EFFECT OF BUDGETING PROCESS ON BUDGET PERFORMANCE OF STATE CORPORATIONS IN KENYA: A CASE OF KENYATTA NATIONAL HOSPITAL
John Kuria Kamau - Master of Business Administration, Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Gladys Rotich - Jomo Kenyatta University of Agriculture and Technology, Kenya
Wicliffe Anyango - Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
Budgeting is a crucial exercise without which a firm or business cannot achieve much. Almost every enterprise, regardless of size, complexity or sector, relies heavily on budgets and budgetary systems to achieve strategic goals since it involves the establishment of predetermined goals, the reporting of actual performance results and evaluation of performance in terms of the predetermined goals. Since independence, Kenya has introduced a number of reforms to the budgetary process with an aim of maximizing benefits accruable from spending through budget reforms in the public sector. These reforms are necessitated by perceived unsatisfactory performance when compared with the expectations of the budget provisions. In spite of these attempts to reform budgetary process in Kenya, it remains unsatisfactory instrument of achieving public policy objectives. This is because budgets are not clearly linked to the planning process and approved policies. The mismatch between expenditures and revenues are unending which leads to mini-budgets, supplementary budgetary estimates and reallocations of budget lines resulting to poor budget performance in State Corporations in Kenya. This study assessed the effect of budgetary process on budget performance in public sector using state corporations in Kenya as a focus. The budgetary process of state Corporation is assessed using variables such as budgetary participation, budgeting sophistication, Budget feedback and Budgetary Controls. The budgetary performance of State Corporations in Kenya is examined by use of budget compliance, value for Money and Budget goal achievement. A descriptive research design was employed by the study. The target population of this study was 450 employees of Kenyatta National Hospital who are involved in budget making. The study uses a formula to come up with a sample size of 72 of this study. A questionnaire, whose content validity was checked through an expertise opinion and reliability through test pre-test methods, was used to gather information. The study used descriptive statistics to analyse the quantitative data and content analysis for the qualitative data. The relationship between budgeting process and budget performance was analyzed using correlation and regression analysis. The study established that budgetary perticipation has an effect on budget performance of State Corporations in Kenya. Regarding budgeting sophistication, the study found that it indeed has a significant effect on performance of State Corporations in Kenya. The study concluded that budgetary participation had the greatest effect on the budget performance of State Corporations of Kenya, followed by budgetary control, then budget feedback while budgeting sophistication had the least effect on the budget performance of State Corporations of Kenya. Therefore the study recommends that staff proposals should be taken into consideration since budget participation is measured from the following factors; the ability for the subordinates to influence the design of the budget, extent the superior manager contacts the subordinates. The study therefore recommends that there should be clear communications channels in all corporations. The study recommends that to add weight to this study, another study should be done to investigate the factors affecting performance in state corporations of Kenya.
