This study seeks to determine the effect of the application of accounting information system (AIS), internal control system, and human resource (HR) competency on the quality of local government financial statements (FS). This study uses agency theory and compliance theory. Agency theory is used to explain that there is a link between the society as the principal and the government as the agent. Compliance theory is a theory, which states that every agency is obliged to comply with regulations because the law-drafting authority has the right to dictate behavior. The population in this study were employees of the financial division of local government organizations in one of the districts in Central Java, Indonesia. The total samples in this study was 106 respondents. The data used are primary data taken from distributing questionnaires to respondents. The method of analysis used to test the hypothesis was multiple linear regression analysis. The results of hypothesis testing indicate that HR competency has an effect on the quality of FS; however, the application of AIS and internal control system has no effect on the quality of FS. The implication of this research underlines the importance of HR competency to improve the quality of local government FS.

1. Introduction
2. Literature Review
    2.1. Agency Theory
    2.2. Compliance Theory
    2.3. Hypothesis Development
3. Research Method
4. Results
    4.1. The Effect of AIS Application on the Qualityof Regional FS
    4.2. The Effect of Internal Control System on theQuality of Regional FS
    4.3. The Effect of HR Competency on the Qualityof Regional FS
5. Conclusion
References

• Anna SUMARYATI(Accounting Department, Faculty of Economic and Business, University of Dian Nuswantoro)
• Eka PRAPTIKA NOVITASARI(Accounting Department, Faculty of Economic and Business, University of Dian Nuswantoro)
• Zaky MACHMUDDAH(Accounting Department, Faculty of Economic and Business, University of Dian Nuswantoro) Corresponding Author