The Impact of Budgetary Controls on the Financial Performance of Parastatals in Kenya

Abstract

The study evaluated the impacts of budgetary controls on the financial performance of parastatals in Kenya. The study explored whether control, planning and monitoring had an impact on the financial performance of the parastatals. The study adopts a descriptive research design to examine the effects of budgetary controls on the financial performance of parastatals in Kenya. The study population used is comprised of 260 registered parastatals in Kenya. The sample size comprised of 120 respondents, including the accountants, finance officers, deputy finance officers, and account assistants. A simple random sampling was used and the data was collected through structured questionnaires with open and closed questions. Analysis of the data was done using the statistical package for social sciences (SPSS) and correlation and regression analysis were used as the major methods of analysis. The results of the study shows that there is significant relationship existing between budgetary controls and financial performance of parastatals in Kenya. The regression and correlation results show that there is a low positive correlation between budgetary controls and the financial performance of parastatals in Kenya according to the value of R2 as represented by 0.201. The research recommended managers have to sensitize the employees on the importance of having planning, control and monitoring in budgeting to increase the financial performance of the parastatals. It also recommends that most parastatals have to develop clear policies towards developing effective budgeting controls to ensure they improve their financial performance.