The Effect of the Budgeting Process on Budget Variance in Non-governmental Organisations in Kenya
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Date
2012Author
Gacheru, Alice N
Type
ThesisLanguage
en_USMetadata
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Organisations have an overall goal or vision that they are established to achieve. An organisation must ensure that all its segments works towards a common goal. Since the performance of the various segments will be interrelated in many ways, each segment manager must know not only hislher own role but also how it interacts with the rest of the organisation. Otherwise, inefficiency and ineffectiveness will develop in the allocation and utilisation of resources. Budgeting is about making plans for the future, implementing those plans and monitoring activities to see whether they conform to the plan.
The objective of the study was to determine the relationship between budgeting process and budget variance in NGOs in Kenya. The population of this study comprised of 6,075 NGOs in Kenya over the last five years 2007-2011. Convenient sampling was used to select 20 NGOs for this study. The researcher used a questionnaire to collect primary data and the data was analysed by descriptive data analysis using SPSS version 17.
The research findings show that a unit change in budget preparation will lead to a 0.722% change in budget variance; a unit change in budgetary control will lead to a 0.661 % change in budget variance; a unit change in budget implementation will lead to a 0.682% change in budget variance. Thus, budget preparation, budgetary control and budget implementation significantly influence budget variance. The study recommends that NGOs should maintain a good budgeting process as the process contributes a lot to their budget variance. This will help them to monitor revenue and expense levels. It also ensures that the cash outflows (payments) and inflows (receipts) remain at adequate levels.
Publisher
University of Nairobi, Kenya