Application of ISAK 35 to the Presentation of Financial Reports of the Manado Diocese of the Catholic Church

This study aims to determine the existing forms of financial reporting and to find out stages, impacts and driving factors of the process of implementing ISAK 35 on the presentation of financial reports of the Manado Diocese of the Catholic Church based on the institutional theory of the form of coercive isomorphism and the Edward III model theory, namely communication, resources, disposition, bureaucratic structure. This study uses the method descriptive qualitative where data collection was carried out by means of interviews and documentation studies. The results show that the policy for implementing financial accounting information systems is not yet fully in accordance with applicable accounting standards. The organization has not fully adhered to the standard of ISAK 35. Financial records are processed using existing financial applications. By the aspect of resources, the attitude of the implementers still shows that the implementers still have minimal/not yet adequate knowledge about the accounting system created and communication between implementing agents is not yet optimal. The indicators in the bureaucratic structure variable in the form of SOPs have been achieved well because in 2019 the Manado Diocese has created a Financial Guideline that must be implemented by every parish, although in practice it is not yet perfect. In its implementation, there are still obstacles from a practical perspective, such as human error, hardware weaknesses, software weaknesses and system weaknesses. Efforts to overcome obstacles include continuing to update applications that have been created based on the latest standards and providing regular training materials that are packaged easily so that the attitude of the application implementing agents themselves can accept the new policy and those responsible for parish finances must be wiser and adhere to diocesan policies to produce financial reports that are transparent, accountable, and trustworthy.


Introduction
Non-profit organizations are different from profit organizations.The focus of non-profit organizations is to provide services to the community, such as educational foundations, NGOs, religious organizations , orphanages, and so on (Faiz, 2020).Non-profit organizations in Indonesia currently prioritize programme quality over financial management.This is despite the fact that a church religious organization's role extends beyond spiritual matters and fellowship to encompass financial reporting, which is essential for supporting the church's needs.Mahsun (2014) clearly demonstrated that the obligation of the trust holder to provide accountability, present, report and disclose all activities and activities that are their responsibility to the party giving the trust who has the right and authority to ask for accountability is also understood as a form of accountability.As a non-profit entity, the church must create a transparent financial management mechanism to create accountability and transparency and then report it to the parties who use the financial reports.
The Catholic Church in the Manado Diocese is the non-profit organization that is the object of our research.Janet et al. (2011) correctly identified that the Church is sui iuris, which means it has its own laws.The Church, as a non-profit organization, has a distinct financial management system that sets it apart from other organizations.Every church must implement an accounting system and financial management standards, as well as record parish financial transactions in accordance with the parish financial guidelines.This is to ensure that the management of parish assets is transparent and credible, and to implement the provisions of the Bishop of the Manado Diocese.The introduction of reporting standards will undoubtedly lead to a significant improvement in the quality of non-profit entity financial reports.The financial management was found to be irregular once again.Despite the availability of financial application software, there are still delays in publishing financial reports to the Diocese, which should be sent no later than the 10th of every month.It goes without saying that human resources are an integral part of the financial management process.Human resources are in a constant state of flux, making the role a mere stepping stone to another desired position.Human resources are the main determinant of the effectiveness of activities and organizational success.Organizations must therefore improve the capabilities of their existing human resources to ensure the success of their operations.Financial management human resources must possess the requisite knowledge, skills, and attitudes to carry out their assigned tasks.There is still a need for improvement in the accounting information systems of the Manado Diocese Catholic Church.Human resources, accounting information systems and technology all have a significant impact on the financial management process.Technology allows us to produce financial reports in a more timely and accurate manner.Non-profit organizations must create clear guidelines and policies to ensure the financial management process runs smoothly in line with existing accounting guidelines or standards.

Literature review
Financial reports are reports that present information explaining financial conditions, which in turn will describe the company's performance (Zamzami et al., 2023).PSAK 01 states that the purpose of financial reports is to provide information regarding the financial position, performance and changes in financial position of an entity or organization that is useful for parties who need it to make good decisions, and also as a comparison material for assessing quality in a period.ISAK 35 allows easier comparison between Indonesian organizations and other international companies.This provides more transparent information to stakeholders and investors.There are significant differences regarding PSAK 45 which was replaced by ISAK 35 and a series of advantages in implementing ISAK 35.This is important for every organization to implement to maintain its credibility and meet international financial reporting requirements.
Become "Non-Profit" consciously because the main activity is not oriented towards making a profit, but that does not mean it does not produce a profit.(Donaldson & Davis, 1991;Schillemans & Bjurstrøm, 2020).The implication of stewardship theory is to explain the existence of the church as an institution that can be trusted to carry out its duties and functions well to achieve the welfare of the people.Church administrators act as stewards with the function of managing resources and the congregation as principals who own the resources.Resource owners (principals) entrust the management of these resources to other parties (stewards) who are more capable.According to Saerang (2003) the dynamics of accountability for church funds vary and are influenced by religious belief systems as well as social and organizational dynamics of the church.According to Denhardt and Denhardt (2007), accountability is the way to satisfy the people as customers of public service providers.This, in turn, has implications for the role of accounting information and accounting practices in the management of church funds.Therefore, it is hoped that the church must implement a financial accountability system in the form of presenting accountable and transparent financial reports in accordance with the characteristics of financial reports, namely relevant, reliable, understandable, and comparable.
Theory coercive form isomorphism.The theoretical basis used in this research is also institutional theory in the form of coercive isomorphism.According to DiMaggio and Powell (1983, 147-154), organizations or institutions will make decisions based on influences from outside the organization and will make efforts to adapt to pressures originating from outside the organization.One of them is good financial management transparency which can be achieved if the organization is able to comply with applicable regulations and standards.The main idea of institutional theory is the formation of entities that are strongly influenced by the surrounding environment (Amirya et al., 2012:345).
Edward III Model Theory.In the process of implementing a standard, policy implementation is a very important aspect.Apart from institutional theory, the author will also use the Edward III model of policy implementation theory as the basis for this research.According to Edward III (1980), there are 4 variables in the implementation or implementation of policies so that they can run well, including communication, human resources, disposition/attitude, and bureaucratic structure.

Research method
The type of research data that will be used by researchers is descriptive qualitative.According to Sugiyono (2020), qualitative methods are research that uses a philosophical basis to examine scientific conditions (experiments).This research uses research data sources, namely primary data in the form of direct interviews with the treasurer and finance team of the Manado diocese which keeps all parish financial reports and the parties involved in them.Researchers came to the research location, namely the Diocese of Manado, to make observations and collect data according to direct reality.To determine sources for this research, the technique used was purposive sampling.According to Sugiyono (2020) purposive sampling is a data sampling technique with certain considerations because It is impossible for a researcher to take all respondents for research, due to limited funds, energy and time.Therefore, researchers can use samples taken from that population.So, researchers certainly take samples that are truly representative (can represent), namely: 1. Finance/Procuracy Section.Researchers chose this informant because they were considered to have the authority to manage diocesan assets under the authority of the bishop.2. Secretariat Section.Researchers chose this informant to obtain information from existing documents regarding the general description of the organization, organizational structure and job description.3. Finance Team.The researcher chose a financial team that was formed to regularly go to churches in the Manado Diocese to carry out supervision/monitoring and examination of the management of assets and finances of existing legal entities.

Parish Applicator in charge of
inputting financial data into the existing application.5. Episcopal representatives/vicars consisting of 9 people to represent some of the duties and authority of the bishop in a narrower and more specific area.The following is a list of Parish names in each Kevikepan.

Result and discussion
In implementing ISAK 35, the Catholic Church in the Manado Diocese is under pressure from coercive isomorphism so that it applies the rules made by the local Bishop.Because the book of Canon Law of the Catholic Church does not mention explicitly and in detail the mechanism for managing parish finances.This is usually regulated in particular law, especially the statutes of the Parish Finance Council which are determined by the Diocesan Bishop with the implementation of the financial application Accounting Information System which is based on the Parish Financial Guidelines.This system is a form of policy implemented by the Diocese of Manado.It is believed that this policy can increase the effectiveness of the parish financial management process in the Manado Diocese.However, the policy for implementing financial application accounting information systems is not yet fully in accordance with applicable accounting standards even though nonprofit organization are required to prepare financial reports in accordance with ISAK 35.The Diocese of Manado has just prepared financial reports according to the old standards, namely PSAK 45 considering that the application used was created before ISAK 35 came into effect so it is not up to date or does not comply with the latest standards published by DSAK IAI regarding financial reporting of non-profit organizations.This policy has also reaped pros and cons in various parties because some people feel it is unnecessary because they are used to the old pattern or in other words conventional.No and reluctant to adapt because it feels difficult, and but as time goes by and because of the patience, willingness and tenacity of the team, especially the bishop, until now, slowly but surely they have accepted and implemented it, because it turns out to be very helpful in utilizing finances in an orderly and directed manner.The most important thing is to empower people/people who have accounting skills.The benefits that can be obtained by users of financial reports of non-profit oriented entities are to assess how management carries out responsibility for the use of resources entrusted to them as well as information regarding the financial position, financial performance and cash flow of the entity which is useful in making economic decisions.The ability of non-profit oriented entities to use these resources is communicated through financial reports.
Financial reports for non-profit oriented entities are different from financial reports for profit-oriented entities.PSAK 1 explains that there are four components of financial reports, while the financial reports of non-profit oriented entities consist of five components, namely: financial position report, comprehensive income report, report on changes in net assets, cash flow report, and notes to financial reports.The income obtained without restrictions comes entirely from collections, actions and donations from the people, honoraria, devotional receipts and business results from the church.The surplus or deficit that occurs comes from income minus expenses incurred during the current period.Income with restrictions comes from receipts for certain purposes, namely APP receipts for the parish and donations for social purposes where these receipts have a predetermined purpose of use.Furthermore, the expenses used during the process of church operational activities include expenses without limitation (apostolic work costs, routine church needs costs, pastoral and employee labor costs, parish household costs, repair and maintenance costs, administration costs, divisional costs, business costs and other costs) as well as costs with limitations (expenses for a specific purpose) are reduced by the church's income so that it will produce a surplus or deficit figure during the current year.report provide a detailed explanation regarding information not included in the previous four reports, namely, comprehensive report, net assets report, cash flow report and financial position report.The Catholic Church in the Diocese of Manado has not prepared notes on financial reports.To make the financial report complete, the entity must make notes on the financial report which are useful to support the financial report that has been made and are an inseparable part of the financial report.
Note A: The Manado Diocese Catholic Church presents donations tied to four accounts, namely receipt of APP for the parish, receipt of donations for social purposes, expenditure of APP allocation funds, and expenditure of social assistance funds.APP receipts for the parish are the result of funds collected by the congregation during the Lenten season to be distributed as social action.Acceptance of donations for social purposes is acceptance aimed at social actions carried out by the church.Parish APP fund allocation expenditure is the expenditure of funds for community socio-economic empowerment activities allocated from APP funds for the parish.Expenditure of funds for social assistance is the expenditure of funds to distribute social assistance, the funds for which come from receiving special donations for social assistance.Church has not prepared notes on financial reports because the church does not really need additional notes on the reports that the church makes, and if at any time notes on these financial reports are needed then there must be approval from the parish priest.accordance with

Conclusion
The

Suggestion
As for the obstacles that have been explained in the discussion section and emphasized again in the conclusion section, the suggestions that researchers can give in answering these problems are as follows: a. Policy, expected all pastors, applicators, DKP and all treasurers can learn about parish financial applications.The person responsible for parish finances is the parish priest, wise to adhere to diocesan policy.And for parishes that do not comply, the diocese must take firm action as far as humanly possible.b.Resources: It is hoped that the Diocese can carry out regular/periodic training programs for agents implementing financial applications with training materials that are packaged easily so that the attitude of the application implementing agents themselves can accept the new policy.Apart from that, it is hoped that the parties involved can think about the future fate of the applicators they use so that they can continue working because they feel that their future lives are guaranteed, for example by providing decent wages and assignment decrees with agreements.c.Communication, utilizing existing technology to be able to communicate well with one another so that the goals to be achieved can be carried out well.d.Disposition, it is hoped that all servants of the people will always be wise, not hedonistic, obey the hierarchy, prioritize the pastoral service of teachers, prophets and kings in accordance with applicable guidelines.e. Bureaucracy, regulations are regulated as much as possible so that there is no misunderstanding of duties and functions, there are no duplicate functions.Apart from that, it is necessary to develop people's understanding of the aims and objectives of implementing the Financial Accounting Information System and all agents involved must understand what supporting factors each parish needs to have to be able to Judging from the form of the report, there are differences as in the table below.

Table 4 Format for the report on the financial position Catholic Church in the Diocese of Manado Financial Position Report For the Year Ending 2022 ASSETS Current assets
The indicators in the bureaucratic structure variable in the form of SOPs have been achieved well because in 2019 the Manado Diocese has created a Financial Guideline that must be implemented by every parish, although in practice it is not yet perfect.Meanwhile, clarity of authority and division of tasks and authority has not been achieved properly because there are several parish priests themselves who are involved in handling the process of inputting data into the application.There are still obstacles from a practical perspective, such as human error, hardware weaknesses, software weaknesses and system weaknesses.Limitations in this research are: -Researchers were unable to conduct interviews with Catholic Church Leaders in the Manado Diocese, in this case the Bishop.Because everything related to financial management is already regulated by the financial council.-Researchers did not specifically examine the impacts that occurred in each parish because the Manado Diocese area was very large.So the researcher only conducted interviews with the person in charge in each region, as well as representatives of the pastor, team and applicator.