Village Government’s Risk Management and Village Fund Administration in Indonesia

Abstract

This study examines the application of risk management in managing village funds, motivated by the village government’s efforts to improve financial management. This research focuses on activities involved in village fund management, including planning, budgeting, administration, reporting, accountability, and supervision. This study analyzes how village governments carry out risk management by considering efficiencies, innovation in public resource management, and anticipating and prioritizing potential threats and opportunities. Data collection involved participant observation, interviews, and analysis of written documents, images, and archives. The result shows that risk management is essential for the management of village funds, and avoiding mistakes in rural communities should be part of their planning and participation. This study highlights the importance of adequate human resources, both in regard to quantity and quality, but it is necessary to pay attention to local strengths by utilizing the nature of cooperation and family skills. Overall, the study emphasizes the need to prioritize risk management in managing village funds to encourage accountability and the efficient use of resources.

1. Introduction

Risk management is an approach or methodology for managing something in relation to threats posed by human activity and devising strategies for mitigating risks through empowering or managing resources. The prompt execution of risk management within governance is a matter of utmost importance. Risk management is implemented mostly within the private sector; nonetheless, it is crucial to acknowledge that the public sector is also confronted with a multitude of intricate occurrences [1]. Risk management is an essential aspect of both the public sector and the political realm. Local authorities in the public sector encounter a multitude of criteria and objectives, accompanied by substantial levels of bureaucracy and regulation [1]. In order to proficiently address the risks within the public sector, it is imperative to implement a methodical and organized strategy that integrates exemplary methodologies from the private sector and compares performance with other public sector entities [2]. According to Gani et al. (2020), this particular strategy has the potential to improve the efficiency of the financial management within the public sector [2]. The complexity of hazards encountered in the public sector is acknowledged to be heightened by the bureaucratic processes that must be navigated [3]. Due to this rationale, there exist multiple risk management principles applicable to the public sector [4]. The application of risk management principles in the public sector is anticipated to facilitate the management of intricate hazards and uphold the perceived public value. Although risk management in the public sector has certain limitations, it remains a crucial aspect [5].

The management of risks is of utmost importance in reducing the potential harm caused by fraudulent actions in the public sector and the increasing likelihood of failure in the IT sector [6,7]. The notion of risk management is of great importance in multiple domains, such as accountability [8], transparency [9], public services, and decision-making [10]. Risk management is an essential component in the successful achievement of strategic goals and the prevention of potential mistakes inside organizations [11,12]. The importance of risk management in the operations of public sector firms cannot be overstated, as it plays a vital role in the identification, analysis, evaluation, monitoring, and control of potential dangers [13]. The primary goal of risk management varies among businesses, but it typically involves the proactive identification of potential hazards before their manifestation and the subsequent implementation of appropriate measures to mitigate or remedy them. Furthermore, the objective of risk management is to cultivate a collective comprehension among various entities and to build a degree of acceptance or tolerance towards specific risks [13,14], as is the importance of creating a risk culture [15] for each level in the organization. Within the framework of Indonesian governance, the Indonesian government’s allocation of village funds fulfills the objective of supplying financial resources to village administrations, especially to facilitate infrastructure development and activities aimed at empowering the community. The fundamental purpose of village funds, as stipulated by the Law of the Republic of Indonesia No. 6/2014 on Villages (2014), is to augment the general welfare of the community and mitigate poverty [16,17].

The management of village funds in Indonesia has demonstrated significant advancements during the previous five-year timeframe. Many rural communities have effectively utilized local financial resources to improve the welfare of their citizens and facilitate the development of the community. However, there are certain issues that must be addressed in order to improve the effectiveness of village budget administration. One of the difficulties that has been recognized pertains to the embezzlement of village money, as shown by the incident that took place in Jember. The aforementioned sites, as indicated by the sources referenced as Jember [18], Skadau [19], and Garut [20] hold significance in relation to the subject matter under consideration. Other notable issues are the lack of community engagement [21], dearth of personnel in accounting and financial administration [22,23], inadequate information and monitoring systems, and incongruity between the management of village funds and the needs of the community [24].

The administration of village funds encounters a range of challenges, encompassing the potential ramifications of a lack of transparency, the risk of authority abuse, the potential for legal infractions, the possibility of fraudulent practices, and the potential for mismanagement resulting in the failure of fund administration. Acquiring a thorough comprehension of the potential hazards linked to the administration of village finances is an essential endeavor for village governments aiming to improve the effectiveness and efficiency of their practices in managing village funds [25,26]. The early identification and implementation of appropriate risk control procedures by village fund managers can successfully limit potential risks, so ensuring the prevention and resolution of any emerging concerns. The objective of this study is to assess the effectiveness and efficiency of the management of village funds, as well as the measures implemented to prevent or reduce potential risks that may develop over the course of this process. The management process of village funds encompasses various actions, including planning, implementation, administration, reporting, and accountability. These actions are conducted in accordance with the guidelines outlined in Ministry of Home Affairs Regulation No. 20/2018, which specifically focuses on Village Financial Management. By gaining an understanding of the potential risks involved in handling village finances, village governments, in their role as financial managers, can improve their ability to plan and develop appropriate strategies to prevent or reduce any negative outcomes that may occur [25,26]. In the event of the insufficient implementation of risk management strategies, administrators responsible for village funds may face unforeseen risks, such as the unauthorized diversion of funds, violations of legal regulations, and inadequacies in the management of village finances. Therefore, the incorporation of risk management assumes a crucial role in the administration of village funds, with the objective of fostering progress. The analysis of keywords utilized by scholars to investigate previous research within the Scopus database reveals a substantial body of scholarly literature concerning risk management in rural regions, specifically within the setting of Indonesia. Nevertheless, the current corpus of academic literature about risk management in rural areas has predominantly concentrated on the field of disaster management [27], volcano case threat [28], and related household vulnerabilities in the Philippines [29].

The present analysis indicates that a considerable proportion of the research on risk management is predominantly carried out by scholars from diverse academic disciplines. Nevertheless, the analysis of data acquired from the Scopus database indicates a notable dearth of scholarly discourse pertaining to the subject of risk management in the governance of village funds within the Village Government. Therefore, this study is of considerable importance as it contributes to the comprehension of risk management strategies in the governance of village finances in Indonesia.

The research questions are:

• How can village funds be managed along with the risks in the planning, implementing, and reporting processes?
• How are the risks identified by the authorized officials in village government identified and dealt with by them?
• What are the challenges and opportunities in managing village funds?

2. Literature Review

When engaging in various activities, it is inevitable that certain hazards will exist, which cannot be mitigated or eliminated [30]. Risk can be defined as the presence of uncertainty in the outcomes and occurrence of events that may result in harm and have adverse effects on the assets, operations, and activities of an entity. The public sector faces several dangers originating from seven primary sources, which include the physical environment, social environment, political environment, regulatory environment, economic environment, operational environment, and cognitive environment [31,32]. Therefore, it is imperative to effectively manage the situation in order to mitigate any potential adverse consequences that may hinder or undermine the intended objective. The field of risk management gained recognition following the conclusion of World War II. Consequently, individuals who possessed a pronounced affinity towards this particular profession afterwards embarked on broadening their pursuits within the realm of the public sector. This assertion is substantiated by multiple studies [33,34,35], which specifically focus on risk management at the local community level [36,37].

Although risk management studies have been implemented in the public sector, the available search results do not demonstrate any noticeable improvement in the management of village money. The extant research about risk management at the village level mostly centers on the subjects of disaster management [24], volcanic risks [25], and household vulnerability in the Philippines [26]. Based on the aforementioned study, it becomes apparent that further investigations are being carried out within the domain of risk management. Nevertheless, there is a dearth of scholarly study that investigates the subject of risk management in the administration of village funds within the framework of Village Government.

Indeed, the utilization of risk management encounters various problems, particularly when implemented at the village level, where a segment of the government system is perceived as the most vulnerable [38]. The presence of misconceptions, internal obstacles, cultural factors, inadequate knowledge, lack of training, failure to identify numerous risks, failure to establish time constraints, inability to navigate the process, and resistance to accepting changes that risk management can enhance are all significant factors. At the village level, the challenges primarily revolve around implementation difficulties, insufficient financial resources, and the roles played by both the government and the private sector. The current problem lies in managing financial aspects with the rise of the digital economy, computers, and telecommunication technologies [39,40]. The primary obstacle encountered in the realm of financial management within rural communities is the inherent complexities associated with risk management [37]. Nevertheless, it is possible for public sector institutions to effectively mitigate risk through the attainment of operational efficiency, the adoption of innovative practices in the management of public resources, and the proactive identification and prioritization of potential risks and opportunities. Nevertheless, the true difficulty lies in implementing these principles and practices of risk management [41].

The ISO 31000 standard, which pertains to the discipline of risk management, was subsequently introduced [42]. Risk management is an ongoing process which involves identifying and assessing risks, taking steps to reduce the likelihood of unwanted events occurring, and implementing measures to manage any risks that do occur [43,44]. The main goal of risk management is to regularly evaluate and manage the likelihood and potential impacts of negative events by applying a set of tactics to reduce their occurrence and smoothly integrate them into the organization’s operations. This involves the proactive identification and mitigation of risks before the adoption of precautionary measures, as well as the continuous management of risks that persist despite the implementation of those measures. The examination of village fund management in relation to good governance [45], fraud prevention, and the readiness of village officials [46,47] demonstrates the limited capacity and competency of village governments in efficiently administering village finances. The presence of this inadequacy gives rise to several possible dangers, including but not limited to fraudulent behaviors, the replication of programs throughout multiple villages, the improper allocation of village funds, and the potential emergence of conflicts within and between community members. The presence of additional threats was brought to attention due to discrepancies in stakeholders’ understanding of local revenues and insufficient levels of community involvement. The village head’s educational background poses a challenge to the efficient administration of local funds. Therefore, it is crucial to improve the functionalities of the equipment to enable its effective application in the domain of risk management [48].

The monetary management process in a village encompasses several distinct stages, including planning, implementation, administration, reporting, and accountability [49]. The planning phase encompasses the development of work plans and budgets, while the implementation phase is concerned with the execution of financial operations and management. The reporting stage encompasses the production of financial reports and related responsibilities, along with the obligation to offer a comprehensive explanation of these reports to governmental entities and the broader public. The evaluation and supervision phase encompasses a systematic examination of program outcomes and activities, with oversight guided by the fundamental values of accountability and transparency. The ultimate phase entails the establishment of accountability. The purpose of this study is to examine the risk management strategies utilized in the distribution of money within rural areas, aiming to enhance the overall welfare of the local population.

3. Method

The study employed a qualitative methodology, specifically utilizing a descriptive research approach, to elucidate the process of applying risk management strategies in the domain of financial management. The investigation focused on two distinct situations to provide a comprehensive analysis. The qualitative technique is a research methodology that enables researchers to conduct concise subject descriptions and obtain comprehensive information, along with in-depth interpretation [50]. The primary objective of this study was to examine the implementation of risk management in fund management within Cibeureum Village and Sukapura Village, located in the Kertasari District of Bandung Regency, during the period of 2015–2019. The study was conducted by conducting a thorough exploration, utilizing a problem formulation that had been created based on the research framework, and employing a qualitative research approach

This research focused on implementing risk management [51] of fund management in Cibeureum Village and Sukapura Village, Kertasari District, Bandung Regency during 2015–2019. The study was carried out by exploring more profoundly the use of the formulation of the problem that had been determined according to the research framework via a qualitative research approach.

Drawing from the aforementioned concerns, this study aimed to elucidate the intricate dynamics of village fund administration and examine the diverse hazards that have emerged as a result of the participation of numerous stakeholders in this process. The objective of this study was to examine the management of village funds through the lens of risk management, specifically focusing on the stages of planning, implementation, administration, reporting, and accountability. Additionally, this study aimed to investigate the determinants that contribute to the adoption of risk management practices in the management of village funds. The study employed qualitative research methods, including in-depth interviews and field observations, to collect the necessary data. The data obtained from these instruments were evaluated using non-statistical techniques. The researcher employed a descriptive study method to provide a systematic, objective, and precise depiction of the issues within the topic [52,53].

3.1. Research Design and Strategy

The methodology that was employed to collect the data utilized methodologies for triangulating the various sources of the data [52]. One example of the use of the data source triangulation [54] methodology is when researchers investigate the accuracy of certain information by drawing upon a wide array of data collection methods and sources. Researchers utilize a wide range of approaches in order to produce evidence or different types of data. Some of these methods include observation (including participant observation), written papers, archives, historical documents, official records, notes or personal writings, and photographs. Aside from these, excavations of archives and investment data are carried out, as well as questions and answers with informants. While processing the data, researchers also perform data reduction. As previously described, the objective of the process of data reduction is to narrow in on the research goals, simplify the information, and change the raw data into a form that is simpler to deal with. During the course of the research procedure, the researchers carried out data reduction in a number of different stages [55].

3.2. Data Collection

The primary strategy of data collection that was utilized in this investigation was conducting direct interviews with the relevant individuals. As part of this investigation, a number of individuals who took part in the management of the financial affairs of the village were questioned through interviews. Purposeful sampling is the name given to the method that is utilized in the process of selecting informants. Using this method, the researchers selected an individual or a group of people who were interested in being interviewed, and they justified their choice by arguing that the individual or group was informed about the administration of the financial resources available to the community [52]. The following table (

Table 1. Research informants.

No	Informant	Position	Role in Fund Management	Type of Institution
1, 2	A1, A2	Bandung District Inspectorate	Supervisor	Government
3, 4	B1, B2	Bandung Regency Community and Village Empowerment Office (DPMD)	Monitoring and Evaluation Team	Government
5	C1	Development Planning Agency at Sub-National Level (Bappeda)	Planning synchronization	Government
6, 7, 8	D1, D2, D3	Kertasari Subdistrict	Coaching and Supervisory Team	Government
9, 10, 11, 12, 13, 14	E1, E2, E3, E4, E5, E6	Cibeureum Village Government	Village fund planning and implementation	Government
15, 16, 17, 18, 19, 20	F1, F2, F3, F4, F5, F6	Sukapurna Village Government	Village fund planning and implementation	Government
21, 22	G1, G2	Cibeureum Village Consultative Body	Village fund planning and monitoring	Community
23, 24	H1, H2	Sukapura Village Consultative Body	Village fund planning and monitoring	Community
25, 26	I1, I2	Village Facilitator	Facilitator	Private
27, 28	J1, J2	Cibeureum Village’s Residents	Beneficiaries	Community
29, 30	K1, K2	Cibeureum Sukapura Village’s Residents	Beneficiaries	Community

Source: Author, 2023.

) contains a list of the names of the people who participated in this inquiry by providing information to the authorities.

3.3. Data Analysis

In this qualitative research, it was found that the data that were acquired through interviews, observations, and documents needed to be analyzed in three steps before they could be understood correctly. This was a requirement in order for the data to be properly interpreted. Reading the transcript of the findings from the field research, organizing the findings into categories that may be decided and interpreted by a process called contextualization [51], and finally contextualizing the findings are the three phases that make up this process. Reading the transcript of the findings from the field research is the first stage. The first step is to read the transcript that was created from the findings of the field research. When performing the task of evaluating the data obtained from this study, the first task that was performed was meticulous recording of all of the information that was gathered. This comprised taking notes and writing transcripts of the interviews that were conducted with the informants, as well as recording the outcomes of the documentation and the discoveries made during the field observations. Additionally, this included recording the findings that were made during the field observations. The transcriptions of the interviews are presented here so that an accurate record is available. This is to ensure that the information is not lost. In addition, the second phase was the process of classifying, grouping, or categorizing the information based on the possibility that different informants may provide responses that are identical or similar to one another. These data were organized according to the questions in order to serve as the basis for the analysis material, which was organized according to the principal theme of each research question that was asked. The analysis material was organized in accordance with the research question that was posed. The technique that was used in the carrying out of the third stage, which is known as data analysis, was the interpretation of responses or information provided by the informants in accordance with their individual classifications. This was the procedure that was used to carry out the third stage. These categories include those that come from groups that are part of the village government, external bureaucracy, and other parties (such as NGOs, community leaders, village assistants, and village facilitators). Additionally, these classifications may overlap with those of other parties. This interpretation of the data that were obtained from groups of government actors, private actors, and public actors was carried out by drawing conclusions from a range of expressions, ideas, arguments, and perceptions by qualitatively comparing them with the reality of the field. This interpretation of the data that were received from groups of government actors, private actors, and public actors was carried out. The comparison in question took place during the very last phase, which was the analysis of the data. This comparison was carried out with a great deal of attention to detail and a sharp focus on the relevant aspects. This was performed so that conclusions could be established regarding whether or not the new findings entirely support the existing (former) ideas, support parts of the existing (former) theories, or may differ (there are new results) from those of the prior theories [56]. This was conducted so that conclusions could be reached on whether or not the new discoveries completely support the existing (former) concepts. When drawing conclusions or presenting findings based on a study, the basis for doing so is an analysis and discussion of the relationship between the primary data information acquired and theoretical ideas or previous research. This serves as the basis for drawing conclusions or presenting findings. The first step towards achieving this goal is to construct a base for future construction [52].

4. Results

During the process of conducting the interviews, it was determined by the researchers that the governing body of the village lacked a satisfactory level of comprehension regarding risk management. This was one of the findings of the investigation. This finding emerged as a result of performing the investigation.

4.1. Strategy for Implementing Risk Management in Village Fund Management

4.1.1. Achieving Efficiency

The achievement of efficiency in the advancement of rural areas requires careful deliberation. The initiation of development planning at the village level commences at the hamlet level, which is subsequently followed by deliberations among hamlets and village development dialogues that necessitate the involvement of all pertinent stakeholders. The facilitation of community desires and goals is achieved through the generation of a roster comprising proposed activities and events, which is undertaken during every meeting. Subsequently, these recommendations are subjected to a process of raised consideration, so ensuring heightened attention and subsequent implementation. Based on the results obtained from the interviews, they became a priority and were implemented. As the interview results show:

“We together with the sub-district government for one week assisted in the preparation of plans to be in accordance with the vision and mission of the village head, but the plans that have been made must be adjusted every year due to policy changes from the central government for village fund priorities”. I1

“The community submits development proposals according to their needs which are not necessarily in accordance with the priorities of village funds directed by the central government. We accommodate all proposals and try to accommodate them to be included in the priorities of the village”. E1, F1.

As shown in Figure 1, the changing priorities set by the central government through the Ministry of Villages, Development of Disadvantaged Regions, and Transmigration are a reference for village-level development planning.

To ensure that the purpose of using village funds remains on target, the Minister of Villages, Development of Disadvantaged Regions, and Transmigration (Kementrian Pembangunan Daerah Tertinggal dan Transmigrasi, PDDT) formulates guidelines and gives directions to the village governments. These guidelines and directions guide the village governments to prioritize them. Nevertheless, the expeditious transmission and execution of this alteration to the local administration are unfeasible. The implementation of a system by the village governments, involving multiple elements within the community, remains necessary for adjustment.

4.1.2. Resource Innovation

The community exhibits a wide range of resources, including both people and natural resources. This source can be employed within the framework of rural development by means of “gotong royong” (community collaboration) for the implementation of tasks that exclusively need manual labor, without the requirement of specific knowledge or skills. The maintenance of mutual assistance throughout the community continues to exhibit resilience. The aforementioned strategy possesses the capacity to reduce the costs linked to the recruitment of a proficient worker for duties related to building. Within the framework of rural development, the exploitation of natural resources encompasses the extraction and subsequent utilization of raw materials. The strategic location of Cibeureum and Sukapura Villages within hilly terrain provides advantageous access to ample water resources and mineral deposits, which can be effectively utilized to support various developmental initiatives.

“Limited resources and profession as a farmer, system rotates in assisting the implementation of development from village funds by empowering villagers for jobs that do not require expertise”. E6, F6

“The Community and Village Empowerment Office conducts regular training on village government officials, especially in managing village funds, this is important so that the use of villages is right on target and on time”. B1

The Community and Village Empowerment Office recognizes the existence of a shortage of human resources at the village level. In order to tackle this matter, the organization adopts various strategies including socializing, training, and financial management help to alleviate the scarcity. In order to offer assistance, a team consisting of two individuals is assigned, consisting of technical assistants and local facilitators. Two individuals are assigned the task of providing assistance to a village throughout the entire process, starting from the initial planning phase and continuing until the formation of management responsibilities.

4.1.3. Threat Anticipation

The execution of development projects in Cibeureum Village and Sukapura Village is accompanied by a multitude of possible hazards. The hamlet is subject to significant hazards primarily stemming from climatic phenomena and landslides, which can be attributed to its geographical positioning in the upper reaches of the Citarum River. The successful execution of development initiatives may encounter challenges if the selected approach does not align with the prevailing conditions, particularly around the commencement of the rainy season. The inclement weather conditions seen during the rainy season present obstacles to the timely completion of building projects and compromise the overall quality of the job. The successful management of possible community grievances arising from unmet proposals was achieved through the implementation of a cooperative approach, thereby preventing the escalation of the issue. The unexecuted initiatives encompassed the determination of targeted recipients and the rehabilitation of usable dwellings. The person who takes on the responsibilities of being both the head of the hamlet and leader of the local community is entrusted with the duty of supervising matters pertaining to the family. Other risks were also expressed in interviews as follows:

“The risk of jealousy is a difference in understanding of the criteria for who deserves help”. E5, E6

“The risk of changes in activities that must be overcome by a meeting on changes in activities is marked by the signing of the minutes with BPD, the results of these changes are reported online to the Bandung district government to get permission for changes”. E3, F3

“The risk of community attendance, out of sync in planning, changes in market prices, changes in development sites, there is a miss in communication between the village government and BPD. Supervision has not been completed in the form of reports, it is still limited to observations and oral reports only”. G1, H2

“Weather risk becomes prone to landslide disasters”. J1, K2

“Cost risk, this occurs at physical construction sites that are long distances and difficult to reach, the funds provided are only for the purchase of materials without providing transportation costs”. E4, F4

“Risk of the policy change and policy content on percentage use of funds”. E5, E6

“Risk of turnover of village devices”. (takes time to adjust to the dynamics of work in the village). B1

“The risk of delays in budget disbursement delays starts from the beginning and more often field officers are not on time which impacts subsequent processes”. E6, F6

“The risk of error needs to be concentrated in inputting the nominal budget in the management of village funds. While the source of the village-managed budget is not only one”. G2, H2

“The risk of not caring about the community, because of the busyness of the community as farmers who do not have enough time to participate in every village deliberation. The absence of the community results in delays in information if there is a change in programs and activities, the village government is considered not to carry out the needs of the community so there is resistance from the community to various activities”. K1, K2

“Discrepancies in the use of village funds are often caused by not attaching proof of transactions. This makes there a difference in calculations that can be considered misappropriation”. A1, A2

“Another threat is to village fund managers who based on their background are still low”. C1

“The risk of community incomprehension is that the community does not understand that the use of village funds must follow the priority scale set by the Pdtt Village Ministry”. E3

“We face more weather and landslide risks in the village due to weather factors that greatly affect the quality of physical work and delays, for which we comply with the village fund management provisions in the regulations”. E1, F1

The sources presented evidence regarding potential dangers that have not been sufficiently documented and included in the entire catalogue of concerns. The prompt and efficient mitigation of these dangers is carried out by the municipal government in collaboration with other pertinent stakeholders within the local community. The sub-district government assumes a crucial role in facilitating risk management by undertaking the responsibility of overseeing and supervising the villages within its authority.

4.1.4. Prioritizing Opportunities

Despite the annual increase in government funding allotted to rural areas, it has been proved that these resources are insufficient in effectively addressing the community’s needs. The continuous need for community support is evident in the active engagement observed during development initiatives, as individuals contribute their skills and efforts to optimize the exploitation of village resources. The technique of allocating human resources in this manner is commonly referred to as “gotong royong”, a term that denotes a collaboration. Furthermore, it is a prevalent occurrence for individuals to frequently express their dissatisfaction with the constrained budgetary allocations for development and social assistance, which are exclusively disbursed based on established criteria.

The resolution of the aforementioned community issues was achieved through the delegation of authority to the head of the hamlet and other prominent members within the community. The answer was provided by the leader of the hamlet and those inside the community who have familial ties. Therefore, the community has the ability to access all the activity programs that have been implemented throughout the current year. The implementation of reporting in village administration is facilitated by the utilization of an online platform known as the Village Financial System Application (Siskeudes). The introduction of online reporting in village administration provides numerous advantages, principally by reducing the need for manual report submission. The utilization of automated report delivery is especially beneficial due to the inherent time-consuming nature of manual report delivery, which can be ascribed to geographical distances.

4.2. Village Fund Management of Sukapura Village and Cibeureum Village

In accordance with Government Regulation No. 60/2014, which pertains to the allocation of village funds sourced from the State Budget, it is specified that individual villages are allocated varying amounts of village funds. The criteria that have been listed for consideration encompass the size of the population, the geographical location, the poverty rate, and the amount of complexity of a certain area. Additionally, these characteristics are accompanied with unresolved concerns that require the active involvement of local village officials.

The concept of village fund management refers to the process of overseeing and controlling resources in accordance with the guidelines set forth in Government Regulation No. 60/2014. This regulation specifically focuses on the distribution and effective use of village funds. The Bandung Regency Regent’s Regulation regarding the administration of village funds is consistently enforced on an annual basis as a way to address the issue at hand. The main goal of village finances is to effectively distribute resources in order to promote development and empower the community, ultimately leading to the improvement of rural communities’ well-being, overall quality of life, and reduction of poverty. The objectives outlined in the Village Government Work Plan are evidently and explicitly stated. The following discussion provides a thorough analysis of the development and advancement of village funds (Figure 2).

Prior to the execution of any project, it is crucial to engage in thorough planning of the allocation and utilization of financial resources within a specific local context. During the planning phase, it is imperative to involve several stakeholders in order to ascertain the distinct requirements and expectations of each party involved in the process. The Cibeureum Village Government and Sukapura Village Government exhibit commendable responsiveness to the community’s aspirations through the implementation of a well-structured planning process. This process involves initial deliberations at the hamlet level, followed by subsequent discussions between hamlets and village planning and development deliberations, commonly known as “Musyawarah Antar Dusun Dan Musyawarah Perencanaan Dan Pembangunan Desa (Musrenbangdes)”. According to a scholarly inquiry [57], it has been noted that the incorporation of a bottom-up planning strategy, which entails the active engagement of all relevant stakeholders, has been linked to the attainment of more advantageous outcomes. The veracity of this assertion is bolstered by the testimonies supplied by the interviewed persons.

This is supported by the statements of the interviewees:

“We provide directions for each village government to make a plan for the use of the Village Revenue and Expenditure Budget (Anggaran Pendapatan dan Belanja Desa, APBDes) by issuing regional regulations, then synchronizing proposals from the village. Proposals that cannot be funded from the village fund as authorized by the village will be a list of proposals that will be discussed to be accommodated in the current year or the following year”. C1

“In nature, the preparation of community development plans is involved each Citizens Association (Rukun Warga, RW), community leaders, and youth leaders. The most complete community involvement at the time of musrenbangdes attended by the district government”. E2, F2, K1

To ensure transparency in the administration of village money, the village government has proactively developed infographics to comprehensively record all operations related to fund management. This measure is implemented with the aim of reducing the likelihood of skepticism or doubt from both the general public and other pertinent stakeholders. Furthermore, in the phase of planning, the distribution of financial resources within the village is carried out in accordance with the following presentation (Figure 3).

The resource distribution in Sukapura Village and Cibeureum Village has been efficiently customized to cater to the unique needs of their separate communities. Within the confines of Sukapura Village, a considerable proportion of the designated financial resources are directed towards the facilitation of village operations and the advancement of pivotal domains, notably the establishment of potable water infrastructure. The allocated budget in Cibeureum Village is utilized for many reasons, encompassing village operations, village development projects such as the creation of clean water facilities, and community development endeavors such as the participation of local health professionals and youth groups.

Based on the data from the Development Local Index, it can be observed that both Cibeureum Village and Sukapura Village underwent alterations in their status as a result of the utilization of local finances. Cibeureum Village, which was officially designated as a Developed Village in 2017, has subsequently advanced to achieve the status of an Independent Village. In 2017, Sukapura Village, previously categorized as a village in the process of development, underwent a transformation and achieved the designation of an Autonomous Village by 2019.

5. Discussion

The scope of Law No. 6/2014 pertaining to rural areas extends beyond the mere provision of substantial financial resources to local communities. The village government is officially recognized and authorized to carry out various duties related to local administration, progress, community development, and empowerment. The aforementioned obligations are derived from community-led initiatives, inherited privileges, and indigenous customs. As per the provisions outlined in Article 75 of the Constitution Law No. 6/2014, the Village Head is assigned the responsibility of overseeing the management of village finances. Nevertheless, the existing jurisdiction of the village government proves inadequate in ascertaining the primary development priorities of the hamlet. This encompasses aspects such as local taxes and levies at the village level, along with other essential components necessary for the effective implementation of contemporary and strategic development initiatives. The level of comprehension among peasants on this matter is often restricted. However, their primary emphasis is placed on the allocation of substantial financial resources, overlooking the fact that the Village Law encompasses a wide range of subjects outside the administration of village funds. The implementation of village autonomy facilitates enhanced self-governance for both the governing authorities and local communities in the administration of village houses. This entails the duty of assembling and overseeing the Regional Revenue and Expenditure Budget (Anggaran Pendapatan dan Belanja Desa, APBDes) along with the Village Original Income—Local Own-source Revenue (Pendapatan Asli Desa, PADes). Both sources of income or budget for village revenue play a crucial part in the progress of the village and the establishment of local autonomy. The primary sources of the village budget consist of three components: the allocation from the village funds, transfers from the central government in the form of village money, and the original income generated by the village through local own-source revenue. The village government uses these financial resources to facilitate a range of programs, encompassing governance, village development, and village community empowerment. The control of village fund utilization is governed by the central government, as outlined in Government Regulation No. 8/2016, specifically addressing the Second Amendment of Government Regulation No. 60/2014. This rule pertains especially to the allocation of village funds sourced from the State Budget, with a particular emphasis on ensuring that this money is allocated only to the development and empowerment of various components within rural communities. Hence, it is crucial to consistently allocate village funds in compliance with Government Regulation No. 8/2016 to augment the efficacy of initiatives and endeavors pertaining to community development and empowerment. The management implements a risk management plan at all levels of employing the village fund budget to effectively handle and mitigate a range of dangers. The aforementioned steps comprise the processes of planning, implementation, administration, reporting, and accountability. The effective implementation of the process is essential in promoting development and empowerment within the village, hence leading to enhanced outcomes that are in line with the goals of community development in the village.

The analysis of village fund management, namely in terms of accountability, transparency, efficacy, and other relevant criteria, has not yielded any supplementary implications for the overall governance of village finances. Our investigation has identified several key factors that should be considered when addressing research inquiries regarding the management of village funds by village governments, with a specific focus on risk management, such as:

A.

Efficiency: The optimization of efficiency is a crucial factor in effectively managing village budgets, with the active engagement of the community beginning from the initial planning stage. As a result, the distribution of village finances will effectively meet the requirements of the indigenous community.

B.

Innovation: In the context of village governance, the village government is tasked with the oversight of the administration of the village funds. Additionally, it is presented with the prospect of exploring novel strategies pertaining to the utilization of both human and natural resources that are already available. The primary objective is to optimize the allocation of financial resources within the village, while simultaneously mitigating the risks associated with the administration of village funds.

C.

Anticipation of threats as a risk [3,58]: The proactive assessment of potential risks is crucial for properly managing a diverse array of hazards originating from both local governing bodies in villages and the external environment. Threats can be described as potential hazards that possess the ability to manifest in an unforeseeable manner. To mitigate the possible risk of community discontent, it is advisable to delegate responsibility to local hamlet heads and community leaders to offer explanations and justifications. Within the field of environmental studies, the level of risk pertaining to weather-related phenomena and geophysical-induced landslides exhibits variability in accordance with the prevalent seasonal patterns.

D.

Opportunities: Opportunities within rural communities may have a limited range, mostly centered on the immediate local environment, and are characterized by the prevalence of strong familial bonds among community members. The presence of homogeneity in labor, religion, and culture presents a favorable prospect for the effective administration of village finances.

Furthermore, it is important to note that the culture of mutual cooperation plays a significant role in the successful implementation of rural development programs. Mutual aid, as an enduring cultural tradition transmitted across generations, effectively fosters the process of community establishment, as well as for the betterment of the broader populace. The aforementioned activity is pursued with the objective of promoting the welfare of the community, as demonstrated by the establishment of housing facilities. Moreover, the level of uniformity within the village community demonstrates a strong sense of familial connection among its constituents.

This suggests the presence of community members who are elderly and capable of providing guidance and assistance to the community, without relying on government intervention. Hence, it is crucial to take into account many viewpoints while examining the management of local finances. In order to ensure the efficient management of village funds, it is imperative to undertake a thorough assessment of all potential risks and adopt appropriate measures to mitigate them. The continuous improvement of capacity and quality in the management of village funds is of utmost importance for the village administration and Village Consultative Council (Badan Permusyawaratan Desa, BPD). It is imperative for local governments to persist in their support and promotion of capacity development endeavors through the facilitation of socialization sessions, provision of training opportunities, and provision of technical assistance to village governments and their employees.

6. Conclusions

The effective administration of village fund management encompasses various challenges and impediments, such as modifications to policies on the allocation of resources, constraints on the capabilities of human resources for strategic planning, and the necessity for active community involvement and consideration of climate stability throughout development endeavors. The aforementioned concerns require the implementation of appropriate control mechanisms, and the utilization of risk management strategies can significantly contribute to improving the management of village funds. Risk management can enhance the administration of village funds by optimizing activity programs and allocating funds strategically to activities that have the highest significance and generate the most benefits for rural communities. Moreover, it is crucial to cultivate creativity in the efficient utilization of both human and non-human resources inside the village. The incorporation of environmental considerations holds paramount importance when allocating village funds for the aim of risk management.

The governments of Cibeureum Village and Sukapura Village have made efforts to achieve effective administration of village funds by taking into account the needs of the local populace. However, the enhancement of village fund management in the future can be accomplished by integrating strategies for risk management. The significance of enhancing the ability of the village administration, particularly the Village Consultative Body (BPD), and other components within the village, has been acknowledged in prior deliberations. Moreover, it is crucial for the Kertasari sub-district government, in its role as a supervisor and overseer of the village, to improve its operational effectiveness.

Moreover, a noteworthy finding of comparable significance relates to the benefits of collaboration and a familial strategy in bolstering risk mitigation within the administration of village funds. The cultural fabric of the village is characterized by a deeply entrenched feeling of local solidarity and strong familial relationships. The integration of these concepts into the implementation of risk management can foster the creation of a unified and synergistic environment throughout the decision-making process. However, it is important to acknowledge the limits of this study since it focuses exclusively on two neighboring villages, and hence lacks a comprehensive representation of all Indonesian villages, each of which may exhibit unique attributes. Furthermore, it is important to acknowledge that not every village in Indonesia is eligible to receive village payments in accordance with the national policy. Therefore, it is imperative to undertake further research in order to assess the factors and approaches contributing to the disparities in village fund management among different villages, while considering the perspective of risk management.