Budgetary control as a measure of financial performance of State Corporations in Kenya
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Date
2013-02
Authors
Adongo, Kenneth Odour
Jagongo, A. O.
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Journal ISSN
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Abstract
The importance of financial stability in enabling an organization to function efficiently
and maximize the potential for service delivery cannot be underestimated. The quest
for better service delivery under new public management in public organizations in
Kenya necessitates the need for public organizations to have proper financial standing
in order to run operations and motivate workers through better remuneration as well as
improved working conditions. Critique of literature on factors affecting financial
performance reveal that gaps remain on the influence of budgetary control on financial
performance of public institutions. This study sought to investigate the relationship
between budgetary controls and financial performance of state corporations in Kenya.
The study sought to determine the salient features of budgetary controls in state
corporations, establish the human factors within budgetary controls, establish the
process of budgetary control in public organizations, and determine the challenges
affecting budgetary control. A descriptive survey design was used to gather data from
the state corporation’s managers of the sampled state corporations. 14 corporations
were selected from the 138 to participate in the study. Purposive sampling was used to
select 42 corporate services manager, finance manager and budget officer from each
corporation to participate in the study. A questionnaire, whose content validity was
checked through an expertise opinion and reliability through test pre-test methods, was
used to gather information. Findings indicate that a positive significant relationship
exists between budgetary control and financial performance of state corporations.
Budgetary features reflect ability to predict financial milestones of organizations.
Human factors within budgetary controls thus managerial commitment, employees’
motivation, employee training, competence as well as the attitude affect the budget
control process. Budgetary control process exhibited a positive significant influence on
financial performance of state corporations through influence on financial objectives,
the allocation of funds as well as investment ventures that organization undertakes. The
study recommends sensitization of management and employees of state corporations on
the importance of budgetary controls in enhancing financial performance, avoidance of
political interference in the budgetary process and use of budgets as tools for
management efficiency.
Key words: Budgetary control, budgetary process, financial performance, state corporations
Description
www.aripd.org/ijat
Keywords
Budgetary control, Budgetary process, Financial performance, State corporations
Citation
International Journal of Accounting and Taxation, Vol. 1 No. 1, Dec. 2013