Abstract: This study aims to determine the effect of financial
conditions and audit opinion on the performance of local
governments in Indonesia. Financial condition is proxied by
financial flexibility and audit opinion is measured using the
opinion issued by the Supreme Audit Agency (BPK). The
Regional Government Performance Variable is measured by the
performance evaluation score of regional government
administration made by the Ministry of Home Affairs of the
Republic of Indonesia in 2018. Thirty-three provincial
governments whose financial reports have been audited in 2018
will be used as samples. The method for testing the effect uses
multiple linear regression with a probability value of 5%. The
test results show that financial conditions have a positive effect on
local government performance with a p-value of 0.0853
(significant at the 10% level). Audit opinion also has a positive
effect on local government performance with a p-value of 0.0090
(significant at the 5% level). This proves that a good financial
condition accompanied by good financial management will be
able to improve the performance of local governments.