Effects of Budgeting and Budgetary Control on Financial Performance of Devolved Government in Kenya

Abstract

In the business World today, Budgeting has been widely used as a tool for budgetary control by many public entities mainly to achieve their financial performance. Budgetary control systems are applied all over in the whole world by being referred absolutely necessary instrument for planning and performance. The study general objective was to determine the effects between budgeting and budgetary control on financial performance of county governments. The study investigated budgeting and budgetary control, managerial performance and county regulation on financial performance of county government. The researcher used quantitative descriptive research design to determine the relationship between budgeting and budgetary control and financial performance of devolved governments. The target population was 47 county governments in Kenya. The researcher used primary source and secondary source data to collect data. The researcher used statistical package for social sciences software (SPSS) version 21 to analyze the data. The study concluded that County government encounters challenges while implementing their budgets such as non- compliance with budgetary timeliness as per public financial management Act 2012, Budget implementation review is done by the office of controller of budgets every three months to examine budget performance, County government budget at planning level considers stakeholders priorities in the coming year and Budgeting links county government budget programmes and budget activities to set goals and targets. The study recommended that county assembly bills should be passed regularly in a financial year to improve county government’s performance. Budget legislation and budget plans should be well executed to avoid financial performance challenges and public service delivery should be improved to increase customer satisfaction. The study recommended a research to be conducted on financial performance of county governments using different variables to cover the 4% variance of the study. The study recommends another research to be conducted on other sectors so as to investigate the relationship between budgeting and budgetary control and financial performance. The study established a strong positive relationship between budgeting and budgetary control and financial performance. The study established a model summary p-value of 0.000 which is less than significant level 0.05, thus indicates that the overall regression model is significant at the confidence level of 95%.