Survey of operational budgetary process and challenges in the mortgage financing institutions in Kenya
The study involves understanding the operational budget process and its effectiveness in the mortgage financing firms in Kenya. The study attempted to evaluate how the firm has employed an operational budget as a management tool. It set out to determine how operational budgeting practice is actually done, the basis of budget formulation and to what extent the budgets are used as a management and control tool. The study concentrated on companies offering mortgage financing in Kenya. The data was collected mainly through detailed questionnaires and analyzed using descriptive statistics by way of summary statistics, tables and percentages. The study reveals that budgets are normally prepared on an annual basis. The budget form an integral part of the planning process .once budgets are prepared and approved little effort is made to use the budgets to control the activities or measure performance by the budget holders. Budgets are an important management control tool if effectively drafted and implemented. To ensure that operational budget process is valuable and effective, the firm needs to place emphasis on stringent budget management practices and strive to achieve set standards and where variances are prevalent, they be addressed and accommodated in the following years budget so that the issues faced are addressed. The study shows that all the major Kenyan mortgage financing institutions have an operational budgeting process which they considered extremely important since it outlines the organizations objectives, targets, means of achievements, cost of achievement and responsibilities. Majority of the mortgage firms drafts their budgeting process annually; this is in line with the accepted practice of the yearly review to match with the budget planning for the coming fiscal year.