EFFECT OF FINANCIAL MANAGEMENT PRACTICES ON BUDGET IMPLEMENTATION OF COUNTY GOVERNMENTS: A CASE OF MACHAKOS COUNTY
Abstract
This study sought to establish the effect of financial management practices on budget implementation of county Governments in Kenya. It was conducted in Machakos County. The researcher was guided by four specific objectives that aimed at determining the extent to which regulation, accounting systems, financial management and budget planning affect budget implementation in the county. The study adopted a descriptive research design. It targeted a population of 100 employees based at the county headquarters and charged with budget preparation and implementation. A sample of 30% of the total population, grouped into three categories of top management, middle level employees and low level employees was drawn using simple random sampling. Three different data collection tools were employed to collect both primary and secondary data. A structured questionnaire and interview schedule were used to collect primary data while a data collection guide was used for secondary data. A pilot test was conducted on 10% of the sample to test the tools. Data analysis was done using SPSS software version 20. Results showed that budget laws provide guidelines that improve efficiency and accountability. The cash system of accounting had made implementation of budgets easy and secure. Internal control systems, financial planning and well trained staff promoted successful implementation, while high debts lead to financial constraints that hindered implementation. Budget planning that promoted participation, was allocated enough time and resources and prioritizes projects tend to reduce financial constraints and promoted accountability. It was also established that financial management constraints were caused by delays in disbursements from the national government and under collection of revenues. These constraints lead to partial implementation of projects. Regression analysis established that all the four variables considered (budget regulation, accounting systems, financial management and budget planning) had a significant positive influence on the success of budget implementation in county governments. The variable with the highest influence was budget planning, followed closely by accounting systems.
Key Words: Regulation, Accounting Systems, Financial Management, Planning, Budget Implementation
Full Text:
PDFReferences
Abdul-Rahman, H. & Berawi, M.A. (2012). Managing change in construction contracting. Contact Management, 42, 10-16.
Audeh (2014). Obstacles of Preparing and Implementing the Budgets in Jordan. A Case Study: Greater Irbid Municipality. Interdisciplinary Journal of Contemporary Research in Business, 6(2), 104-112.
Brown J. L., Evans J. H., & Moser D. V. (2009). Agency Theory and Participative Budgeting Experiments. Journal of Management Accounting Research, 21(1), 317-345.
Burugu, J. N. (2014). The county: Understanding devolution and governance in Kenya. Nairobi: CLEAD International.
Christensen, J. G. (1992). Hierarchical and Contractual Approaches to Budgetary Reform. Journal of Theoretical Politics, 4(1), 67-91
Donaldson, T. & Preston, L., (1995). The stakeholder theory of the corporation: Concepts, Evidence, and Implications. Academy of Management Review, 20(1), 65-91
Flak, L. S. & Dertz, W., (2006). Stakeholder Theory and Balanced Scorecard to Improve Strategy Development in Public Sector. Norway, Agder University College.
Gachithi, E.W. (2010). The challenges of budget implementation in public Institutions: A Case Study of University of Nairobi. Unpublished MBA Thesis, University of Nairobi.
Gicheha M. M. (2013). The Effect Of Budget Implementation On The Financial Performance Of International Non-Governmental Organizations In Kenya. Unpublished MBA Thesis, University of Nairobi.
Glenngård, A. H., & Maina, T. M. (2007). Reversing the trend of weak policy implementation in the Kenyan health sector: A study of budget allocation and spending of health resources versus set priorities.Health Research Policy and Systems, 5(1), 1-9.
Green, W.H. (20). Econometric Analysis, 6th ed, New York, Prentice Hall
Gujarati. (2004).Basic Econometrics, 4th ed. New York, McGraw-Hill.
Hogye, M., (2009). Theoretical approaches to public budgeting’ in Local government budgeting.
Kenya & International Budget Partnership (Organisation)(2014).50 things every county government official needs to know about public finance under the Constitution.
Khainga, D. (2007). Governance in public expenditure management: Key issues and challenges in Kenya. Nairobi, Kenya: Kenya Institute for Public Policy Research and Analysis.
Kibugi, R. (January 01, 2014). The Constitutional Basis of Public Participation in Environmental Governance: Framing Equitable Opportunities at National and County Government Levels in Kenya. The World Bank Legal Review : Law and Justice for Development, 5, 307-327.
Lyne, S.R, (2008). The role of the budget in medium and large UK companies and the Relationship with budget pressure and participation. Accounting and Business Research, 18 (71), 195-211.
Mutungi, M. (2015). Kenya mpya: Selecting and holding county and national leaders to account. Nairobi: M. Mutungi.
Nganga, K. (2014). The formation of a county government in Kenya: expectations of the dying millions.
Onduso E. A. (2013). The effect of budgets on financial performance of manufacturing companies in Nairobi County.Unpublished MBA Thesis, University of Nairobi.
Poister, T. H., Hall, J. L., & Aristigueta, M. P. (2015). Managing and measuring performance in public and nonprofit organizations: An integrated approach. Policy, Ethics, 10th ed.. New York, McGraw-Hill.
Post, J.E., Lawrence, A., & Weber, J. (2002).Business and Society: Corporate Strategy, Public
Surianti M. & Dalimunthe A. R. (2015).The Implementation of Performance Based Budgeting In Public Sector (Indonesia Case: A Literature Review). Research Journal of Finance and Accounting, 6 (12), 198-210.
Williams L.K. (2014). Evaluation of Public Engagement in the Yolo County Budget Process. Unpublished thesis, California State University, Sacramento.
Wilson, A. (2009). Political Implications of Budget Reform.Public Administration Review, 21 (3), 183–190.
Žurauskas, I. (2015). The impact of political corruption on budget deficits in OECD countries.Unpublished Thesis, ISM University of Management and Economics, Vilnius.
DOI: http://dx.doi.org/10.61426/sjbcm.v3i4.351
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.