Accounting Controls and Financial Data Quality in Credit Unions: Evidence from Northeastern Indonesia

Abstract

This study investigates the role of accounting controls in shaping financial data quality within credit unions in Northeastern Indonesia. Although reliable financial information is essential for member-based financial institutions, limited empirical attention has been given to the contribution of distinct accounting control mechanisms to the quality of financial data in this organizational setting. Guided by internal control theory, the study examines preventive, detective, corrective, compensatory, and directive controls as components of the accounting control environment. A cross-sectional mixed-methods design was adopted, combining quantitative survey evidence from 181 executives and board members representing 181 credit unions with qualitative evidence obtained through semi-structured interviews with selected executives. The findings show that accounting controls are generally well established across the sampled credit unions, with compensatory and detective mechanisms receiving particularly strong assessments. Financial data quality is likewise favorably assessed, particularly with respect to the relevance of information for decision making, timeliness, and completeness. The predictive analysis demonstrates that the examined accounting control dimensions have positive and statistically significant relationships with the relevant outcomes. Among the control mechanisms, preventive controls exhibit the strongest predictive relationship, highlighting the importance of control activities that address accounting risks before they materialize. Detective, compensatory, corrective, and directive mechanisms also demonstrate significant contributions, indicating that different forms of control operate through complementary channels. The study extends internal control theory to the credit union context by demonstrating the empirical relevance of differentiated control mechanisms for financial data quality. The findings provide a basis for credit unions to evaluate their control architecture as an interconnected system rather than as isolated procedures, with particular attention to the alignment between control design, financial reporting processes, and information-use requirements.