Page 39 - SUSTAINABILITY ISSUES & COVID-19

According to GAS Number 01, financial statements are prepared to provide relevant information regarding the financial
position and all transactions carried out by a reporting entity during one reporting period. Financial reports are
mainly used to determine the value of resources used to carry out government operational activities, assess financial
conditions, evaluate the effectiveness and efficiency of a reporting entity, and help determine compliance with laws
and regulations (Republik Indonesia, 2010). Each reporting entity has the obligation to report the efforts that have
been made and the results achieved in carrying out activities in a systematic and structured manner during a reporting
period, one of which is for accountability purposes. This means being accountable for the management of resources
and the implementation of the policies entrusted to the reporting entity in achieving the stated objectives periodically.
Accountability in the definition of GAS also means the evaluation of the implementation of activities. Accountability
and evaluation are inseparable things.

1.2 Prior Research
The theory behind the revaluation and depreciation of infrastructure assets rests on the definition of infrastructure
assets in government. It is universally agreed that infrastructure assets in government are long-lived assets (sometimes
with uncertain lives), which cannot be sold and used to provide services to the community at zero or nominal costs
(Barnes & Lord, 2017). Government infrastructure assets or also known as the state-owned assets are different from
private assets that can generate cash because their objectives are different from ownership by private companies that
expect financial benefits. This makes government assets difficult to valued because there is no comparable data on the
market.

Problems with the valuation of infrastructure assets in government arise in large part because well-established
commercial accounting principles are inapplicable due to the unique characteristics of public sector infrastructure
assets. For example, these assets have been around for a long time and sometimes live uncertainly, there is no market
where these assets can be sold, and most local government assets do not operate for profit (Ivannikov, 2020). Because
the government applies a historical cost policy, assets are recorded at their acquisition value. When the government
requires a large asset value to be used as underlying assets for the issuance of Government Islamic Securities, the
government will take existing assets to determine their fair value. One problem arises because of the unique
characteristics of the assets owned by the government.

The revaluation model provides more benefits than the cost model in solving cash shortages, reflects the fair value or
market price of fixed assets in the financial statements, and offers relevant financial information to stakeholders, but
incurs higher costs (Zakaria et al., 2014). The results of asset valuation form the basis for calculating depreciation and
also affect the financing ratio through the effect of equity value (Barnes & Lord, 2017). Asset revaluation will provide
benefits to the government as the owner of the assets, although there will be costs involved. The results of asset
revaluation will form a new fair value, useful life, and new depreciation value so that it can be optimized for financing
such as with the Government Syariah Security.

The quality of the implementation of asset inventory will affect the legal audit and the implementation of asset
valuation (Sangadji, 2018). Asset management aspects such as valuation and asset inventory influence the efforts
to optimize assets by the Sragen local government (Widayanti, 2010). The application of GAS with organizational
commitment has a significant effect on the financial accountability of the Bandung City government (Zeyn, 2011).
Inventory activities are carried out before revaluation to ensure the validity of the assets to be revalued. Inventory and
appraisal must be carried out adequately to obtain a picture of the actual assets owned, both in terms of quantity,
volume, physical potential, and economic potential. Inventory and appraisal must be following accounting standards
so that accountability aspects can be met.

According to Deaconu & Nistor (2014), a properly performed asset valuation will guarantee the credibility of accounting
information that can support decision making by interested parties. It must be supported by more detailed accounting
standards in terms of concepts and types of value, each with more technical guidance than is currently provided by
the International Valuation Standard. The lack of detail regarding the valuation methodology, which is subsequently
not found in the professional guidance provided by the International Valuation Standard, results in inadequate
financial reporting support in government agencies. This can lead to reduced credibility of the accounting information

38 International Conference on Sustainability
(5 Sustainability Practitioner Conference)
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