Effect Of Financial Management Practices On Budgetary Performance Of County Governments In Kenya: A Case Study Of Kirinyaga County

Abstract

Devolution has the goal of devolving economic resources and bringing services closer to the people. Effective public finance management procedures are essential for citizens to feel this. County governments must spend allocated finances properly in order for the Kenyan national government to accomplish its fiscal goals. Government officials must recognize the need of fully utilizing allotted monies in order to provide services to as many individuals as feasible. The study sought to determine the effect of financial management practices on county governments' budgetary performance in Kenya: The study sought to: determine the effect of revenue collection on budgetary performance, the effect of budgetary control on budgetary performance, the effect of payables management on budgetary performance, and the effect of accounting controls on the budgetary performance of Kirinyaga County. The theories used in this study were: the Agency theory, Stakeholder theory, and Institutional theory. A descriptive research design was used in the study. Purposive sampling was used in selecting participants from the 20 wards in Kirinyaga County. The respondents comprised of 83 participants. The primary data collection instrument used in the study was a questionnaire that contained open-ended and closed questions, while financial and budget reports from the county government and office of the Auditor General for financial years 2017/2018 and 2018/2019 were used as secondary data sources. A pilot study was also be carried out at the Kirinyaga County Government main office involving five participants to determine the questionnaire's validity and reliability in answering the research questions. Quantitative data was analyzed using SPSS version 22.0 software, while content analysis was used to analyze qualitative data. Inferential statistics in the form of multiple regression and paired t-tests, and descriptive statistics were used to analyze the data. The results were presented in the form of tables and graphs. Findings revealed that financial management practices had a positive and significant effect on budgetary performance of county government of Kirinyaga. Findings revealed that revenue collection, budgeting process, payables management and accounting controls had a positive and significant effect on budgetary performance of county government of Kirinyaga. The study concluded that revenue collection had a positive and significant effect on budgetary performance of county governments in Kenya. The study also concluded that budgetary process had a positive and significant effect on budgetary performance of county governments in Kenya. The study concluded that payables management had a positive and significant effect on budgetary performance of county governments in Kenya. Finally, the study concluded that accounting controls had a positive and significant effect on budgetary performance of county governments in Kenya. The study recommends that county governments should manage their budgets to eradicate extravagance and use funds for stipulated purposes. The study also recommends that in order to improve on their local revenue collection, County Governments need to diversify their sources of revenue in order to reduce over-dependence on national government and enhance their budgetary performance.