What Is Financial Management

How Political Influence Affects Financial Management and Budgetary Control in Local Governments in Uganda

Despite the recognized importance of budgeting and its suggested links to organizational structure, there has been little empirical exploration of how public sector budgeting has developed within increasingly decentralized frameworks of governance.

This is particularly the case for developing countries like Uganda adopting decentralized structures, despite recognition that appropriate budgeting practices are consistent with all societies' legitimate expectations that public resources be employed efficiently and effectively (Henley et al.1998).

From the Ugandan perspective, information provided by the Inspector General of Government relating to tenders and contracts, mismanagement and misappropriation of funds and embezzlement of funds from cases reported to the inspectorate of government of Uganda, clearly shows that there is a problem with financial management and budgetary control in both central and local governments in Uganda. (www.igg.go.ug).

A review of related literature regarding the study area has a broader spectrum.

According to Michael Power's description, auditing of different sorts is now so pervasive in the United Kingdom's administrative culture as to create an impression that there is always somebody looking over one's shoulder. At first glance, this might seem to contradict the post-bureaucratic premises of administrative reform in the UK. Auditing which, in its traditional form, focuses on verifying compliance with administrative and financial procedural norms is clearly part of the bureaucratic model. Yet in the eyes of some observers, the devolution and decentralisation aspects of post bureaucratic reforms creates increased need for auditing. (Hood, 1991: 8)

Methodology:

election of respondents in the sampled geographical areas was based on factors such as length of service of Employees in the firms or Government services as well as the length of time taken by specific Service Beneficiaries in the sampled geographical areas.

This is to say that those chosen respondents were the ones whose length of service/stay is longest in the sampled geographical area.

The total population was therefore 1, 300 people of which 650 were Beneficiaries and 650 Government Employees hence only 900 sampled Respondents in both categories in all 5 Regions were interviewed. This represented 62% of the population sampled in all the five Regions of Uganda for this Research.

Questionnaires and survey guide were designed used to collect information on , Financial Management and Control Services under the decentralised system The questions as much as possible tried to tap all the dimensions of the constructs.
Results

The major findings of the study were highlighted based on the answers to the research questions and testing of the variables of interest with the statistics within the specified limits of significance.

A relative number agreed to the fact that corruption in local governments is a hindrance to good financial management practices. Also to a great extent, it was observed that decentralized government structures control funds.

Table 4.6 Cross tabulation of various factors against Budgetary Control

(mean =3.7734) and financial decentralised structure is good for the development if proper accounting systems are put in place.
Coefficients(a)

Unstandardized

Coefficients

Standardized

Coefficients

t

Sig.

Dependent Variable: Budgetary Control

Model

B

Std. Error

Beta

(Constant)

.582

.073

7.988

.000

R Square

.882

Political Influence

1.852E-02

.011

.029

1.636

.103

Sig.

F Change

.000

Auditing

.211

.012

.356

18.268

.000

Accounting

.145

.009

.337

15.786

.000

Taking the significance levels at ?/2=0.05 to be the standard, 0.00 as the significance value which is less than 0.005 indicates a high level of compliance indicating that there is a positive relationship between financial management and decentralised government structures. Budgetary control was measured against decentralised government structures the level of significance was 0.00 still which implied that the level of correlation between the two is positively high.

The relationship between political influence and financial management and budgetary control

Results from table 4.5 have a p-value of 0.123 which is by far greater than 0.05 indicating that political influence affects financial management negatively. Likewise table 4.6 shows that as political influence increases, budgetary control is affected and vice versa.

Discussions

Political influence was made to be a major problem to proper financial management. Also corruption was found to be a major hindrance to proper financial management. This confirms the fact that most of the cases cited on corruption in local governments have been aligned along politically driven motives

If it wasn't because of the fact that corruption levels are really high in these local governments, there was a general agreement that really decentralised government structures lead to better financial management as the seemingly obstruct task is broken down to smaller task which increases efficiency as the number of people handling the task at hand is made smaller. This can be seen from the reasons as to the objectives why world bank supported in developing economies. The same is true for budgetary control in other words better budgetary control is made manifest under decentralised systems as compared to the centralised ones.

It was brought to the researchers attention that that the degree of financial management isn't affected by one's degree of expertise. This has been confirmed on a number of occasions where highly qualified staff are involved in financial scandals that are manipulated by them. For example recently in Uganda, global fund money that was supposed to care for HIV/AIDS patients was diverted for some officers' interests and yet these officers were highly qualified.

On the other hand human expertise greatly affects budgetary control because a budget is made professionally and once but the implementation of these projects is what fails the personnel. Budgets are made by highly skilled people both at the central government and the local governments.

Conclusions and Recommendations

There should be effective administration in the act of recentralizing Chief Administrative officers (CAOs). The CAOs were recentralized but they have not had independence in making decisions especially where their standards are compromised by politicians., so a great arm in administration should legalise a policy framework of operation which will minimize interruptions from parties that have interest.

Most government services are offered under decentralisation. However issues like lack of transparency, improper accounting systems and corruption are still a hindrance to the growth of proper financial management strategies and budgetary control under the decentralisation process in local governments.

To be able to effectively achieve the objective of reducing poor financial management and budgetary control to a considerable low level, efforts or strategies formulated and directed towards decentralisation need to be holistic in nature. Financial Management issues cannot effectively be addressed in isolation but have to be taught to all stakeholders i.e. the beneficiaries, the service providers, the national and local policy implementers.

Government should also through its parliamentary wing enact tough anticorruption laws for professionals in various key financial positions in government. The agencies that are in charge of anticorruption like the Inspector General of Government (IGG), Auditor and Accountant general should be well remunerated to effectively carry out their duties in the struggle against poor financial management and budgetary control so that the funds utilization to specific targets without diversion through mainly political interference.

As another measure, strict government regulations should be instituted on financial management and control to the decentralised governments and budgetary reports should be followed to promote accountability and feasibility. In order for effective implementation, there is need for government to regularly hire professionally qualified financial experts to review the applicability of existing accounting and financial controls.

The agencies under this operation should be well renumerated, have high cooperation with donors on their funds utilisation to specifically allocated areas to reduce diversion and politically motivated ideas.

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Opio Stanley

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