EFFECTS OF INTERGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM ON PUBLIC ENTITY: A CASE STUDY OF UASIN GISHU COUNTY GOVERNMENT
JIMMY KIPROTICH KOECH
A RESEARCH PROJECT SUBMITTED TO THE KENYA INSTITUTE OF MANAGEMENT, IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF A DIPLOMA OF PURCHASING AND SUPPLY MANAGEMENT
This project is my original work and has not been submitted anywhere for academic purposes.
Jimmy Kiprotich Koech
Declaration by the supervisor
This project has been submitted with my approval as the supervisor of the above student.
On behalf of the kenya institute of management
Branch Manager, KIM eldoret.
I would like to dedicate this work to my brothers and family members for always wishing me the best, and encouraging me endlessly.
I would like to acknowledge in a special way and thank my supervisor Martin Ongeri, for his valued guidance, support and direction. His academic inputs and extensive discussions highly inspired my writing to produce more than just the academic output.
Technology have let to the growth of Financial management information systems which is computerization of public expenditure management processes including budget formulation, budget implementation, and accounting with the support of a fully integrated system for financial management of link departments and other spending agencies. Management of information using computerized systems and the internet has revolutionized the way organizations both in government and private transact their internal and external operations. The use of technology that include electronic tools and media, is vastly changing the way public procurement is executed and thus constituting a key part of modern public procurement. The specific objectives of the study was to establishing the effect of IFMIS on public entity at the department of procurement and supplies in the county government of Uasin Gishu and to determining the effect of IFMIS on the delivery of public service at the county the study also seeks to assess the effect of IFMIS on staff competence and skills of civil service, county policies, technological infrastructure and Top management support on supply chain management performance in UGCG. The target population was 150 county officers which consisted of top management staff, ICT, finance and procurement department staff in the UGCG. Random sampling was used to select 50 county officers. The study mainly used primary data that was collected using a semi-structured questionnaire administered to the officers while PPOA staffs were interviewed. The study findings showed that implementation of IFMIS has greatly affected procurement and supply processes effectiveness, cost savings, efficiency, functionality and increased quality in county government. The study findings showed that there has been a reasonable level of application of IFMIS in UGCG. Furthermore the highest number of staffs in the County possesses the required skills, abilities and experience for IFMIS implementation and these are being enhanced by the provision of further experience by county’s training and capacity building programs. The research findings revealed that the provision of procedures that offered perfect instructions, processes and procedures for employees was the most dominant culture. The study found that corruption practices have reduced as the civil servants act with integrity while carrying out daily businesses and offering services to the public. The study recommends that the county undertakes wide capacity building and training during the early stage of any process and that the county reviews the policy guidelines for more successful implementation of IFMIS with regard to management accountability.
LIST OF THE ABREVIATIONS
IFMIS : INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM
ICT : INFORMATION COMMUNICATION AND TECHNOLOGY
PSM : PURCHASING AND SUPPLY MANAGEMENT
UGCG : UASIN GISHU COUNTY GOVERNMENT
PPOA : PUBLIC PROCUREMENT OVERSIGHT AUTHORITY
IMF : INTERNATIONAL MONETARY FUND
P2P : PROCURE TO PAY
EGPP : ELECTRONIC GOVERNMENT PROCUREMENT PROCESS
MOF : MINISTRY OF FINANCE
Table of Contents
LIST OF THE ABREVIATIONS VI
CHAPTER ONE: INTRODUCTION 1
1.0 INTRODUCTION TO THE STUDY 1
1.1Background of the study 1
1.3 Statement of the problem 7
1.4Objectives of the study 9
1.4.1Main objectives of the study 9
1.4.2Specific objectives 9
1.5 Research Question 9
1.6Significance of the study 10
1.6.1The county ministry of finance 10
1.6.2County Government of Uasin Gishu 10
1.7Limitation of the study 11
1.8The scope of the study 11
CHAPTER TWO: LITERATURE REVIEW 12
2.0 LITERATURE REVIEW 12
2.1 Introduction to literature review 12
2.2Theoretical review 12
2.2.1System theory 13
2.2.2 Institutional Theory 14
2.3Empirical literature 15
2.4Summary of literature review 19
3.0CHAPTER THREE: RESEARCH METHODOLOGY 21
3.1Introduction to research methodology 21
3.2 Research Design 21
3.3 Target Population 22
3.4 Sample and sampling technique 22
3.5 Data collection Instruments 23
3.6 Data analysis and data presentation 24
CHAPTER ONE: INTRODUCTION
1.0 INTRODUCTION TO THE STUDY
The chapter contains the background study, statement of the problem, objectives of the study, research questions, significance of the study, limitation of the study and the scope of the study.
1.1Background of the study
The inclination procedures have been in use for some time now with Germany and Britain being the first adopters of the process in the late 20th century. (GIZ, 2013), adoption of these regulations also came with trading partnerships which gave partisan treatment to members of the trading blocks in the European Union. In current generation the Public segment and in particular the civil service plays an essential role in the effective delivery of public services that are key to the functioning of a both the county and state economy. When the delivery of services is forced or that becomes ineffective, it affects the quality of life of the people in the society and nation’s development process (Kobia, 2006).Many developing counties, however, continue to suffer from unsatisfactory and often dysfunctional governance systems that include rent seeking and malfeasance, inappropriate allocation of resources, inefficient revenue systems, and weak delivery of vital public services (Kragbe, 2012).
The entrance of technology to the world business segments which including electronic tools and platforms, has immensely changed the perceptions of many people and the way public procurement is implemented and thus constituting a key part of modern public procurement. The benefits of e-procurement are therefore much more than not only the improved efficiency through computerization of county activities. E-procurement represents a powerful information and management tool that reinforces the strengthening of public procurement systems and that which can transform the provision of public services (Bailey 2008). State in developing counties is progressively adopting ways and systems to modernize and improve procurement and supplies processes due to its significant contribution to the county’s growth. Globally, Governments are investing a great deal of resources to streamline and improve procurement and supplies management and implementing new systems that manage tenders through e-procurement. This is geared towards enhancing accessibility of tenders, increasing efficiency and saving costs in the department and improving transparency to reduce corruption in procurement and supplies services (Baily, 2008)
In the past years, procurement and supplies management systems in Kenya has undergone substantial developments (Kipkorir, 2010). This is attributed to the acceptance of e-government services and the increased in the use of technologies which has dramatically changed service delivery, business models and the public’s perception and expectations of the quality and efficiency of information sharing and service delivery (Muthoni 2010; Owegi and Aligula, 2006). And one of the information systems that has helped revolutionize the supply chain effectiveness in Kenya is integrated financial management information system (IFMIS) introduced to the public procurement offices.
Kenya has however continue to be rank as one of the most corrupt nation across the world and bribery is one of the issue cited by Kenyans as major concern (hope, 2011) the results of these developments are within all public sectors across the country and now a strong emphasis have been placed to ensure the corruption is over and done with. Sinking corruption is one of the vocal points across the country (hope 2011) there have been a lot carried out by the both the county and national government to ensure that corruption have been compacted and reduced. A lot of emphasis has been placed on matters to do with honesty, accountability and avoidance of fraud in public sectors.
One of the priorities in public sector is to institutionalize and reform these sectors so as to increase effectiveness, efficiency and ethical delivery of service. The government of Kenya in the year 2003 started implementing reforms to address inefficiencies in the use of public resources and week institution of governance (Ayoti, 2003). Such reforms included Government financial management act which was to provide for the management of government financial affairs, to make certain provisions with respect to the exchequer account and the Consolidated Fund, to provide for persons to be responsible for government resources and to provide for other related matters (Government Financial Management Act, 2004). Later in the year 2010 when the new constitution was promulgated, financial probity was enshrined in the constitution of Kenya 2010 under chapter six which spells out matters of integrity and leadership of state officers (National Council for Law Reporting, 2010). In section 76 which addresses questions of probity, it states; (1) a gift or donation to a State officer on a public or official occasion is a gift or donation to the Republic and shall be delivered to the State unless exempted under an Act of Parliament; (2) a state officer shall not- (a) maintain a bank account outside Kenya except in accordance with an Act of Parliament; or (b) seek or accept a personal loan or benefit in circumstances that compromise the integrity of the State officer.
Financial probity is about the ethical, lawful, prudent, effective and transparent conduct of financial transactions and of processes that ensure that all such transactions and procedures are supported as appropriate by a strong risk management strategy (Kragbe, 2012). Unauthorized expenditure refers to overspending and/or spending that is not in accordance with the mandated purpose of appropriated funds (Bragg, 2013) and Public money is considered to have been inappropriately managed or spent on instances of unauthorized expenditure, fruitless and wasteful expenses, and/or irregular expenditure are present. Fruitless and wasteful expenditure refers to unnecessary expenditure that should have been avoided if reasonable care had been exercised while irregular expenditure refers to authorized expenditure that happens to be in contravention of other applicable legislation (Moeti et al, 2007).
According to Burgess, financial probity is monitored through the standard procedures of accounting and auditing procedures (Burgess, 2014). Such procedures are embedded in electronic transaction processing technologies such as the Integrated Financial Management Information Systems (IFMIS). IFMIS is the computerization of public expenditure management processes including budget formulation, budget execution, and accounting with the help of a fully integrated system for financial management of line ministries and other spending agencies (Diamond & Khemani, 2005). According to Beschel and Ahern, integrated financial management information systems can facilitate timely and accurate reporting; allowing internal controls to be exercised through the IFMIS, and therefore support more consistent compliance; and allow central agencies to oversee budget execution by line ministries, and therefore facilitating the devolution of responsibilities to front line managers while retaining information at the center (Baschel and Ahern 2012) .
Probity is achieved by using IFMIS as a tool to ensure the promotion of transparency in e-governance. On reviewing the experiences regarding the application of IFMIS to developing countries, Wescott, Bowornwathana and Jones (2009) noted that IFMIS can facilitate recurrent/capital budget integration and improve accounting and reporting systems, but only if the country’s budget and accounts classification is reformed and the system is appropriately phased and adapted to a country’s capacity to maintain it. One of the major reform initiatives rolled out by the government of Kenya was the automation of public financial management processes through the establishment of IFMIS. According to Ministry of Finance (2013), IFMIS was first launched in 2003 in Kenya and the IFMIS Re-engineering Strategic Plan (2011-2013) was launched in 2011. The Ministry of Finance (2013) defines IFMIS as an automated system that interlinks planning, budgeting, expenditure management and control, accounting, audit and reporting. It is intended to ensure a higher degree of data quality, improve workforce performance for improved business results and link planning, policy objectives and budget allocations.
It is also intended to enhance reporting capabilities to support budget planning, automate the procurement process such as requisition, tendering, contract award and payment. Further, it is also intended to facilitate auto reconciliation of revenue and payment, automated revenue collections and automated bank reconciliation. According to Nzuve (2012), IFMIS enhances effectiveness and transparency of financial management system, offers a standardized integrated financial management reporting system, and provides timely and accurate financial information.
The county government of Uasin Gishu is a creation of the constitution of Kenya 2010 and a successor of the defunct Wareng county council. It operates under the auspices of the cities and urban areas act, the development government act and a host of others acts. The UGCG is in charge with the responsibilities of providing variety of services to residence within its jurisdiction. These include the services that were provided by the Wareng county council and the one which have been transferred from the national government.
1.3 Statement of the problem
The public procurement and supply chain management in Kenyan public sector has been going through positive reforms which include the Kenyan parliament passing the public procurement and disposal act 2005 which has resulted into formation of public procurement oversight authority (PPOA). In addition to this there has been tremendous growth of information technology in the country that has transformed the way public procurement is carried out in the country. Introduction and the growth of technology has let to promotion of IFMIS as a core component of public financial reforms for developing county governments activities; effective control of finances, transparency and accountability.
According to Ngugi and Mugo(2012) Kenya leaves a lot to be desired in the fight against misappropriation of funds in the public sector. Financial probity is closely related to the accountability of monetary values in a given sector and with the adoption of electronic financial management system in processing of ministries procurement processes technology such as the implementation of the IFMIS is expected to eradicate the corruption practices in the said ministries and the civil servants will be perceived to be acting in accordance with the constitution of the Kenya. There is broad agreement that the implementation of fully functional electronic management of financial transactions in the counties can improve significantly and provide real time financial position of the managed sections and other managers can use it to administer programs effectively and managed the budgets and the resources.
According to kinyua (2003) the government has experience misappropriation of the funds and lack appropriation control mechanisms in purchasing and supply management which has led to poor service delivery and theft in the ministries. Despite the existence of manual based control system, lack of accountability in government expenditures has been a concern to the public and to the governing authority and also to the international institutions such as IMF and the World Bank (kinyua 2003). In the year 2003 the government of Kenya introduces the IFMIS to cushion and monitor the financial process in the government institutions against loss of revenues in departmental expenditure. During the first two phases over the first three years, a number of diagnostics review has been conducted and financial management system was develop. The implementation part of it has raised a number of issues but the system has been implemented and is being used in both the national and the county government.
According to Diamond et al (2005) on the introduction of IFMIS on developing countries, first there is a need of total commitments, sufficient man power and financial resources, internal support and an agenda for effective change in management ways. Secondly there is a need to consider the IFMIS by these countries as a component of wider reform process and thirdly there should be the implementation strategy to guide the administrators in terms of functionality. A study conducted by Bill Dorotisky on the bank funded projects found that only 21% of the IFMIS projects were successful, only 6% of the projects were considered sustainable. None of the studies tackle the effects of IFMIS on the financial management practice of public sector in Kenya and in particular county governments. It was on this background that the research aimed on filling the existing gaps in the area by assessing the effectiveness of IFMIS on the county Government of Uasin Gishu.
1.4Objectives of the study
1.4.1Main objectives of the study
The primary objective of the study with respect to the financial management of public resources sought to analyze the effective nature of the integrated financial management system on the performance of public sector in Uasin Gishu County Government.
1. To establish the effect of IFMIS on the perceived financial probity of civil servants at the procurement department.
2. To determine the effects of IFMIs on the delivery of the public service at the public sector.
3. To determine how IFMIS has affected the internal functioning of the public sector.
4. To verify the effects of IFMIS on budgeting of public money.
1.5 Research Question
A research question is a statement about an area of concern, a condition that need improvement , a difficult to be eliminated, or a troubling that exist in the literature, in theory, or in practice that points to the need for meaningful understanding and a deliberate investigation. The research questions are derived from the objectives of the study
i. What are the effects of IFMIS on the performance of public entity?
ii. How to civil servants at the procurement department perceive the implementation of IFMIS?
iii. What are the effects of IFMIS on the delivery of service at the public sector?
iv. What are the effects of IFMIS on the internal functioning of the public sector?
v. What are the effects of IFMIS on budgeting of the public finance?
1.6Significance of the study
This research was important because it seek to find out and to fill the gabs between the laws governing the public resources that is by day to day broken by servants employed by the public sector to govern this resources but at the end of this all this laws are neglected by the same. The study sought to find answers to issues that is becoming more applicable in the increasing information sectors in the county and country at large hence the study is beneficial to the following stakeholders.
1.6.1The county ministry of finance
The study will provide first hand evaluation of the performance of the ministry in terms of its delivery of services to the public. The findings of this study could also be used by the ministry to identify gaps that which can be bridged for future improvement for the better performance of the ministry and of the entire government.
1.6.2County Government of Uasin Gishu
The county government of Uasin Gishu could also use the finding on this research as an independent, objective assessment of the gains it has accrued since the implementation of the integrated financial management system. The finding of the study could inform policy development in the county and in the future in terms of adoption of technology to improve the service delivery in the county functions.
This study would also be useful to the citizens of the republic of Kenya through the implementation of recommendations that which would follow this study, Kenyan citizen would enjoy the benefits of having their financial resources monitored and used accordingly by the individual employed by the government. Citizens would enjoy improved and better delivery of services through better management of public finance
1.7Limitation of the study
The major limitation in this study was shortage of time to collect the data forcing the researcher to wait for long for subjects to respond. Lack of prior research data for literature review. However, with the current technology and libraries offered online the researcher had to acquire resources to access this online article. Limited funds to carry out the research in terms of traveling and collecting data which force the researcher to wake up early enough take walk as he tries to minimize his expense on transport. Some of the respondents may not be ready to assist in providing the relevant information hence moral hazards but with the involvement of top level management the data could be collected with no or little problems.
1.8The scope of the study
The study investigates the effects of IFMIS on the performance of public entity at the county government of Uasin Gishu. The target population is 400 respondents from which a sample size of 40 respondents were picked. The study period was between June and August 2018.
CHAPTER TWO: LITERATURE REVIEW
2.0 LITERATURE REVIEW
2.1 Introduction to literature review
This chapter review the literature form that is being used in this study and try to compare and to contracts the finding of the previous researches finding and try to fill some gaps which were left out by this researches due to development in the I information system in the country and the county management. Both independent and dependent variables are explained in the research and finally the summary conclusions and recommendation are explained for the authorities to implement.
Edwin R. B. (2008) defined IFMIS as integrated management software that is able to assist government in management of financial management process that which include the planning, budgeting, accounting and reporting. It enables the government to record all the government expenditure information which users can access and extract specific information they require to carry out certain task or activity. Reports can be retrieved at any given time through the IFMIS software Ameen and Ahmed (2012) submitted that some system contain a libraries of reports in hundreds of standard form. All the data, people, software and hardware are all combined to form information in the system and keep track of all the events happen in the financial sector of the government in a summary form.
IFMIS was an initiative to re-engineer financial process in the republic of Kenya and it originated from the office of the deputy prime minister and the minister of finance. The process of transforming the financial system was first launched in 2003 and its implementation originated in filling the gaps which originated from the SIBET system which was used before the introduction of IFMIS, however it only introduced limited modules. Hon. Uhuru Kenyatta in February 28th 2011 launched strategic plan ( 2011-2013) which was to see the IFMIS being fully implemented across all the government expenditure department. The IFMIs re-engineering program adopted in the fully intergraded system policy cycle end to end framework.
IFMIS seek to increase the confidence of and keep track record of the events that which ids occurring in the financial management sectors in the ministries and enhance credibility of the officer’s employed to safe guard the public resources though greater comprehensive and transparency of all transaction information. IFMIS seek to improve budget planning process and its execution by providing timely and accurate information for budget management process. IFMIS allow for the decentralizations of the activities and resources under the control of the national treasury ministry therefore the implementation of the software across all the department allow for the transparency and discipline and control of cost by reducing the administrative task and civil servant workload GoK(2000)
The origin of systems is traced back to a biologist Ludwig Von Bertalanffy (1901-1972) he became one of the general system theory where in the year 1945 he introduce models, principles, and laws that apply to generalized systems or their sub-system( Bevir, 2010). Smith Acuna (2010) defines system as a set of unifying principles about the organization and function of systems; where systems are defined as meaningful whole that are maintained by the interactions of the attached part where Draft (2009) defines the functionality of the system as acquiring inputs from the external environment. In classical system theory, bureaucracies in the government are part and parcel of the complex web of interrelationship of the management of government transaction processes both in organizational and at individual level. IFMIS operation seeks to give transparency to the financial transactions in the financial sectors in the government. It gives transparency to bureaucratic operations and act to mitigate a natural and organizational interest. It support values such as probity, stewardship, and help sustain the civil service culture which are motivated by the concern for the proper use of the public money (Bourn, 2008).
Concepts and techniques of the systems are important for a number of reasons and according to Mayers(2004) firstly, they are the bases for the development of the computerized information systems found in all types of organization today. Organization system is an integral part that plans organize staff, make decisions concerning an organization as whole. In order to meet citizens, visitors, and internal expectations in an efficient manner governments are turning their services to ICT forms to enhance their services by lowering cost of production and increasing productivity ( Ngugi and Mugo 2012). The management part of a given sector does ensure that the systems are given the proper infrastructure for its operations and maintained in order for it to meet its objectivity (Bevir, 2008)
2.2.2 Institutional Theory
Scott(2001) defines institutional theory as a social structure that have gain social resilience in the society or the in the country of a higher degree of resilience Akinola (2005) observed that an institution is a body that have been embedded in a specific country institutional arrangement.
According to Scott (2001) there are three different institutions namely, regulatory, cognitive and regulatory. In the regulatory institution there are the set of formal and informal rules set, monitored and enforced and where necessary the rules are enforced by laws, regulations and government policies set by the ruling authority which restrict the behaviors or promote the interactions of the employee in a given institution both in the national and county government ( Busenitz, Goacutemez, and Spencer (2000) the normative system in the other hands are obliged to follow set of normative rules that are prescribed to them and are only followed so as to archive the objective set by the ruling authority( Scott 2001) where in contrast, the cognitive system recognizes the shared conceptions that constitute the nature of social reality and the frames through which meaning is made(Scott 2001)
Hence, personal cognitive and social structure and social knowledge combine to represent a nation’s cognitive environment. In contexts where institutional and competitive pressures exert strong influence the strategic decisions of the mangers results both in the conformity to institutional pressure which leads to isomorphism and legitimacy, and in differentiation, which, following the resource-based view of the firm, can increase the possibility of creating a competitive advantage through heterogeneity in resources and capabilities. In this study compliance to organizational and government policies is a determinant of effective supply chain management performance.
From the view of ministry of finance (2013), IFMIS strengthen the financial control process and accountability when it comes to expenditure, it facilitating a full and updated picture of commitments and expenditures in a continuous basis. Once an entry is entered into the system it hence registers every stage at every entry point giving the authority the room to track all the transaction process entered into the system all from the release of the budget to commitment, purchase, payment request, reconciliation of bank statements, and accounting of expenditure.
A study was conducted by Hendrick (2012) to identify gaps that which need to be filled and he did identify some challenges that is being encountered with the implementation of IFMIS in public expenditures in south Africa. Hendrck conducted his study in order to give solutions to the challenges that face the authorities so as to make the step successful. He found that the sheer size of the companies and complexities encountered in these companies made it difficult for the authorities to implement the IFMIS and risk involved in the practice. However, there are a number of best practices which if implemented will see the IFMIS successful which involve the development of infrastructure. Eisenstat (2003) found that ICT infrastructure plays a supportive but important role in implementation of improved procurement practices.
Njode and Kimanzi(2014) study on the effectiveness on the performance of the integrated financial management system found that out of the four variables used; financial reporting , budgeting, internal control and implementation of government projects, IFMIS has been effective in financial reporting, budgeting and internal control as well as implementation of government projects, although there were challenges faced in the internal controls the study revealed that there was a positive relationship between effectiveness of IFMIS on public finance management and independent variables; finance reporting, budgeting, internal control and project implementation as was revealed in the regression analysis.
Diamond (2005) gives his view about IFMIS as a system that for a long time it helps in tracking financial events and summarizing financial information’s. It gives adequate report, policy decision, fiduciary responsibilities and preparation of auditable financial statements. The consideration will lead to improve public finance management and service delivery to the citizens and accountability. IFMIS adoptions generally guides in the process from budget preparation and execution to accounting (Harwlow, 2008)
Henrick (2012) submit that a well-designed IFMIS system provide a number of features that helps in detecting excessive payment of merchandize, fraud and theft of public finance. These include, for example, automated identification of exceptions to normal operations, patterns of suspicious activities, automated cross-referencing of personal identification numbers for fraud detection, cross-referencing of asset inventories with equipped purchase to detect theft, automated cash disbursement rules and identification of ghost workers.
Some of the examples that IFMIS aim to make it easier include Procure to Pay(P2P)system which is developed to streamline procurement and payment process by fully automating the procurement to payment transaction and hence increasing control and visibility over the entire life-cycle of a procurement process. End-to-End automated process start at the development of procurement plans, to the actual procurement of merchandize and services, to payment of suppliers for merchandize supplied and services offered (Ministry of Finance, 2013). Subramaniam and Shaw( 2002) submits that the benefits of Integrated financial management system in E-Government Procurement processes are in line with the international recognized laws concerning the purchase and delivery of services in a public entity: it gives transparency and compliances of the set rules, increase in performance and quality and hence the growth in the economy of the county and the country. Diamond and Khemani(2005) for instance reported that in Tanzania, the benefits of IFMIS have been extensive, with the restoration of expenditure control and improved levels of overspendings, and a substantial reduction in domestic arrears. A number of government Bank accounts have been reduces to single manageable account maintained at the central bank where the lag in reconciliation of the banking data has been reduced from two years to automated reconciliation on a daily basis. Comprehensive and fully reconciled fiscal data and reports are available on a continuous basis.
IFMIS implementation is a challenge in implementation stage in the area of public procurement. To realize the full potential hence require the public entity to perceive these development as technological issues is to understand their reach and relevance for policy, training, infrastructure, design, production and delivery, as well as technological literacy of awareness.
According to Odoyo et al(2013) on the effects of implementation of IFMIS on cash management practice on public entity in Eldoret west district, treasury department, Kenya the study revealed that IFMIS in the public sector was undergoing challenges with many users experiencing problems with certain complicated features of IFMIS coupled with security, flexibility and reliability issues that have an impact on the efficient cash management in the public entity on delivery of services. Finding showed that the effects of IFMIS on cash management showed positive reliability and flexibility. Finding also showed that reliable system is one that which will give accurate, timely, complete and consistent information when needed. Also, the infrastructure supporting the system should be well secured from destruction, corruption, unauthorized access and breach of confidentiality so that there is efficient cash management. Odoyo found that the implementation of IFMIS has not been a success as a result of the top down management exhibited in most of the public entities.
2.4Summary of literature review
The literature has pin-pointed two theories; Agency theory and System theory. The relevant of system theory in this study gives the relationship between IFMIS and public probity. This centrality is fund in the definition of the system, as a set of interrelated or interconnected parts working together as part of the entire whole body. Since system function by the direction given to it by the external input device that gives instructions, hence, the effectiveness of IFMIS as a system is contingent upon the quality and integrity of the inputs to the system. These include data, people, information and the instruction. Agency theory also is central to the study in that the discourse about the principal agent problem which nictitate the occurrence of the agency cost. The agency cost in this study manifest itself in the investment of the IFMIS system and the infrastructure which becomes the incentives that makes the public servant align their interest with that of the tax payers leading to financial probity.
This chapter has also critically discussed the empirical literature. Much of the empirical literature as dwelled on the benefits of IFMIS as a tool for financial control and reporting and therefore some relation can be inferred in terms of financial probity. However, some past study on the effects of IFMIS on the management of public finance which have yielded mixed reaction. In addition, these studies do not clearly situate their analysis based on the theoretical framework. This necessitates the need for ongoing studies on the effects of IFMIS as a tool for financial control and reporting tool on financial probity in the government offices.
3.0CHAPTER THREE: RESEARCH METHODOLOGY
3.1Introduction to research methodology
This chapter expound on the methodology that was used to study the effects of IFMIS on the performance of the county government of Uasin Gishu. This part expound on the criteria of the design, population, sample size method, data and data analysis methods.
3.2 Research Design
This is the structural arraignment of research scheme outlined and planned that is used to generate answers to the research problem. Babbie (2008) defines research design as the arrangement of condition and the way the data has been analyzed so as to combine the relevance of the research with the state of the variables in the process. Case Study research design has been used by the researcher. This type of design presents the picture of the single or part of phenomenon under investigation as it exit and its results or findings are generalized. Case Study research design measure variable as it is naturally through the use of question answered questions such as how, when Where, what and how much Through interviews, observations, or study of journals/records that exits(Cooper and Schindler, 2006). The design was carefully used to ensure that there is complete description of the situation, making sure that there is minimal bias in collection of data to reduce or minimize the errors analyzing the data. The study was guided by four independent variables; staff competence and skill; policy; top management support and technological infrastructure support. The use of the descriptive research design enables the researcher to give its proper recommendation on the general view of the population that was studied. The researcher gave recommendation that which will help the county government of Uasin Gishu and others around the country as well as the national government as whole.
3.3 Target Population
The population is the aggregate of all cases that which conform to the designated set of specification. The population of the study comprise of all IFMIS users that comprise of the groups of individual, objects, items, cases, articles, or things with common characteristics that exists at the particular time (Kothari, 2008). The study comprised of 100 employees working in the ICT, finance and procurement department with the top management of the Uasin Gishu County Government. The study adopted the census survey owing to the small number of departments. The study used non-probability design of sampling to select the top management, ICT, finance and procurement staff to participate in the study.
3.4 Sample and sampling technique
Sample is a sub set of selected individuals from within the entire group or groups of populations to yield some knowledge about the entire organization or group of individual so as to represent the entire population. The aims of sampling are to make general to all population so as to make the study manageable (Mugenda and Mugenda, 2006). The study used purposive sampling method. This gave researcher a chance to pick the subject based on own subjective judgement within the shortest time. According to mugenda and mugenda (2003), a sample size of at least 10%-20% of the population is enough for descriptive judgment. Thus, the study used a sample of 40 employees working in the procurement, finance, ICT and top management staff. The sample size was therefore 32 respondents.
3.5 Data collection Instruments
The study used structured and unstructured questioners to collect data. A questionnaire is an instrument designed by the researcher with a list of questions to which a research subjects are expected to react to or to respond to. Kirakowski (2008) defines the use of questionnaire as a method for the elicitation, recording and collecting information. The questionnaires were used because they are not expensive. The first part of the questionnaire contained the questions seeking the demographic information from the respondent such as the tenure in the ministry, department, education, computer literacy, among others. The second section was made up of five like scale statements seeking respondent views regarding their perceived financial probity of civil servants at the ministry. The third and final section was made up of questions attempting to establish the effects of IFMIS on the delivery of service at the ministry. The process of collecting data involved first, pilot-testing the instruments on a small sample of 4 respondents to evaluate the robustness of the questionnaires in archiving the study objectives. Reliability was to be achieved through the use of Cronbach’s Alpha, a coefficient of the reliability test which is effective for testing reliability of research instruments. Calculations of Cronbach’s Alpha are based on the number of items and the average inter-item correlation, ranging from 0 for a completely unreliable to 1 for a complete reliable instrument where a Cronbach’s Alpha of 0.7 is recommended (Hilton, 2004). The closed ended questionnaire had a five pointed like scale where the respondents were required to fill according to their level of agreement to the statements. The questionnaire was framed in accordance with the objectives of the study. Qualitative data was collected from open items while quantitative data was collected from the closed ended items in the questionnaire.
3.6 Data analysis and data presentation
The study used primary data that was collected using semi-structures questionnaires. The data was coded and entered into statistical package for social science in the preparation for data summarization and analysis. Descriptive statistical techniques were used to summarize the data into frequency tables. Qualitative data was analyzed using tables and figures for easy understanding and interpretations. Quantitative data was analyzed using content analysis. This method included analyzing words or pictures by collecting data, recording people experiences not selecting and pre-chosen aspect. The data to be obtained in the study were analyzed by organizing them into similar themes and tallying the number of similar responses. Further analyses were analyzed using correlation coefficient and multiple linear modeling techniques. The following regression equation proposed by Ghauri and Gronhaug(2005) was used.
Y = ?0 + ?1X1 + ?2X2 + ?3X3 + ?4X4 +?
Y == represent dependent variable (public entity performance)
?0 == represent the constant in the given equation
X == represent the effects of IFMIS implementation.
Effects of IFMIS implementation was then measured using four data point
X1 == Staff competence.
X2 ==Organizational Policy.
X3 ==Top management support.
X4 ==Technological infrastructure.
? ==error term for the model which means that the model may not be completely accurate, and will result in differing results during real world applications.
?0, ?1, ?2, ?3 and ?4 are the standardized regression coefficient and are the correlation between the predictor and dependent variables.
The research findings were presented into the graphs, charts and tables so as not only does it become visual when analyzing but also see what happened and make interpretation the best way to show the data to other users.