SUMMARY
This research aims at examining the effect of board's knowledge about budget and board's performance toward local expense and income budget supervision: participation of society as moderating variable. The independent variable in this research was the board's knowledge about budget and board's performance, and the dependent variable was the local expense and income budget supervision. The samples of this research were the members of the peole's representative covering the regional areas of Bantul, Sleman and Municipal Yogyakarta. The samples were taken using the purposive sampling. The result of the research show that 1) the board's knowledge about budget have positive influence on the local expense and income budget supervision, 2) board's performance has positive influence on the local expense and income budget supervision, 3) the interaction between on the board's knowledge about budget and participation of society has negative influence on the local expense and income budget supervision, 4) the interaction between on the board's performance and participation of society has negative influence on the local expense and income budgetsupervision.