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Indonesia: Strengthening Village Financial Systems FAQs

Siskeudes or Sistem Keuangan Desa (Village Financial System) is an application. It is used by villages to create the budgets, accounts, and financial reports. It is provided by the central government for free. District/city governments can also use Siskeudes to compile budgets and budget realization reports for villages in their jurisdiction.

Before Siskeudes was launched, most villages created budgets and financial reports, and managed accounts using MS-Excel or other applications that were not standardized. This meant that district/city governments could not reliably monitor and evaluate village budgets and financial reports. Also, many villages had purchased applications developed by private companies, which could not be upgraded to meet regulatory standards. Siskeudes solves this by standardizing formats of data input and reporting.

In May 2015, the Indonesian Government, through the Development Finance Comptroller (Badan Pengawasan Keuangan dan Pembangunan or BPKP) developed Siskeudes on the recommendation of the Corruption Eradication Commission and instructions from the House of Representatives’ Commission XI. Siskeudes then became a joint product of BPKP and the Ministry of Home Affairs (MoHA), and was launched in July 2015. It was first implemented by villages in early 2016.

Siskeudes helps village governments to easily create budgets and financial reports and manage accounts. It allows district/city governments to compile, monitor and evaluate Village Budget Plans. Once data is entered, Siskeudes automatically produces reports which saves village governments time and effort, reduces irregularities due to human error and helps with the aggregation of data. Also, any illegal change of activities or budgets can be tracked and prevented in Siskeudes.

First, Siskeudes allows financial budgeting and reporting by villages to become more timely and accurate. This allows the central government to disburse funds to villages on time.  

Second, it improves village financial accountability because notes and reports in Siskeudes cannot be altered without due process.

Third, Siskeudes can also be used by district and city governments to compile budget realization reports of all villages in their jurisdiction. These reports are included in the district/city government financial report which is audited by the Supreme Audit Agency.

Fourth, since villages and districts no longer need to pay to obtain or develop village finance applications, they can instead use these earmarked funds to train village and district apparatus to better manage finances.

  1. Some provincial and district governments have not committed to implementing Siskeudes and Task Forces at district/city levels are yet to be established.
  2. Not enough funds are made available to train staff at MoHA, BPKP, local governments and villages to improve financial management skills.
  3. Some districts don’t have the human resources, nor the technical capacity to assist villages in their jurisdiction.
  4. Villages are reluctant to implement Siskeudes and instead prefer to use manual excel-based systems because the latter are easier to modify locally (data changes, creation of new activities that were not included in village budget, etc.).
  5. Many village governments lack the capacity to meet central government standards on managing village finances.
  1. By ensuring a legal basis for using Siskeudes. A Circular letter from MoHA instructing all provinces and districts to implement Siskeudes is needed. Districts should establish task forces to implement Siskeudes and manage complaints.
  2. By allocating funds for training. Central and local governments should provide additional training to key staff to improve their financial management skills.
  3. By providing training opportunities and materials in financial management. District and sub-district officials require training in managing village-level finances and in providing assistance to villages when required. Video tutorials, e-learning materials, users’ discussions groups on social media are needed to improve flow of knowledge between trainers and trainees.
  4. By engaging village-level facilitators. Facilitators have historically played an important role in building capacity in villages. However, facilitators are not yet consistently involved in implementing the Siskeudes. MoHA, BPKP, and the Ministry of Villages, Development of Disadvantaged Regions and Transmigration (MoV) can coordinate the involvement of village facilitators to support the implementation of Siskeudes.
  5. By requiring villages to use Siskeudes. All Regents and Mayors (who report to provincial Governors) should issue Instructions to villages to make use of Siskeudes to prepare village-level budgets and reports.

Siskeudes has been used successfully in approximately 60% of 67,000 Indonesian villages which have so far implemented it. The remaining villages have recently begun using Siskeudes and so far, only to create village budgets. In Papua and North Kalimantan, less than 30 percent of villages had used the application. Geographic remoteness, lack of supervision, limited electricity and internet facilities are some obstacles to villages implementing the Siskeudes.

  1. Technical Review. A technical review or special audit of Siskeudes should be conducted by BPKP and MoHA to ensure that it complies with regulations, is bug-free, and meets user needs.
  2. Certification. It should also be certified by an independent firm to guarantee its quality and reliability.
  3. Integration. Siskeudes should be used as the primary data source for other applications such as for Village Fund disbursement (OMSPAN at the Ministry of Finance), and for the Village Development Information System (SIPEDE at MoV).
  4. Web version. An online version of Siskeudes which auto-synchronizes between villages and districts/cities is needed. An online version will require adequate network infrastructure.