This study aims to analyze the determinant factors that affect the Indonesia supreme audit board findings and the quality of local government financial statements. The samples of this study are the local government financial statements in 2013, which was audited by the Indonesia supreme audit board on the audit report in 2014. This study solicits 418 local governments using purposive sampling method for selecting the samples. The analytical method utilizes multiple linear regression for the first model (the Indonesia supreme audit board findings) and logistic regression for the second model (the quality of the local government financial statements).
The hypothesis testing result for the first model shows that the local government size, internal control weaknesses, the auditor's level of education, and the educational background of the regent/ mayor have significant positive effect to the amount of supreme audit board findings. This hypothesis result also find that the geographic type and audit opinion for prior year have significant negative effect to the amount of supreme audit board findings. In the other hand, the ranking of local government, auditor gender, the complexity of local government, and local government’s age do not contribute to the supreme audit board findings. 
For the second model, the hypothesis testing shows that the ranking of local government and the audit opinion for prior year have significant positive effect on the quality of local government financial statements. This testing also finds that the geographic type and the amount of supreme audit board findings have significant negative effect to the quality of local government financial statements. However, local government size, internal control weaknesses, the auditor's level of education, auditor gender, the complexity of local government, local government age, and the educational background of the regent/mayor have no influence to the quality of local government financial reports.
Keywords: audit, agency theory, local government, supreme audit board findings, the quality of financial statements