Safeer Sajid: John Waites

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DISSERTATION PROPOSAL.

TOPIC.. EFFECTIVE FINANCIAL MANAGEMENT


SYSTEM IN DONOR FUNDED PROJECT.
A case study of University of Daress Salaam. Tanzania.

Prepared By:

Safeer Sajid
Course: MBA

Uni. ID 0911867093897

(ID 270582SS)

(07894557056) safeer_sajid@yahoo.com

Submitted To:

John Waites

PREAMBLE..
The aim of this proposal is to give an overview insight to what is
expected of the main dissertation in the course of the research
work.
The dissertation is divided into five chapters, chapter one deal with
the introduction and background information to the study.
Chapter two deal precisely with the literature review, use of relevant
literatures, books and journals for comparison and development of
critical focus.
Chapter three will focus on research methodology, research aims
and objectives and different methods of data collection.
Chapter four however is the research findings, test of hypotheses
and analysis of data.
Finally, chapter five which is the last chapter of the dissertation
concludes the entire research work with specific recommendations
and area of further research.

CHAPTER ONE

1.0 INTRODUCTION

1.1 Background information

This chapter introduces the basis of this study; it forms the


foundation of for the rest of other chapters. The core issue of the
study is financial management system in donor funded Projects.

Financial management system can be referred to as a set of


activities by which an organization or institution manages its
finances. It encompasses what traditionally referred to as Financial
and management accounting. The very justification for a sound
financial management system and good accounting system rests on
the assumption that information and reports emanating from there
improve the quality of decision making. A sound financial
management system can be referred to as a system that is able to
provide timely and reliable information, give early warning of
problems in projects implementation and allow project
implementation and allow the monitoring of a project’s progress
towards its agreed objectives. A sound financial management
system is well backed up with a sound accounting system which is a
system that provides reliable records and reports of financial
transactions of the project. It provides sufficient financial
information for managing and monitoring project activities.

The emphasis is therefore on providing a timely, accurate and


picture of the past events as a consequence of proper
implementation of the agreed set of activities in accordance of the
approved budget. The benefits derived from this kind of practice
include; to serve the management with information for control
purposes, to serve as reliable framework for projecting and planning
for future economic activities and to give the picture that can build
the confidence of donors on the safety of their funds. At this
juncture, it is important to note that a financial management system
is the system like others, which is an integrated whole entity
consisting of functionally independent parts. The concern is on the
entire organinization on how it will implement the effective financial
system.

In this regard, financial management system can be grouped into


two branches, which are administrative system and accounting
system. Administrative systems play various roles which include:
assisting all project coordinators, project managers or accounting
officers in decision making, planning, communicating, controlling
and evaluating performance objectively. On the other hand,
accounting system is concerned with identifying financial
information, expressing the information in numeric terms and
communicating this information to interested parties.

Colin Drury (2000) describes accounting as process of


identifying, measuring and communicating economic information to
permit informed judgements and decision by users of information. In
other words, accounting is concerned with providing with both
financial and non-financial information that can help decision
makers to make good decision makers to make good decision. Both
financial and non-financial information provides a strong
management control device that assists the management to be
objective when making decision. The emphasis is now on providing
a timely, accurate and reliable picture of the past events as
consequences of proper implementation of the agreed set of
activities in accordance with approved budget.
With the rapid changes in the world, financial management
control is looked to be a continuous monitoring process. Herbert, et
al, (1987), suggests that financial management control, among
others, considers the following aspects

• A systematic effort to set performance standards consistent


with planning objectives
• To design information feedback system
• To compare actual performance with the predetermined
standards
• To take any action required to ensure that all institution or
corporate resources are used in the most effective and
efficient way possible in achieving institutional objective

Since the economy, both at National and global level, consists


of customers, employees and investors, a good financial
management system contributes to both individuals benefit and the
welfare of the general community. Weston, (1987) argues that
proper financial management within the firm will help the business
to provide better products at lowers prices to its customers, pay
high salaries and wages to its workers and managers and still
provide greater returns to the investors. It is so obvious that in order
to achieve any panned goals, one of the essential pillars is a sound
financial management system. Thus well administrative and
accounting systems are very important in today’s world, in both
developed and developing countries.

The need for sound financial system as a tool for achieving


government, organisation, or institutional goals rests on the centre
role contributed by finances. Finance is the one of the most required
scarce resources in both developed and developing countries and
requires proper management of it. The developed countries are at
high level on achieving their goals to the extent that they are in a
position to support financially developing countries. It is true that
finances for many of the development projects in developing
countries like Tanzania rely much on donor funds.

1.2 Statement of the Problem

University of Dar es Salaam is a public institution whose most of


its projects rely much on today’s declining donor finances. Using
UDSM as a model this study sought to review and assess the
efficiency and effectiveness of donor-funded financial management
system, in attempt to establish the factors behind poor financial
management system in these donor-funded projects. In addition, it
is intended to suggest ways for strengthening the current financial
management system

1.3 Research Objectives

The main objective of this research is to study the efficiency and


effectiveness of financial management systems as applied to
various projects on day to day activities. It will also examine how
individual behavioural and social considerations play part in the
design of project organisation structures and operations of effective
donor-funded project accounts with the focus on timeliness,
accuracy and usefulness of financial reports.

The study will further assess how efficient and effective are the
donor-funded projects financial management system in achieving
projects programme goals in Tanzania context, with reference to
donor support at University of Dar es Salaam. It is important to note
that adequate knowledge, skills and experience on financial
management discipline, as well as supportive attitudes towards
having a sound financial management system in work organisation,
and behavioural factors emanating from organisational based self
esteem are the mostly key element that enables availability of
timely, accurate, reliable and useful financial information. Despite
the fact that the financial management system includes both

1.4 Significance of the Study

The importance of higher learning education to any country in the


world is well known. The demand for such education in a developing
poor country like Tanzania is even more critical. Such education
requires tremendous resources, which a poor country like Tanzania
cannot manage alone without support from the donors. The only
way to convince donors to continue financing the institution offering
higher education in Tanzania is by having a sound financial
management system. Therefore this study is worth undertaking

CHAPTER TWO

2.0 LITERATURE REVIEW


This chapter reviews theoretical and empirical literature on the
development of financial management theory and practice with
special interest on the financial management system in donor
funded projects. The chapter ends with a test hypothesis based on
the reviewed literature and thus identification of the gaps as
observed in the existing literature towards which this study is
intended to make its contribution.

Contingency Approach to Management


The contingency approach to management is based on the idea that
there is no one best way to manage and that to be effective, planning,
organizing, leading, and controlling must be tailored to the particular
circumstances faced by an organization. Managers have always asked
questions such as "What is the right thing to do? Should we have a
mechanistic or an organic structure? A functional or divisional
structure? Wide or narrow spans of management? Tall or flat
organizational structures? Simple or complex control and coordination
mechanisms? Should we be centralized or decentralized? Should we
use task or people oriented leadership styles? What motivational
approaches and incentive programs should we use?" The contingency
approach to management (also called the situational approach)
assumes that there is no universal answer to such questions because
organizations, people, and situations vary and change over time. Thus,
the right thing to do depends on a complex variety of critical
environmental and internal contingencies.

Contingency theory refers to any of a number of management


theories. Several contingency approaches were developed concurrently
in the late 1960s. They suggested that previous theories such as
Weber's bureaucracy and Taylor's scientific management had failed
because they neglected that management style and organizational
structure were influenced by various aspects of the environment: the
contingency factors. There could not be "one best way" for leadership
or organization. Historically, contingency theory has sought to
formulate broad generalizations about the formal structures that are
typically associated with or best fit the use of different technologies.
The perspective originated with the work of Joan Woodward (1958),
who argued that technologies directly determine differences in such
organizational attributes as span of control, centralization of authority,
and the formalization of rules and procedures. Fred Fiedler's
contingency model focused on individual leadership. Other researchers
including Paul Lawrence, Jay Lorsch, and James D. Thompson were
more interested in the impact of
CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 Introduction

As established in the preceding chapters this study is


concerned with assessment of the effectiveness and efficiency of
financial management system in donor funded projects towards
achieving targeted goals. Thus i sought to establish the existent to
which the financial management system in donor funded projects is
effective and efficient in achieving projects programme goals. This chapter
therefore, present the research methodology adopted in this study

In any research and by deriving from the preceding chapters the


following things should be covered according to. (Chow and Knight
2002), Research Design, Population, Sampling procedure and
Sample size and type of Data collected. Also, it includes method of
data collection and data analysis technique.

3.1.2Research Aim and Objectives

The main objective of this research is to study the efficiency and


effectiveness of financial management systems as applied to
various projects on day to day activities. It will also examine how
individual behavioural and social considerations play part in the
design of project organisation structures and operations of effective
donor-funded project accounts with the focus on timeliness,
accuracy and usefulness of financial reports.

The study will further assess how efficient and effective are the
donor-funded projects financial management system in achieving
projects programme goals in Tanzania context, with reference to
donor support at University of Dar es Salaam. It is important to note
that adequate knowledge, skills and experience on financial
management discipline, as well as supportive attitudes towards
having a sound financial management system in work organisation,
and behavioural factors emanating from organisational based self
esteem are the mostly key element that enables availability of
timely, accurate, reliable and useful financial information. Despite
the fact that the financial management system includes both
administrative and accounting systems, the limitation of time, funds
and other resources, made the focus of this study concentrate on
accounting system only.

3.1.3. Specific Objectives

The specific objectives of the study will be;

1) To assess the extent to which the accounting and internal


control systems at UDSM to Ensure the conduct of an orderly and
efficient payment and procurement process, adheres to the budget
discipline, segregation of duties, proper record keeping, and
safeguarding of assets and resources.

2) To establish whether the finances of the projects are handled


by an adequate number of knowledgeable, Skilled and experienced
financial management staff and the extent to which the
organisational based self esteem of donor funded project staff
affects timeliness, accuracy and usefulness of accounts.

3) To establish the extent to which organisational based self


esteem of individual donor funded projects staff affects timeless,
accuracy and usefulness of accounts.

3.2 Research Design

This research is cross-sectional and descriptive aiming at


assessing how effective and efficient are the donor-funded projects
financial management system in achieving projects programme
goals at UDSM. The survey tools employed included observation,
where by the researcher will directly observe the facts-this is an
excellent vehicles in measuring individual attitudes. (Babbie 1989).
In some cases i will administered the questionnaires, and carried
out some interview in order to minimise the number of incomplete
questionnaire, reduce risk and misunderstood questions and
achieve high completion and return rate.

3.2.1 Population

The population studied includes financial management system of all


donor funded projects responsible at University of Dar es Salaam,
i.e. at Main Campus, UCLAS and MUCHS. The person contacted
includes seniors which are projects Accountants, Projects
Coordinators, Assistant coordinators, and juniors which involve Staff
at the low rank.

3.2.2 Sampling Procedure and Sample Size

Due to time constraints and other resources, the study will not
exhaustively cover each project; rather representative projects were
studied on behalf of the entire population. More ever i will assume
that procedures and work environment for all donor funded project
financial management system are homogeneous and only individual
differ. Thus in all donor funded projects at UDSM environment allows
the implementation of an effective financial management system
that is necessary for achieving the targeted donor funded project
goals.

Selecting a sample is a fundamental element of a positivistic study.


A representative or a good sample is one who results can be taken
as a true picture for the whole population; i other words, results can
be generalised. A good sample must be (a) chosen at random, (b)
large enough to satisfy the needs of the investigation being
undertaken, and (c) Unbiased (Hussey, 1997). Sampling analysis the
most important question is what should be the sample size of the
sample or how large or small should be. (Koritsas, 1990).

In view of the fact that i aimed at assessing how efficient and


effective are donor funded projects financial management system in
achieving projects programme goals at UDSM, It is therefore
important to use a sample that is adequate and representative as
possible. Sekeram (1984) argued that a sample size larger than 30
and less than 500 is appropriate for any research. On judging on the
sample size, Koritsas (1990) concluded that in any sampling
analysis the most important question is what should be the size of
the sample or how large or small it should be. Due to resources
constraints, which include money, time and other facilities, a
judgement sample of 60 projects were selected randomly. This
number is is considered to be large enough for this study.

3.3 Types of Data and Data Collection Methods and


Procedure

In this study, primary and secondary data were collected. The


primary data gave the views and suggestions of respondents in
relation to the current financial management system in use for
meeting the project goals. On the other hand, the secondary data
revealed among others, the trends and the status of the reports
produced by the existing financial management system.

3.3.1 Data Collection Methods and Procedure

The following methods and procedures were applied in collection


of intended information;

(a) A semi-structured questionnaire is used to gather information


prepared constituting primary data. The questionnaires will be
distributed to project’s accountants, Coordinators and Assistant
Coordinators and any staff who participate direct or indirect in the
project. For the purpose of having a chance of elaborating some of
the questions, some of the questionnaires are personally
administered. I had sent those questionnaires through mail and
made calls for those staff concerned who seems to me need
personally administered.

(b) In order to complement the data collected through questionnaire


in (a) above, a discussion and structured interviews with some
project accountants and Coordinators were contacted through
phone calls though its not face to face interview during the course
of data collection. This help to increase the level of validity and
reliability of data that are relevant to the objectives and question of
this study.

(c) Collection of Secondary Data: - Secondary data were collected


from Audited project’s accounts, minutes of project reviewing
meetings, accounts records and project document. Other sources
were published and unpublished research/ reports collected from
University Officials, Office of the Controller and Audit General,
Treasury and from Libraries.
In this regard, data are collected for the period back to the year
1998 whereby in this 10 years time i thought is sufficient time for
providing the real picture of financial management system used by
projects in achieving their goals. The collected data are analysed to
establish the most applicable element that influence sound financial
management system in the donor funded projects as being
implemented at the UDSM

3.4 Data Analysis and Testing Model

In order to test the level of the explanatory variables


generating the individual staff perception on the effectiveness and
efficiency of donor funded project financial management system,
descriptive and statistical analysis will be used on the data collected
from primary and secondary sources.

The collected data for independent and dependent variables are


both ordinal and bivariate. The distribution of data can be put into
pairs of measurement. The objective of the research was to
investigate the association between the factors determining the
effective financial management system and the observed practice
that implementing the effective financial management system of
donor funded project and its end result that are measured in terms
of timely, accurate and useful financial reports are observed at
UDSM.
3.4.1 Analysis Benchmark Indicators
In order to assess the achievement of the objective of this study, the
matrix table as shown in the main dissertation, Table 1 was
employed as a benchmark (standards) for comparing some of the
results with the established standards.

CHAPTER FOUR

4.0 RESEARCH FINDINGS AND ANALYSIS

4.1 GENERAL FINDINGS

4.1.1 Field Work Execution


The field work assignment which includes distribution of
questionnaires, interviews and collection of secondary data in some
ways is done for four to five weeks.

Three campuses of University of Dar es salaam which are the


Main Campus, UCLAS and MUCHS, were visited during the exercise
of Data collection. All of these campuses are in Dar es Salaam with
the exception of the Institute Marine Sciences under Main campus
which is allocated in Zanzibar.

Distributions of questionnaires were made to various projects


coordinators, projects assistant coordinators and projects
Accountants who were selected randomly from the three campuses.
These questionnaires aimed at collecting information to aspect that
has an impact on the efficiency and effectiveness of the financial
management system in donor funded projects. Interviews with some
projects coordinators and accountants were conducted and the
information collected gave an in depth understanding of the
operations of the projects.

Out of the total 30 questionnaires distributed 25 (90%) were filled


and collected. This number is considered to be satisfactory for this
study.

5.2 CONCLUSION

The donor support to the developing countries, including Tanzania,


is highly needed for the struggle against poverty. These supports
are from the Tax payers of the developed countries who also need
to see that their funds are properly managed. However, there are
many reported problems on management of donor funds to the
extent that some donors terminate some of the contracts.

Since it will be extremely difficult to manage development without


donor support, the need for a Sound Financial Management System
in donor funded programmes and project becomes inevitable. Such
discipline of management is not only for the donor funds but also for
the scarce resources that are locally generated. It is therefore
crucial for the Government Ministries, Departments, Institutions,
Parastatals and NGO’S to build a culture of seeking proper ways of
management of funds.
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Fiedler, Fred and Chow , Knight.(2000): Theory of leadership


effectiveness, new york: Mc Graw- Hill.

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Korista,paul.(1997), A Diagnostic test for the Distribution – free


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