| dc.description.abstract | There is perceived endemic financial mismanagement (corruption) in Kenya today. Traditionally, corruption was perceived to be a preserve of the Government Sector. Recent studies (by Transparency International, External Auditors, the Bretton Woods' Institutions, Consulting and Research Firms amongst others) show that the problem is equally endemic in the Non-Government Sector as it is in the Public Sector. Budgets form the base for financial management in Non-Governmental Development Sector. This study set out to determine how budgeting practice is actually done, to what extent the budgets are used as management and control tools and the mechanisms International Non Governmental Organizations (INGOs) adopt to control financial mismanagement.
Due to the historical ties between Kenya and Great Britain, a fact that is well reflected in the number of British INGOs operating in Kenya and the magnitude of their operations, this study zeroed in on the British INGOs operating in Kenya. Four British INGOs and twelve local organizations funded by British INGOs were selected in Kenya using convenience stratified sampling approach. Data was collected through detailed questionnaire, desk study of policy documents, and observation of the practice and follow up discussions. The data collected was analyzed by descriptive" statistics using summary statistics, tables and percentages.
The study reveals that budgets are normally prepared using such modem practices as zero based or priority based budgeting .. They (budgets) form an integral part of the planning process and have become a standard practice. However, there is over-emphasis on conformity to budgets and parameters (funds that can be mobilized) which tends to relegate proper financial management to the periphery. Many organizations strive to spend without due regard to value for money and impact. Generally aspects of cost effectiveness are left out of the budget management. Once budgets are approved, little effort is made to use the budgets to control the activities or measure performance by the budget holders. Financial mismanagement in this sector is never taken too seriously. The worst scenario is the possibility to cut funding or have staff dismissed. Scrupulous staffs find this convenient and
therefore keep on recycling themselves between NGOs with a string of scandals behind them. The NGOs do not share such crucial information amongst themselves. The push by funding organizations to spend (which in fact is a measure of success) has just worsened the matter.
The findings lead to calls for more stringent budget management practices in the sector. There is need to utilize different expertise (finance and monitoring experts) in preparation and monitoring of budgets. While profit measure is the main indicator of performance in profit sector, budget management should similarly be adopted as the yardstick in non-profit sector. This should be measured against the background of sound financial policies, systems and practices to ensure efficiency and cost effectiveness. External audits, monitoring and evaluations should be made mandatory and performance evaluation tied to actual rewards and punishment. There is a big gap that needs the active participation of such umbrella bodies as the NGO Council, which can formulate and implement strict code of conduct and generally acceptable practices. The need exists for the "funding" development organizations to share information and co-ordinate their work so as to reduce financial mismanagement. The Kenya Government will also need to move fast to enact stringent anti-corruption laws to help control the national culture of corruption. Many of the incidences of financial mismanagement can indeed be interpreted as finance crimes and, by extension, crimes against humanity where they directly lead to threats to lives. | en |
