Digital Transformation and Financial Reporting Quality in Rural Banks: Evidence from Indonesia

Abstract

This study aims to analyze the impact of digital transformation on financial reporting quality in Rural Banks (BPR) in Indonesia. In addition, this research examines the role of internal control systems as a supporting factor in improving the reliability of financial statements. This study adopts a qualitative approach using a phenomenological design to explore the experiences of accounting practitioners in BPR. Data were collected through semi-structured interviews with internal auditors, external auditors, and accounting staff. The findings reveal that digital transformation significantly improves financial reporting quality by enhancing accuracy, timeliness, and transparency. However, several challenges were identified, including limited technological infrastructure, lack of human resource competence, and resistance to organizational change. Internal control systems play a crucial role in ensuring that digital implementation aligns with accounting standards and regulatory requirements. This study contributes to the literature by providing practical insights into how digitalization can strengthen financial reporting practices in small financial institutions