The effect of budgeting on organizational financial performance of the health sector in South Sudan: a case study of Afenet

Abstract

The study was carried out to establish the effect of budgeting on organizational financial performance in the health sector in South Sudan focusing on AFENET as a case study. The study was guided by the following objectives to establish the effect of Budget planning on organizational financial performance, to assess the effect of budget monitoring on organizational financial performance, and to examine the relationship between budget control organizational financial performance. The study targeted a total population of 160 respondents from AFENET staff & stakeholders and a sample size of 114 respondents was selected using Sloven’s formular (2008). A descriptive research design was employed and both qualitative and quantitative approaches of data collection were used. Data were analyzed using descriptive statistics, correlation and multiple regression analysis. The research finding indicate that there is a very strong positive association between Budget Planning and Financial Performance (r=.892, p<.000). This signifies that through proper planning the organization is able to assess where it is going, supposed to be and go in terms of its set objectives and goals thus improving its financial performance. The percentage of variation in the dependent variable (Financial performance) is explained by the independent variables. From the finding, it showed that the independent variable (Budget Planning) contributed to 89.2% of the variation in organizational financial performance as explained by adjusted R Squire of 0.105 which shows that the model is a good prediction. The results indicate that there is a positivecorrelation between budget monitoring and Financial Performance (r=.898, p<.000). This signifies that through Monitoring the organization is able to assess whether it is achieving the stated objectives and goals and be able to devise actionable measures to rectify any deviations/low performances in the organization. The findings revealed that the level of significance was 0.048 implying that the regression model is significant in predicting the relationship between Budget monitoring and financial performance. With the aid of an F-test table, the tabulated value for (f=4.036) means that the model was statistically significant. Financial performance was used as the dependent variable and budget monitoring as the independent variable. It was established that Budget monitoring (ß=0.898, t=82.009, p<.000), thus indicating that Budget monitoring affects financial performance in African Field Epidemiology Network. On the first study objective, the researcher concluded that Budget planning is exercised in AFENET. The budget Committee uses resource allocation process to plan, manage, and assign resources that helps to reach strategic goals by identifying and allocating resources needed by departments to ensure effective financial performance. The Budget committee includes the top management and a few subordinates in AFENET in resource allocation and decision-making processes. This has contributed to transparency in resource and activity management. On the second objective, it was concluded that insufficient monitoring of Budget activities hinders accountability in AFENET. The project budget holders on a monthly basis don’t usually share project burn rates with the finance department making it difficult for the management to track the financial performance of the projects. This has contributed to the delayed execution of activities and procurements thus hindering the financial performance of the organization during the budget period. On the third objective of the study, it was concluded that budgetary control has helped AFENET management to evaluate plan, implement them by monitoring activities to ensure that they fall on what was planned, proper budgeting and budgetary control involve a way of decision making that serves the organization in determining its goals, purposes or objectives and budgetary control system eliminates misuse of finances and help management and stakeholders to determine whether organization objectives are achieved and operations are consistent with the plan. The study recommends that AFENET Subordinates should be involved in budget planning and decision making. The activities of the various parts of the organization should be planned and coordinated very well which will ensure effective budgeting. In addition, orientation, seminars and workshops on budgeting should be adequately emphasized to those involved in the budget preparation. Budget committee should function very well to make sure that the proper budget is applied and in an effective way. The researcher recommended that AFENET adopts a bottom top budgeting process in order to plan for all challenges from the grass root to ensure a proper budgetary implementation process. The study also added that health sector organizations should adopt implementation of flexible budgets since this caters for unexpected happenings like civil wars, landslides, outbreak of epidemics that may not be planned for in fixed budget system hence enhancing organizational financial performance.