EFFECT OF BUDGETARY CONTROL USES ON FINANCIAL PERFORMANCE

OF PUBLIC UNIVERSITIES IN NAIROBI COUNTY, KENYA

BY

BORNFACE OTIENO ODERO

A RESERCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN FINANCE

DEPARTMENT OF ACCOUNTING AND FINANCE

MASENO UNIVERSITY

©2019
 DECLARATION

This research project is my original work and has never been presented for an award in
any other University or Institution of Higher Learning.

Signature: …………………………………….. Date: ……………………………

BORNFACE OTIENO ODERO

MSC/BE/00127/2016

This project has been submitted for presentation with my approval as the Student‟s
Supervisor.

Signature: ………………………………… Date: ………………………………

DR. BENJAMIN OMBOK

SCHOOL OF BUSINESS AND ECONOMICS

MASENO UNIVERSITY

ii
 ACKNOWLEDGEMENT
I wish to express my gratitude to all the people who made my research project a
success. Special thanks goes to God the Almighty for granting me favour and
protection for the entire research period. Finally, I am grateful to my supervisor, Dr.
Benjamin Ombok for his guidance as this research project could not have been
successful without his contribution.

iii
 DEDICATION
I dedicate this research project to my family for being supportive throughout the study
period.

iv
 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 expenditutre, 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.

v
 TABLE OF CONTENTS
TITLE PAGE ……………………………………………………………………….….i
DECLARATION ............................................................................................................ii
ACKNOWLEDGEMENT .............................................................................................iii
DEDICATION ............................................................................................................... iv
ABSTRACT .................................................................................................................... v
TABLE OF CONTENTS ............................................................................................... vi
LIST OF ABBREVIATIONS ......................................................................................... x
DEFINITION OF TERMS ............................................................................................ xi
LIST OF TABLES ........................................................................................................xii
LIST OF FIGURES .....................................................................................................xiii

CHAPTER ONE: INTRODUCTION ......................................................................... 1

1.1 Background of the Study .......................................................................................... 1
1.1.1 Financial Performance ........................................................................................... 2
1.1.2 Budgetary Controls ................................................................................................ 5
1.1.3 Benefits of Budgetary Controls ............................................................................. 6
1.1.4 Objectives of Budgetary Controls .......................................................................... 7
1.1.5 Challenges affecting Budgetary Controls in Organizations................................... 8
1.1.6 Relationship between Budgetary Controls and Financial Performance ................ 8
1.2 Statement of the Problem ........................................................................................ 13
1.3 Objectives of the Study ........................................................................................... 14
1.3.1 General Objectives ............................................................................................... 14
1.3.2 Specific Objectives of the Study .......................................................................... 14
1.4 Research Hypothesis ............................................................................................... 14
1.5 Scope and Limitations of the Study ........................................................................ 14
1.6 Justification of the Study ........................................................................................ 15
1.7 Conceptual Framework ........................................................................................... 15

CHAPTER TWO: LITERATURE REVIEW .......................................................... 17

2.1 Introduction ............................................................................................................. 17
2.2 Theoretical Literature.............................................................................................. 17
2.2.1 Theory of Budgeting ............................................................................................ 17
2.2.2 Punctuated Equilibrium Theory of Budgeting ..................................................... 18
vi
2.2.3 Budgetary Control Theory ................................................................................... 19
2.2.4 Accounting Theory .............................................................................................. 20
2.3 Measures of Financial Performance........................................................................ 21
2.3.1 Profitability .......................................................................................................... 21
2.3.2 Liquidity............................................................................................................... 22
2.3.3 Return On Assets ................................................................................................. 22
2.3.4 Return On Investments ........................................................................................ 23
2.3.5 Solvency............................................................................................................... 23
2.3.6 Operational Efficiency ......................................................................................... 23
2.4 Uses of Budgetary Controls .................................................................................... 23
2.4.1Budget Planning .................................................................................................... 24
2.4.2 Budget Coordination ............................................................................................ 24
2.4.3 Budget Control ..................................................................................................... 25
2.4.4 Staff Motivation ................................................................................................... 26
2.4.5 Performance Evaluation ....................................................................................... 26
2.4.6 Monitoring ........................................................................................................... 26
2.5 Empirical Literature ................................................................................................ 27
2.5.1 Global Studies ...................................................................................................... 27
2.5.2 Regional Studies .................................................................................................. 28
2.5.3 Local Studies ........................................................................................................ 29
2.6 Summary of Literature Review ............................................................................... 31

CHAPTER THREE: RESEARCH METHODOLOGY ......................................... 32

3.1 Introduction ............................................................................................................. 32
3.2 Research Design...................................................................................................... 32
3.3 Study Area .............................................................................................................. 32
3.4 Target Population .................................................................................................... 32
3.4.1Sample Size........................................................................................................... 33
3.4.2 Sampling Procedure ............................................................................................. 33
3.5 Data Collection Instruments and Procedure ........................................................... 33
3.5.1 Pilot Testing ......................................................................................................... 34
3.5.2 Validity of Instruments ........................................................................................ 34
3.5.3 Reliability of Instruments ................................................................................... 34

vii
3.6 Data Analysis Techniques....................................................................................... 35
3.6.1 Model Specification ............................................................................................. 35
3.6.2 Variables, Variable Measurement and Specification ........................................... 36
3.7 Ethical Considerations ............................................................................................ 36

CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION OF

RESULTS .................................................................................................................... 37
4.1 Introduction ............................................................................................................. 37
4.2 Response Rate ......................................................................................................... 37
4.3 Demographic Information of the Respondents ....................................................... 37
4.4 Planning .................................................................................................................. 39
4.4.1 Duration and Approximate Annual Budgeted Revenue & Expenditure .............. 39
4.4.2 Budget Planning Process...................................................................................... 41
4.5 Budget Control Process........................................................................................... 42
4.5.1 Frequency of Budget Review............................................................................... 42
4.5.2 Level of Agreement/Disagreement with Budget Control Statements .................. 43
4.6 Budget Coordination Process .................................................................................. 44
4.7 Relationship between Planning and Financial Performance of Public Universities
....................................................................................................................................... 44
4.8 Association between Co-ordination and Financial Performance of Public
Universities ................................................................................................................... 46
4.9 Relationship between Control and Financial Performance of Public Universities . 48
4.10 Regression Equation ............................................................................................. 50

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS ............................................................................................ 52
5.1 Introduction ............................................................................................................. 52
5.2 Summary of the findings ......................................................................................... 52
5.2.1 Response Rate ...................................................................................................... 52
5.2.2 Demographic Information of the Respondents .................................................... 52
5.2.3 Planning ............................................................................................................... 53
5.2.3.1 Duration and Approximate Annual Budgeted Revenue & Expenditure ........... 53
5.2.3.2 Budget Planning Process .................................................................................. 53
5.2.4 Budget Control Process........................................................................................ 53
5.2.4.1 Frequency of Budget Review............................................................................ 53
viii
5.2.5 Budget Coordination Process ............................................................................... 54
5.2.5.1 Level of Agreement/Disagreement with Coordination Statements .................. 54
5.2.6 Relationship between Planning and Financial Performance of Public Universities
....................................................................................................................................... 54
5.2.7 Association between Co-ordination and Financial Performance of Public
Universities ................................................................................................................... 55
5.2.8 Relationship between Control and Financial Performance of Public Universities
....................................................................................................................................... 55
5.2.9 Pearson Correlation Cofficientsa for Budget Planning Process ........................... 55
5.2.10 Pearson Correlation Cofficientsa for Budget Coordination Process ................. 56
5.2.11 Pearson Correlation Cofficientsa for Budget Control Process .......................... 56
5.3 Conclusions ............................................................................................................. 57
5.4 Policy Recommendations........................................................................................ 57
5.5 Recommendations for Further Research ................................................................. 58
REFERENCES............................................................................................................ 59
APPENDICES ............................................................................................................. 67

ix
 LIST OF ABBREVIATIONS
ANOVA - Analysis of Variance

BC - Budgetary Control

BCT - Budgetary Control Theory

CIMA - Chartered Institute of Management Accountants

EBIT - Earning Before Interest and Tax

FP - Financial Performance

GP - Gross Profit

MCS - Management Control System

OCOB - Office of Controller of Budget

PET - Punctuated Equilibrium Theory

PFM - Public Finance Management

PUK - Public Universities in Kenya

ROA - Return On Assets

ROI - Return On Investments

ROS - Return On Sales

SPSS - Statistical Package for Social Scientists

VA - Variance Analysis

VIF - Variance Inflation Factor

ZBB - Zero Based Budgeting

x
 DEFINITION OF TERMS

Budget Committee :This is a group of people within an organization that

reviews, adjusts and approves the budgets submitted by
departmental heads.

Budget Cycle :This refers to life of a budget from creation or

preparation to evaluation.

Budget :Refers to a plan quantified in monetary terms, prepared

and approved prior to a defined period of time.

Budgetary Control :A system of controlling costs, which includes the

preparation of budgets, coordinating the departments
and establishing responsibilities, comparing actual
performance with that budgeted and acting upon
results to achieve maximum profitability.

Budgeting :This is the process of preparing budgets.

Financial Performance :This refers to the extent to which financial goals are
accomplished.

Liqudity : Refers to a company‟s ability to convert its assets to

cash in order to pay its liablities when they are due.

Retun On Invetstments : A financial ratio that measures the gain or loss on an

investment, relative to the amount of money invested.

Return On Assets : A financial ratio that shows the percentage of profit a

company earns, relative to its overall resources.

Solvency : A measure indicating an entity‟s ability to repay all

indebtedness if all of its assets were to be sold.

Surplus : Excess of total revenue over total expenditure of an

entity.

xi
 LIST OF TABLES

Table 3.1: Respondents Subgroups……………………………………………...……33

Table 3.2: Reliability Statistics……………………………………………………….35

Table 4.1: Distribution of Respondents by Demographic Characteristics……………38

Table 4.2: Level of Agreement/Disagreement with Budget Planning statement……..41

Table 4.3: Level of Agreement/Disagreement with Budget Control statement………43

Table 4.4: Level of Agreement/Disagreement with Budget Coordination statement...44

Table 4.5: Model Summary for Planning……………………………………………..44

Table 4.6: Pearson Correlation Coefficient for Budget Planning…………………….45

Table 4.7: Model Summary for Coordination………………………………………...46

Table 4.8: Pearson Correlation Coefficient for Budget Coordination Process……….47

Table 4.9: Model Summary for Control………………………………………………48

Table 4.10: Pearson Correlation Coefficent for Budget Control Process…………….49

xii
 LIST OF FIGURES
Figure 1.1: Conceptual Framework…………………………………………………...16

Figure 4.1: Period Annual Budgeted Revenue and Expenditure……………………...40

Figure 4.2: Budget Review Timelines………………………………………………...42

xiii
 CHAPTER ONE

INTRODUCTION

This section entails background information from previous researches done that are

relevant to effectiveness of Budgetary Controls on Financial performance of Public

Universities in Kenya.

1.1 Background of the Study

The need for better performance in public institutions of higher learning requires

proper financial standing in order to run operations (Nyongesa, A.,Odhiambo, A.&

Moses, N., 2016). Public institutions of higher learning resources are limited and

budgets provide one means to allocate resources among competing uses (Ronald,

Michael & Frannk, 2008). Most public institutions of higher learning have not

effectively applied budgetary control techniques in financial performance (Nelson &

Miller, 2008). In the absence of budgetary control, too many managers spend all of

their time dealing with daily demands (Nyongesa et al, 2016). According to Garrison

& Norren (2000), the budgeting process provides a means of allocating resources to

those parts of the organization where they can be used most effectively. Most Public

Universities in Kenya are facing financial crises precipitated majorly by reduction in

both parallel programmes and Government capitation (Rajab & Nyaundi, 2018). They

suggested that Public Universities are broke and in deep financial crises that would

soon grind them to a halt. They asserted further that most public institutions of higher

learning are hardly surviving and unable to meet financial obligations, including

submitting statutory deductions, inability to pay lecturers and other university staff,

throwing the future of some of them into disarray. The financial crises have been

compounded further by ballooning wage bills and upsurge in utility bills. To sustain

their operations,a majority of Public Universities resort to bank loans and overdrafts,

1
making them technically insolvent in the long run (Rajab & Nyaundi, 2018).

According to Mukhwaya (2018), players in the higher education sector agreed that

universities, especially the big and older ones are in dire financial crunch, and if not

bailed out soon will have massive ramifications on University education. He suggested

that none of the Public Universities has a sound financial base and that the bigger ones

are hardest hit because they mount expensive academic programmes run by a huge

workforce.

1.1.1 Financial Performance

Financial performance of an organization is the subjective measure of how well a firm

can use assets from its primary mode of business and generate revenue (Ashok, 2009).

It is the measurement of the results of the company‟s performance in form of ROA and

ROE (Siyanbola, 2013). According to Isaboke & Kwasira (2016), financial

performance of an organization is key for sustainability of companies. Financial

performance is a scientific evaluation of profitability and financial strength of any

business concern (Kennedy and Macmillan,1986). They stated further that financial

statement analyses attempt to unveil the meaning and significance of the items

composed in profit and loss account and balance sheet. The importance of financial

stability ranges from enabling an organization to have sufficient resources for quality

service delivery, maximizing the potential of service delivery, enhancing the ability to

pay staff, vendors and creditors on time and maintenance of good credit risk

(Anderson, 2011).

According to accounting point of view, financial statements are prepared by a business

enterprise at the end of every financial year. Financial statements are end products of

financial accounting. They are capsulated periodical reports of financial and operating

data accumulated by a firm in its books of accounts - the General Ledger. Other non

2
financial indicators of performance measurement include; employment generation,

research and development, health education and economic development among others.

Financial resource is considered important to many institutions and establishments

(Allis, 2004). This means that it must be effectively and efficiently managed to bring

about the needed change and results from activity for which the funds have been made

available. However, sometimes this important resource is mismanaged and

misappropriated by those put in charge (Rosen & Gayer, 2010). According to Venanci

(2012), the measures of Financial performance include a company‟s total earnings or

profit, share value and growth index.

Needles (2011), highlighted different methods for measuring financial performance

such as; Profitability – return on Investments, earnings before interest and tax, gross

profit margins, Growth – market share growth, sales growth, Efficiency – return on

sales, return on equity. In an attempt to address the critical issues affecting Financial

Performance, various authors have come up with factors affecting financial

performance. A study carried out by Skandalis (2008), examined the effect of export

activity, location, size and index for management competence on financial

performance. Another study by Skandalis (2010), examined the effects of foreign

direct investments and openness in developing countries‟ financial performance.

Elements that define Financial Performance in an organization include; Liquidity,

Profitability, Solvency, Financial efficiency among others. Analysis of Financial

performance of an entity identifies its financial strengths and weaknesses by properly

establishing relationship between items of statement of financial position and those of

statement of financial performance. Since financial statements give both quantitative

and qualitative data, authors often emphasize their completeness (Kothari &

3
Barone,2006). However, Financial statements can serve „not only as a map but a

maze‟ to their users (Fraser & Ormiston, 2013).

Financial Management is a critical function in an organization‟s success. Globally,

there has been a shift in government laws and regulations dealing with Public

Universities in the last decade or two in which Public Universities have transformed

from simple governmental agencies into public corporations, giving the management

new authority and sometimes corporate style governing boards with new

accountability requirements (Albach, Reisberg & Rumbley, 2009). Financial

Management practices in public universities in Kenya face myriad of challenges as

reflected in audit findings by the office of Auditor General from audit of such

institutions such as; operating on negative working capital, fraud, flaws in

procurement procedures, lack of value for money in financial operations, uncontrolled

capital expenditure, excessive borrowings and inept financial management practices

among others. The Auditor General has on several occasions reported that most Public

Universities in Kenya are technically insolvent and cannot meet their financial

obligations as their current liabilities exceed current assets (Rajab & Nyaundi, 2018).

According to Mukhwaya (2018), none of the Public Universities in Kenya has sound

financial base. He alluded to the fact that all are in the „red‟ and the worst affected are

older ones which mount expensive academic programmes run by huge workforce

which is further aggravated by reduction in government capitation every financial

year. He opined that due to mismanagement of finances, there is too much

indebtedness as Universities resort to paying salaries from bank overdrafts as a last

resort.

4
1.1.2 Budgetary Controls
Budgetary Control is a system of controlling costs which embraces; preparation of

budgets, coordinating the departments and establishing responsibilities, comparing

actual performance with budgeted and acting upon results to achieve maximum

profitability (Brown & Howard, 2002). Budgetary Control is the process of developing

a spending plan and periodically comparing actual expenditure against that plan to

determine if it or the spending patterns need adjustments to stay on track (Dunk,

2009). It refers to how well managers utilize budgets to monitor and control costs and

operations in a given accounting period. In other words, budgetary control is a process

for managers to align financial and performance goals with budgets, compare the

actual results and adjust performance (Maina, 2017). Budgetary control therefore

relates to the use of budget as a control device whereby predetermined plans or

standard output, income and expenditure are compared with actual attainment so that if

necessary, corrective action may be taken before it is too late (Nwoye, 2015). The

Institue of Cost and and Management Accountants (1999), defines budgetary control

as the establishment of budgets relating the responsibility of executives to the

requirements of a policy and the continuous comparison of actual with budgeted

results, either to be secured by individual action of the objective of the policy or to

provide a basis for it revision. Chartered Institute of Management Accountants (2000),

sees budgetary control as the process of comparing the actual outcomes with planned

outcomes and reporting on the variations. According to Stedry (2002), control is the

activity which measures deviation from planned performance and provides

information upon which corrective action can be taken either to alter future

performance so as to control original plan or modify the original plan.

5
As a tool for measuring performance, Budgetary Control provides comparisons

between the budget targets and actual targets and deviations determined; performance

of each department is reported to the top management which enables introduction of

management by exception (Thuita & Kibati, 2016). According to Carr and Joseph

(2000), budgetary controls help management teams in making future plans through

implementation of short-term plans and monitoring activities aimed at conforming to

those plans. They opined further that effective implementation of budgetary control

techniques is a guarantee for effective implementation of budget in the firm.

Budgetary control techniques reflect financial implications of business plans as well as

identifying the amount, quantity and timing of resources needed (Shields & Young,

1993). Management in various organizations should put in place measures to solve the

budgetary control system problems such as enhancing better understanding of

budgetary control techniques, their behavior and institutional dynamics among the

staff, developing strong financial integration with performance management, quarterly

revision of financial plan to redirect resources at frequent intervals and better

engagement between organizational leaders, managers and finance staff with proper

timing of the financial plan (Mohamed et al., 2015).

1.1.3 Benefits of Budgetary Controls

Preetabh (2010), highlighted the benefits of budgetary control as profit maximization;

a budgetary control aims at maximization of profits of an organization through, proper

planning and co-ordination of different functions, proper control over various capital

and revenue expenditure and putting resources into best use. Waren (2011), noted that

within an organization, different departments have a bearing on one another, this

therefore makes co-ordination of various executives and subordinates necessary in

achieving budget targets. Other benefits as indicated by preetabh (2010), include;

6
specific time aims, the plans, policies and goals are decided by the top management.

All efforts are put together to reach the common goal of the organization. Every

department is given a target to be achieved. The efforts are directed towards achieving

some specific aims.

As a tool for measuring performance, budgetary control provides comparisons

between the budget targets and actual targets and deviations determined; performance

of each department is reported to top management which enables introduction of

management by exception. Magah (2005), asserted that budgetary controls are

important tools for a country‟s economy. This is because it allows planning for

expenditure thus facilitating systematic spending. Finances are put to optimum use,

extending the benefits to industry and national economy. He opined that this reduces

wastages of national resources. According to Merika (2008), the deviations in

budgeted and actual performance will enable determination of weak spots. This

enables an organization to concentrate on those aspects where performance is less than

stipulated.

1.1.4 Objectives of Budgetary Controls

According to Pandit (2016), some of the objectives of budgetary control are; to plan,

which is the most important feature of budgetary control because management is

forced to look ahead, set targets, anticipate problems and give the organization

purpose and direction, to communicate ideas and plans to everyone affected by them

as it is necessary, to coordinate the activities of different departments or sub-units of

the organization. This implies that for example, purchasing department should base its

budget on production requirements, and that production budget should in turn be based

on sales expectations, to establish a system of control by having a plan against which

7
actual results can be progressively compared and finally, to motivate employees to

improve their performance.

1.1.5 Challenges affecting Budgetary Controls in Organizations

Neely (2001), did a study on weaknesses of budgetary controls. The study was based

on review of empirical literature from similar studies. The findings included

weaknesses such as; restraining of responsiveness and acting as barrier to change,

budgets are rarely strategically focused and often contradictory, they add little value

especially given the time required to prepare them, they concentrate on cost reduction

and not value addition, they do not reflect emerging network structure that

organizations are adopting, they encourage gaming and perverse behaviours, they

reinforce departmental barriers rather than encourage knowledge sharing and make

people feel undervalued. Prendergast (2000), identified three main problems

associated with budgeting. Firstly, a lot of guesswork is involved in the budgeting

process, secondly, budgets are increasingly inaccurate as a result of shorter product

life cycles and rapidly changing business environment. Finally, there is the extent of

budget gamesmanship. He argues that over the years, budgets have resulted in a

conflict between top management and their subordinates. While top management

attempts to „get the most out of their staff‟, subordinates on the other hand work to

build slack in their budgets in an effort to make budget numbers easier to attain. This

could lead to budgetary slack.

1.1.6 Relationship between Budgetary Controls and Financial Performance

Budgetary Control is a management tool used by both public and private entities to

effectively manage their limited financial resources. The success of financial

performance in any organization depends on effective budgetary control, a process

which calls for continuous administration (Proctor, 2006). According to Jones et al.

8
(2009), Budgetary Controls in government entities entail financial planning,

controlling, financial evaluation and performance of budgets in order to efficiently

achieve the public finance management goal, on proper allocation as per proposed

budgets.

Hemsing and Baker (2013), carried out a study on effect of Tight Budgetary Control

on Managerial behavior in Swedish Public Sector. They used descriptive survey

design and sampled 62 Managers from different municipalities and Universities in

Sweden. The findings established that majority of local Managers in Swedish Public

Sector experienced tight budgetary controls. The study never captured the effect of

budgetary control uses on an organization‟s financial performance. Therefore there is a

gap in literature in relation to effect of budgetary control uses on financial

performance of Public Universities in Kenya.

Marcomick and Hardcastle (2011), did a study on relationship between Budgetary

Control and Organizational Performance in government parastatals in Europe. A

sample of 40 government parastatls were selected for the exercise. Secondary data was

used and a period of ten years considered. A regression model was used for data

analysis. The results revealed a positive relationship between Budgetary Control and

Organizational performance of government parastatals. Government parastatals in

Europe and Public Universities in Kenya have different revenue streams, financing

methods, systems of operations and objectives. Therefore a gap in literature exists in

relation to effect of budgetary control uses on financial performance of Public

Universities in Kenya.

Nwoye (2015), sought to study Budgeting and Budgetary Control as the metric for

corporate performance. The methodology adopted in the study was descriptive,

9
involving the study of budgetary control activities in 30 organizations selected from a

number of States in the Federation, Nigeria. He posited that making efforts to achieve

operational targets and objectives without effective budgeting and budgetary control

measures would be tantamount to a blind pursuit of goals. He opined that great

majority of firms were guilty of preparing initial budgets only to over-shoot the budget

limits during implementation stage due to poor budgetary control measures. The study

advises top management of modern organizations to take budgeting and budgetary

control issues seriously as no appreciable success could be achieved with hapharzard

budgeting and budgetary controls. The study only examined budgeting and budgetary

control and its merit as a predictor of general corporate performance without focusing

on any specific measure of financial performance, a gap this study sought to explore.

Harelimana (2017), carried out a study on the Effect of Budgetary Control on

Financial Performance of Kigali Serena Hotel in Rwanda. It sought to; assess

techniques of budgetary controls used in Kigali Serena Hotel, analyze the indicators of

financial performance of Kigali Serena Hotel and to establish the relationship between

budgetary control techniques and financial performance indicators in Kigali, Serena

Hotel. The study adopted analytical research design. The study findings depicted a

positive relationship between Budgeting and Budgetary Control system and Financial

Performance of the Hotel. The study considered both planning and control as measures

of budgetary control but left out coordination of activities amongst various

departments which is equally important. Besides, Serena Hotel in Rwanda and Public

Universities in Kenya have different revenue streams, financing methods, systems of

operations and objectives. Therefore a gap in literature exists in relation to effect of

budgetary control uses on financial performance of Public Universities in Kenya

which the study sought to delve in.

10
Adongo and Jagongo (2013), did a study which investigated the relationship between

Budgetary Control and Financial performance of State Corporations in Kenya. It

sought to determine the salient features of Budgetary Controls in state corporations,

establish the Human factors within budgetary controls, establish the process of

budgetary control in public organizations and determine the challenges affecting

budgetary controls. A descriptive survey design was used to gather data from

Managers of the sampled state corporations. 14 corporations were selected from a

population of 138 to participate in the study. Purposive sampling was used to selelct

42 corporate services managers, finance managers and budget officers from each

corporation to participate in the study. The findings indicated a positive significant

relationship between budgetary controls and financial performance of state

corporations. The study focused on independent variables including; human factors

within BC, processes of BC and challenges of BC which are different form those

considered by this study. A literature gap therefore still exists on effect of budgetary

control uses such as Control, Planning and Coordination on Financial Perfomance of

Public Universities in Kenya, that this study sought to explore.

Thuita & Kibati (2016),did a study on the influence of Budget Management Practices

and Controls on Effective Management of Finances in Public Universities in Kenya. It

considered campuses within Nakuru town and used exploratory research design. The

study findings revealed that financial performance of Public Universities was

significantly affected by the extent to which budget management practices were

upheld and the financial controls in place. The research focused majorly on Budget

Management Practices and financial controls other than on Budgetary Control uses

and their effect on Financial performance of Public Universities in Kenya which this

study sought to find out.

11
Kerosi (2018), sought to determine association between Budgetary Control Practices

and the Management of Micro and Small Enterprises at Kangemi Town in Kenya. A

descriptive survey design was adopted to capture catergorical description of attitudes

of the study population. A sample size of 75 out of 160 registered micro and small

enterprises in Kangemi, Kenya was taken. The study established that management of

micro and small entreprises is positively related to Budgetary Control Practices. There

is a literature gap as independent variables considered never included coordination as a

function under budgetary control which this study seeks to also consider. Besides, it

focused on micro and small enterprises other than on Public Universities in Kenya

which have different financing systems, revenue streams, methods of operations and

objectives.

Chirchir and Simiyu (2017), did a study on Influence of Budgetary Control System on

Financial Performance of ALMASI Beverages Group Limited, Kenya. The study

adopted descriptive design and sampled 126 out of a target population of 147, using

purposive sampling technique. The research findings showed a significant influence of

Budgetary control systems on financial performsnce of an organization. There is a

literature gap as the study focused on four variables such as planning, human factors,

resource availability, monitoring and evaluation. Of the variables only planning is

considered by this study. Besides, ALMASI Beverages Group has different streams of

revenue sources, operations, systems and objectives from those of Public Universities

in Kenya, hence the need to carry out the study.

Nyongesa et al. (2016), studied the effect of Budgetary Control on Financial

performance of Institutions of Higher Learning in Western Kenya. The study was

conducted in institutions of higher learning in Vihiga, Bungoma, Kakamega and Busia

counties. Finance Officers, Accountants, Bursars and Principals were the respondents.
12
Descriptive survey design was used in the study with a target population of 109. The

research findings established that budgetary control had a statistically significant effect

on Financial Performance in Public Institutions of Higher Learning. There is a

literature gap as the study looked at budgetary control measures such as; Budget

Process, Projected income, Allocation of funds and Variance Analysis whereas this

study considered budgetary control uses such as; Planning, Coordination and Control

and their effect on Financial performance of Public Universities in Kenya. Besides, the

research considered financial performance measures such as; Expenditure control,

Liquidity and Capital Improvements which are totally different from the ones

considered by this study like; Surplus, Liquidit and ROA.

1.2 Statement of the Problem

Public Universities in Kenya have grown exponentially in the recent past. This growth

rate has been attributed to increased intake of students. Audit reports by Office of the

Auditor General on Public Universities in Kenya have depicted them as having

enormous financial challenges including; operating on negative working capital, fraud,

excessive outstanding fees, flaws in procurement procedures and lack of value for

money in their expenditures. This therefore underscores the need for Public

Universities to undertake budgetary control practices in their financial operations.

Literature reviewed largely depict Kenya as having made attempts to adopt budgetary

reforms seeking to address resource constraints and national development priorities.

However,a gap remains in establishing the effect of budgetary controls uses on

financial performance of Public Universities in Kenya, considering such uses as;

Planning, Control and Coordination against financial performance measures such as;

Surplus, Liquidity and ROA.This study therefore sought to fill this gap.

13
1.3 Objectives of the Study

1.3.1 General Objectives

To determine the effect of budgetary control uses on financial performance of Public

Universities in Kenya.

1.3.2 Specific Objectives of the Study

The study was guided by the following specific objectives;

i. To establish the relationship between Planning and Financial Performance of

Public Universities in Kenya.

ii. To establish the association between Co-ordination and Financial Performance

of Public Universities in Kenya.

iii. To establish the relationship between Control and Financial Performance of

Public Universities in Kenya.

1.4 Research Hypothesis

H01: There is no relationship between Planning and Financial Performance of Public

Universities in Kenya.

H02: There is no association between Co-ordination and Financial Performance of

Public Universities in Kenya.

H03: There is no relationship between Control and Financial Performance of Public

Universities in Kenya.

1.5 Scope and Limitations of the Study

The study was conducted in Kenya among Finance officers concerned with budget

preparation in Main Public Universities within Nairobi County. It considered

budgetary control uses and how they could be manipulated to influence financial

performance of an organization. It was carried out in July 2019. A census survey

method was adopted where all the five main Public Universities located in Nairobi
14
County were considered for three financial periods from 2013 to 2017. The sample for

the study constituted Finance Staff concerned with budgeting and budgetary controls

of selected Public Universities. Possible limitations that affected the study included;

funding problems, non responses, lack of access to population of interest, long

clearance processes within Finance Departments in sampled Universities among

others.

1.6 Justification of the Study

The study was intended to establish correlation between Budgetary Control uses and

Financial Performance of Public Universities in Kenya with an aim of helping

management control their costs, avoid wastages and realize maximum returns from

their limited financial resources. The study was aimed at guiding policy makers in

underscoring the value of Budgetary Control uses on Financial Performance of

organizations and form a basis for future similar research studies.

1.7 Conceptual Framework

According to Miles and Huberman (1994), a conceptual framework lays out the key

factors, constructs or variables and presumes relationships among them. The study

intended to establish the effect of Budgetary Controls Uses on Financial Performance

of Public Universities in Kenya. It was focused on Budgetary Control Uses as

independent variable in which; Planning, Coordination and Control were considered.

The dependent variables were Financial Performance measured by; Surplus, Liquidity

and Return On Assets. Funds availability and prevailing economic conditions were the

intervening variables as illustrated below;

15
Independent Variables Dependent variables
Uses of Budgetary Controls Measures of Financial Performance

 Planning  Surplus
 Coordination  Liquidity
 Control  ROA

Intervening Variables

 Funds Availability
 Government Policies
 Management Support

Figure 1.1: Conceptual Framework (own conceptualization, 2019).

The conceptual framework in this research proposal implies that if Budgetary Control

functions like; Planning, Coordination and Control are adopted in Public Universities

then Financial Performance will be enhanced as indicated by measures sof financial

performance such as Surplus, Liquidityand ROA.

16
 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction
This chapter reviewed relevant existing literature from other researchers who carried

out their research in the same field of study. Specific emphasis was put on issues

pertaining to effect of budgetary controls on Financial performance of selected Public

Universities in Kenya.

2.2 Theoretical Literature

Various theories have in the past been formulated to explain the pertinent issues

influencing financial performance in organizations. This study was premised on four

theories of budgeting and budgetary controls namely; Theory of Budgeting,

Punctuated Equilibrium Theory of Budgeting, Budget Control Theory and Accounting

Theory.

2.2.1 Theory of Budgeting

An effective Management Control System solves an organization‟s need to plan and

consider how to confront future potential risks and opportunities by establishing an

efficient system of control, a detector of variances between organizational objectives

and performance (Anthony & Goviandarajan, 2007). Budgets are considered to be the

core elements of an efficient control process and consequently vital part to the

umbrella concept of an effective MCS (Davila & Foster, 2007). As a forward looking

set of numbers, budgets project future financial performance which enable evaluating

the financial viability of a chosen strategy (King, Clarkson & Wallace, 2010). In most

organizations this process is formalized by preparing annual budgets and monitoring

performance against budgets (Silva & Jayamaha, 2012). Budgets are therefore a mere

collection of plans and forecasts. They reflect the financial implication of the business

plans, identifying the amount, quantity and timing of resources needed (Innes, 2005).
17
Budgeting can further influence the behavior and decisions of employees by

translating business objectives and providing a benchmark against which to assess

performance (Sandino, 2007). During budget preparation procedures, consideration of

alternative causes of action becomes an integral part and leads to increased rationality.

A budget allows a goal, a standard of performance to be established with subsequent

comparison of actual results with the created standard. It requires those involved to be

forward looking rather than looking back (Kroll, 1997).

Shields and Young (1993), opined that budget acts as a detector of variances between

organizational objectives and performance and vital part of the umbrella concept of an

effective budgetary performance. They form benchmarks by comparing actual results

with budgeted plans and to take corrective action if necessary (Sharma, 2012).

Budgets have therefore been identified as playing a number of roles which include

making goals explicit, coding learning, facilitating control and contracting with

external parties (Coltman & Jagels, 2001).

2.2.2 Punctuated Equilibrium Theory of Budgeting

Baumgartner and Jones (1993), established their concept of “punctuated equilibria”

that addresses both incremental and large budget changes. It asserts that there is a state

of equilibrium followed by a punctuated change followed again by equilibrium. The

state of equilibrium is during quiet periods of incremental change. Punctuations are

breaks from the equilibrium norm. Punctuated equilibrium theory involves

environments of stability shifting into environments of instability (Jordan, 2002).

Thus, in order to establish equilibrium in terms of budget changes, the budget and

budgetary control measures put in place by an entity become pivotal to the overall

performance system of ensuring stability of environment. PET incorporates

incrementalism but also accounts for large punctuated changes that occur in budgetary

18
changes. The theory predicts that the distribution of policy changes will have mostly

small changes located in the central part of the distribution and many large, punctuated

changes in the tails of distribution. Baumgartner and Jones (2009), borrowed this

theory from the physical sciences that describe earthquakes and landlides. In short,

PET states that small changes will build up demand and pressure within a system that

will eventually give way as massive changes. The theory demonstrates the presence of

incremental and punctuated changes in many contexts from local, state, federal

government and agencies. It robustly demonstrates this pattern of budgetary changes

existing in many different contexts (Jones et al, 2009).

2.2.3 Budgetary Control Theory

This theory explains the relationship between budgetary control and financial

performance of organisations. According to this theory, a budgetary control process is

a tool used by organizations as a framework for revenue and expenditure allocation.

According to Robinson and Last (2009), budgeting is used by firms as a framework for

spending and revenue allocation. Organizations should come up with effective

budgeting systems in order to ensure that their resources are not wasted. Budgeting

systems help in ensuring that outputs produced and services delivered achieve their set

objectives. Financial viability is determined by the level of income a firm is able to

maintain in any given time (Robinson, 2009). The firm has to put clear controls that

ensure the budget is well maintained and allocated as required and strictly followed so

that variances can be explained and mitigated as much as possible. Robinson and Last

( 2009), assert that, if a firm has less income however, it might have to find a way to

fund its estimated budget by borrowing and tax restructuring. According to Sawhill

and Williamson (2001), budgets can be used as indicators of measuring ruling

governemnet‟s performances. Budgets are a statement of whether these governments

19
are competent in administering their national goals through good resource use. It is

therefore very crucial that an organization should understand its budgeting systems as

well as giving priority to urgent matters that require attention for firm‟s control tools.

2.2.4 Accounting Theory

According to Kaplan & Norton (1996), Accounting Theory is aimed at the provision

of a coherent set of logical principles that form the general frame of reference for

evaluation and development of sound policy development and accounting practices.

Norreklit and Mitchell (2010), suggest that the purpose in developing a theory of

accounting is to establish standards for judging the acceptability of accounting

methods. The theory has assisted in making predictions of the likely outcome of

budget action in a given set of circumstances. Premised on the accounting theory,

Horvath (2009), argues that the accounting methods that do not meet the set standards

should be rejected. Accounting theory helps in explaining and guiding management

actions in identifying and locating information necessary to be used in budget

preparation (Henry, 1985). The money measurement concept in accounting has

contributed greatly in providing yardstick for qualifying, conversion and translating

various inputs in relation to materials, and machines required in the preparation of

budget (Horvath & Seiter, 2009). Qi (2010), suggests that accounting theory views a

firm as a separate entity in which its activities are distinct from its owners. This

principle serves as an impetus to the generall philosophy of budget itself as a tool for

effective management (Qi, 2010). According to Horngren et al. (1997), accounting

principles are an impetus to the general philosophy of budget itself as a tool for

effective management.

Budget as a tool uses accounting concepts to a great extent. It is under the accounting

theory that financial standards can be set to guide a firm towards achieving its

20
financial goals. Management accounting theory also provides several yardsticks to be

used for control such as variance analysis. Budgeting provides a feedback mechanism

to the management of an organization on how well financial assets are managed as

determined by the match between the plans and actual status upon implementation of

budgets. Financial statements are prepared by use of historical data which helps in

forecasting of future financial plans. The cost accounting theory developed by

Wedgwood in early 20th century which emphasizes on cost identification, allocation

and revenue maximization has provided a basic insight and blue print in budget and

control in an organization. The matching concept in accounting also plays a role as

reference issue in budget analysis (Flamholtz, 2012).

2.3 Measures of Financial Performance

Financial performance is the subjective measure of how well a firm can use assets

from its primary mode of business and generate revenue (Powers, 2010). According to

Kennedy and Macmillan (1986), financial performance is a scientific evaluation of

profitability and financial strength of any business concern. They state further that

financial statements analyses attempt to unveil the meaning and significance of the

items found in profit and loss account and balance sheet. This in turn assists

management in formulation of sound operating and financial policies. According to

Venanci (2012), measures of financial performance include; company‟s total earnings

or profit, share value and growth index. Different methods used to measure financial

performance as indicated by Needles (2011), include; Profitablity – ROI, EBIT, GP

Margins. Growth – Market share growth, Sales growth. Efficiency – ROS, ROE.

2.3.1 Profitability
Profitability involves the capacity to make benefits from all the business operations of

an organization, firm or company (Muya & Gathogo, 2016). Profitability measures

21
extent to which a business generates a profit from factors of production such as labour,

capital and management. Profit is also used as an index for performance measuring of

a business (Ogbadu, 2009).

2.3.2 Liquidity
According to Ross et al. (2009), liquidity refers to the ease and quickness with which

assets can be converted to cash, without significant loss in value. Liquidity is defined

by current ratio. Current ratio is a measure of liquidity calculated by dividing the

firm‟s current assets by its current liabilities (Gitman, 2012). The formula of current

ratio is as follows;

Current Ratio =

According to Fields (2002), a ratio below 1.0 means that current assets are less than

current liabilities, a clear indication that the company has liquidity problems.

2.3.3 Return On Assets

According to Ross et al. (2009), ROA is a measure of profit per dollar of assets. This

implies that it measures the overall effectiveness of management in generating profit

per dollar by relating net income to total assets. Return on Assets indicates how a firm

is in relation to all the company‟s assets (Poznanski et al., 2013). It gives an idea of the

way financial decisions improve the use of an organization‟s resources to generate

revenue. It further indicates efficiency of management of a company in generating net

income from all the resources of the institution (Khrawish, 2011). It is determined by

the following formula;

Return on Assets =

22
2.3.4 Return On Investments
According to Fields (2002), ROI is a financial performance measure that assists an

organization in evaluating whether a proposed investment opportunity is worthwile

within the context of the company‟s business objectives and financial constraints. It is

calculated as follows;

ROI = x 100

A high ROI implies that investments gains compare favourably to investment costs.

2.3.5 Solvency
Jackson et al., (2002), defines solvency of a firm as when the total assets of the firm

are higher than its current liabilities; thus it can pay its debts. Solvency measures the

amount of borrowed capital used by the business relative to the amount of owner‟s

equity capital invested in the business. This implies that solvency measures provide

indication of the business‟ ability to repay all indebtedness if all of the assets were

sold. Such measures also indicate the business ability to withstand risks by providing

information about its ability to continue operating after a major financial adversity.

2.3.6 Operational Efficiency

Operational Efficiency is the extent to which changes in the cash conversion cycle,

operating expenses to sales revenue ratio, operating cashflows, total assets turnover,

total debts to total assets ratio, firm size and operating risk impact the future

performance of the firm (Abuzayed & Molyneux, 2009).

2.4 Uses of Budgetary Controls

Budgetary Control can be viewed as a system of controlling costs which embraces the

preparation of budget, coordinating the departments and establishing responsibility,

comparing actual performance with budgeted and acting upon results to achieve

maximum profitability (Brown & Howard, 2002).

23
2.4.1Budget Planning
A budget provides a detailed plan of action for a business over a definite period of

time. For effective budgetary control, an organization needs to prepare a detailed plan

in both financial and quantitative terms for the coming financial period (Robinson &

Last, 2009). According to Premchand (2004), the first step in budget process is

planning for budget preparation and setting out goals and timelines for its production.

Budgeting in public organizations start from identifying departmental needs by

departmental heads. It is a hierarchial process that starts from each department of an

organization and ends at the apex of the hierarchy. The basic reason for requiring

estimates from subordinates is that higher officials do not have enough detailed

information, time or specialized skills to prepare the plans themselves (Lewis, 2005).

Detailed plans relating to production, sales, raw material requirements, labour needs,

advertising and sales promotion performance, research and development activities,

capital additions among others should be formulated. By planning, many problems are

anticipated long before they arise and solutions sought through careful study thus,

most business emergencies can be avoided. In a nutshell, budgeting forces

management to think ahead, to anticipate and prepare for anticipated conditions.

2.4.2 Budget Coordination

Waren (2011), noted that within an organization, different departments have a bearing

on one another, this therefore makes co-ordination of various executives and

subordinates necessary in achieving budget targets. Budgeting aids managers in

coordinating their efforts so that objectives of the organization as a whole harmonize

with the objectives of its divisions. Effective planning in organization contributes a lot

in achieving coordination. The development of a budgetary control system is an

activity which requires coordinated efforts from different departments and at various

levels. There should be coordination in the budgets of various departments. For

24
example, the budget of sales should be in coordination with budget of production.

Similarly, production budget should be prepared in coordination with the purchases

budget, and so on. To ensure staff become involved and participate in a useful and

meaningful manner, all efforts need to be coordinated. Since different departments are

involved, conflicts are likely to arise. The organization should develop mechanisms to

resolve such conflicts without affecting the basic objectives. Management must ensure

that people actively participate in the budget process. It is only through active

participation that staff feel committed, motivated and encouraged to work towards the

common goals and objectives of an organization.

2.4.3 Budget Control

Controls check whether the plans are being realized and put into effect corrective

measures and determines where deviation or shortfall is occurring (Egan, 2010). Egan

emphasized that without effective controls, an enterprise will be at the mercy of

intenal and external forces that can disrupt its efficiency. According to Koontz et al.

(1979), control is the regulation of work activities in accordance with predetermined

plans, such as to ensure the accomplishment of the organization‟s objectives. Control

operates through standards and also measures the work performance according to these

standards and correct deviations from standards. It presumes that there is a standard or

plan against which performance is compared. Lucey (2003), in support of the above,

opined that control concerns itself with efficient use of resources to achieve a

previously determined objective, or set of objectives contained within a plan. Steps

involved in control include; establishing plan, goal or objective decision rule,

recording of actual performance of activities, creation of a mechanism to compare the

above steps, extraction of variances between the planned and actual performance,

25
investigation of the causes leading to the variances and correcting the variances or

taking appropriate action on the variances.

2.4.4 Staff Motivation

Hansel et al.(2003), suggest that for an effective budget implementation, the budget

plan should be clearer and more accurate, the financial resources readily available and

sufficient, while actively involved staff in the budget making should be motivated to

facilitate successful implementation of the budget process. If employees actively

participate in budget preparation and are convinced that that their personal interests are

closely associated with the success of the organization, they will be motivated to

ensure effective implementation of the budget. Budgets will therefore motivate

workers depending on how management engage them mentally, emotionally and

physically during the budgeting process.

2.4.5 Performance Evaluation

Acoording to Simiyu (2002), evaluation is the process of developing a plan in

cooperation with an evaluation workgroup of stakeholders who foster common

objectives for effective budgetary control. Budgets are the basis of performance

evaluation as they reflect realistic estimates of acceptable and expected performance.

Most managers are interested to know what is expected of them so that they monitor

their own performance. It is more accurate and reliable to measure current

performance against a budget rather than against results of previous year when

conditions might have changed.

2.4.6 Monitoring
Once the budgets have been implemented they need to be monitored and controlled to

ensure effectiveness in aligning budgets over a given period of time (Horngren et al.,

1997). A budget supports a manager‟s efforts to monitor operations, identify variances

26
and enact corrective action if necessary. It allows an evaluation of activities in terms of

contribution to organizational objectives.

2.5 Empirical Literature

Budgetary Control is a management tool used by both public and private entities to

effectively manage their always limited financial resources. According to Jones et al.

(2009), Budgetary Controls in government entities entail financial planning,

controlling, financial evaluation and performance of budgets in order to efficiently

achieve the public finance management goal, on proper allocation as per proposed

budgets.

2.5.1 Global Studies

Hemsing and Baker (2013), carried out a study on effect of Tight Budgetary Control

on Managerial behavior in Swedish Public Sector. They used descriptive survey

design and sampled 62 Managers from different municipalities and Universities in

Sweden. The findings established that majority of local Managers in Swedish Public

Sector experienced tight budgetary controls. The study never captured the effect of

budgetary control uses on an organization‟s financial performance. Therefore there is a

gap in literature in relation to effect of budgetary controls on financial performance of

Public Universities in Kenya which this study sought to explore.

Marcomick and Hardcastle (2011), did a study on relationship between Budgetary

Control and Organizational Performance in government parastatals in Europe. A

sample of 40 government parastatls were selected for the exercise. Secondary data was

used and a period of ten years considered. A regression model was used for data

analysis. The results revealed a positive relationship between Budgetary Control and

Organizational performance of government parastatals. Government parastatals in

Europe and Public Universities in Kenya have different revenue streams, financing

27
methods, systems of operations and objectives. Therefore a gap in literature exists in

relation to effect of budgetary control uses on financial performance of Public

Universities in Kenya which the study seeks to fill.

2.5.2 Regional Studies

Nwoye (2015), sought to study Budgeting and Budgetary Control as the metric for

corporate performance. The methodology adopted in the study was descriptive,

involving the study of budgetary control activities in 30 organizations selected from a

number of States in the Federation, Nigeria. He posited that making efforts to achieve

operational targets and objectives without effective budgeting and budgetary control

measures would be tantamount to a blind pursuit of goals. He opined that great

majority of firms were guilty of preparing initial budgets only to over-shoot the budget

limits during implementation stage due to poor budgetary control measures. The study

advises top management of modern organizations to take budgeting and budgetary

control issues seriously as no appreciable success would be achieved with hapharzard

budgeting and budgetary controls. The study only examined budgeting and budgetary

control and its merit as a predictor of general corporate performance without focusing

on any specific measure of financial performance, a gap which this study sought to fill.

Harelimana (2017), carried out a study on the Effect of Budgetary Control on

Financial Performance of Kigali Serena Hotel in Rwanda. It sought to; assess

techniques of budgetary controls used in Kigali Serena Hotel, analyze the indicators of

financial performance of Kigali Serena Hotel and to establish the relationship between

budgetary control techniques and financial performance indicators in Kigli serena

Hotel. The study adopted analytical research design. The study findings depicted a

positive relationship between Budgeting and Budgetary Control system and Financial

Performance of the Hotel. The study considered both planning and control as measures

28
of budgetary control but left out coordination of activities amongst various

departments which this study included. Besides, Serena Hotel in Rwanda and Public

Universities in Kenya have different revenue streams, financing methods, systems of

operations and objectives. Therefore a gap in literature exists in relation to effect of

budgetary control uses on financial performance of Public Universities in Kenya

which the study sought to fill.

2.5.3 Local Studies

Adongo and Jagongo (2013), did a study which investigated the relationship between

Budgetary Control and Financial performance of State Corporations in Kenya. It

sought to determine the salient features of Budgetary Controls in state corporations,

establish the Human factors within budgetary controls, establish the processof

budgetary control in public organizations and determine the challenges affecting

budgetary controls. A descriptive survey design was used to gather data from

Managers of the sampled state corporations. 14 corporations were selected from a

population of 138 to participate in the study. Purposive sampling was used to selelct

42 corporate services managers, finance managers and budget officers from each

corporation to participate in the study. The findings indicated a positive significant

relationship between budgetary controls and financial performance of state

corporations. The study focused on independent variables such as; human factors

within BC, processes of BC and challenges of BC which are different from those

considered by this study. A literature gap therefore still exists on effect of budgetary

control uses such as Control, Planning and Coordination on Financial Perfomance of

Public Universities in Kenya, that this study explored.

Thuita & Kibati (2016), did a study on the influence of Budget Management Practices

and Controls on Effective Management of Finances in Public Universities in Kenya. It

29
considered campuses within Nakuru town and used exploratory research design.The

study findings revealed that financial performance of Public Universities was

significantly affected by the extent to which budget management practices were

upheld and the financial controls in place. The research focused majorly on Budget

Management Practices and financial controls other than on Budgetary Control uses

and their effect on Financial performance of Public Universities in Kenya which this

study delved in.

Kerosi (2018), sought to determine association between Budgetary Control Practices

and the Management of Micro and Small Enterprises at Kangemi Town in Kenya. A

descriptive survey design was adopted to capture catergorical description of attitudes

of the study population. A sample size of 75 out of 160 registered micro and small

enterprises in Kangemi, Kenya was taken. The study established that management of

micro and small entreprises is positively related to Budgetary Control Practices. There

is a literature gap as independent variables considered never included coordination as a

function under budgetary control which this study did. Besides, it focused on micro

and small enterprises other than on Public Universities in Kenya which have different

financing systems, revenue streams, methods of operations and objectives, a gap this

study explored.

Chirchir and Simiyu (2017), did a study on Influence of Budgetary Control System on

Financial Performance of ALMASI Beverages Group Limited, Kenya. The study

adopted descriptive design and sampled 126 out of a target population of 147, using

purposive sampling technique. The research findings showed a significant influence of

Budgetary control systems on financial performsnce of an organization. There is a

literature gap as the study focused on four variables such as planning, human factors,

resource availability, monitoring and evaluation. Of the variables only planning was
30
considered by this study. Besides, ALMASI beverages has different streams of

revenue sources, operations, systems and objectives from those of Public Universities

in Kenya, promting the need to carry out the study.

Nyongesa et al. (2016), studied the effect of Budgetary Control on Financial

performance of Institutions of Higher Learning in Western Kenya. The study was

conducted in institutions of higher learning in Vihiga, Bungoma, Kakamega and Busia

counties. Finance Officers, Accountants, Bursars and Principals were the respondents.

Descriptive survey design was used in the study with a target population of 109. The

research findings established that budgetary control had a statistically significant effect

on Financial Performance in Public Institutions of Higher Learning. There is a

literature gap as the study looked at budgetary control measures such as; Budget

Process, Projected income, Allocation of funds and Variance Analysis whereas this

study considered budgetary control uses such as; Planning, Coordination and Control

and their effect on Financial performance of Public Universities in Kenya. Besides, the

research considered financial performance measures such as; Expenditure control,

Liquidity and Capital Improvements which are totally different from the ones

considered by this study like; Surplus, Liquidit and ROA.

2.6 Summary of Literature Review

From the available information on previous studies carried out on relationship

between Budgetary Controls and Financial Performance, there is little information on

Budgetary Control uses such as; Planning, Control and Coordination and their effect

on Financial Performance Measures like; Surplus, Liquidity and ROA of Public

Universities which are the gaps this study sought to fill.

31
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction
This chapter discusses the approaches and techniques the researcher used when

collecting data. It presents the research design, sampling, data collection methods,

techniques of data analysis, reliability and validity of research instruments.

3.2 Research Design

A research design refers to the way the study is designed, that is, the method used to

carry out research (Mugenda and Mugenda, 2003). It relates to the overall strategy

chosen to integrate different components of the study in a coherent and logical way,

thereby ensuring the research problem is effectively addressed; it constitutes the

blueprint for the collection, measurement and analysis of data. The study will adopt a

descriptive survey design to capture the categorical description of attitudes of the

study population. A descriptive study is concerned with finding what, where and how

of a phenomenon (Kothari, 2004). According to Sekaran (2003), descriptive studies

often result in formulation of principles of knowledge and solution to significant

problems. Sekaran (2003), further opined that descriptive studies are designed to

obtain current phenomenon and whenever possible to draw varied conclusions from

facts as discussed. Sekaran (2003), asserted that descriptive research design is easy to

understand as it attempts to collect data from population members and describes

existing phenomenon with reference to budgetary controls.

3.3 Study Area

This study was conducted on five Main Public Universities located in Nairobi County.

3.4 Target Population

Lumley (2004), defines a population as a larger collection of all subjects from where a

sample is drawn. Sekran (2003), defines target population as the population in which
32
the researcher wants to generalize the study results. The study was be conducted in

five Main Public Universities located in Nairobi County. These include; University of

Nairobi, Kenyatta University, Multimedia University, Technical University of Kenya

and the Co-operative University of Kenya. The study targeted population comprising

staff in finance departments directly involved in managing University finances such

as; Finance Officers, Deputy Finance Officers, Accountants and Accounts Assistants.

3.4.1Sample Size
The 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.

3.4.2 Sampling Procedure

The research adopted purposive sampling technique. This is a non-probability

sampling technique based on characteristics of population and objectives of the study.

It is also known as judgemental, selective or subjective sampling. It is a sampling

technique in which the researcher relies on his or her own judgement when choosing

members of population to participate in the study. A sample was drawn from each

subgroup from the five main Public Universities and the distribution was as follows;

Table 3.1: Respondent subgroups

Name of University Finance Deputy Accountants/ Accounts

Officer Finance Snr. Assistants
Officers Accountants
Kenyatta University 1 2 3 2
Multimedia University 1 2 3 2
Technical University of Kenya 1 2 3 2
The Co-operative University of Kenya 1 2 3 2
University of Nairobi 1 2 3 2
Total 5 10 15 10

3.5 Data Collection Instruments and Procedure

Data collection tools are the instruments which are used to collect the necessary
information needed to serve or prove facts (Mugenda and Mugenda, 2003). The study
33
used both primary and secondary data techniques. Primary data was collected from the
field by use of semi-structured questionnaires, consisting of both closed and open
ended questions. The structured questionnaire were administered through a drop and
pick later method at an agreed time with the researcher. Dependent variables were
measured using performance indicators from the audited financial information.
Secondary data was used to supplement the data received from questionnaires.

3.5.1 Pilot Testing

The study conducted a pilot study of 10% of respondents (4 respondents) from the
sample population of 40 Finance Staff. Mugenda and Mugenda (2003), observe that
the purpose of pilot study is to assess the clarity of the instruments and the validity and
reliability of each item in the instrument. From the pilot study, the researcher was able
to detect questions which were ambiguous and needed editing and incorporation of
items on demographic information. The pilot testing helped in honing the reseracher‟s
skills before conducting the main research study. Pilot testing too ensured questions
were understood by the respondents and there were no problems with the wording or
measurement.

3.5.2 Validity of Instruments

According to Mugenda and Mugenda (1999), validity is the accuracy and
meaningfulness of inferences, which are based on the research results. It is the degree
to which results obtained from analysis of data actually represent variables of the
study. Content validity showed whether the questions and statements fully represented
every element of the research questions and objectives of the proposed study.
Construct validty on the other hand ensured that the questions and statements were
correctly and clearly stated. To ensure validity, the researcher shared details and
structure of the proposed research instruments with the supervisor and experts in the
field for analysis to crosscheck and affirm that indeed the research instrument would
capture the full concept of the proposed study. Thereafter, the reasearcher made
necessary changes as applicable a longside the results obtained from pilot study.

3.5.3 Reliability of Instruments

Reliability refers to the consistency of measurement (Shanghverzy, 2003). The study
used Cronbach (Alpha – α) model to test reliability of the data. Brown (2002),
indicates that Cronbach‟s alpha reliability coefficient normally ranges between 0 (if no
variance is consistent) and 1 (if all variances are consistent). The closer the coefficient
34
is to 1.0, the greater the internal consistency of the items in the scale. An alpha (α)
score of 0.70 or higher is considered satisfactory (Gliem and Gliem, 2003). The results
of data obtained from pilot study involving 4 respondents representing 10% of the
sample size from JKUAT is outlined in table 3.2 below. The alpha value obtained
compared with the acceptable standard value range of 0.7.

Table 3.2: Reliability Statistics

Cronbach's Alpha N of Items

.783 27
Source: Piolt study data 2019

From table 3.2 above it is evident that the obtained Cronbach alpha value of 0.783 is
above the acceptable standard value of 0.7 hence indicative that the data collection
instrument was likely to yield reliable and valid results.

3.6 Data Analysis Techniques

Raw data obtained from the field were first coded into categories, entered into SPSS,
cleaned for consistency and analyzed using descriptive statistics and presented in
tabular format, depicting frequencies, percentages, regression summary models and
pearson correlation coefficient.

3.6.1 Model Specification

To test the relationship between variables in budgetary control uses, independent
variables and financial performance measures of Public Universities, dependent
variables, the study adopted a linear regression model as follows;

Y = α + β1X1 + β2X2 + β3X3 + -----ɛ

Where;

Y = Financial performance of Public Universties in Kenya

α = Constant term

β1,β2,β3 = Beta coefficients

X1 = Planning

35
X2 = Coordination

X3 = Controlling

ɛ = Standard Error

Independent variables used to measure BC uses of Public Universities in Kenya

included; Planning, Coordination and Control. The basis of the model was to
determine whether Public Universities in Kenya adhered to Budgetary Control
measures in order to realize financial soundness. This was measured using the three
key independent variables involving; Planning, Coordination and Control. Information
was obtained by use of structured questionnaire. Coefficient of determination was used
to establish whether the model is a sound predictor. For test of significance, ANOVA
test was adopted.

3.6.2 Variables, Variable Measurement and Specification

The study used measures of financial performance in Public Universities as dependent
variables. Independent variables used to meaure budgetary controls included;
Planning, Coordination and Control. For the study to realize its objectives,
independent variables were measured using frequency at which budgetary control uses
are implemented for financial soundness of PUK.

3.7 Ethical Considerations

Research ethics constitute beliefs about what is right or wrong, proper or improper,
good or bad in conducting studies (McMillan & Schumacher, 2001). The research
treated information from respondents with utmost confidence without disclosing the
respondents‟ identity and the respondents were given assurance that their responses
would be used solely for the study. Consent was sought from the participants after
being informed of the rationale and nature of the study to ensure voluntary
participation.

36
 CHAPTER FOUR

DATA ANALYSIS AND INTERPRETATION OF RESULTS

4.1 Introduction
This chapter presents the findings, interpretation and discussion of the study. It is

sequenced into five main sections comprising response rate, demographic information

of the respondents, relationship between i) Planning and Financial Performance of

Public Universities in Kenya, ii) Co-ordination and Financial Performance of Public

Universities in Kenya and iii) Control and Financial Performance of Public

Universities in Kenya.

4.2 Response Rate

The study targeted 40 respondents. 38 responses were attained, translating to 95.0%

response rate. This return rate was good enough for the study because Saunders and

Gay (2003) stated that a return rate of more than 50% was acceptable in research.

4.3 Demographic Information of the Respondents

Table 4.1 below summarizes the responses obtained from the question that sought

demographic information of the respondents.

37
Table 4.1: Distribution of Respondents by Demographic Characteristics

Characteristic F %
Job Title
Accounts Assistants 21 55.3
Accountants 17 44.7
Gender
Male 25 65.8
Female 13 34.2
Age bracket
31-40 years 32 84.2
41-50 years 4 10.5
18-30 years 1 2.6
Over 50 years 1 2.6
Level of education
Undergraduate 22 57.9
Postgraduate 15 39.5
Certificate 1 2.6
Terms of employment
Permanent and pensionable 26 68.4
Contract 10 26.3
Temporary 2 5.3
Duration in the current position.
Less than 5 years 27 71.1
5- 10 years 10 26.3
More than 10 years 1 2.6
Years of service in a Public University in Kenya
Less than 5 years 19 50.0
5-10 years 11 28.9
More than 10 years 7 18.4
Not stated 1 2.6
Source: Research Data 2019

Table 4.1 shows that when distributed by job titles, majority (55.3%) of the

respondents were Accountants Assistants while 44.7% were Accountants.

In relation to gender, the table is indicative of majority (65.8%) of the respondents

being males while 34.2% were females. The findings demonstrate efforts by the

universities to comply with affirmative action in employment opportunities.

When distributed by age bracket, the table depicts most (84.2%) of the respondents

were aged between 31-40 years, 10.5% ranged from 41-50 years while 2.6% each

were aged 18-30 years and over 50 years respectively.

38
On education level, the table demonstrates that majority( 57.9%) of the respondents

had attained undergraduate qualifications, 39.5% had postgraduate credentials while

2.6% were certificate holders. The findings signify that most of the respondents had

the requisite competence and knowledge as depicted by their job titles.

When categorized by their terms of employment, the table illustrates that majority

(68.4%) were permanent and pensionable, 26.3% were on contract while 5.3% were

engaged on temporary basis.

With regard to the question that sought information on duration in their current

positions, table 4.1 shows that majority (71.1%) of the respondents stated they had

served for less than 5 years, 26.3% reported 5 to 10 years while 2.6% indicated they

had served for more than 10 years.

Subsequently, when asked how long they had worked in a public university in Kenya,

majority (50.0%) of the respondents reported having spent less than 5 years, 28.9%

stated 5 to 10 years, 18.4% had been working for more than 10 years while 2.6% did

not comment.

4.4 Planning

4.4.1 Duration and Approximate Annual Budgeted Revenue & Expenditure

The respondents were first asked to indicate the period covered by their respective

budgets, then approximate level of annual budgeted revenue and subsequently

approximate annual budgeted expenditure. Their responses are summarized in figure

4.1 below.

39
Figure 4.1 Period, Annual Budgeted Revenue and Expenditure

Period, Annual Budegeted Revenue & Expenditure

42.1%
Annual Budgeted

Over 10 Billion
Expenditure

57.9%
Kshs. 5 to 10 Billion

39.5%
Annual Budgeted

Over 10 Billion
Revenue

60.5%
Kshs. 5 to 10 Billion
Covered by
Budget
Period

100.0%
1 year

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0%

Responses in Percentages
Source: Research Data, 2019

From figure 4.1 above, it is evident that all (100.0%) the respondents reported that

their respective budgets covered a period of 1 year.

With regard to approximate level of annual budgeted revenue, the figure illustrates that

majority (60.5%) of the respondents indicated that their respective universities had

approximate annual budgeted revenue ranging between 5 to 10 Billion while 39.5%

reported Over Kshs. 10 Billion. Similarly, the figure portrays majority (57.9%) of the

respondents reporting that their respective universities had approximate level of

annual budgeted expenditure within the range of Kshs. 5 to 10 Billion while 42.1%

stated over kshs. 10 Billion.

40
4.4.2 Budget Planning Process
When asked to indicate their level of agreement /disagreement with the statements

relating to budget planning aspects, the responses obtained are summarized in table

4.2.

Table 4.2. Level of Agreement/Disagreement with Budget Planning

Statements

Statements on budget Planning Aspect %

Agreement/Disagreement
A SA NS D
Each department of the University prepares budget 81.6 10.5 5.3 2.6
plans prior to budget periods.
The University has both short and long term budget 68.4 15.8 13.2 2.6
plans.
The University incorporates both development and 60.5 26.3 10.5 2.6
recurrent plans in their budgets.
The University‟s budget at planning level factors in the 60.5 23.7 13.2 2.6
priorities of different departments.
Source: Research Data 2019

Table 4.2 above shows that most (92.1%, 84.2%, 86.8%, 84.2%) of the respondents

confirmed that; each department in their respective universities prepare budget plans

prior to budget periods, the universities had both short and long term budget plans,

they incorporate both development and recurrent plans in their budgets and that their

budgets at planning level do factor in priorities of different departments, 5.3%, 13.2%

each and 10.5% were not sure while 2.6% respectively disagreed this was not the case.

These findings demonstrates a general consensus among the respondents with regard

to involvement of departments in preparation of budget plans prior to budget periods,

formulation of both of short and long term budget plans, incorporation of both

development and recurrent plans and considers priorities of different departments

during budget planning process.

41
4.5 Budget Control Process

4.5.1 Frequency of Budget Review

Figure 4.2 below summarizes that responses obtained from the question that sought

information on how often the budgets were reviewed.

Figure 4.2 Budget Review Timelines

Budget Review Intervals

100.0% 94.8%
90.0%
80.0%
70.0%
Response in %

60.0%
50.0%
40.0%
30.0%
20.0%
10.0% 2.6% 2.6%
0.0%
Quarterly Annually Bianually
Review Interval

Source: Research Data, 2019

From figure 4.2, it is evident that most (94.8%) of the respondents reported their

budgets were reviewed on quarterly basis while 2.6% each stated annualy and

biannually respectively.

42
4.5.2 Level of Agreement/Disagreement with Budget Control Statements
Table 4.3 Level of Agreement/Disagreement with Control Statements

Statement on Budget Control Activity %

Agreement/Disagreement
A SA NS D
There exists a budgetary committee that periodically 81.6 13.2 2.6 2.6
meets to review budget performance
The Institution has budget policies that help in 76.3 13.2 7.9 2.6
monitoring budget spending limits.
The institution periodically prepares reports for budget 68.4 18.4 10.5 2.6
performance evaluation
At end of budget cycle, the institution compares actual 63.2 15.8 18.4 2.6
and budgeted performance and tabulates variances.
The Institution‟s adverse budget deviations are reported 55.3 26.3 15.8 2.6
to budget committee if one exists
The Institution takes corrective action to address adverse 47.4 26.3 23.7 2.6
variances reported.
Source: Research Data 2019

Table 4.3 above shows that most (94.8%,89.5%,86.8%,79.0%) of the respondents

were respectively in agreement with regard to; existence of budgetary committees that

periodically meet to review budget performance, the institutions having budget

policies that help in monitoring budget spending limits, periodically prepare reports

for budget performance evaluations and do compare actual and budgeted

performance, tabulating variances at the end of the budget cycle. A further 2.6%,

7.9%,10.5% and 18.4% respectively were not sure while 2.6% each reported this was

not the case.

Similarly, majority (71.1% and 73.7%) of the respondents agreed that their

institutions‟ adverse budget deviations are reported to Budget Committees and

corrective actions taken to address the adverse effects respectively, 26.3% and 23.7%

were not sure while 2.6% each did not comment.

43
4.6 Budget Coordination Process
Table 4.4 Level of Agreement/Disagreement with Coordination Statements

Statements on Coordination Aspects %

Agreement/Disagreement
A SA NS D
The University harmonizes budgets of various 65.8 26.3 5.3 2.6
departments.
The University‟s Finance Office is responsible for 60.5 31.6 5.3 2.6
centralized control over the budget process, who must
work closely with Senior Management and departmental
heads.
The budgetary process communicates to staff what is 73.7 13.2 10.5 2.6
expected of them as it allows for a consensus of ideas,
strategies and direction.
Within the institution there is some level of 60.5 23.7 13.2 2.6
interdependence between departments and activities
considered in the budget
Source:Research Data, 2019
Table 4.4 depicts that most respondents (92.1%, 92.1%, 86.8% and 84.2%)

respectively affirmed that; their universities harmonizes budgets of various

departments, Finance Office is responsible for centralized control over the budget

process and closely works with Senior Management and departmental heads, the

budgetary process communicates to staff what is expected of them as it allows for a

consensus of ideas, strategies and direction in addition to there being some level of

interdependence between departments and activities considered in the budget,

respectively; 5.3%,5.3%, 10.5%,13.5% were not sure whether this was the case while

2.6% each did not comment.

4.7 Relationship between Planning and Financial Performance of Public

Universities
Table 4.5 Model Summary for Planning
R R Adjusted R Std. Error of the Change Statistics
Square Square Estimate R Square F Change df1 df2 Sig. F
Change Change
.525a .276 .212 .676 .276 4.312 3 34 .011
a. Predictors: (Constant), Planning Activities
Source: Resaerch data 2019.

44
Table 4.5 above shows existence of correlation between planning and financial

performance of public universities as indicated by R value of 0.525 which is greater

than 0 hence signifying a positive association. Thus as the value of budget planning

activies attributes increases, there is a corresponding increase in financial performance

of public universities in Kenya. The R value is also closer to half of 1 hence an

indication of a moderate positive association between budget planning process

activities and financial performance of the institutions.

Table 4.6 Pearson Correlation Cofficientsa for Budget Planning Process

Model for budet planning Unstandardized Standardize t Sig. Correlatio Collinearity
Coefficients d ns Statistics
Coefficients
B Std. Beta Zero-order VIF
Error
(Constant) 3.698 .813 4.549 .000
11. What is your approximate -.575 .223 -.377 - .014 -.396 1.005
level of annual budgeted 2.580
expenditure?
c. The University .389 .194 .352 2.012 .052 .366 1.439
incorporates both
1
development and recurrent
plans in their budgets.
d. The University's budget at -.014 .192 -.012 -.071 .944 .207 1.441
planning level factors in the
priorities of different
departments.
a. Dependent Variable: Financial performance of Public Universities.
b. Independant variable: Budget Planning Process
Source: Resaerch data 2019.

Table 4.6 above shows that t value of 4.549 is greater than 1.92 signfying a general

positive effect of budget Planning activities on Financial Performance of Public

Universities in Kenya as does the p value, 0.000< alpha value of 0.05 (confidence

level at 95%), an indication that there is sufficient evidence to confirm existence of

significant relationship between budget Planning and Financial performance of Public

Universities in Kenya. This is further corroborated by the positive zero orders of

45
0.207 and 0.366 relating to; the University incorporating both development and

recurrent plans in their budgets.and the University's budget at Planning level factors in

the priorities of different departments respectively, confirming that an increase in the

variables will result in a corresponding increase in Financial Performance of the

universities and vise versa. Despite the negative Z-order (-0.396) for approximate

level of annual budgetted expenditure, the observed aggregate positive effect is thus

attributable to the weak multicollinearity among the variables that tend to

overshadow the negative effects as depicted by Variance Inflation Factors (VIF)

ranging from 1.005 to 1.441. Organizations should therefore adopt Planning as a tool

under Budgetary Control as the above results envince a positive significant

relationship between Budget Planning and Financial Performance of Public

Universities. This differed from the study carried out by Nwoye (2015), who studied

Budgeting and Budgetary Control as metric for corporate performance with no focus

on Planing as Budgetary Control tool.

4.8 Association between Co-ordination and Financial Performance of Public

Universities
Table 4.7 Model Summary for Co-ordination

R R Adjusted Std. Error of Change Statistics

Square R Square the Estimate R Square F Change df1 df2 Sig. F
Change Change
.506a .256 .214 .676 .256 6.023 2 35 .006

a. Predictors: (Constant), Coordination Activities

Source: Research data 2019.

Table 4.7 above illustrates there being association between budget Coordination and

Financial performance of public universities as depicted by R value of 0.506 which is

greater than 0, signifying a positive association. It can thus be deduced from these

findings that an increase in Budget Coordination activities variables is likely to cause

46
 a correspondending positive effect in the Financial Performance of public universities.

The association between the variables is moderate since R is closer to mid 1.

Table 4.8 Pearson Correlation Cofficientsa for Budget Coordination Process

Model for budget Coordination Unstandardized Standardized t Sig. Correlatio Collinearit

process Coefficients Coefficients ns y Statistics
B Std. Beta Zero-order VIF
Error
(Constant) 1.438 .614 2.343 .025
a)The University harmonizes budgets .180 .222 .150 .809 .424 .398 1.629
for various departmentss
b. The University's Finance Office is .457 .213 .399 2.142 .039 .492 1.629
responsible for centralized control over
budget process, who must work closely
with Senior management and
Departmental Heads
a. Dependent Variable: 16. Planning, budgeting and coordination generally improves financial performance of an
organization.

Source: Resaerch data, 2019.

Table 4.8 above illustrates t value of 2.343 as greter than than 1.92 signfying a general

positive effect of budget Coordination activities on financial performance of public

universities in Kenya which is further exhibited by the p value, 0.025< alpha value of

0.05 (confidence level at 95%), an indication that there is sufficient evidence to

confirm existence of significant relationship between Budget Coordination and

Financial Performance of Public universities in Kenya. This is further validated by the

positive zero orders ranging from .398 to .492, hence an increase in the variables will

result in a corresponding increase in Financial Performance of the universities and

vise versa. Besides, the VIF of 1.629 indicates weak multicollinearity among the

variables hence each seems to have an independent effect on Financial Performance

as earlier shown by the moderate positive association, R value of the model summary.

Organizations should therefore adopt Coordination as a tool under Budgetary Control

as the above results depict a positive significant relationship between Cordination and
47
Financial Performance of Public Universities. This differed from the study carried out

by Hemsing and Baker (2013) who studied the Effect of Budgetary Control in

Swedish Public Sector but never explored Effect of Budgetary Control Uses on

Financial Performance of an organization.

4.9 Relationship between Control and Financial Performance of Public

Universities
Table 4.9 Model summary for Control

R R Square Adjusted Std. Error of Change Statistics

R Square the Estimate R Square F Change df1 df2 Sig. F
Change Change

.253a .064 -.018 .769 .064 .777 3 34 .515

a. Predictors: (Constant), Control Activities

Source: Research data, 2019

Table 4.9 above demonstrates an association between Budget Control and Financial

Performance of Public universities as shown by R value of 0.253 which is greater than

0, signifying a positive association, albeit a weak one. These findings evince that an

increase in budget control variables is likely to cause a correspondending weak

positive effect in the Financial Performance of Public Universities.

48
 Table 4.10 Pearson Correlation Cofficientsa for Budget Control Process

Model for budget Control Unstandardiz Standardiz t Sig. Correlatio Collineari

ed ed ns ty
Coefficients Coefficient Statistics
s
B Std. Beta Zero-order VIF
Error
2.35 .805 2.92 .00
(Constant)
3 4 6
a) There exists a Budgetary .262 .299 .178 .877 .38 .209 1.493
Committee that periodically meets 7
to review budget perfoormance?
1c) The Institution periodically - .262 -.039 - .86 .141 1.736
prepares reports for budget .046 .177 0
performance evaluation
f). The Institution takes corrective .155 .184 .161 .844 .40 .201 1.319
action to address adverse 5
variances reported.
a. Dependent Variable: Financial Performance of Public Universities.
b. Independent Variable: Budgetary Control activities.
Source: Research data, 2019

Table 4.10 above envinces t value of 2.924 to be greater than 1.92, signfying a general

positive effect of Budget Control activities on Financial Performance of public

universities in Kenya, with p value, 0.006< alpha value of 0.05 (confidence level at

95%), an indication that there is sufficient evidence to confirm existence of a

significant relationship between Budget Control process and Financial Performance of

public universities in Kenya. This is further validated by the positive zero orders for

all the three variables namely; existence of a Budgetary Committee that periodically

meets to review budget performance, the institution periodically prepares reports for

budget performance evaluation and the institution takes corrective action to address

adverse variances (0.209,0.141, 0.201) respectively, thus an increase in the variables

is likely to yield a corresponding increase in Financial Performance of the universities

and vise versa. It is also noteworthy that the aggregate positive effect depicted is

corroborated by the weak multicollinearity among the variables as shown by values

49
ranging from 1.319 to 1.736 which is in line with the findings on model summary, R

value that had signified a weak association. Organizations should therefore adopt

Control as a tool under Budgetary Control as the above results illustrate a positive

significant relationship between Control and Financial Performance of Public

Universities. This differed from the study carried out by Thuita and Kibati (2016),

who studied Budget Management Practices and Controls on Effective Management of

Public Universities in Kenya which maily focused on Budget management practices

and financial controls rather than on Budgetary Control Practices.

4.10 Regression Equation

Y = α + β1X1 + β2X2 + β3X3 + ɛ

Y= β0 + β 1X1+ β 2X2
Y= 3.698(-0.639) + 1.438(1.475) + 2.353 (0.514)
= -2.363+ 2.121+ 1.209
= 0.967
The equation above depicts a value of 0.967 thus it is deducable from findings that an

increase in independent variables (budegt Planning, Coordination and Control) by a

unit value of 0.967 will result in a corresponding effect in Financial Performance of

the public university and vice versa.

From the foregoing all the p values denoted as (sig) of 0.000, 0.025 and 0.006 for

Budget Planning, Budget Coordination and Budget Control respectively are less than

the alpha value of 0.05 (confidence level of 5%). The following conclusions can thus

be made in relation to the three null hypotheses assumed under chapter one sub

section 1.4;

Reject the null hypothesis and accept the alternative hypothesis that states: There is a

significant relationship between Budget Planning and Financial Performance of Public

Universities in Kenya.

50
Reject the null hypothesis and accept the alternative hypothesiss that states: There is a

significant relationship between Budget Coordination and Financial Performance of

Public Universities in Kenya.

Reject the null hypothesis and accept the alternative hypothesis that states: There is a

significant relationship between Budget Control and the Financial Performance of

Public Universities in Kenya.

From the foregoing, it is evident that indeed there exists a significant relationship

between budget Planning, Coordination, Control and Financial Performance of Public

Universities in Kenya.

51
 CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction
This section presents the summary arising from the foregoing results, conclusions

based on the research objectives and the recommendations of the study.

5.2 Summary of the findings

5.2.1 Response Rate

The study targeted 40 respondents out of which 38 responses were received,

translating to 95.0% response rate.

5.2.2 Demographic Information of the Respondents

When distributed by job titles, majority (55.3%) of the respondents were Accounts

Assistants while 44.7% were Accountants, thus all respondents were accountants.

In relation to gender, majority (65.8%) of the respondents were males while 34.2%

were females, an indication of compliance with affirmative action in employment

opportunities.

Most (84.2%) of the accountants were aged between 31-40 years.

On education level, majority (57.9%) of the respondents had attained undergraduate

qualifications, 39.5% had postgraduate credentials. It is deducable that most of the

respondents had the requisite competence and knowledge as depicted by their job

titles.

When categorized by their terms of employment, majority (68.4%) were permanent

and pensionable, 26.3% were on contract while 5.3% were engaged on temporary

basis. With regard to duration in their current positions, majority (71.1%) of the

respondents reported they had served for less than 5 years, 26.3% had worked for 5 to

10 years while 2.6% indicated they had served for more than 10 years. Subsequently,

majority (50.0%) of the respondents reported having spent less than 5 years of work
52
experience in public universities in Kenya, 28.9% stated 5 to 10 years, 18.4% had

been working for more than 10 years.

5.2.3 Planning

5.2.3.1 Duration and Approximate Annual Budgeted Revenue & Expenditure

All the respondents reported their respective budget coverage as a period of 1 year.

With regard to approximate level of annual budgeted revenue, majority (60.5%) of the

respondents indicated that their respective universities had approximate annual

budgeted revenue ranging from 5 to 10 Billion while 39.5% reported Over Kshs. 10

Billion. Similarly, majority (57.9%) of the respondents reported that their respective

universities had approximate level of annual budgeted expenditure within the range of

Kshs. 5 to 10 Billion while 42.1% stated over kshs. 10 Billion.

5.2.3.2 Budget Planning Process

Most (92.1%, 84.2%, 86.8%, 84.2%) of the respondents confirmed that; each

department in their respective universities prepare budget plans prior to budget

periods, the universities had both short and long term budget plans, they incorporate

both development and recurrent plans in their budgets, budgets at planning levels do

factor in priorities of different departments. These findings demonstrate a general

consensus among the respondents with regard to involvement of departments in

preparation of budget plans prior to budget periods, formulation of both short and

long term budget plans, incorporation of both development and recurrent plans and

consideration of priorities of different departments during budget planning process.

5.2.4 Budget Control Process

5.2.4.1 Frequency of Budget Review

Most (94.8%) of the respondents reported their budgets to be reviewed on quarterly

basis which is in tandem with performance contracting reporting cycles undertaken on

53
quarterly basis. Most (94.8%,89.5%,86.8%,79.0%) of the respondents were also in

agreement that there is existence of budgetary committees that periodically meet to

review budget performance, the institutions have budget policies that help in

monitoring budget spending limits, periodically prepare reports for budget

performance evaluations and they do compare actual and budgeted performance and

tabulates variances at the end of the budget cycle. Similarly, majority (71.1% and

73.7%) of the respondents reported that their institutions‟ adverse budget deviations

are reported to Budget Committees and corrective actions are taken to address the

adverse effects respectively while 26.3% and 23.7% were not sure.

5.2.5 Budget Coordination Process

5.2.5.1 Level of Agreement/Disagreement with Coordination Statements

Most (92.1%, 92.1%, 86.8% and 84.2%) respectively affirmed that their universities;

harmonize budgets of various departments, Finance Offices are responsible for

centralized control over the budget process and closely work with Senior Management

and departmental heads, the budgetary processes communicate to staff what is

expected of them as it allows for a consensus of ideas, strategies and direction in

addition to there being some level of interdependence between departments and

activities considered in the budget

5.2.6 Relationship between Planning and Financial Performance of Public

Universities
Regression model summaries for the independent variable confirmed existence of a

moderate positive correlation between Planning and Financial Performance of Public

Universities as indicated by R value of 0.525 which is greater than 0 and closer to 1.

54
5.2.7 Association between Co-ordination and Financial Performance of Public
Universities
There is a moderate positive association between budget Coordination and Financial

Performance of Public Universities as depicted by R value of 0.506 signifying that an

increase in Budget Coordination activities variable is likely to cause a

correspondending positive effect on the Pinancial Performance of Public Universities.

5.2.8 Relationship between Control and Financial Performance of Public

Universities
There is a weak positive association between budget Control and Financial

Performance ofPpublic Universities as shown by R value of 0.253. These findings

evince that an increase in budget Control activities variable is likely to cause a

correspondending weak positive effect on the Financial Performance of Public

Universities.

5.2.9 Pearson Correlation Cofficientsa for Budget Planning Process

The t values of 4.549 is greater than 1.92, signfying a general positive effect of budget

Planning activities on Financial Performance of Public Universities in Kenya which is

consistent with the p value, 0.000< alpha value of 0.05 (confidence level at 95%) an

indicator there is sufficient evidence to confirm existence of significant relationship

between budget Planning and Financial Performance of Public Universities in Kenya.

The positive zero orders of 0.207 and 0.366 relating to the universities incorporating

both development and recurrent plans in their budgets.and the University's budget at

Planning level factoring in priorities of different departments respectively confirms

that an increase in the variables will result in a corresponding increase in financial

performance of the Universities and vise versa. Despite the negative Z-order (-0.396)

for approximate level of annual budgetted expenditure, the observed aggregate

positive effect is thus attributable to the weak multicollinearity among the variables

55
that tend to overshadow the negative effects as depicted by Variance Inflation Factors

(VIF), ranging from 1.005 to 1.441.

5.2.10 Pearson Correlation Cofficientsa for Budget Coordination Process

The t value of 2.343 is greater than than 1.92 signfying a general positive effect of

budget Coordination activities on Financial Performance of Public Universities in

Kenya which is further exhibited by the p value, 0.025< alpha value of 0.05

(confidence level at 95%) a pointer that there is sufficient evidence to confirm

existence of significant relationship between budget Coordination and Financial

Performance of Public Universities in Kenya as further exemplified by the positive

zero orders ranging from .398 to .492 hence an increase in the variables will result in

a corresponding increase in financial performance of the universities and vise versa.

Besides, the VIF of 1.629 indicates weak multicollinearity among the variables hence

each seems to have an independent effect on financial performance as earlier shown

by the moderate positive association, R value of the model summary.

5.2.11 Pearson Correlation Cofficientsa for Budget Control Process

The t value of 2.924 is greater than 1.92 signfying a general positive effect of budget

Control activities on Financial Performance of Public Universities in Kenya, with the

p value, 0.006< alpha value of 0.05 (confidence level at 95%) an indication that there

is sufficient evidence to confirm existence of a significant relationship between

budget Control process and Financial Performance of Public Universities in Kenya.

This is further validated by the positive zero orders for all the three variables namely;

existence of a Budgetary Committees that periodically meet to review budget

performance, the institutions periodically prepare reports for budget performance

evaluation and; the institutions take corrective action to address adverse variances

(0.209,0.141, 0.201) respectively, thus an increase in the variables is likely to yield a

56
corresponding increase in Financial Performance of the Universities and vise versa. It

is also noteworthy that the aggregate positive effect depicted is corroborated by the

weak multicollinearity among the variables as shown by values ranging from 1.319 to

1.736 which is in line with the findings on model summary, R value that had signified

a weak association.

5.3 Conclusions
The following conclusions can be drawn from the foregoing summary in line with the

research study objectives and the three null hypotheses assumed under chapter one,

sub section 1.4;

i. Reject the null hypothesis and accept the alternative hypothesis that states:

There is a significant relationship between Budget Planning and Financial

Prformance of Public Universities in Kenya.

ii. Reject the null hypothesis and accept the alternative hypothesis that states:

There is significant assiciation between Budget Coordination and Financial

Performance of Public Universities in Kenya.

iii. Reject the null hypothesis and accept the alternative hypothesis that states:

There is significant association between Budget Control and Financial

Performance of Public Universities in Kenya.

5.4 Policy Recommendations

Budgetrary Control helps enhancing Financial Performance as it compares budget

targets with actual performance and adverse deviations thereof are corrected in time.

This enables introduction of Management by objectives with its inherent benefits.

Planning is an important aspect of budgetary control that enables management to look

ahead, set targets, anticipate problems and give the organization purpose and direction.

Control regulates activities in accordance with predetermined plans, such as to ensure

57
the accomplishments of the organization‟s objectives. For attainment of financial

objectives, there should be sound coordination in the budget activities of various

departments. Budgetary Control uses therefore have positive effects on Financial

Performance of Public Univesities thus should be adopted to the letter.

5.5 Recommendations for Further Research

From literature reviewed, few studies have been carried out on Effect of Budgetary

Control Uses on Financial Performance of Public Universities in Kenya. Related

research studies should be carried out on Private organizations with profit orientation

as this study only delved in Public Universities in Kenya. In future similar studies

should be carried out in both public and private entities in Kenya as Budgetary

Control is a vital financial control tool for all organizations.

58
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 APPENDICES

APPENDIX I: LETTER OF INTRODUCTION

Bornface Otieno,
MASENO UNIVERSITY,
KISUMU CITY CAMPUS

Dear Respondent,

RE: DATA COLLECTION

I am a student at Maseno University, pursuing a Degree in Master of Science,
Finance Option. Currently I undertake a research study on “Effect of Budgetary
ControlUses on FinancialPerformance of Public Universities in Nairobi County,
Kenya”. You have been selected to participate in this study and I would greatly
appreciate your assistance by responding to the questionnaire as correctly,
completely and honestly as possible. Your responses will be treated withutmost
confidentiality and strictly used for intended academic purposes.
Thanks in advance for your cooperation.
Yours Faithfully,

BORNFACE OTIENO

67
 APPENDIX II: QUESTIONNAIRE

SECTION A: DEMOGRAPHIC INFORMATION

1. What is your job title?
a) Finance Officer [ ]
b) Deputy Finance Officer [ ]
c) Accountant/ Snr. Accnt [ ]
d) Accounts Assistant [ ]
2. Please indicate your gender;
a) Male [ ]
b) Female [ ]
3. What is the name of your University?------------------------------
4. Please indicate your age bracket;
a) Between 18 and 30 years [ ]
b) Between 31 and 40 years [ ]
c) Between 41 and 50 years [ ]
d) Over 50 years [ ]
5. What is your highest level of education?
a) Certificate [ ]
b) Diploma [ ]
c) Undergraduate [ ]
d) Postgraduate [ ]
6. What are your terms of employment?
a) Permanent and Pensionable [ ]
b) Contract [ ]
c) Temporary [ ]
d) Other:--------------------------- [Specify]
7. What duration have you taken in current position?
a) Less than 5 years [ ]
b) Between 5 and 10 years [ ]
c) More than 10 years [ ]
8. How long have you worked in a Public University in Kenya?

68
 a) Less than 5 years [ ]
b) Between 5 and 10 years [ ]
c) More than 10 years [ ]

SECTION B: PLANNING
9. Please indicate the period covered by your budget;
a) Less than 1 year [ ]
b) I year [ ]
c) More than 1 year [ ]
10. What is your approximate level of annual budgeted revenue?
a) Less than Kshs. 5 Billion [ ]
b) Between Kshs. 5 and 10 Billion [ ]
c) Over Kshs. 10 Billion [ ]
11. What is your approximate level of annual budgeted expenditure?
a) Less than Kshs. 5 Billion [ ]
b) Between Kshs. 5 and 10 Billion [ ]
c) Over Kshs. 10 Billion. [ ]
12. Please tick the following statements by indicating your level of agreement
with the listed activities as; (i) Disagree (ii) Not Sure (iii) Agree (iv)
Strongly Agree
Statements (i) (ii) (iii) (iv)
a) Each department of the University prepares budget
plans prior to budget periods.
b) The University has both short and long term budget
plans.
c) The University incorporates both development and
recurrent plans in their budgets.
d) The University‟s budget at planning level factors in
the priorities of different departments.

SECTION C: CONTROL
13. How often is your budget reviewed?
a) Annually [ ]
b) Biannually [ ]
c) Quarterly [ ]
d) None [ ]

69
 14. Please tick the following statements by indicating your level of agreement
with the listed activities as; (i) Disagree (ii) Not Sure (iii) Agree (iv)
Strongly Agree

Statements (i) (ii) (iii) (iv)

a) There exists a budgetary committee that
periodically meets to review budget performance
b) The Institution has budget policies that help in
monitoring budget spending limits.
c) The institution periodically prepares reports for
budget performance evaluation
d) At end of budget cycle, the institution compares
actual and budgeted performance and tabulates
variances.
e) The Institution‟s adverse budget deviations are
reported to budget committee if one exists
f) The Institution takes corrective action to address
adverse variances reported.

SECTION D: COORDINATION
15. Please tick the following statements by indicating your level of agreement
with the listed activities as; (i) Disagree (ii) Not Sure (iii) Agree (iv)
Strongly Agree
Statements (i) (ii) (iii) (iv)
a) The University harmonizes budgets of various
departments.
b) The University‟s Finance Office is responsible for
centralized control over the budget process, who
must work closely with Senior Management and
departmental heads.
c) The budgetary process communicates to staff what
is expected of them as it allows for a consensus of

70
 ideas, strategies and direction.
d) Within the institution there is some level of
interdependence between departments and
activities considered in the budget

Thanks for your participation

71
 APPENDIX III: MEASURES OF PERFORMANCE SHEDULE

UNIVERSITY SURPLUS/ LIQUIDITY ROA

(DEFICIT)

6,251,063,719.67 0.89 0.05

Kenyatta University

1.25 (0.20)
(315,347,000.00)
Multimedia University

0.29 (0.07)
(430,102,343.00)
Technical University of Kenya

0.58 (0.00)
1,783,739.00
The Co-operative University of
Kenya
258,657,862.33 1.94 2.48
University of Nairobi

Source: Research data, 2019

72
 APPENDIX IV: PROPOSED BUDGET

ITEM QUANTITY UNIT COST

COST KSHS.
KSHS.
Stationery 3,000
Printing 3,000
Photocopy 3,000
Internet 6,000
Travelling and Accommodation 3 10,000 30,000
Research Assistants 2 10,000 20,000
Contingencies 10,000
TOTAL 75,000

73
 APPENDIX V: RESEARCH SCHEDULE

Time Period 208 2019

Nov Dec Jan Feb Mar Aprl May Jun Jul Aug Sep Oct
Activity
Topic Selection
Developing
and Defending
Concept Paper
Proposal
Writing
Proposal
Defense and
Corrections
Field Study
Data Analysis
Project
Writing
Project
Defense,
Corrections
and
Submission

74
 APPENDIX VI: LIST OF PUBLIC UNIVERSITIES IN KENYA
(Source: Commssion For University Education, Kenya)

S/N University Year of Year of

o. Establishment Award of
Charter
Public Chartered Universities
1. Chuka University 2007 2013
2. Dedan Kimathi University 2007 2012
3. Egerton University 1987 2013
4. Garissa University 2011 2017
5. Jaramogi Oginga Odinga University of Science and 2009 2013
Technology
6. Jomo Kenyatta University of Agriculture and 1994 2013
Technology
7. Karatina University 2010 2013
8. Kenyatta University 1985 2013
9. Kibabii University 2011 2015
10. Kirinyaga University 2011 2016
11. Kisii University 2007 2013
12. Laikipia University 2009 2013
13. Maasai Mara University 2008 2013
14. Machakos University 2011 2016
15. Maseno University 2001 2013
16. Masinde Muliro University of Science and Technology 2007 2013
17. Meru University of Science and Technology 2008 2013
18. Moi University 1984 2013
19. Multimedia University of Kenya 2008 2013
20. Muranga University of Technology 2011 2016
21. Pwani University 2007 2013
22. Rongo University 2011 2016
23. South Eastern University of Kenya 2008 2013
24. Taita Taveta University 2011 2016
25. Technical University of Kenya 2007 2013
26. Technical University of Mombasa 2007 2013
27. The Co-operative University of Kenya 2011 2016
28. University of Eldoret 2010 2013
29. University of Embu 2011 2016
30. University of Kabianga 2009 2013
31. University of Nairobi 1970 2013
Public Constituent Colleges
32. Alupe University 2015
33. Bomet University College 2017
34. Kaimosi Friends University College 2015
35. Tharaka University College 2017
36. Tom Mboya University College 2016
37. Turkana University College 2017

75
Main Public Universities located within Nairobi County
(Source: Commission for University Education, Kenya)
1. Kenyatta University
2. Multimedia University
3. Technical University of Kenya
4. The Co-operative University of Kenya
5. University of Nairobi

76
 APPENDIX VII: GAPS FROM REVIEWED LITERATURE

The table below illustrates gaps from reviewed literature;

Author/year Title Methodology Findings Identified Gaps

Hemsing & Effect of Descriptive Majority of Never captured the effect of
Baker Budgetary approach. local managers budgetary control on
(2013) Control on Sampled 62 in Swedish organization‟s financial
Managerial Managers public sector performance.
Behaviour in from different experienced
Swedish Public municipalities tight budgetary
Sector. and control
universities in
Sweden.
Nwoye Budgeting and Descriptive There is a Examined Budgeting and
(2015) Budgetary approach, positive BC and its merit as a
Control as the sample of 30 relationship predictor of general
Metric for organizations. between corporate performance
Corporate Budgeting and without focusing on any
Performance Budgetary specific measure of financial
Control and performance.
Financial
Success of an
organization.
Harelimana The Effect of Analytical There was a Under independent
(2017) Budgetary Research positive variables, left out
Control on design. relationship Coordination which is one of
Financial between the core functions of BC
Performance of Budgetary systems.
Kigali serena Control System
Hotel in and Financial Serena Hotel in Rwanda and
Rwanda. performance of Public University in Kenya
the Hotel have different revenue
streams, systems of
operations and objectives.
Adongo & Budgetary Descriptive Budgetary Looked at independent

77
Jagongo Control as a survey Control process variables such as; human
(2013) Measure of design. exhibited a factors within BC, Process
Financial Sample of 14 positive of BC and Challenges of BC
Performance of corporations significant which are different from this
State from 138 influence on study.
Corporations population financial
in Kenya performance of
state
corporations.
Thuita & Budget Explanatory Financial Delved majorly on Budget
Kibati Management Research Performance of Management practices and
(2016) Practices and Design. Public Financial Controls rather
Controls on Sample of 76 Universities than on Budgetary Control
Effective from target was Uses.
Management population of significantly
of Finances in 328. affected by the
Public extent to which
Universities in budget
Kenya management
practices were
upheld and
financial
controls in
place.
Kerosi Analysis of Descriptive Management of Independent variables never
(2018) Budgetary Survey Micro and included coordination as a
Control design. Small function under BC. Besides,
Practices and Sample size enterprises is it only focused on the effect
the of 75 out of a positively of BC variables on Micro
Management population of related to the and Small Enterprises other
of Micro and 160 Budgetary than on Public Universities
Small registered Control which have different systems
Enterprises at micro and Practices. of operations and objectives.
Kangemi small
Town in enterprises in
Kenya Kangemi,

78
 Kenya.

Chirchir & Influence of Descriptive There existed Focused on four variables

Simiyu Budgetary statistics. significant such as planning, human
(2017) Control Sample size influence of BC factors, resource availability,
System on of 126 from systems on monitoring and evaluation.
financial population of Financial Of the variables, only
Performance of 147. Performance of planning is captured in this
ALMASI Purposive the study. Besides, ALMASI
Beverages sampling organization beverages has different
Group adopted. streams of revenue sources,
Limited, operations and systems
Kenya. compared to Public
Universities in Kenya.
Nyongesa et Budgetary Descriptive Budgetary Looked at BC measures such
al, (2016) Control and Survey Conrol has a as Budget Process, Projected
Financial Design with a statistically Income, Allocation of funds
Performance of target significant and VA whereas this study
Institutions of population of effect on considers BC uses such as
Hogher 109. Financial Planning, Coordination and
Learning in Performance in Control.
Western Public
Kenya. Institutions of
Higher
Learning.

79