EFFECT OF FINANCIAL MANAGEMENT PRACTICES ON BUDGET IMPLEMENTATION OF COUNTY GOVERNMENTS: A CASE OF MACHAKOS COUNTY

Abstract

This study sought to establish the effect of financial management practices on budget implementation of county Governments in Kenya. It was conducted in Machakos County. The researcher was guided by four specific objectives that aimed at determining the extent to which regulation, accounting systems, financial management and budget planning affect budget implementation in the county. The study adopted a descriptive research design. It targeted a population of 100 employees based at the county headquarters and charged with budget preparation and implementation. A sample of 30% of the total population, grouped into three categories of top management, middle level employees and low level employees was drawn using simple random sampling. Three different data collection tools were employed to collect both primary and secondary data. A structured questionnaire and interview schedule were used to collect primary data while a data collection guide was used for secondary data. A pilot test was conducted on 10% of the sample to test the tools. Data analysis was done using SPSS software version 20. Results showed that budget laws provide guidelines that improve efficiency and accountability. The cash system of accounting had made implementation of budgets easy and secure. Internal control systems, financial planning and well trained staff promoted successful implementation, while high debts lead to financial constraints that hindered implementation. Budget planning that promoted participation, was allocated enough time and resources and prioritizes projects tend to reduce financial constraints and promoted accountability. It was also established that financial management constraints were caused by delays in disbursements from the national government and under collection of revenues. These constraints lead to partial implementation of projects. Regression analysis established that all the four variables considered (budget regulation, accounting systems, financial management and budget planning) had a significant positive influence on the success of budget implementation in county governments. The variable with the highest influence was budget planning, followed closely by accounting systems.