Impact of Budgeting On the Performance of Local Governments. A Case Study of Rakai Local Government.

TABLE OF CONTENTS

DECLARATION ............................................................................................................................. i

APPROVAL ................................................................................................................................... ii

DEDICATION ............................................................................................................................... iii

TABLE OF CONTENTS .............................................................................................................. iv

ACKNOWLEDGEMENT ........................................................................................................... viii

ABSTRACT .................................................................................................................................... 1

CHAPTER ONE .............................................................................................................................. 1

GENERAL INTRODUCTION ....................................................................................................... 1

1.0 Introduction ................................................................................................................................ I

1.1 Background of the study ............................................................................................................ 1

1.2 Problem statement ..................................................................................................................... 3

1.3 Purpose of the study ................................................................................................................... 5

1.3.0 Specific objectives .................................................................................................................. 5

1.4 Research questions ..................................................................................................................... 6

1.5 Scope of the study ...................................................................................................................... 6

1.5.0 Geographical scope ................................................................................................................. 6

1.5.1 Subject scope .......................................................................................................................... 6

1.5 .2 Conceptual scope .................................................................................................................... 6

1.5.3 Time scope .............................................................................................................................. 7

1.6 Significance of the study ........................................................................................................... 7

1.7.0 Conceptual frame work ...................................................... : .................................................... 7

1.7.1 Dependent Variable ................................................................................................................ 8

1.7.2 Independent Variable .............................................................................................................. 8

CHAPTER TWO ........................................................................................................................... 10

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LITERATURE REVIEW .............................................................................................................. 10

2.0 Introduction .............................................................................................................................. l 0

2.1.0 Budgeting .............................................................................................................................. 10

2.1.1 Proportions of financial resources approved for the specific sectors for District Local

governments ................................................................................................................................... 11

2.1.2 Reasons for budgeting .......................................................................................................... 12

2.1.3 Pre-Conditions for Successful Budgeting ............................................................................. 12

2.1.4 Importance ofbudgeting ....................................................................................................... 12

2.1.5 The Criteria for Successful Budgeting Process .................................................................... 14

2.1.6 Implications for late or no budget ......................................................................................... 14

2.2.0 Financial Performance .......................................................................................................... 14

2.2.1 Financial Performance analysis ............................................................................................ 15

2.2.2 Areas of Financial Performance Analysis ............................................................................ 15

2.2.3 Significance of financial performance measurement .......................................................... .16

2.3.0 Theoretical Framework ......................................................................................................... 16

2.3.1 The Theory ofBudgeting ...................................................................................................... 16

2.3.2 Accounting Theory ............................................................................................................... 16

2.3 .3 Budgetary Control Theory .................................................................................................... 17

2.4.0 External factors for poor Performance and Poor service Delivery ...................................... .17

2.4.1 Internal actors or poor Performance and Poor service Delivery .......................................... .20

2.5 The relationship between budgeting and financial performance ............................................ .21

CHAPTER THREE ....................................................................................................................... 24

METHODOLOGY ........................................................................................................................ 24

3.0 Introduction .............................................................................................................................. 24

3.1 Research Design ...................................................................................................................... 24

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3.2 Area and population of the study ............................................................................................. 24

3.3 Sampling procedure ................................................................................................................. 24

3.4 Sample size .............................................................................................................................. 25

4.1.2 Age ........................................................................................................................................ 25

3.5 Sources of data ......................................................................................................................... 25

3.6 Data collection methods .......................................................................................................... 26

3.6.1 Observation method .............................................................................................................. 26

3.6.2 Questionnaire ........................................................................................................................ 26

3.6.3 Interview Method .................................................................................................................. 26

3.6.4 Research Instruments ............................................................................................................ 26

3.6.5 Documentary Review ........................................................................................................... 27

3.7 Measuren1ents of variables ...................................................................................................... 27

3.7.1 Validity of the instruments ................................................................................................... 27

3.7.2 Pre-testing .......................................................................... '.··················································27

3.7.3 Reliability of Instruments ..................................................................................................... 27

3.8 Data analysis ............................................................................................................................ 28

3.9 Ethical considerations .............................................................................................................. 28

CHAPTER FOUR ......................................................................................................................... 29

DATA PRESENTATION, ANALYSIS AND DISCUSSION .................................................... .29

4.0 INTRODUCTION ................................................................................................................... 29

4.1 Respondents Demographic Characteristics ............................................................................. 29

4.1.3 Number of years of service of respondents at Rakai district ................................................ 32

4.2 Budgeting levels ...................................................................................................................... 33

4.3 Financial performance ............................................................................................................. 35

4.4 Impact of budgeting on financial performance on local government ...................................... 36

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4.5 Proportions of Financial Resources Approved for the Specific Sectors for Rak:ai District

Local Government in 2014/15 and 2015/16 ................................................................................. .38

4.6 The effect of forecasting on financial performance oflocal government ............................... .40

4. 7 Relationship between budgeting and financial performance .................................................. .42

CHAPTER FIVE ........................................................................................................................... 45

SUMMARY, CONCLUSION AND RECOMMENDATION ..................................................... .45

5.0 Introduction .............................................................................................................................. 45

5.1 Summary of the research objectives ....................................................................................... .45

5.2 Finding of the researcher relating to the impact of budgeting on financial performance on

local government. .......................................................................................................................... 45

5.3 Conclusion ............................................................................................................................... 46

5.5 Limitations of the study ........................................................................................................... 47

5.6Suggested further research ........................................................................................................ 48

REFERENCES .............................................................................................................................. 49

APPENDICES ............................................................................ , .................................................. 51

QUESTIONAIRE ONE ................................................................................................................. 51