Date post: | 11-Apr-2017 |
Category: |
Government & Nonprofit |
Upload: | kyambogo-university |
View: | 31 times |
Download: | 0 times |
KYAMBOGO UNIVERSITY
INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM (IFMIS) AND
FINANCIAL REPORTING EFFECTIVENESS OF LOCAL GOVERNMENT IN
UGANDA: A CASE STUDY OF WAKISO DISTRICT
BY
MUGABA MUHAMAD MUHAMUD
(BSWASA, KYU)
A RESEARCH REPORT SUBMITTED TO GRADUATE SCHOOL IN FULFILLMENT
OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE IN
ORGANISATION AND PUBLIC POLICY MANAGEMENT OF KYAMBOGO
UNIVERSITY
NOVEMBER, 2016
i
DECLARATION
I hereby do declare that this research report is my own effort and it has never been produced
anywhere in Kyambogo University or any other institution of higher learning before.
SIGNATURE……………………………………………….DATE…………………………...….
MUGABA MUHAMAD MUHAMUD
14/U/12863/GMOP/PE
ii
APPROVAL
This dissertation has been developed and submitted with the approval of the following
supervisors;
SIGNATURE………………………………………………DATE…………………………….
DR. MARY MAURICE MUKOKOMA (PhD)
SIGNATURE………………………………………………DATE…………………………….
DR. TEOPISTA N. KYAMANYWA (PhD)
iii
TABLE OF CONTENTS
DECLARATION......................................................................................................................................... ii
APPROVAL............................................................................................................................................... iii
List of Table...............................................................................................................................................vii
DEDICATION..........................................................................................................................................viii
ACKNOWLEDGEMENT.......................................................................................................................... ix
ABBREVIATION……………………………………………………………………………………..……x
ABSTRACT...............................................................................................................................................xi
CHAPTER ONE:........................................................................................................................................1
INTRODUCTION.......................................................................................................................................1
1.0 Introduction..........................................................................................................................................1
1.1 Background to the Study......................................................................................................................1
1.2 Statement of the Problem.....................................................................................................................4
1.3 Objectives of the Study........................................................................................................................4
1.3.1 General Objective.........................................................................................................................4
1.3.2 Specific Objectives.......................................................................................................................4
1.4 Research Questions..............................................................................................................................5
1.5 The Scope of the Study........................................................................................................................5
1. 6 Significance of the Study....................................................................................................................6
1.7 A Conceptual framework.....................................................................................................................7
CHAPTER TWO:........................................................................................................................................8
iv
LITERATURE REVIEW............................................................................................................................8
2.0 Introduction..........................................................................................................................................8
2.1 The Concept of IFMIS.........................................................................................................................8
2.2 Financial Reporting Effectiveness.......................................................................................................9
2.3 Budgeting preparation and financial reporting effectiveness............................................................10
2.4 Transactions Processing and Financial Reporting Effectiveness.......................................................13
2.5 Report preparation and financial reporting effectiveness..................................................................18
CHAPTER THREE:..................................................................................................................................24
RESEARCH METHODOLOGY..............................................................................................................24
3.0 Introduction........................................................................................................................................24
3.1 Research Desigsn...............................................................................................................................24
3.2 The Target Population........................................................................................................................24
3.3 Sampling Size and Sampling Technique...........................................................................................24
3.4 Data Collection Methods and Tools..................................................................................................25
3.5 Data Collection Procedures................................................................................................................26
3.6 Data Quality Control..........................................................................................................................26
3.7 Reliability and Validity......................................................................................................................26
3.7.1 Reliability....................................................................................................................................26
3.7.2 Validity.......................................................................................................................................27
3.8 Measurement of Variables.................................................................................................................27
3.9 Data Analyses Methods.....................................................................................................................27
3.10 Ethical Considerations.....................................................................................................................28
3.11 Limitation to the Study....................................................................................................................28
CHAPTER FOUR:....................................................................................................................................29
PRESENTATION AND ANALYSIS OF RESULTS...............................................................................29
4.0 Introduction........................................................................................................................................29
4.1 Demographic Characteristics of Respondents...................................................................................29
v
4.1.1 Gender of Respondents...............................................................................................................29
4.1.2 Age of Respondents....................................................................................................................29
4.1.3 Level of Education of Respondents............................................................................................30
4.1.4 Department of Respondents........................................................................................................30
4.1.5 Number of years spent in the Department..................................................................................31
4.2 Frequency of IFMIS Use...................................................................................................................31
4.3 IFMIS budget preparation and financial reporting effectiveness of Local Governments.................32
4.5 Transactions Processing and Financial Reporting Effectiveness of Local Governments..................35
4.7 Report Preparation and Financial Reporting Effectiveness of Local Governments..........................40
4.9 IFMIS and Financial Reporting Effectiveness...................................................................................43
CHAPTER FIVE:......................................................................................................................................47
DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS...........................................................47
5.1 Introduction........................................................................................................................................47
5.2 Summary............................................................................................................................................47
5.3 Discussions........................................................................................................................................48
5.3.1 The Effect of IFMIS budget preparation on Financial Reporting effectiveness.........................48
5.3.2 The Effect of Financial Transactions Processing on Financial Reporting Effectiveness...........50
5.3.3 The Effect of IFMIS financial report preparation on financial reporting effectiveness.............52
5.4 Conclusions........................................................................................................................................54
5.4.1 The Effect of IFMIS budgeting system on Financial Reporting effectiveness...........................54
5.4.2 The Effect of IFMIS financial transactions system on financial reporting effectiveness...........55
5.4.3 The Effect of IFMIS Report preparation on financial reporting effectiveness...........................55
5.5 Recommendations..............................................................................................................................55
5.6 Recommendation for Further Studies................................................................................................56
REFERENCES/BIBLIOGRAPHY...........................................................................................................57
Appendix 1: Questionnaire........................................................................................................................60
Appendix 2: Krejcie and Morgan Table (1970) For Determining Sample Size.........................................63
vi
Appendix 3: Frequency table of IFMIS Budget preparation on financial reporting effectiveness.............63
Appendix 4: Frequency table of transaction processing on financial reporting effectiveness....................64
Appendix 5: Frequency table of IFMIS report preparation on financial reporting effectiveness...............65
Appendix 6: Frequency table of IFMIS on financial reporting effectiveness.............................................65
Appendix 7: Introductory letter.................................................................................................................66
LIST OF TABLE
Table 1: Showing the Sample size
Table 2: Showing Gender of Respondents
Table 3: Showing Age of Respondents
Table 4: Showing Level of Education of Respondents
Table 5: Showing Department of Respondents
Table 6: Showing Period spent in the department
Table 7: Showing Frequency of IFMIS Use
Table 8: Showing budget preparation and financial reporting Effectiveness (n=104)
Table 9: Showing correlation between IFMIS budget and financial reporting effectiveness
Table 10: Showing Transactions Processing and Financial Reporting Effectiveness (n=104)
Table 11: Showing the correlation between IFMIS transaction processing and financial reporting
effectiveness
Table 12: Showing Report Preparation and Financial Reporting Effectiveness (n=104)
Table 13: Showing correlation between IFMIS Report preparation and financial reporting effectiveness
Table 14: Showing IFMIS and Financial Reporting Effectiveness (n=104)
Table 15: Showing a multi-variate Logistic Regression of Financial Reporting Effectiveness and IFMIS
Budget Preparation, Transaction Processing and Report Preparation
vii
ABBREVIATIONS
IFMIS: Integrated Financial Management Information System
USAID: United State Aid for International Development
IMF: International Monetary Fund
MTEFs: Medium Term Expenditure Frameworks
PEM: Public Expenditure Management
MFPED: Ministry of Finance, Planning and Economic Development
FMIS: Financial Management Information System
PFM: Public Fund Management
G2C: Government to Citizens
G2B: Government to Business
G2G: Government to Government
CVI: Content Validity Index
SPSS: Statistical Packages for Social Sciences
viii
ABSTRACT
The study sought to examine the effect of Financial Integrated Management Information System
on Financial Reporting Effectiveness of District Local Governments in Uganda. The main
objectives of the study was to assess the effect of Budget Preparation on Financial Reporting
Effectiveness of District Local Governments, to analyse the effect of Transaction Processing on
Financial Reporting Effectiveness of District Local Governments, and to examine the effect of
Report Preparation on Financial Reporting Effectiveness of District Local Governments.
The study adopted a descriptive case study research design due to its ability to provide a
snapshot of the current state of affairs. Data was collected using a questionnaire and structured
interviews and collected data was analysed using quantitative and qualitative method of data
analysis.
The study found that IFMIS system positively affected and improved the financial reporting
effectiveness of district local government by ensuring consistency in reporting with mean
support of 3.30, accuracy 4.19, timely reporting 4.39, transparency 4.32 and ensuring relevancy
of the report 4.23. This overwhelming support for the system reflect that IFMIS has great effect
on financial reporting of effectiveness of Wakiso district. This positive effect is achieved through
effective budget preparation, transaction processing and effective report preparation of the
system meaning that, this discovery fulfils one of the objective for the introduction of Integrated
Financial Management Information System (IFMIS) in district local government which is
improving financial reporting effectiveness.
ix
The study therefore recommended that district managers need to continuously train its staff on
the use this information to plan and formulate budgets; examine results against budgets and
plans; manage cash balances; track the status of debts and receivables; monitor the use of fixed
assets and monitor the performance of specific departments or units for effective financial
reporting effectiveness.
x
xi
CHAPTER ONE
INTRODUCTION
1.0 Introduction
A well-designed Integrated Financial Management Information System (IFMIS) contains the
characteristics that include management function that provides a wide range of non-financial and
financial information and the system affects the reporting effectiveness (Hendriks, 2012). IFMIS
is meant to be used as a common system across government institutions, including Local
Governments. The integration of IFMIS across the board ensures that all users adhere to
common standards, rules and procedures, with the view to reducing risks of mismanagement of
public resources through automated reporting of financial matters.
Financial reporting effectiveness provide information about the financial position, performance
and financial adaptability of an institution that is useful to a wide range of users for assessing the
stewardship of management and for making economic/financial decision. Therefore, financial
reporting effectiveness is crucial to financial decision-makers to make decision on investment,
policy, and marketing strategies. Decisions are made out of available information; hence,
financial reports should be made available to users periodically (Maidoki, 2013).
Timeliness principle in accounting refers to the need for accounting information to be presented
to the users in time to fulfil their decision making needs. The timeliness of accounting information
refers to the provision of information to users quickly enough for them to take action. The timeliness
concept is of particular importance in four areas of a business (Diamond & Khemani, 2005). Many of the
public sector institutions do not timely release the financial information due to the nature of the systems
used to generate financial information. This make financial reporting effectiveness very hard when there
is no timely financial information and therefore hard to make financial decisions (Hendriks, 2012).
Timeliness of accounting information is highly desirable since information that is presented
timely is generally more relevant to users while conversely, delay in provision of information
tends to render it less relevant to the decision making needs of the users. Timeliness principle is
therefore closely related to the relevance principle. It is also important to protect the users of
accounting information from basing their decisions on outdated information (Brown, 2008).
Accuracy: is freedom from error (correctness), or closeness to truth or fact, resulting from
exercise of painstaking care or due diligence. According to auditor general report (2015)
1
observed that accuracy in financial reports in public sector is still a problem, because accuracy
has been depends on how the data is collected, and is usually judged by comparing several
measurements from the same or different sources and yet public sector has been lacking a system
to collect uniform data. Coupled with accuracy is consistency which means that accounting
methods once adopted must be applied consistently in future (World Bank, 2013). This has been
a challenge to almost public sector institutions, because of the manual approach public sector use
in reporting financial report, they have not been consistent in reporting as advanced by (Bragg,
2013). Transparency is the extent to which investors have ready access to required financial
information about a company, such as price levels, market depth and audited financial reports
(Karatsi, 2015). Transparency helps reduce price volatility, because all the market participants
can base decisions of value on the same data. Local government also have a strong motivation to
provide disclosure, as transparency is generally rewarded through the stock's performance.
1.1 Background to the Study
Over the past decade, developing, transition and post-conflict countries have increasingly
embarked on efforts to computerize their government operations, particularly with respect to
Public Financial Management and reporting. Most common among these have been the effort to
introduce Integrated Financial Management Information Systems (IFMIS) that computerize and
automate key aspects of budget execution and accounting operations across the institutions of
government (Rozner & Gallagher, 2008).
There has been a growing interest in the quality of public sector financial management in
developing countries with developing countries being encouraged to reform their expenditure
management and accountability systems and increasingly embark on major projects to
computerize their public institutions financial operations (Bason, 2010). Introducing Integrated
Financial Management Information Systems (IFMIS) in developing countries has been the most
popular among those projects to computerize public institutions’ accounting and payment
operations aimed at improving financial reporting (International Monetory Fund, 2010).
IFMIS refers to the use of information and communications technology in financial operations to
support management in budget decisions making, transaction processing, fiduciary
responsibilities, and preparation of financial reports and statements of the organisation (Rozner
& Gallagher, 2008). Its scope covers accounting, budgeting, cash management and debt
2
management and related core treasury systems, and reporting. In its basic form, an IFMIS is little
more than an accounting system configured to operate according to the needs and specifications
of the environment in which it is installed (Brown, 2008).
As advanced by Meigns (1998) and cited by Maidoki (2013), financial reporting effectiveness is
the process of communicating financial information that is accurate, transparent, and consistent
within time bound to decision-makers. It provides information useful for making investment
decisions. Its disclosure provides both quantitative and qualitative information for its user’s
effective use and reliable decisions. In other words it presents information in a way that can be
understood by users. However Larson (1999), view financial reporting effectiveness as the
communication of relevant financial information to decision- makers (Maidoki, 2013).
IFMIS can enable prompt and efficient access to reliable financial data and help strengthen
government financial controls, improving the provision of government services, raising the
budget process to higher levels of transparency and accountability and expediting government
operations (Isidore, 2012). Donors and international institutions like the International Monetary
Fund (IMF), the World Bank, and USAID have played a critical role, and will continue to do so
in supporting and shaping developing countries’ financial management systems through projects
that provide a combination of technical assistance, training, financial resources and procurement
support to partner governments (Rozner & Gallagher, 2008). This is due to a broad agreement
that freely functioning IFMIS can improve financial management by providing real time
information that financial and other managers can use to administer programs effectively,
formulate budget and manage resources.
Institutional-centric theory of finances proposed by Stein and Rosefielde in 2005 as an
alternative to the flawed financial liberalization theory that increased the instability of
developing countries during the 90s. Based on the theory of imperfect markets, it acknowledges
the existence of imperfect information in the informal and formal institutions, which efficiency is
the engine of development (Stein &Rosefielde, 2005; Dornbusch&Reynoso, 2003). This
therefore highlighted the need to have an integrated system that supports real time financial
information access. An integration of financial functions was proposed by Demaestri and
Guerrero (2003) and theoretically suggests that effectiveness and efficacy are achieved when
financial information is integrated. In relation to this study, adoption of IFMIS in the districts is
3
aimed at enhancing information access through integration of various functions thereby
removing information asymmetry. This as suggested by Demaestri and Guerrero (2003) will
enhance effectiveness and efficacy of district treasury and therefore ensure effective public
financial reporting (Wamuyu, 2013).
The middle late 1990s saw the proliferation of Medium Term Expenditure Frameworks (MTEFs)
throughout the developing world. About 25 countries in Africa including Kenya, South Africa,
Uganda, Asia (eastern, central, and southern), Latin America, and Eastern Europe are at various
stages in the process of adopting MTEFs and other countries are seriously considering it. This
proliferation has occurred over a relatively short period of time. Of the 25 existing MTEFs,
nearly 90% were adopted over the five-year period 1997-2001. It is not premature to say that
MTEFs are a trend in developing country public expenditure management (PEM), and the trend
shows no signs of cresting” (Wynne, 2005).
Since 2002, the Government of Uganda has been installing a number of stand-alone
computerised systems in various Government Ministries, Agencies and Local Governments in an
attempt to plug these deficiencies and for the strengthening of government finance and
accounting functions (Diamond & Khemani, 2005). The system was first extended to 22
ministries and 25 districts, by 2014 IFMIS had been operationalized in 77 districts to manage
public funds Wakiso district inclusive ( (Nabuukera , 2014). This is being done for the purpose
of improving management, reporting and transparency of public funds for effective service
delivery. The establishment of an IFMIS has become an important benchmark for the country’s
budget reform agenda often regarded as a precondition for achieving effective management of
budgetary resources (Muigai, 2012).
Wakiso district is among the districts that have been using IFMIS since 2014 and its focus is not
only on efficiency and effectiveness but also ensuring management and interactive access of
information on their expenditure by the public and improvement to service delivery (MoFPED,
2015). The ambition to adopt the system was influenced by the benefits advanced by Hendriks
(2012) that IFMIS forms part of the financial management reform practices of developing
countries globally and holds benefits such as effective control over public finance, enhance
transparency and management and serves as a deterrent to corruption and fraud through
reporting.
4
1.2 Statement of the Problem
Auditor General Report (2015) observes that Wakiso district failed to effectively report for
finances worthy Ush. 30,092,483,676 in financial year ended 30th June 2015 and it’s not only
Wakiso but other district as well. As a way to improve district financial reporting. IFMIS was
introduced in the district as a tool to cushion the district against loss of revenue through
unauthorized expenditure so as to improve financial reporting (Munyambonera & Lwanga,
2015). Despite the existence of the system for three years, the financial misappropriation has
remained unchanged which affects service delivery and value for money (Dener & Young, 2015)
and (Karatsi, 2015). This calls for an investigation about the system in regard to ensuring
financial reporting effectiveness of the district if local government funds are to achieve its goal
and ensure future financial management.
1.3 Objectives of the Study
1.3.1 General Objective
To determine the effect of Integrated Financial Management Information System (IFMIS) on
Financial Reporting Effectiveness of Wakiso District Local Government
1.3.2 Specific Objectives
The study was guided by the following three specific objectives;
i. To assess the effect of budget preparation on financial reporting Effectiveness of Wakiso
District
ii. To establish the effect of transaction processing on financial reporting effectiveness of
Wakiso District
iii. To examine the effect of report preparation on financial reporting effectiveness of Wakiso
District
1.4 Research Questions
The study was tasked to answer the following question below:
i. What is the effect of budget preparation on financial reporting effectiveness of Wakiso
District?
5
ii. How does IFMIS transaction processing affect financial reporting effectiveness of
Wakiso District?
iii. What is the effect of report preparation on financial reporting effectiveness of Wakiso
District?
1.5 The Scope of the Study
This study was limited to assessing the effect of Integrated Financial Management Information
System (IFMIS) on Financial Reporting Effectiveness of district Local Governments taking a
case study of Wakiso District Local Government. This study was guided by key components
IFMIS components that include budget Preparation, transaction processing and report
preparation with emphasis on objectives that include; To assess the effect of Budget Preparation
on Financial Reporting Effectiveness of District Local Governments, analyzing the effect of
Transaction Processing on Financial Reporting Effectiveness of District Local Governments and
examining the effect of Report Preparation on Financial Reporting Effectiveness of Wakiso
District Local Governments. This is because they are the key areas that can leads to effective
financial reporting and management.
The study was carried out at Wakiso District Local Government. Wakiso District lies in the
Central Region of the country, bordering with Nakaseke District and Luweero District to the
north, Mukono District to the east, Kalangala District in Lake Victoria to the south, Mpigi
District to the southwest and Mityana District to the northwest. This was due to the fact that
Wakiso district is one of those that has been using IFMIS in executing its financial activities
The study was limited to three years between 2014 and 2016. This is because this is the period
that the IFMIS has been operating in Local Government.
1. 6 Significance of the Study
This research was important because it investigated and provided answers to issues that were
becoming more applicable in the increasingly information systems environment; leadership and
financial management of District Local Government. The findings of this study would be
important to managers in Local Government because it could be used to make major
improvements to managerial deficiencies that may exist within their respective Districts.
6
District Local Governments servant have new channels of record keeping and they will be in a
position to use IFMIS to provide timely, accurate and consistent data for management and
budget decision making. It also provided them with means that provides value for money.
The Wakiso District Local Government benefited from the information on the effects of IFMIS
on Financial Management in Local Governments, its importance and how to successfully use the
system to ensure financial efficiency and effectiveness and improve service delivery
The study stimulated academic interest in the whole aspect of integrated financial management
information system in the District Local Governments because it was a relatively new field hence
forming a basis for future research in IFMIS both in private and public sectors.
Guide policy makers in Local Governments, implementers and other public agencies on refining
IFMIS if gaps exist to achieve accurate financial management and provide information to
donors and citizens on how to mitigate challenges faced in implementation of IFMIS in district
local governments in Uganda
1.7 A Conceptual framework
Independent Variables Dependent Variable
Moderating variables
Source: Adapted from Rozner & Gallagher (2008)& Maidoki, (2013) and modified by the
researcher.
The study conceptualises that there is an effect between IFMIS and financial reporting
effectiveness of local governments. According to Rozner & Gallagher (2008), an IFMIS assists
management in ensuring financial reporting and accountability for the deployment and use of
public resources and in improving the effectiveness and efficiency of public expenditure
programmes for effective service delivery
7
- Budget preparation- Transaction processing - Report Preparation
- Operating Environment
- Timeliness- Accuracy- Consistency- Transparency
IFMIS Financial Reporting Effectiveness
In the above conceptual framework the success or failure of IFMIS in ensuring financial
reporting effectiveness is dependent Budget preparation, Transaction process, and Financial
Report Preparation and moderating variable like operating environment also contribute to the
success of the system. By tracking financial events through an automated financial system,
district management is able to exercise improved control over expenditure and to improve
transparency through reporting in the budget cycle as a whole (Diamond & Khemani, 2006),
(Rozner & Gallagher, 2008).
In conclusion this chapter provides background information on integrated financial management
information systems, trends and implementation issues underpinning financial reporting
effectiveness in Wakiso District Local Governments. The chapter discusses the problem and
raises the research questions. Further, it provides the scope and explains the significance of the
study.
8
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
This chapter presents the research design and techniques that were used in collecting and
analyzing data towards the achievement of the stated objectives. These include; area of study,
study population, sample size, study variables, sources of data collection, data collection
methods, data analyses, ethical consideration and the limitations of the study.
3.1 Research Design
Descriptive Case study research design was adapted for the study. This refers to an empirical
inquiry that investigates a single phenomenon within its real-life context; when the boundaries
between phenomenon and context are not clearly evident; and in which multiple sources of
evidence are used. It was used because case study research design allows the examination of the
data is most often conducted within the context of its use, that is, within the situation in which
the activity takes place (Zainal, 2007).
Descriptive case study research design was used because of its ability to provide a real situation
of the current state of affairs and the major variables to be studied include: financial budget
planning, financial transaction processing and financial report preparation and the research was
both qualitative and quantitative approaches and it was interactive with a number of departments
in the district (Zainal, 2007)
3.2 The Target Population
The target population were employees of Wakiso Districts Local Government in department that
includes finance, internal audits, and at Public works department where the financial system is in
use. According to Auditor General report, (2015) Wakiso district has about 150 staffs. The
researcher ascertained this population with the human resource department of the district council
on the possible number of employees in each of the department under study.
9
3.3 Sampling Size and Sampling Technique
The sample size in this study was 108 respondents determine using Krejcie and Morgan table
(1970) which was obtained from the target population.
Table 1: Showing the Sample size
Department Population Sample size Sampling strategy
Finance 16 15 Systematic
Audit 18 16 Systematic
Procurement and Marketing 22 20 Stratified
Accounts 23 20 Stratified
Education 11 9 Systematic
Health 12 9 Systematic
Planning 13 11 Systematic
Administration 9 8 Systematic
Source: Krejcie & Morgan, (1970).
Both Stratified random sampling and systematic technique was used because the study
population is heterogeneous as it comprises of employees from different departments. After
stratification of the respondents, purposive sampling was used to select the sample elements from
each stratum to get the actual number of 108 respondents that represented the target population.
This technique also ensured fair and accurate representation of the general target population. In
research, at least 30% of the target population is a recommended size to study the population
(Kothari, 2014). A sample size of 108 respondents therefore is enough to be studied in this study.
3.4 Data Collection Methods and Tools
The questionnaire was used to collect data and the questionnaire was structured in nature in order
to ensure data collection validity and reliability and deep insight on the statistical variables and it
was used to collect information from the rest of the respondent in the selected departments. In
this study, the questions sought answers to the research questions and the respondents were
provided with a list of close-ended questions based on each specific objective.
10
The questionnaire was divided into five sections. The first section sought respondents’
demographic profile such as gender, age, education, years of service at the district, among others.
The second section comprised of Likert Scale questions about the effect of IFMIS budget
preparation on financial reporting effectiveness in district local governments. The third section
comprised of questions about the effect of IFMIS transactions processing on financial reporting
effectiveness in district local governments. The fourth section had questions about the effect of
IFMIS report preparation on financial reporting effectiveness in district local governments, and
the last section contained questions concerning the effect of IFMIS on financial reporting
effectiveness in district local governments. Structured interviews were also used
3.5 Data Collection Procedures
Upon the approval of the topic, the researcher wrote a proposal which was approved by the
supervisor and graduate school for data collection. The researcher obtained an introduction letter
from Graduate school which was presented to district authorities for permission to collect data.
Upon acceptance, the researcher begun to identify the respondents who are in this case
employees of the district. The researcher introduced himself to the respondent and explain how
he/she was selected to be part of the study. The researcher asked for consent from the respondent
to participate in the study. Upon respondent acceptance, the research administered a
questionnaire to the respondent or begun an interview with the respondent. Upon completion of
the interview or filling of the questionnaire, the researcher collected the questionnaires and
thanked the respondents for participating in the study
3.6 Data Quality Control
After the collection of raw data with the relevant research instruments, the researcher ensured
that he cross checked the questionnaires to ensure that also questions are answered before
leaving the field. This was coupled with supervision of the research assistants by the team leader
in this case the researcher during data collection to ensure that everything is done as planned
3.7 Reliability and Validity
3.7.1 Reliability
Reliability is the measure of the degree to which a research instruments yields consistent results
or data after repeated trials. A pilot study was conducted on a few personnel of Mukono district
11
to measure the validity and reliability of the research instrument. Those selected for piloting
were not selected again for the main study.
The reliability (internal consistency) of the collected data in this study was assessed by
calculating the Cronbach’s Alpha coefficient using statistical package for social sciences (SPSS).
Although several measures of reliability can be ascertained in order to establish the internal
consistency of an instrument, this method was considered to be the most general form of
reliability estimation. In this method reliability was operationalized as internal consistency,
which is the degree of inter correlations among the items that constitute a scale. An alpha value
of 0.895 was obtained hence demonstrating internal consistency of new scales.
3.7.2 Validity
Content validity was used to determine the extent to which the items in the questionnaire provide
adequate coverage of the investigative questions. It was used through the judgments and
guidance that made by supervisors on the items included in the instrument. To measure this
validity, this formula was applied
CVI = Number of items rated relevant by all experts = 32 = 0.821
Total number of in terms in the instrument 39
The CVI was 0.821 and therefore the instrument was considered valid and was taken on for data
collection
3.8 Measurement of Variables
Budget preparation was assessed in terms of flexibility, realistic and ability to track expenses and
incomes. Transaction processing was measured in regard to rapid response, reliability,
inflexibility and controlled processing while Report preparation was measured in terms of
straight forwardness, structure and organised, relevancy, clarity, comprehensive and factual. And
financial reporting effectiveness was assessed in regard to accuracy, transparency, consistency,
timeliness
Likert scale of measurement of 1-5 dimensions (Strongly Agree (5), Agree (4), Neutral (3),
Disagree (2) and Strongly Disagree (1)) was used to measure the opinions of on various aspects
of IFMIS on financial reporting effectiveness to draw conclusion on the study.
3.9 Data Analyses Methods
12
The procedure for data analysis began by first coding and entering the data in the Statistical
Package for the Social Sciences (SPSS), computer software used for analysing data. Coding, in
essence, entails the attribution of a number to a piece of data, or group of data, with the express
aim of allowing such data to be analysed in quantitative terms and the analysis was done using
SPSS at two levels. First, Descriptive summary of the findings was analysed and presented using
mean, standard deviation, maximum and minimum distribution and findings were presented in
tables.
Secondly a multi-variant logistic regression was used to determining the net impact of
independent variable on dependent variable that IFMIS budget preparation, transaction
processing and report preparation on financial reporting effectiveness. This was because logistic
regression has been proven to be efficient in the analysis of data where response variable is
categorical.
3.10 Ethical Considerations
The researcher sought the consent of the respondents before the information is collected from
them regarding the study objectives by making them aware of the type information required.
The researcher ensured confidentiality about the information to be obtained from the
respondents.
3.11 Limitation to the Study
Because financial reporting effectiveness is a very sensitive subject. There was some resistance
by respondents to offer information which made data collection a challenge especially because
investigations in the system was misconstrued to be investigations on the users and managers of
the system. This was especially so in the wake of recently unearthed high profile financial
mismanagement cases that have earthed in many district of Uganda (Auditor General, 2015).
However the researcher minimised this by ensuring that the purpose of research and what the
data is intended for was explained to the respondents before the interviews commenced and
questionnaires administered to put the respondents at ease.
13
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF RESULTS
4.0 Introduction
The purpose of the study was to determine the effect of Integrated Financial Management
Information System on Financial Reporting Effectiveness of District Local Governments in
Uganda. This chapter presents the results and findings of the study. The chapter begins by
analysing the general information of the respondents, and then presents the analysis of the effect
of Effect of IFMIS Budget Preparation and Financial Reporting Effectiveness of Local
Governments. The chapter then presents the analysis of the effect of Effect of IFMIS
Transactions Processing and Financial Reporting Effectiveness of Local Governments and then
ends with the analysis of the effect of Effect of IFMIS Report Preparation and Financial
Reporting Effectiveness of Local Governments. The total number of questionnaires distributed
were 108.
In this section, the general information/demographic characteristics of respondents such as
gender, age bracket, education level, the department the respondents worked in and period
respondents have worked the department was analysed. The section also analyses the frequency
of the usage of IFMIS in their departments.
4.1 Demographic Characteristics of Respondents
4.1.1 Gender of Respondents
14
The distribution of the staff according to their gender is as shown in table 4.2. The table shows
that 50.9% of the respondents were of female gender while 49.07% of the respondents were of
the male gender. Therefore, both male and female respondents were adequately represented.
Table 2: Showing Gender of Respondents
Gender Frequency Percentage
Male 55 50.9
Female 53 49.07
Total 108 100.0
Source: Primary data
4.1.2 Age of Respondents
The distribution of respondents by age is shown in table. The table shows that 38.0% of the
respondents were in the 40-49 years age bracket while those over 50 years were 7.4% of the
respondents. The table also shows that the respondents in the 30-39 age brackets were 23.1%
whilst those in the 18-29 age brackets were 31.5% of the respondents. Therefore, the majority
(38.0%) of the respondents were 40-49 years old.
Table 3: Showing Age of Respondents
Age category Frequency Percentage
18-29 34 31.5
30-39 25 23.1
40-49 41 38.0
50 and above 8 7.4
Total 108 100.0
Source: Primary data
4.1.3 Level of Education of Respondents
15
The distribution of respondents by their level of education is shown in table below. The table
shows that 82.4% of the respondents were undergraduates while 17.6% had done their Diploma
postgraduates and certificate holders were not there. Thus, the majority of the respondents were
University graduates.
Table 4: Showing Level of Education of Respondents
Level of Education Frequency Percentage
Certificate 0 0%
Diploma 19 17.6
Degree 89 82.4
Postgraduate 0 0%
Total 108 100.0
Source: Primary data
4.1.4 Department of Respondents
The respondents were asked to indicate the departments where they were working. The
distribution is shown in table. The table shows that 13.9% of the respondents were working in
the Finance department while 11.1% were working in the Audit department. Those who were
working in the procurement department were 18.5%, those working in Education department
were 9.3%, and those working in Health were 9.3%, respondents working in the Accounts
department were 19.4%, respondent working in planning were 11.1% while those respondents
working in Administration were 7.4%. Therefore, the majority of the respondents were working
in the accounts and procurement department.
Table 5: Showing Department of Respondents
16
Department Frequency Percentage
Finance 15 13.9
Audit 12 11.1
Procurement and Marketing 20 18.5
Accounts 21 19.4
Education 10 9.3
Health 10 9.3
Planning 12 11.1
Administration 8 7.4
Total 108 100.0
Source: Krejcie & Morgan, (1970).
4.1.5 Number of years spent in the Department
The respondents indicated their tenure as captured in table below. The table shows that 2.9% of
the respondents had worked for less than a year while those who had worked for 1-3 years were
32.4% of the respondents. The respondents who had worked for 4-10 years were 56.5% of
whereas those who worked for over ten years were 8.3%. Therefore, majority of the respondents
worked with the district for at least four years.
Table 6: Showing Period spent in the department
Period spent in the department Frequency Percentage
Less than 1 year 3 2.8
1-3 years 35 32.4
4-10 years 51 56.5
More than 10 years 9 8.3
Total 104 100.0
Source: Primary data
4.2 Frequency of IFMIS Use
17
The respondents were asked to indicate the frequency with which they used IFMIS. Table shows
that 49.1% of the respondents used IFMIS daily whereas 9.3% of the respondents used the
software weekly. The table also shows that 24.1% of the respondents used IFMIS monthly while
17.6% of the respondents used the software quarterly and lastly, 0.0% of the respondents used
IFMIS annually. Therefore, the majority of the respondents used IFMIS daily.
Table 7: Showing Frequency of IFMIS Use
The level of IFIMIS usage Frequency Percentage
Daily 49.1 49.1
Weekly 10 9.3
Monthly 26 24.1
Quarterly 19 17.6
Annually 0 0%
Total 108 100.0
Source: Primary data
4.3 IFMIS budget preparation and financial reporting effectiveness of Local Governments
The study sought to assess the of IFMIS budget preparation on financial reporting in district
local government as an objective and the findings presented in the table below relates to this
objective.
Table 8: Showing budget preparation and financial reporting Effectiveness (n=108)
StatementMean
Standard
DeviationMin Max
It is easy to prepare a budget using IFMIS 4.56 0.636 2 5
IFMIS is realistic to resources available for spending easily 4.06 0.537 2 5
IFMIS ensures Equity and makes budget priorities easy 4.08 0.664 3 5
IFMIS enables us to determine budget costs so easily 3.43 1.172 2 5
IFMIS makes it easy to integrate all departmental budget together
including the ranking of their projects and activities for funding (flexible)3.90 0.757 2 5
It enable public to offer budget guidance and proposals before approval 3.47 1.222 1 5
It easy tracks income and expenditure of the district using IFMIS 3.77 1.072 1 5
18
IFMIS enables the district to update its budget quickly 3.84 0.915 2 5
IFMIS makes presentation and discussion of the budget so convenient 3.82 1.155 1 5
IFMIS makes sharing of budget information so quick and easy 3.54 1.042 1 5
Authorization of the budget is quick 4.27 0.672 3 5
Source: Primary data
The study sought to assess the respondents’ views on whether IFMIS enabled them to prepare a
district budget with ease. Table 8 indicates that the mean support on this view was 4.56 which
implies that the majority of the respondents supported that the view that IFMIS eases budget
preparation process. However 0.636 of the respondents deviated from the mean on the view that
IFMIS eases budget preparation process. The minimum response rate on whether IFMIS enabled
easy budget preparation was 2 and the maximum was 5. This therefore means that, majority of
the respondents were in support of the view that IFMIS helped them to easily prepare a district
budget.
About whether IFMIS is realistic to available resources for spending, table 8 indicates that the
mean support on this view was 4.06 which expressed that the majority of the respondents
supported that the view that IFMIS is realistic to available resources for spending. 0.537 of the
respondents deviated from the mean of 4.06 on the view that IFMIS is realistic to available
resources for spending. The minimum response rate on this view was 2 and the maximum was 5.
This picture therefore implies that, majority of the respondents were in support of the view that
IFMIS is realistic to available resources for spending.
The study sought to examine the respondents’ views on whether IFMIS ensures equity in budget
priorities. Table 8 indicates that the mean support for this view was 4.08 and this is far away
from the real mean which indicated that the majority of the respondents supported that the view
that IFMIS ensures equity in budget priorities. However 0.664 of the respondents deviated from
that mean on the view that IFMIS ensures equity in budget priorities. The minimum response
rate on this view was 3 and the maximum was 5. The results therefore shows that, majority of the
respondents were in support of the view that IFMIS ensures equity in budget priorities.
The study sought to analyse the respondents’ views on whether IFMIS determines budget costs.
Table 8 indicates that the mean support on this view was 3.43. This mean show that the majority
19
of the respondents supported that the view that IFMIS determines budget costs. The results. The
findings also reflected 1.172 of the respondents deviated from the mean on this view that IFMIS
determines budget costs. The minimum response rate on this view was 1 and the maximum was
5. These results therefore means that, majority of the respondents were in support of the view
that IFMIS determines budget costs.
The respondents were also asked about whether IFMIS integrates and ranking departmental
budget. Table 8 results indicates that the mean support for this view was 4.56. This mean is
stretching to 5 which showed that the majority of the respondents supported that the view that
IFMIS integrates and ranking departmental budget. However 0.636 of the respondents deviated
from that mean on the view that IFMIS integrates and ranking departmental budget process but
this is too low. The minimum response support rate was 2 and the maximum was 5. The results
therefore means that, majority of the respondents were in support of the view that IFMIS
integrates and ranking departmental budget.
The study aimed at examining the respondents’ views on whether IFMIS makes quick budget
authorization. Findings from table 8 showed the mean support of 4.27 which show that the
majority of the respondents supported that the view that IFMIS makes quick budget
authorization although 0.672 of the respondents deviated from the mean on the view that IFMIS
makes quick budget authorization. The minimum response support rate was 3 and the maximum
was 5. These results therefore implies that, majority of the respondents were in support of the
view that IFMIS makes quick budget authorization.
Table 9: Linear regression of Budget preparation and financial reporting effectiveness
Model Summary
R R Square
Adjusted
R Square
.325(a) .106 .097
a Predictors: (Constant), Uses IFMIS to prepare Budget
Coefficients (a)
Mode Coefficients Sig.
20
Constant .975 .000
Uses IFMIS to prepare Budget .325 .001
a Dependent Variable: Financial Reporting Effectiveness
Findings from the model summary 1 above, indicate that there is a significant and positive
correlation between IFMIS budget preparation and financial reporting effectiveness (r=0.325**
p=0.001) and the extent to which this variable affect the financial reporting effectiveness is r2=¿
0.106 which is below 0.01 (p<0.01). The finding show that there is a significant relationship
between budget preparation using IFMIS and financial reporting effectiveness. These results
have often been experience with the introduction of IFMIS in local government which was one
of the objective of IFMIS in Ugandan district.
The study sought to assess the effect of IFMIS Budget preparation on Financial Reporting
Effectiveness. The findings indicate that departments that use IFMIS in preparing budgets are
0.325 times more likely to be effective in reporting financial matters than those departments that
used IFMIS to prepare budgets. The findings also show a significance level of 0.001 meaning
that departments that used IFMIS to prepare budgets lead to effective financial reporting in the
district. The results therefore show that there is significant effect of IFMIS budget preparation
and financial reporting effectiveness in the district. These results were are attributed to the strict
follow of the budgeting rules
4.5 Transactions Processing and Financial Reporting Effectiveness of Local Governments
The study sought to analyse the of IFMIS transaction process on financial reporting in district
local government as an objective and the findings presented in the table below relates to this
objective.
Table 10: Showing Transactions Processing and Financial Reporting Effectiveness (n=10)
Statement MeanStandard
DeviationMin Max
All district’s transactions both receipts and payments are processed
through IFMIS4.42 0.569 3 5
IFMIS offers rapid and quick response to the concerned parties 4.26 0.483 3 5
Only budgeted activities and authorized ones for funding is processed 4.13 0.654 3 5
21
IFMIS detects the error in process of authorization so quickly 3.59 1.137 1 5
IFMIS organizes and structure information about spending of the district 3.62 1.232 1 5
Only captured and validated transactions are allowed for processing 3.76 1.102 1 5
IFMIS allows only factual information to be processed 4.19 0.966 1 5
IFMIS makes it to trace all stages of transaction processing in the district 4.15 0.498 3 5
IFMIS allows timely sharing of transaction information to all concerned
parties in the district3.92 0.844 2 5
IFMIS makes bank reconciliation automatically and offers information 3.71 0.982 2 5
IFMIS makes transaction process participatory in the district 3.77 1.184 1 5
IFMIS keeps the transaction and database information for reference. 4.12 0.910 2 5
Source: Primary data
The study sought to examine the respondents’ views on whether IFMIS processes all transaction
receipts and payments of the district. Table 10 indicates that the mean support on this view was
4.42. This mean support indicates that the majority of the respondents supported that the view
that IFMIS processes all transaction receipts and payments of the district. The findings also
indicates 0.569 of the respondents deviated from the mean on the view that IFMIS processes all
transaction receipts and payments of the district. The minimum response support rate was 3 and
the maximum was 5. These finding therefore indicated that, majority of the respondents were in
support of the view that IFMIS processes all transaction receipts and payments of the district.
The study sought to analyse the respondents’ views on whether IFMIS offers rapid and quick
response of the transaction. Table 10 indicates that the mean support on this view was 4.26. This
mean was stretching next to greater 5 which show that the majority of the respondents supported
that the view that IFMIS offers rapid and quick response of the transaction, although there were
about 0.483 of the respondents deviated from the mean on the view that IFMIS offers rapid and
quick response of the transaction. The minimum response support rate was 3 and the maximum
was 5. The results therefore indicated that, majority of the respondents were in support of the
view that IFMIS offers rapid and quick response of the transaction.
The study sought to establish the respondents’ views on whether IFMIS allows only budgeted
activities are processed for funding. Table 10 indicates that the mean support was 4.13. This
22
mean if great which show that the majority of the respondents supported that the view that
IFMIS allows only budgeted activities are processed for funding. But 0.654 of the respondents
deviated from the view that IFMIS allows only budgeted activities are processed for funding
despite high support for the view. The minimum response support rate was 3 and the maximum
was 5. This therefore means that, majority of the respondents were in support of the view that
IFMIS allows only budgeted activities are processed for funding.
The study sought to determine the respondents’ views on whether IFMIS quickly detects errors
in the authorization process. Table 10 indicates that the mean support was 3.59 which show that
the majority of the respondents supported that the view that IFMIS quickly detects errors in the
authorization process. 1.137 of the responses from the respondents deviated from the view that
IFMIS quickly detects errors in the authorization process. The minimum response support rate
was 1 and the maximum was 5. This therefore means that, majority of the respondents were in
support of the view that IFMIS quickly detects errors in the authorization process.
The study sought to examine the respondents’ views on whether IFMIS organizes and structures
information about district spending. Table 10 indicates that the mean support was 3.62. This
mean is great which show that the majority of the respondents supported that the view that
IFMIS organizes and structures information about district spending. However 1.232 of the
respondents deviated from that mean on the view that IFMIS organizes and structures
information. The minimum response support rate was 1 and the maximum was 5. This therefore
means that, majority of the respondents were in support of the view that IFMIS organizes and
structures information about district spending.
The respondents were also asked about whether IFMIS organizes and structures information
about district spending. Results in table 10 indicates that the mean support on this view was 3.62
which show that the majority of the respondents supported that the view that IFMIS organizes
and structures information about district spending. However 1.232 of the respondents deviated
from the mean on the view that IFMIS organizes and structures information. The minimum
response support rate was 1 and the maximum was 5. These results therefore implies that,
majority of the respondents were in support of the view that IFMIS organizes and structures
information about district spending.
23
The views of the respondents were also sought as to whether IFMIS processes only captured and
validated transactions. Results in table 10 indicates that the mean support on this view was 3.76
which showed that the majority of the respondents supported that the view that IFMIS processes
only captured and validated transactions. The findings also indicated 1.102 of the respondents
who deviated from the mean on the view that IFMIS processes only captured and validated
transactions. The minimum response support rate was 1 and the maximum was 5. This therefore
means that, majority of the respondents were in support of the view that IFMIS processes only
captured and validated transactions.
The opinions of the respondents were also sought as to whether IFMIS allows only factual
information to be processed. Table 10 indicates that the mean is 4.19 which show that the
majority of the respondents supported that the view that IFMIS allows only factual information
to be processed. However 0.966 of the respondents deviated from the view that IFMIS allows
only factual information to be processed. The minimum response support rate was 1 and the
maximum was 5. This therefore means that, majority of the respondents were in support of the
view that IFMIS allows only factual information to be processed
The study sought to establish the respondents’ views on whether IFMIS can trace all the stages
of the transaction processed. Finding from table 10 indicates that the mean support on this view
was 4.19 which show that the majority of the respondents supported that the view that IFMIS can
trace all the stages of the transaction processed. However 0.966 of the respondents deviated from
the view that IFMIS can trace all the stages of the transaction processed. The minimum response
support rate was 1 and the maximum was 5. These results therefore means that, majority of the
respondents were in support of the view that IFMIS can trace all the stages of the transaction
processed.
About whether IFMIS can trace all the stages of the transaction processed. Results from table 10
indicates that the mean support on this view was 4.15 which is close to greater 5 indicating that
the majority of the respondents supported that the view that IFMIS can trace all the stages of the
transaction processed. However 0.498 of the respondents deviated from the view that IFMIS can
trace all the stages of the transaction processed. The minimum response support rate was 1 and
the maximum was 5. These findings therefore means that, majority of the respondents were in
support of the view that IFMIS can trace all the stages of the transaction processed
24
The study sought to analyse the respondents’ views on whether IFMIS allows timely sharing of
the transaction information. Findings from table 10 indicates that the mean support on this view
was 3.92 which show that the majority of the respondents supported that the view that IFMIS
allows timely sharing of the transaction information. However 0.844 of the respondents deviated
from the view that IFMIS allows timely sharing of the transaction information. The minimum
response support rate was 2 and the maximum was 5. This therefore means that, majority of the
respondents were in support of the view that IFMIS allows timely sharing of the transaction
information
The study sought to examine the respondents’ views on whether IFMIS makes automatic bank
reconciliation. Table 10 indicates that the mean support on this view was 3.71 which show that
the majority of the respondents supported that the view that IFMIS makes automatic bank
reconciliation. However 0.982 of the respondents deviated from the view that IFMIS makes
automatic bank reconciliation. The minimum response rate was 2 and the maximum was 5. This
therefore indicated that, majority of the respondents were in support of the view that IFMIS
makes automatic bank reconciliation.
About whether IFMIS makes the transaction process participatory. Table 10 indicates that the
mean is 3.71 which show that the majority of the respondents supported that the view that IFMIS
makes the transaction process participatory. 0.982 in this respect shows responses of the
respondents deviated from the mean on the view that IFMIS makes the transaction process
participatory. The minimum response rate was 1 and the maximum was 5. These finding
indicated that, majority of the respondents were in support of the view that IFMIS makes the
transaction process participatory
The study sought to establish the respondents’ views on whether IFMIS keeps transaction and
database information for reference. Table 10 indicates that the mean support was 4.12 which is
close to the 5, this indicated that the majority of the respondents supported that the view that
IFMIS keeps transaction and database information for reference. However 0.910 of the
respondents deviated from the view that IFMIS keeps transaction and database information for
reference. The minimum response rate was 2 and the maximum was 5. This therefore implies
that, majority of the respondents were in support of the view that IFMIS keeps transaction and
database information for reference.
25
Table 11: Linear regression of Transaction processing and financial reporting effectiveness
Model Summary
R R Square Adjusted R Square
.537(a) .289 .282
a Predictors: (Constant), Used IFMIS for transaction processing
Coefficients (a)
Mode Coefficients Sig.
Constant .571 .000
Used IFMIS for transaction processing .545 .000
a Dependent Variable: Financial Reporting Effectiveness
The findings indicate that there is a great effect between IFMIS transaction processing and
financial reporting effectiveness r=0.537** p= 0.000, and the extent to which IFMIS transaction
processing affect the financial reporting effectiveness is r2=0.289 which p<0.01). These finding
therefore indicated that when using IFMIS in any transaction in the district paves higher chance
of being effective in reporting financial matters.
The study sought to establish the effect of IFMIS Transaction Processing on Financial Reporting
Effectiveness. The findings indicate that departments that use IFMIS in processing transaction
are 0.545 times more likely to be effective in reporting financial matters than those departments
that did not use IFMIS in processing transactions in the district. The findings show 0.000
significance level which implies that departments that used IFMIS to process transaction were
effective in reporting financial transactions in the district. The findings in the regression 0.000
significance level implying that there is a significant effect of IFMIS Transaction processing on
financial reporting effectiveness in the district. This great effect is attributed to the fact that after
the information has been fed into the system it is easier to monitor and quickly process any
transaction using the system so the system can only release what has been fed in it for a
particular item.
4.7 Report Preparation and Financial Reporting Effectiveness of Local Governments
26
The study sought to examine the of IFMIS report preparation on financial reporting in district
local government as an objective and the findings presented in the table below relates to this
objective.
Table 12: Showing Report Preparation and Financial Reporting Effectiveness (n=108)
Statement MeanStandard
DeviationMin Max
It is easy to prepare a financial report using IFMIS 4.23 0.937 1 5
It is easy to organize and structure a report using IFMIS 4.20 0.597 2 5
The system produces a report timely and friendly for the user 3.64 0.775 2 5
IFMIS help to derive the specific information required to carry out duties 3.73 0.895 2 5
Reports produced using the system are straight forward and facilitates
analysis3.75 0.693 2 5
IFMIS presents reports in a purposeful way as required by the district 3.75 0.983 2 5
IFMIS ensure release of comprehensive but compact report for the 3.80 1.028 2 5
Factual and accurate reports are prepared through IFMIS 4.02 0.945 2 5
IFMIS reports accurately discloses the financial position of the district 4.39 0.793 2 5
The report prepared with IFMIS is clear and relevant to the district 4.26 0.557 2 5
Source: Primary data
Respondents were asked whether IFMIS ease budget preparation. Findings on table 12 indicates
that the mean support on this view was 4.23 which show that the majority of the respondents
supported that the view that IFMIS ease budget preparation. However 0.937 of the respondents
deviated from the view that IFMIS ease budget preparation. The minimum response support rate
was 1 and the maximum was 5. This therefore, means that majority of the respondents were in
support of the view that IFMIS ease budget preparation
The study also sought whether IFMIS organizes and structures financial report. Table 12
indicates that the mean is 4.20 which show that the majority of the respondents supported that
the view that IFMIS organizes and structures financial report. However 0.597 of the respondents
deviated from the view that IFMIS organizes and structures financial report. The minimum
response rate was 2 and the maximum was 5. This therefore, means that majority of the
respondents were in support of the view that IFMIS organizes and structures financial report
27
The views of the respondents was sought as to whether IFMIS produces timely and friendly
reports to the user. Table 12 indicates that the mean is 3.64 which show that the majority of the
respondents supported that the view that IFMIS produces timely and friendly reports to the user.
However 0.775 of the respondents deviated from the view that IFMIS makes the transaction
process participatory. The minimum response rate was 2 and the maximum was 5. This
therefore, means that majority of the respondents were in support of the view that IFMIS
produces timely and friendly reports to the user
The opinion of the respondents was sought as to whether IFMIS helps to derive at specific
information in the report for duties. Table 12 indicates that the mean is 3.73 which show that the
majority of the respondents supported that the view that IFMIS helps to derive at specific
information in the report for duties. However 0.895 of the respondents deviated from the view
that IFMIS makes the transaction process participatory. The minimum response rate was 2 and
the maximum was 5. This therefore, means that majority of the respondents were in support of
the view that IFMIS helps to derive at specific information in the report for duties.
The study sought to determine the respondents’ views on whether IFMIS produces straight
forward reports which enable analysis. Table 12 indicates that the mean is 3.75 which show that
the majority of the respondents supported that the view that IFMIS produces straight forward
reports which enable analysis. However 0.693 of the respondents deviated from the view that
IFMIS makes the transaction process participatory. The minimum response support rate was 2
and the maximum was 5. This therefore means that, majority of the respondents were in support
of the view that IFMIS produces straight forward reports which enable analysis.
The study sought to determine the respondents’ views on whether IFMIS reports only purposeful
reports required by the district. Table 12 indicates that the mean is 3.75 which show that the
majority of the respondents supported that the view that IFMIS reports only purposeful reports
required by the district. However 0.983 of the respondents deviated from the view that IFMIS
reports only purposeful reports required by the district. The minimum response support rate was
2 and the maximum was 5. This therefore means that, majority of the respondents were in
support of the view that IFMIS reports only purposeful reports required by the district
The opinion of the respondents was sought as to whether IFMIS releases comprehensive and
compacted financial reports. Table 12 indicates that the mean is 3.80 which show that the
28
majority of the respondents supported that the view that IFMIS releases comprehensive and
compacted financial reports. However 1.028 of the respondents deviated from the view that
IFMIS releases comprehensive and compacted financial reports. The minimum response support
rate was 2 and the maximum was 5. This therefore showed that, majority of the respondents were
in support of the view that IFMIS releases comprehensive and compacted financial reports.
The study sought to determine the respondents’ views on Whether IFMIS prepares only factual
and accurate reports. Table 12 indicates that the mean is 4.02 which show that the majority of the
respondents supported that the view that IFMIS prepares only factual and accurate reports.
However 0.945 of the respondents deviated from the view that IFMIS prepares only factual and
accurate reports. The minimum response support rate was 2 and the maximum was 5. This
picture reflected that, majority of the respondents were in support of the view that IFMIS
prepares only factual and accurate reports.
The study question also sought to determine whether IFMIS accurately discloses financial
position of the district. Table 12 indicates that the mean is 4.39 which show that the majority of
the respondents supported that the view that IFMIS accurately discloses financial position of the
district. However 0.793 of the respondents deviated from the view that IFMIS accurately
discloses financial position of the district. The minimum response support rate was 2 and the
maximum was 5. This therefore revealed that, majority of the respondents were in support of the
view that IFMIS accurately discloses financial position of the district.
About whether IFMIS whether IFMIS prepares clear and relevant financial reports for the
district. Table 12 indicates that the mean is 3.75 which show that the majority of the respondents
supported that the view that IFMIS prepares clear and relevant Financial reports for the district.
However 0.693 of the respondents deviated from the view that IFMIS prepares clear and relevant
financial reports for the district. The minimum response rate was 2 and the maximum was 5. This
therefore means that, majority of the respondents were in support of the view that IFMIS
prepares clear and relevant financial reports for the district.
Table 13: Linear regression between Report preparation on financial reporting
effectiveness
Model Summary
29
R R Square
Adjusted
R Square
.539(a) .291 .284
a Predictors: (Constant), Used IFMIS for report preparation
Coefficients (a)
Mode Coefficients Sig.
(Constant) .685 .000
Used IFMIS for report preparation .582 .000
a Dependent Variable: Financial Reporting Effectiveness
About the effect of IFMIS financial report preparation on financial reporting effectiveness, the
results indicate that there is a significant positive relation between the two variables with
r=.0.539**, and the extent to which financial report preparation affect the reporting effectiveness
was 0.29 (r2=0.29¿ withp=0.000 which p<0.01. This findings shows that there is an
improvement of financial reporting effectiveness when districts use the system to prepare
financial reports. This means that if district can fully use the system in all it financial business,
there will be limited loss of money hence effective service delivery in the district.
The study sought to examine the effect of IFMIS Report preparation on Financial Reporting
Effectiveness. The findings indicate that departments that use IFMIS in preparing financial
report were 0.582 times more likely to be effective in reporting financial matters than those
departments that did not use IFMIS in preparing financial reports in the district. The findings
show 0.000 significance level which implies that departments that used IFMIS to preparing
financial reports were effective in financial reporting in the district. The findings in the
regression tables therefore implies that there is a significant impact of IFMIS financial report
preparation on financial reporting effectiveness in the district and significant 0.000 were constant
variable or unexplained figures in the study. Because is already with information that is required
to prepare a financial report, it is easy prepare a report which increases the system’s effectiveness
in reporting financial matters.
4.9 IFMIS and Financial Reporting Effectiveness
30
The study sought to determine the impact of IFMIS on financial reporting in district local
government as an objective and the findings presented in the table below relates to this objective.
Table 14: Showing IFMIS and Financial Reporting Effectiveness (n=108)
StatementMean
Standard
Deviatio
n
Min Max
IFMIS is consistent in reporting District financial matters 3.30 1.013 1 5
Reports prepared using IFMIS are accurate/systematic 4.19 0.986 1 5
IFMIS ensures timely reporting of the transaction made as required 4.39 0.674 3 5
The system is transparent when reporting financial matters 4.23 0.727 2 5
IFMIS reports on required information asked by the user 4.32 0.579 3 5
Source: Primary data
The study sought to examine the respondents’ views on whether IFMIS produces complete and
self-explanatory financial reports. Table 14 indicates a mean of 3.30 which show that the
majority of the respondents supported that the view that IFMIS produces complete and self-
explanatory financial reports. However 1.013 of the respondents deviated from the view that
IFMIS produces complete and self-explanatory financial reports. The minimum response rate on
this view was 1 and the maximum was 5. The findings therefore shows that, majority of the
respondents supported view that IFMIS produces complete and self-explanatory financial
reports.
About whether IFMIS is consistent in reporting district financial matters, Table 14 indicates that
the view attracted much support with a mean of 4.19 which implies that the majority of the
respondents supported that the view that IFMIS is consistent in reporting district financial
matters although the same table 9 shows that 0.986 of the respondents deviated from the view
that IFMIS is consistent in reporting district financial matters. The minimum response rate on
this view was 1 and the maximum was 5. This therefore implies that, majority of the respondents
supported the view that IFMIS is consistent in reporting district financial matters which is a very
important component of financial reporting effectiveness.
The study also sought to determine the respondents’ views on whether IFMIS prepares accurate/
systematic financial reports of the district. Table 14 indicates that the mean was 4.39 which show
31
that the majority of the respondents supported that the view that IFMIS prepares accurate/
systematic financial reports. In this respect 0.674 responses of the respondents deviated from the
view that prepares accurate/ systematic financial reports. The table also shows a minimum
response rate of 3 and the maximum was 5. These findings therefore implies that, majority of the
respondents were in support of the view that IFMIS prepares accurate/ systematic financial
reports.
The study also sought to analyse the respondents’ views on whether IFMIS ensure timely
reporting of the transaction made in the district. Table 14 indicates that the mean is 4.23 which
show that the majority of the respondents supported that the view that IFMIS ensure timely
reporting of the transaction made in the district while 0.727 of the responses deviated from the
view that ensure timely reporting of the transaction made in the district. The minimum response
rate was 2 and the maximum was 5. This therefore means that, majority of the respondents were
in support of the view that IFMIS ensure timely reporting of the transaction made in the district.
The study sought to analyse the respondents’ views on Whether IFMIS is transparent when
reporting financial matters. Table 14 indicates that the mean is 4.32 which show that the majority
of the respondents supported that the view that IFMIS is transparent when reporting financial
matters. However 0.579 of the respondents deviated from the view that IFMIS is transparent
when reporting financial matters. The minimum response rate was 3 and the maximum was 5.
This therefore, means that majority of the respondents were in support of the view that IFMIS is
transparent when reporting financial matters.
The study sought to assess the respondents’ views on whether IFMIS reports on information as
asked by the user. Table 14 indicates that the mean is 4.16 which show that the majority of the
respondents supported that the view that IFMIS reports on information as asked by the user.
However 0.860 of the respondents deviated from the view that IFMIS reports on information as
asked by the user. The minimum response rate was 2 and the maximum was 5. This therefore
showed that, majority of the respondents were in support of the view that IFMIS reports on
information as asked by the user.
Table 15: Summary table of Regression of Financial Reporting Effectiveness and IFMIS
Budget Preparation, Transaction Processing and Report Preparation
32
Variables R Coefficient Significance
IFMIS budget preparation .325 .325 .001
IFMIS transaction processing .537 .545 .000
IFMIS report preparation .539 .582 .000
Source: Primary data
The study sought to assess the effect of IFMIS Budget preparation on Financial Reporting
Effectiveness. The findings indicate that departments that use IFMIS in preparing budgets
are .325 times more likely to be effective in reporting financial matters than those departments
that used IFMIS to prepare budgets. The findings also show a significance level of 0.001
meaning that departments that used IFMIS to prepare budgets lead to effective financial
reporting in the district. The results therefore show that there is significant effect of IFMIS
budget preparation and financial reporting effectiveness in the district. These results were are
attributed to the strict follow of the budgeting rules
The study sought to establish the effect of IFMIS Transaction Processing on Financial Reporting
Effectiveness. The findings indicate that departments that use IFMIS in processing transaction
are .545 times more likely to be effective in reporting financial matters than those departments
that did not use IFMIS in processing transactions in the district. The findings show 0.000
significance level which implies that departments that used IFMIS to process transaction were
effective in reporting financial transactions in the district. The findings in the regression tables
implies that there is a significant impact of IFMIS Transaction processing on financial reporting
effectiveness in the district. This great effect is attributed to the fact that after the information has
been fed into the system it is easier to monitor and quickly process any transaction using the
system so the system can only release what has been fed in it for a particular item.
The study sought to examine the effect of IFMIS Report preparation on Financial Reporting
Effectiveness. The findings indicate that departments that use IFMIS in preparing financial
report are .582 times more likely to be effective in reporting financial matters than those
departments that did not use IFMIS in preparing financial reports in the district. The findings
show 0.000 significance level which implies that departments that used IFMIS to preparing
financial reports were effective in financial reporting in the district. The findings in the
regression tables therefore implies that there is a significant impact of IFMIS report preparation
33
on financial reporting effectiveness in the district and significant 0.000 were constant variable or
unexplained figures in the study. Because is already with information that is required to prepare a
financial report, it is easy prepare a report which increases the system’s effectiveness in reporting
financial matters.
In conclusion, the findings show that IFMIS has great effect on financial reporting effectiveness
in the district given the fact that the budgeting follow the law and rules that guide budgeting in
the district and therefore the system is an asset in improving financial reporting of the district and
achieve value for money.
CHAPTER FIVE:
34
DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This chapter discusses the findings, makes conclusions and recommendations. This chapter starts
with a simple summary of the study. The chapter then proceeds to discuss the study findings
according to the set objectives. Conclusions are then drawn in view of the discussion under each
objective and finally, the chapter makes recommendations for improvement in financial reporting
effectiveness of the district as well as suggestions for future study.
5.2 Summary
The purpose of the study was to assess the effect of IFMIS on the financial reporting
effectiveness of district local governments in Uganda. The three specific objectives of the study
were: to assess the effect of Budget Preparation on Financial Reporting Effectiveness of District
Local Governments, to establish the effect of Transaction Processing on Financial Reporting
Effectiveness of District Local Governments, and to examine the effect of Report Preparation on
Financial Reporting Effectiveness of District Local Governments.
Descriptive case study research design was employed due to its ability to provide a snapshot of
the current state of affairs. The study population were staffs of Wakiso district local government.
The sample population comprised of 108 staff working in the finance, accounts, procurement and
audit departments, Health, community based and office of the Chief Administrative Officer and
Stratified and purposive sampling technique were used. Questionnaire and non-structured
interview schedule were used to collect the data and the response rate of 100% was recorded.
The data was analysed using SPSS for descriptive and linear regression and the findings were
presented in tables.
5.3 Discussions
The discussion in this section related to the objectives of the study that include; the effect of
IFMS budget preparation on financial reporting effectiveness, effect of IFMIS transaction
processing on financial reporting effectiveness, and the effect of IFMIS report preparation on
financial reporting effectiveness. The discussion was expresses in terms of description and
regression in relation to the literature advanced about the system in ensuring financial reporting
effectiveness in district local governments as seen below;
5.3.1 The Effect of IFMIS budget preparation on Financial Reporting effectiveness
35
The study findings indicate that many of the respondents were of the view that IFMIS budgeting
enabled them to ensure equity in budgeting and being realistic to resources available for the
district. These findings indicate that the IFMIS budgeting system improve the reporting
effectiveness of financial matters in the district. These findings were also reflected in the positive
correlation between the IFMIS budget preparation on financial reporting effectiveness (r=0.
325**, p=0.001 which p<0.01). This offer a consensus agreement with the views of Hendricks
(2012) who argue that IFMIS allow a more standardized and realistic budget formulation across
government, while promoting better control over budget execution through the full integration of
budget execution data. The findings informs that IFMIS improves financial reporting
effectiveness of the public sector specifically local governments. It also allow for the
decentralization of financial functions and processes under the overall control of the Ministry of
Finance, enhance financial discipline and control operating costs by reducing administrative
tasks and civil servants’ workload. In line with this argument, the findings show that majority of
the respondents (73%) agreed that it is very simple to tracks income and expenditure of the district
using IFMIS as seen in appendix 3. These findings were in line with Braggs (2013) who suggested
that Budgeting system plays an important role to Organisation management, especially in
decentralized agencies and that company/District needs budget to translate all the company's
strategies into short-term and long-term plans and objectives. These results do not differ from the
observations of one the respondent who reported that
“Because the system’s operation is linked to computer technology, it has a provision
which you click after all the budget details has been captured to prepare a full budget
and the whole budget will be summarized in a few hours as long as the systems network
is strong”.
Another respondent from the accounts department reported that
“As long as the environment is conducive with no interruption from anywhere the system
is the best to use in budgeting because if programmed and follow the budgeting rules and
regulations, it improve the information generation financial matters which later we use
in financial reporting for any financial decision to be made”
36
Following the discussion and interaction with officials in the district, there is a clear picture that
IFMIS is appreciated and what the district need to do to make the system more fruitful is
capacity building of the staff that use the system.
The respondents were also asked about whether IFMIS integrates and ranking departmental
budget. Table 8 results indicates that the mean support for this view was 4.56. This mean is
stretching to 5 which showed that the majority of the respondents supported that the view that
IFMIS integrates and ranking departmental budget. However 0.636 of the respondents deviated
from that mean on the view that IFMIS integrates and ranking departmental budget process but
this is too low. The minimum response support rate was 2 and the maximum was 5. The results
therefore means that, majority of the respondents were in support of the view that IFMIS
integrates and ranking departmental budget. These findings agree with Allen and Tommasi
(2011) description of the system as to openness, communication and accountability. When
transparency is achieved in budget reports, the reliability of information is enhanced; in turn
financial reporting is improved. This disagreement may associated to the fact that the system is
new in districts and the respondents have not been trained on how to use it effectively. The study
findings also showed that majority of the respondents 74.0% agreed that using IFMIS make it
easy to integrate all departmental budget together including the ranking of their projects and
activities for funding as in in appendix 3. This was obtained from finding that the IFMIS was
effective in improving district financial budgeting and ranking. These findings were also
reflected in the positive correlation between the IFMIS budget preparation on financial reporting
effectiveness (r=0. .291**, p=0.003 which p<0.01).
The findings were consistent with the views of Dener and Young (2015) that the system
allocates resources fairness is referred to the extent in which a firm identify allocating resources
policy and procedures with emphasizes on equity and transparency principles. Transparency can
be defined as "the essential condition for a free and open exchange whereby the rules and
reasons behind regulatory measures are fair and clear to all participants”. The study also showed
that majority 73% of the respondents agreed that IFMIS enabled them to tracks income and
expenditure of the district easily as reflected in appendix 3. This corresponded to positive
correlation between the effects of IFMIS on improved financial reporting and IFMIS enabling
37
them to tracks income and expenditure of the district easily, which implied improved financial
reporting effectiveness in districts by the system.
Similarly, findings showed that majority of the respondents supported that the view that IFMIS is
realistic to available resources for spending. 0.537 of the respondents deviated from the mean of
4.06 on the view that IFMIS is realistic to available resources for spending. The minimum
response rate on this view was 2 and the maximum was 5. This therefore implies that, majority
of the respondents were in support of the view that IFMIS is realistic to available resources for
spending. Appendix 3 indicate that majority of the respondents 63.0% agreed that IFMIS
provides real time sharing of budget information so quick and easy. The results were consistent
with the observation put forward by Wamuyu (2013) that making budget data publicly available
is necessary to enable transparent reporting of the government’s financial intentions and of its
use of taxes. The study also found that majority 92.3% of the respondents agreed that it easy to
make a district budget based on resources available using IFMIS and presents the budget in a
way that enable analysis. This agrees with the views of Karatsi (2015) who argued that IFMIS
can facilitate timely and accurate reporting.
These findings move hand in hand with the response made by one of the respondent who
commented that
“The system is so reliable because when a transaction is made, it provides a notification
message to the concerned parties and the amount is has released. This message comes
immediately the transaction is made. So it gives quick update of the amount paid”.
Results from the regression indicate that using IFMIS for budget preparation may lead to
effective financial reporting. The regression findings also show a significance level of 0.002
meaning that departments that used IFMIS to prepare budgets are more likely to achieve
effective financial reporting in the district. The finding therefore shows that there is significant
effect of IFMIS budget preparation and financial reporting effectiveness in the district and 0.705
in this respect means the level of error that was cited in the data. These results are attributed to
the fact that the system follow rules and regulation during the budgeting process which positively
affects the system’s performance in ensuring financial reporting effectiveness. These findings are
supportive with views of Karatsi (2015) who argued that IFMIS can facilitate timely and
accurate reporting.
38
5.3.2 The Effect of Financial Transactions Processing on Financial Reporting Effectiveness
The study established the majority of the respondents supported that the view that IFMIS
processes all transaction receipts and payments of the district. These findings agree with the
observation sighted by Diamond and Khemani (2005) who emphasized that it was essential that
both receipts and payments are processed by the FMIS, including the payroll payments to ensure
that the budget and accounts are comprehensive. The implication of these results is a reduction in
wastage and irregular/illegal payments which makes the correlation coefficient (r=0.521**,
p=0.000) which p<0.01) significant. This indicate that the system has helped to reduce instances
of unauthorized, unnecessary or irregular expenditure, suggesting that public money was being
appropriately managed through IFMIS which improves financial reporting effectiveness.
The research findings show that the majority of the respondents supported that the view that
IFMIS offers rapid and quick response of the transaction, although there were about 0.483 of the
respondents deviated from the mean on the view that IFMIS offers rapid and quick response of
the transaction. The appendix table 4 about frequencies also indicate that majority of the
respondents 98.1% agreed that the system is good at providing rapid and quick transaction
responses to the concerned parties in the district. These findings were in line with the benefits
outlined by proponents of automation cited by Simon et al. (2011). The mean support of 4.13 on
this view showed that the majority of the respondents supported that the view that IFMIS allows
only budgeted activities are processed for funding. The study also study established that majority
of the respondents 84.6% agreed that IFMIS allows only authorized budgeted activities and
projects for funding. This means that the IFMIS encourages due diligence in its users which is
consistent with sound financial reporting principles as emphasized by Moeti, Khalo and
Mafunisa (2007) the system offers rapid response and this has to do with quick information
available to the public. The system said to be responsive if we can produce the maximum and
quick amount of financial information for a given and fixed transaction or payment made.
The study established that the system quickly detects errors in the authorization process and that
majority of the respondents supported that the view that IFMIS quickly detects errors in the
authorization process. This was not different from the findings indicated in the frequency results
in appendix 4 which indicate that majority of the respondents 67.3% agreed that there were
39
inbuilt analytical tools within IFMIS that detects the error in process of authorization so quickly.
This suggest that the objective of better financial reporting as outlined by Isidore (2012) was
fulfilled through IFMIS. In terms of transaction processing, it is expected that the automation
and interlinking of procurement processes such as requisition, tendering, contract award and
payment has yielded dividends for districts. One of the issued that manifests in the finding which
showed that 79.8% of the respondents agreed that IFMIS allows timely sharing of transaction
information to all concerned parties which promote transparency and effective financial
reporting. This is one of the gains which motivated the introduction of the IFMIS and the
positive correlation between the system and improvements in financial transaction processing
suggest that all procuring entities within the district buy the right products and or services at the
right prices. This is done by availing information to potential buyers and such instances financial
reporting effectiveness is improved.
This agreement is in line with the response of one respondent who observed that
“You see that it has with it a component which quickly tell if the amount being paid is
above or less than what it has so if you entered for example 50,000 on a certain item, it
cannot allow you to pay over or less than that amount, it will inform you that the order is
out of proportion, so the system easily detect the mistake”
The study findings established that majority of the respondents supported that the view that
IFMIS processes only captured and validated transactions which looked not different from
frequency that majority of the respondents 78.9% agreed that IFMIS processes only captured and
validated transactions of the district as shown in appendix 4. The results shows a significant
correlation coefficient (r=0.521**, p=0.000) which p<0.01) between IFMIS transaction
processing on financial reporting effectiveness and validated transactions of the district. This is
consistent with the observation of Simson, Sharma, & Aziz (2011) who notes that the various
public financial reporting processes are structured around the budget cycle. This annual cycle
aims to ensure that public expenditure is well planned executed and accounted for.
The findings in the Pearson correlation on this objective correspondents with regression result
which shows that that departments that use IFMIS in processing transaction are 2.326 times more
likely to be effective in reporting financial matters than those departments that did not use IFMIS
in processing transactions in the district. The findings show 0.000 significance level which
40
implies that departments that used IFMIS to process transaction were effective in reporting
financial transactions in the district implying that there is a significant impact of IFMIS
Transaction processing on financial reporting effectiveness in the district and 0.625 in this
respect means the level of standard error that was cited in the data. This great impact is attributed
to the fact that after the information has been fed into the system it is easier to monitor and
quickly process any transaction using the system so the system can only release what has been
fed in it for a particular item. The results therefore indicated that IFMIS transaction processing
impact positively on the financial reporting effectiveness in the district.
5.3.3 The Effect of IFMIS financial report preparation on financial reporting effectiveness
Regarding the financial report preparation, the study findings revealed that majority of the
respondents were in support of the view that IFMIS ease budget preparation with mean support
of 4.23. This agrees with the arguments of Thurakam (2007), who observed that the statements
which are prepared from accounting information are known as financial statements. Most
countries require the preparation of at least four statements: an operating statement reflecting
revenues and expenses; a statement of assets and liabilities of the entity; a cash flow statement
related to operating, investment, and financing activities; and a statement presenting additional
information on a disaggregated basis (Hoek, 2010). They are the end products of accounting
process in an enterprise. The appendix 5 also established that 88.4% of the respondents agreed
that it is easy to prepare a district financial report using IFMIS which simplifies the financial
reporting of the district. This is linked to further findings which showed that that majority of the
respondents were in support of the view that IFMIS organizes and structures financial report as
with majority (64.4%) of the respondents agreed that financial reports produced using the system
are straight forward and facilitates analysis which facilitated effective financial reporting of the
district which has a positive correlation between IFMIS transaction processing and financial
reporting effectiveness with r=.0.509**, p=0.000 which p<0.01. as well as producing purposeful
reports required by the district which was within the expectations for the introduction of the
system hence improving financial reporting effectiveness
The study established that majority of the respondents were in support of the view that IFMIS
prepares only factual and accurate reports which is not different from the frequency results of
79.9% respondents agreed that IFMIS Financial reports prepared through IFMIS are factual and
41
accurate which promote effective financial reporting as seen in appendix 5. This means that that
users of financial reports were able to access and analyse only factual information concerning
financial management at the district which enhanced financial reporting effectiveness. This is
one of the benefits anticipated with the introduction of IFMIS by the district. These findings
depicts the positive correlation IFMIS transaction processing and financial reporting
effectiveness with r=.0.509**, p=0.000 which p<0.01. The findings agree with the observation
made by Simson et al., (2011) that the system has to gain an understanding of how public funds
have been utilized, and how they contribute to government policies, it is important to monitor the
results of expenditure. This has led to the establishment of government monitoring and
evaluation systems for factual and comprehensive reporting. These systems are used to measure
the quantity, quality and targeting of goods and services that the state provides and to measure
the outcomes and impact resulting from them.
The study established that on aggregate majority of the respondents were in support of the view
that IFMIS accurately discloses financial position of the district with a mean support of 4.39.
these findings were not different from the results produced by the frequency table appendix 5
which established also that majority of the respondents 92.3% agreed that IFMIS prepared
financial reports accurately discloses the financial position of the district. The study also
established findings therefore indicate that many of the respondents 97.3 agreed that IFMIS
produces financial reports that are clear and relevant to all stakeholder in the district as indicated
in appendix 5. These results agreed with the observation of Ministry of Finance (2015) that for
this purpose it is anchored in the district accounting system and should be designed to perform
all necessary accounting functions as well as generate custom reports for internal and external
use. For example, the component of reporting of district transactions encompasses all activities
that include the updating and maintenance of the general ledger, the reconciliation of sub ledgers
to the general ledger and closing of books. It also includes recording, control and reporting on
fixed assets at both National and district level. The findings agree with the correlation results
which showed that there is a positive significant correlation between IFMIS transaction
processing and financial reporting effectiveness with r=.0.509**, p=0.000 which p<0.01. This
correlation picture shows that there is a likelihood of improving financial reporting effectiveness
when districts use the system to prepare financial reports. This means that if district can fully use
the system in all it financial business, there will be limited loss of money hence effective service
42
delivery in the district. The finding on this objective is not different from what one the
respondent that
“The system has got quick responsive mechanism immediately after the transaction has
been made, it briefly brings a message to the concerned parties about what transaction
has been made, for what purpose to who and the time of transaction”
The findings in the Pearson correlation about this objective correspondents with regression result
which shows use of IFMIS in preparing financial report put them at 2.546 times more likely to be
effective in reporting financial matters than those departments that did not use IFMIS in
preparing financial reports in the district. The findings show 0.001 significance level which
implies that departments that used IFMIS to preparing financial reports were effective in
financial reporting in the district. Implying that there is a significant impact of IFMIS Report
Preparation on financial reporting effectiveness in the district. This is because the system is
already with information that is required to prepare a financial report, it is easy prepare a report
which increases the system’s effectiveness in reporting financial matters.
5.4 Conclusions
5.4.1 The Effect of IFMIS budgeting system on Financial Reporting effectiveness
Using IFMIS in budget preparation positively affect the financial reporting effectiveness in local
governments. These results are attributed to the fact that the system follow rules and regulation
during the budgeting process which positively affects the system’s performance in ensuring
financial reporting effectiveness. This means that the introduction of the system in the district led
to improvement in the budgeting and financial reporting of easy costing of the activities in the
budget, improved equity in budget priorities, easy integration of all departmental budgets in the
district including their cost ranking, easy tracking of the income and costs of the district budget,
easy updating of the budget, ensuring convenience in making budgets of the district, quick
sharing of budget information and quick authorization of the budgeting process and that IFMIS
helped the district Transparency, accuracy and relevancy which are critical in promoting
financial reporting effectiveness which was one the objective for the introduction of IFMIS.
5.4.2 The Effect of IFMIS financial transactions system on financial reporting effectiveness
Using IFMIS in transaction processing significant improvements in financial reporting
effectiveness in district local governments. This was shown by offering rapid and quick financial
43
transaction responses/ messages to various stakeholders in the district, provision of receipts of
the payment transacted, processing of only budgeted and authorized activities, detecting of errors
in the authorization process, structuring information about the spending made, validation of
transactions before processing, tracing of all stages of transaction processing in the district,
automatic reconciliation of bank statement, making transaction processing participatory and
keeping transaction database information for reference in the district. The findings were also
Pearson correlation and multivariate logistic regression results. This therefore meant that the
objectives of improve rapid response, reliability, inflexibility, controlled processing were
achieved.
5.4.3 The Effect of IFMIS Report preparation on financial reporting effectiveness
In terms of using IFMIS to prepare report, IFMIS has led to improved Organisation and structure
of the financial report, timely release of financial report which is friendly to the user, helping to
derive the specific information required to carry out duties, release of straight forward financial
reports that facilitate analysis, accurate disclosure of the district financial position, enhanced
transparency, increased accountability, auditable financial statements and enhanced credibility of
the reports of the district and improve financial reporting. Therefore IFMIS report preparation
positively effects financial reporting effectiveness of the districts and the objective for the
introduction of the system was achieved.
5.5 Recommendations
In order to help achieve the objective of realizing the full benefits of a fully integrated end-to-end
financial management information system, the district should both appeal to and support the
adoption of the system within the district local government system. This may require advocacy
and capacity building by the national government to influence policy development that embraces
the system at district level.
Local governments should leverage on the efficiency and effectiveness gains of the IFMIS to
consolidate stakeholder confidence through more awareness and publicity of the achievements.
For example, they should explore opportunity for partnership with the private sector and
nongovernmental actors to support their agenda as a way of promoting sustainability of the
respective agencies.
44
The government should integrate non-financial information into the system so that other
functions within the organizations can also benefit from the advantages of IFMIS. Such functions
include information technology, security and maintenance, human resource and other peripheral
functions. This recommendation is subject to cost-benefit analysis.
5.6 Recommendation for Further Studies
The purpose of this study was to determine the effect of IFMIS on the financial reporting
effectiveness of district local governments in Uganda. The three specific objectives of the study
were: to assess the effect of Budget Preparation on Financial Reporting Effectiveness of District
Local Governments, to analyse the effect of Transaction Processing on Financial Reporting
Effectiveness of District Local Governments, and to examine the effect of Report Preparation on
Financial Reporting Effectiveness of District Local Governments. Therefore, the study
recommends that in future, a study be conducted on the effectiveness of IFMIS of financial
reporting effectiveness in private Organizations. This study will be key in identifying whether
the IFMIS adopted by organizations are important in improving the financial reporting
effectiveness and what other strategies can be adopted so as to improve financial reporting.
45
REFERENCES/BIBLIOGRAPHY
Actionaid. (2014). Corruption and the Service Delivery Tragedy in Uganda, Stories from the
Eastern Leg of the Anti-Corruption Caravan.
Auditor General (2015). Report of Auditor General on Financial Statement of Wakiso District
Local Government for the year Ended 30th June 2015.
Allen, R. (2009). The Challenge of Reforming Budgetory Institutios in Developing Countries.
Washington DC: International Monetory Fund.
Allen, R., & Tommasi, D. (2011). Managing Public expenditure (Electronc resource): a
reference book for transition countries. Paris: OCED Publishing.
Barton, A. (2009). The use and Abuse of Accounting in the Public Sector Financial Management
Reform Program in Australia. A journal of Accounting, Finance and Business Studies,
45(2), 221-248.
Bason, C. (2010). Leading Public Sector Innovation: Co-creating for a better society. Bristol:
The policy Press.
Bragg, S. M. (2013). Accounting Best Practices (7th ed.). New York: John Wiley & Sons.
Brown, E. R. (2008). Integrated Financial Management Information Systems. A Practical
Guide. USAID.
Cem, D., Alexandra, W. J., & Leslie, D. W. (Financial Management Information System: 25
years of World Bank experience on what works and what does not). 2011 (Vol. 1).
Washinton DC.
46
Chene , M. (2009). Assessing the relationship between Characteristics and Organisational
culture. Academy of Management Journal, 37, 522-554.
Dener, C., & Young, S. (2015). Financial Management Information System and Open Budeget
Data: Do Governments Report on Where the Money Goes? Washington DC: World Bank
Publications.
Diamond, J., & Khemani, P. (2005). Introducing Financial Management Information Systems in
Developing Countries. New Delhi: Fiscal Affairs Department.
Diamond, J., & Khemani, P. (2006). ‘Introducing financial management information systems in
developing countries’. OECD Journal on Budgeting 5(3), 97–132.
Hendriks, C. J. (2012). Integrated Financial Management Information Systems: Guidelines for
effective implementation by the public sector of South Africa. Bloemfontein: University
of the Free State, South Africa.
Howard, P. (2004 ). Building and Implementing a Security Certifcation and Accreditation
Program. Boca Raton: CRC Press.
International Monetory Fund. (2010). Combined First and Second Reviews under the
Arrangement Under the Extended Credit Facility, Request for Waiver of Non-observance
of Performance Criteria, Modification of Performance Criteria and Rephrasing of
Disbursements. Washington DC: International Monetory Fund.
Isidore, M. (2012). An assessment of how integrated financial management information system
enhances financial decision making at Tanesco. Public finance Journal, 24(62), 89-105.
Jin, D., & Lin, S. (2012). Advances in Electronic Commerce, Web Application and
Communication. New York: Springer Publishers.
Karatsi, R. (2015, 9 26). Why is the new salary system failing civil servants? Saturday Vision, p.
6.
Kasumba, S. (2009). Where New Technology Meets Socio-Economic Impasses: A Study of the
Integrated Financial Management System as a Management Control in Local
Governments in Uganda. Accountancy Business and the Public Interest, 8(2), 1-43.
47
Kimwele, J. (2009). Factor affecting effective implementation of IFMIS in government ministries
in kenya. . University of Nairobi: Unpublished MBA.
Kothari, C. R. (2014). Research Methodology: Methods and Techniques (3rd ed.). New age
International publishers.
Krejcie, R.V & Morgan, D (1970). Determining Sample size for Research Activities, 607-610
Lambright, G. M. (2011). Decentralization in Uganda:Explaining Successes and Failures in
Local Governance. Boulder, USA: First Forum Press, A Division of Lynne Rienner
Publishers, Inc.
Mckinney, J. B. (2004). Effective Financial Management in Public and Non-profit Agencies (3rd
ed.). Praeger Publishers.
Modina , S., & Zanolli, R. (2008). Rationalising administrative processes interms of efficacy,
efficiency and effectiveness. Milano: Guiffre Editore.
Moeti, K., Khalo, T., & Mafunisa, J. (2007). Public Finance Fundamental. Cape Town. South
africa: Africa Juta Publishers. Retrieved on 14rh April 2016.
MoFPED. (2015). The Effectiveness of the Integrated Financial Management System In Uganda.
Kampala.
Muigai, E. K. (2012). The impact of Integrated Financial Management Information System on
Financial Performance of Public Sector. Patent No. D61/60169/2011. Kenya/East
Africa. Unpublished Thesis, University of Nairobi.
Nabuukera , C. (2014, September 13). The electronic system reaches 77 districts. The Saturday
Vision, pp. 2-3.
Picci, L. (2005). The Quantitative Evaluation of the Economic Impact of e-government: A
structural modelling appraoch. Retrieved on 15th June 2016, from Information
Economics and Policy; http://www.elsevier.com/locate/iep.
Pollitt, C. (2008). Integrated Financial Management and Performance Management. OECD
Journal on Budgeting, 1(1), 1-37.
48
Rabrenović, A. (2009). Financial Accountability as a Condition For EU Membership. Belgrade:
Institute of Comparative Law.
Rozner, S. (2008). Best practices in fiscal reform and economic governance. Introducing
integrated financial management information systems.
Rozner, S., & Gallagher, M. (2008). Integrated Financial Management Information Systems, A
Practical Guide. Washington: Bureau of Economic Growth, Agriculture and Trade.
Rupanagunta , K. (2006). E-Governance in Public Finance Mnangement: An Overview. IIMB
Management Review, 1(2), 403-413.
Thurakam, R. (2007). Management Accounting. New Delhi: New Age International.
Wamuyu, K. (2013). The effect on Integrated Finanvcial Management Information System on
Financial Management and service delivery of Government Ministries in Kenya.
Unpublished Thesis.
World Bank. (2013). Local government management and services delivery adaptable program
loan (apl) project in support of the public financial management reform program and the
decentralization policy strategic framework .
Wynne, A. (2005). Public financial management reforms in developing countries: lessons of
experience. London, United Kingdom: The Knowledge Management and Program
Support Department.
Zainal, Z. (2007). Case study as a research Method. Journal Kemanusiaan bil, 1-6.
49
50