The Impact of Integrated Financial System on Financial Management of Public Sector in Kenya- a Case of the National Treasury

Abstract

Public financial management practices have been characterized by challenges in revenue mobilization, lack of clarity and responsibility in the use of public funds. These problems have attributed to persistent increase in budget deficits, public debts and poor governance. Integrated financial management information system is an essential tool in the management of financial resources in an organization. Integrated financial management information system is implemented with the aim of connecting all the departments of the organization to a core network. The integration of different functions and entities within the shared database provides managers with tools for planning and control of public resources. The objective of the study was to determine the impact of integrated financial management information system on financial management of the public sector in Kenya. This study was anchored on two theories; the technology acceptance model and systems theory. The study adopted a descriptive research design. The target respondents were 45 respondents from the national treasury. Primary data was collected from the respondents using structures questionnaires through drop and pick method. The questionnaires had three sections; Section A of the questionnaire contained the general information. Section B sought to obtain information on the factors affecting management of financial resources through IFMIS while section C of the questionnaire sought to obtain information concerning the impact of IFMIS implementation. The data collected was analyzed using both descriptive and inferential statistics such means and standard deviation with the aid of Statistical Tool for Social Sciences (SPSS) version 2. Before subjecting the data to inferential statistics the accuracy of the data was evaluated using different diagnostic tests to establish any errors which could have led to biasness in the interpretation of results. This enhances the reliability and validity of the data. The inferential statistics was undertaken by performing a regression analysis on the dependent variable (financial management) and the independent variables (budgeting, internal controls and financial reporting). The study found that integrated financial management information system have a significant effect on financial management at the national treasury. This was evidenced by a value of 0.016 at 95% confidence level. This shows that the model adopted for this study was significant. The study recommends that financial management should involve development and implementation of strong and reliable integrated financial systems with well-coordinated and defined components such as budgeting, internal control and financial reporting so as to promote favorable and more productive financial management practices.