Managerial Challenges of Work Unit X in the Ministry of Finance: Avoiding Spending Inefficiencies Amidst Pressure from Absorption Percentage Targets

Abstract

Abstract Budget performance indicators were initiated by the Ministry of Finance. The first indicator related to budget effectiveness is the Budget Execution Performance Indicator (IKPA), which uses budget absorption as one indicator. Meanwhile, the Ministry of Finance also implements a second indicator to measure efficiency through the Budget Performance Evaluation Instrument (EKA). Each central government work unit is assessed using these two schemes. The effectiveness indicator expects the highest budget absorption, while the efficiency indicator expects budget savings. This study used secondary data in the form of budget performance recapitulations using both IKPA and EKA. Research aims: This study aims to examine the implementation of budget performance indicators within a work unit. Budget performance indicators were initiated by the Ministry of Finance. Design/Methodology/Approach: Data analysis used a correlation test for qualitative data. Research findings: Data analysis used a correlation test for qualitative data. The analysis results showed a correlation between the two indicators of -0.503 (significant), indicating that these two indicators are inverse, indicating potential disruption for the work unit in determining priority indicators. Theoretical Contribution/Originality: This research contributes to contingency theory, particularly regarding instrument conflict. It quantitatively demonstrates that two performance indicators issued by the same authority can negate each other if not synchronized. Successfully achieving compliance with the IKPA creates a negative contingency for the achievement of the EKA indicator. Practitioners/Policy Implications: Two budget performance indicators issued by the same authority can negate each other, causing operational confusion in the work unit that implements them. Research Limitations/Implications: This study is a single case study of Work Unit X. Without a comparison unit, the findings cannot necessarily be generalized to other work units with different organizational structures or budget scales.