could compete with other Islamic commercial banks. This can be known from PT Bank BPD NTB Syari'ah being included in one of the highest scores for the quality of financial reporting characteristics. PT Bank BPD NTB Syari'ah has made
311 preparations for two years from the Extraordinary General Meeting of Shareholders (RUPS-LB) results of Bank NTB on 31 October 2016, which approved the shift in the company's business activities of Bank NTB from conventional to sharia business activities. In the qualitative characteristics of timeliness, there was an increase and a decrease in scores. The bank had an increased score in Bank Victoria Syari'ah, while the score decreased in three banks: BPD NTB Syari'ah, Mandiri Syari'ah, and Bukopin Syariah.
Table 3.
The Comparison of the Qualitative Characteristics Scoring in Financial Reporting Before and After Applying SAK Online
Bank Relevance
Faithful
Representation Understandability Comparability Timeliness Total 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019
PT Bank Aceh Syariah 17 17 20 20 19 19 20 21 3 3 76 77
PT Bank BNI Syariah 17 17 20 20 19 19 20 21 3 3 76 77
PT Bank BRI Syariah 17 17 20 20 19 19 20 21 3 3 76 77
PT BPD NTB Syariah 17 17 20 20 19 19 20 21 4 3 76 77
PT Bank BJB Syariah 17 17 20 20 19 19 18 19 3 3 74 75
PT Bank Victoria Syariah 17 17 20 20 19 19 19 19 3 4 75 75
PT Bank Syari'ah Mandiri 16 16 20 20 19 19 17 17 3 2 72 72
PT Bank Muamalah 18 18 22 22 19 19 17 17 3 3 76 76
PT Bank Mega Syari'ah 17 17 20 20 19 19 16 16 3 3 72 72
Pannin Dubai 17 17 20 20 19 19 16 16 4 4 72 72
PT Bank BukopinSyari'ah 16 16 21 21 19 19 17 17 4 3 73 73
BCA Syari'ah 17 17 20 20 19 19 17 17 3 3 73 73
BTPN Syari'ah 16 16 20 20 19 19 16 16 4 4 71 71
Bank Net Syari'ah 16 16 20 20 19 19 17 17 4 4 72 72
Table 4
Paired Samples Statistics
Mean N Std. Deviation Std. Error Mean
Pair 1 T2018 73.86 14 1.916 .512
T2019 74.21 14 2.293 .613
The mean score for the quality of financial reporting in 2018 was 73.86, while in 2019, it was 74.86. Based on these descriptive statistics, although there was only a slight
change in numbers, there was still an increase in the financial reporting quality after applying SAK Online.
Table 5
Paired Samples Correlations
N Correlation Sig.
Pair 1 T2018 & T2019 14 .988 .000
The application of SAK Online correlates with financial reporting quality. This is evidenced by a positive correlation of 0.998 with a significant level of 0.000 below 0.05.
Table 6
Paired Samples Test
Paired Differences
t df
Sig. (2- tailed) Mean
Std.
Deviation
Std. Error Mean
95% Confidence Interval of the Difference Lower Upper Pair 1 T2018 -
T2019 -.357 .497 .133 -.644 -.070 -2.687 13 .019
The results of the Paired Sample Tests in the table above describe significant differences in the financial reporting quality after applying SAK Online. The paired sample T-Test proves it. The result of the T value of -2.687 is smaller than T table 2.16036, which means Ha is accepted. From the probability value, a significance value of 0,019 is obtained less than 0.05, which means a significant difference in the average financial reporting quality before applying SAK Online. After applying SAK Online, we can conclude that the hypothesis was accepted according to the result.
The descriptive statistical analysis results prove that three of the five qualitative financial reporting characteristics, such as Understandability, Relevance, and Faithful Representation, did not change after applying SAK Online in 2019. However, qualitative characteristics in Comparability and Timeliness proved to have changed. The analysis of the overall financial reporting quality score in table 4 shows that the overall average score for the qualitative characteristics of financial reporting has increased after applying SAK Online. This result is supported by the paired sample T-test results showing that the Ha is accepted, which means that statistically, with α = 5%, the reporting quality before and after applying SAK Online significantly differs. The
313 significant difference can be seen in two qualitative characteristics: Comparability and Timeliness. Qualitative characteristics in comparability consist of six indicators. The notes explained the implications of change and revision on changes and revisions in accounting policies, estimates, and judgments. Adjustments on the company's previous accounting period figures were based on changes in accounting policy or estimates.
Furthermore, this study compared the current and previous accounting results and found that the annual report information is equal to that of other institutions and proposes financial index numbers and ratios. The timeliness indicator's qualitative character is the Natural logarithm of the total days the auditor took to sign the report after the book- year end.
The finding above supports Haouam (2020) and Kusuma Wardani & Pulung Nugroho (2018), which found a positive relationship between these dimensions and financial reporting quality, whose accounting is improved by information technology.
SAK Online is an application-based Financial Accounting Standard (SAK). SAK Online was launched by the Institute of Indonesia Chartered Accountants (IAI) in early May 2019. SAK Online is a part of the development of digital technology IAI Lounge Phase 3. The findings above proved that SAK Online could enhance the quality of financial reporting. SAK Online is a mobile internet application created to make it easier for accountants to access the latest PSAK anywhere. The flexibility for accessing Financial Accounting Standards (SAK) can help accountants find references related to financial reporting standards according to their field conditions. Because of this ease of technology, the quality of financial reporting is expected to be higher. IAI launched SAK Online as a form of IAI's real contribution to increasing the financial reporting quality in Indonesia while accelerating the literacy of SAK for business and financial stakeholders. Based on the results, it is proven that the comparability quality generated after the application of SAK Online is of higher quality. This is because the ease of reading PSAK Online can increase uniformity and consistency in using financial reporting standards so that financial reporting is made based on the same and consistent rules and regulations between companies. However, auditors will be more careful in
making decisions about the timeliness of using SAK Online. This causes the preparation of auditor reports to take longer.
5. Conclusion, Implication, and Limitations 5.1. Conclusion
From the results discussed above, the financial reporting quality before and after applying SAK Online significantly differs. This main difference comes from the qualitative characteristics of comparability as well as timeliness; the application of SAK Online can improve the uniformity and consistency of the practice of using financial reporting standards, but using SAK Online makes auditors more careful in making decisions on the auditor's report so that it takes longer.
5.2. Implication and Limitation
Practically, the results of this study are expected to provide a general description of the effectiveness of using the SAK Online after one year of being launched by IAI. This study wants to empirically assess whether there are enhancements in the financial reporting quality of sharia commercial banks in Indonesia before and after applying SAK Online. This result can also be a reference for the Institute of Indonesia Chartered Accountants (IAI) in developing SAK Online to be more applicable and utilized for accountants.
Theoretically, this study is expected to enrich the literature on the utilization of application-based Financial Accounting Standards (SAK). However, further studies should be conducted to describe the effectiveness of using this application over a more extended period and using samples from various industrial sectors because this study only used 14 sharia commercial banks in Indonesia, inferring the results cannot be generalized to all industries. SAK Online was launched in early May 2019, and no study has discussed this application. Therefore, this study could provide the stakeholder’s point of view on using SAK Online.
315 Reference
Al-Dmour, A. H., Abbod, M., & Al-Qadi, N. S. (2018). The impact of the quality of financial reporting on non-financial business performance and the role of the organization's demographic' attributes (type, size, and experience). Academy of Accounting and Financial Studies Journal.
Arum, P. D. E. (2013). Implementation of International Financial Reporting Standards ( IFRS ) and the Quality of Financial Statement Information In Indonesia. Research Journal of Finance and Accounting.
Beest, F. Van, & Boelens, S. (2009). Quality of Financial Reporting : measuring qualitative characteristics. NiCE Working Paper 09-108.
Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency? Journal of Accounting and Economics.
https://doi.org/10.1016/j.jacceco.2009.09.001
Cheung, E., Evans, E., & Wright, S. (2010). A historical review of quality in financial reporting in Australia. Pacific Accounting Review.
https://doi.org/10.1108/01140581011074520
Dewan Standar Akuntansi Keuangan IAI. (2019). Kerangka Konseptual Pelaporan Keuangan.
Don Q. Dao. (2018). How Information Technology Impacts Financial Reporting.
https://www.techfunnel.com/fintech/information-technology-impacts-financial-reporting/
Eng, L. L., Lin, J., & Neiva De Figueiredo, J. (2019). International Financial Reporting Standards adoption and information quality: Evidence from Brazil. Journal of
International Financial Management and Accounting. https://doi.org/10.1111/jifm.12092 Gajevszky, A. (2015). Assessing Financial Reporting Quality: Evidence from Romania. Audit
Financiar.
Grant, G. H., Miller, K. C., & Alali, F. (2008). The effect of IT controls on financial reporting.
Managerial Auditing Journal. https://doi.org/10.1108/02686900810899536 Haouam, D. (2020). IT governance impact on financial reporting quality using COBIT
framework. Global Journal of Computer Sciences: Theory and Research, 10(1), 1–10.
Herath, S. K., & Albarqi, N. (2017). Financial Reporting Quality : A Literature Review School of Business Administration. International Journal of Business Management and
Commerce.
Hope, O. K., Thomas, W. B., & Vyas, D. (2013). Financial reporting quality of U.S. private and public firms. Accounting Review. https://doi.org/10.2308/accr-50494
IAI. (2019). SUPPORTING ENHANCEMENT OF FINANCIAL REPORTING QUALITY, IAI LAUNCHES THE SAK ONLINE. http://www.iaiglobal.or.id/v03/berita-
kegiatan/detailberita-1150=supporting-enhancement-of-financial-reporting-quality-iai- launches-the-sak-online
IASB. (2008). Exposure Draft of Improved Conceptual Framework for Financial Reporting:
Chapter 1: The Objective of Financial Reporting, Chapter 2: Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information. In International Accounting Standard Board.
JABALLAH, E., YOUSFI, W., & ZARAI, M. A. (2014). Quality of financial reports:
Evidence from the Tunisian firms. E3 Journal of Business Management and Economics, 5(2), 030–038.
Kusuma Wardani, D., & Pulung Nugroho, S. (2018). The Impact of Information Technology on Financial Statement Quality: A Moderating Role of Internal Control System.
https://doi.org/10.4108/eai.23-4-2018.2277603
Mahboub, R. (2017). Main determinants of financial reporting quality in the Lebanese banking sector. European Research Studies Journal. https://doi.org/10.35808/ersj/922
N, N. A., D, K. J., & T, A. A. (2016). Financial Reporting Quality on Investors’ Decisions.
International Journal of Economics and Financial Research ISSN.
Renkas, J., Goncharenko, O., & Lukianets, O. (2015). Quality of financial reporting:
approaches to measuring. International Journal of Accounting and Economics Studies.
https://doi.org/10.14419/ijaes.v4i1.5509
Tang, Q., Chen, H., & Lin, Z. (2016). How to measure country-level financial reporting quality? Journal of Financial Reporting and Accounting. https://doi.org/10.1108/jfra-09- 2014-0073
Wardhani, R., Utama, S., & Rossieta, H. (2012). The Effect of Degree of Convergence to IFRS and Governance System to Quality of Financial Reporting: Evidence From Asia.
International Accounting and Corporate Governance.
Yurisandi, T., & Puspitasari, E. (2015). Financial Reporting Quality - Before and After IFRS Adoption Using NiCE Qualitative Characteristics Measurement. Procedia - Social and Behavioral Sciences. https://doi.org/10.1016/j.sbspro.2015.11.091
Ze, Z. X., Dyson, J. R., & Powell, P. L. (1996). The impact of information technology on
317 corporate financial reporting: A contingency perspective. British Accounting Review.
https://doi.org/10.1006/bare.1996.0015
