Effect of budgetary control uses on financial performance of public universities in Nairobi county, Kenya

Abstract

Available information reveal that financial performance of Public Universities has continued to dwindle despite implementation efforts to their budgets with its inherent control features. Budgetary Control refers to how well managers utilize budgets to monitor and control costs and operations in a given accounting period. It is a process for managers to align financial performance goals with budgets, compare actual results and adjust performance. Sound financial performance is a core objective of every successful organization. Financial performance of Public Universities in Kenya still remain a challenge as often reported by Office of the Auditor General where a majority have been found to; be operating on negative working capital, excessive outstanding fees, uncontrolled capital expenditure, fraud among others. The main objective of the study is to establish the Effect of Budgetary Control Uses on Financial Performance of Public Universities in Kenya. The specific objectives guiding the study were; to establish the relationship between Planning and Financial Performance of Public Universities in Kenya, to establish the association between Coordination and Financial Performance of Public Universities in Kenya and, to establish the relationship between Control and Financial performance of Public Universities in Kenya. It was guided by a conceptual framework relating the variables of study. The study was premised on theories such as; Punctuated Equilibrium Theory of Budgeting, Theory of Budgeting, Budgetary Control Theory and Accounting Theory. A census survey was conducted in all the five main Public Universities located in Nairobi County. A sample size of 40 respondents were considered, targeting; Finance Officers, Deputy Finance Officers, Accountants and Accounts Assistants. Choice of Nairobi County was influenced by the number of main Public Universities and their constituents in favourable proximity. Data was elicited from selected respondents using structured questionnaire whose content validity was checked through an expertise opinion and reliability through Cronbach (0.7 Alpha – α) model. Secondary data necessary for computation of measures of Financial Performance were obtained from audited financial statements of the Public Universities for the three financial periods falling between 2014 and 2017. Descriptive and correlation methods were used to analyze data. Regression Analysis was used to determine existence of significant relationship between independent and dependent variables at alpha value of 0.05 (95% confidence level). The results indicated existence of a significant relationship between Budget Planning, Budget Coordination, Budget Control and and Financial Performance of public universities in Kenya as exemplified by p values of; 0.000, 0.025 and 0.006 respectively. The findings of the study may guide policy makers in underscoring the value of Budgetary Control uses on Financial Performance of public universities and other organizations. It would also go a long way in forming a basis for future similar research studies. In future similar studies should be carried out for both public and private entities in Kenya as Budgetary Control is a vital financial control tool for all organizations.