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The background of this research is based on the increasing budget managed by the Village Government, which comes from Central Government transfer funds, Village Fund Allocation, Regional Tax and Retribution Sharing, District Financial Assistance, Provincial Financial Assistance and Village Original Income. So that the Central Government issued the Minister of Home Affairs Regulation No. 20/2018 concerning Village Financial Management which was previously regulated through the Minister of Home Affairs Regulation No. 113/2014. This Minister of Home Affairs Regulation is also the basis for the Pasuruan Regency Government to issue Pasuruan Regent Regulation Number 31 of 2018 concerning Village Financial Management. The Village Government can use this regulation in preparing the Village Revenue and Expenditure Budget and conducting village financial management, particularly in allocating or budgeting funds for environmental management in their respective villages. This regulation is expected to regulate and assist the Village Government in managing the budgets they receive.

The purpose of this research is to analyze the performance of the Village Government in Pasuruan Regency in managing village finances based on the Pasuruan Regent Regulation Number 31 of 2018 concerning Village Financial Management, identifying the obstacles faced and how the role of the Village Head, village apparatus and the Regency Government in supporting the success of village financial management to realize successful development in the village. In this study using a qualitative approach and descriptive type of research. The research was conducted in 3 (three) villages with the status of disadvantaged, developing and advanced villages in Pasuruan Regency based on Build Village Index. The Developing Village Index is a composite index that is formed based on three indices, namely: Social Resilience Index, Economic Resilience Index and Ecological / Environmental Resilience Index. The Developing Village Index will determine the 5 status of Village progress and independence, which is called the Village Status Classification. Village status classifications consist of Independent Villages, Advanced Villages, Developing Villages, Disadvantaged Villages and Very Disadvantaged Villages

The results of the study found that there were still several villages that were still negligent and had difficulty implementing these regulations. There are indications that village financial management is still not in accordance with the standards set by the government, especially at the implementation stage. This is also due to the changing regulations which result in overlapping policies.