The Role of Artificial Intelligence in Improving the Efficiency and Accuracy of Local Government Financial Reporting: A Systematic Literature Review

Darmawati Darmawati (), Noor Ismawati Jaafar, Rahmawati Hs, Haniek Khoirunnissa Baja, Asharin Juwita Purisamya, Audrey Michelle Wenny Yolanda, Baso Amir and Muhammad Reza Pahlevi Juanda
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Darmawati Darmawati: Department of Accounting, Faculty of Economics and Business, Hasanuddin University, Makassar 90245, Indonesia
Noor Ismawati Jaafar: Department of Decision Science, Faculty of Business and Economics, Universiti Malaya, Kuala Lumpur 50603, Malaysia
Rahmawati Hs: Department of Accounting, Faculty of Economics and Business, Hasanuddin University, Makassar 90245, Indonesia
Haniek Khoirunnissa Baja: Department of Accounting, Faculty of Economics and Business, Hasanuddin University, Makassar 90245, Indonesia
Asharin Juwita Purisamya: Department of Accounting, Faculty of Economics and Business, Hasanuddin University, Makassar 90245, Indonesia
Audrey Michelle Wenny Yolanda: Department of Accounting, Faculty of Economics and Business, Hasanuddin University, Makassar 90245, Indonesia
Baso Amir: Department of Accounting, Faculty of Economics and Business, Hasanuddin University, Makassar 90245, Indonesia
Muhammad Reza Pahlevi Juanda: Department of Accounting, Faculty of Economics and Business, Hasanuddin University, Makassar 90245, Indonesia

JRFM, 2025, vol. 18, issue 11, 1-20

Abstract: Digital transformation has driven the use of artificial intelligence (AI) in local government financial reporting to improve efficiency, transparency, and accountability. This study employs a systematic literature review (SLR) approach to analyze 20 relevant articles, identifying common characteristics of publications, research focus, methods, AI technologies used, key findings, research gaps, and future research directions. The analysis results show the dominance of machine learning and expert systems in detecting fraud, predicting financial performance, and improving reporting accuracy. However, limitations in infrastructure, regulations, and system integration across government agencies remain significant challenges to implementing AI in the public sector. This study proposes the need for the development of practical implementation models, collaboration between academics, government, and technology developers, as well as the formulation of policies that support ethical and responsible AI governance. These findings make a significant contribution to shaping the strategic direction of AI utilization to strengthen local government financial reporting systems sustainably.

Keywords: Artificial Intelligence; digital financial reporting; local government; public sector accounting; transparency (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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