EFFECT OF BUDGETARY PROCESSES ON FINANCIAL PERFORMANCE OF COUNTY GOVERNMENTS UNDER THE WESTERN REGION ECONOMIC BLOC, KENYA

Abstract

Financial performance is a major concern for the county governments because through improved financial performance the county governments are able to fulfill their obligation of service delivery to the citizens. Hence, adhering to the budgetary processes is important in enhancing financial performance at the county level. However, the county governments in Kenya especially those in the Western Region Economic Bloc (WREB) are still encountering financial performance challenges despite undertaking of the budgetary processes. It is on this basis that this paper explored the effect of budgetary processes on the financial performance of the WREB counties in Kenya. Specifically, the paper examined the effect of budgetary planning, budgetary implementation and budgetary control and auditing on the financial performance of the WREB counties in Kenya. It also examined the combined effect of budgetary planning, implementation and control and auditing on the financial performance on the financial performance of the WREB counties. The study was anchored on the theory of budgeting and adopted the causal explanatory research design. The target population was 191 budgeting officers, accountants and internal auditors from 5 WREB counties in Kenya. Data was collected using structured questionnaires and document analysis and both the descriptive and inferential statistics employed in data analysis. The results showed that budgetary planning, implementation and control and auditing significantly affected the financial performance of the WREB counties (Beta=0.428; p=.002<0.05, Beta=0.324; p=.000<0.05 and Beta=0.460; p=.003<0.05). Moreover, the joint effect of budgetary planning, implementation and control and auditing on the financial performance of the WREB counties was significant. It is recommended that the WREB counties should adhere to the provisions of the budgetary processes to enhance their financial performance