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THE IMPACT OF FINANCIAL MANAGEMENT

ON THE ORGANIZATIONAL PERFORMANCE
(A CASE IN ROBE MUNICIPALITY)

A SENIOR ESSAY SUBMITTED TO THE DEPARTMENT

OF MANAGEMENT IN PARTIAL FULFILLMENT FOR
THE REQUIREMENT OF BACHELOR OF ARTS DEGREE
IN MANAGEMENT

BY MEAZA HAILU
ADVISER GEZHAGN

MADA WALABU UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT

BALE ROBE , ETHIOPIA

MAY 2010 E.c

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Acknowledgement

First and for most I would like to thank my almighty God for his protection and help
me at every steps of my life and success in my work.In addition I would like to
express my deep gratitude to my advisor Gezahegn S not only for spending his value
able precious time in reading every portion of the paper but also for his value able
comments ,suggestions and criticism that guided me in doing the research without his
support and co-operation this would not have been finalized.I would also like to
thanks the manager of robe municipality for his greater support in giving me every
information of the study and the employees of the organization for their co-operation
to fill the questionnaire.

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Abstract

This study was focus on the impact of financial management on organizational

performance in robe municipality.The main objectives of this study is to analyze the
impact of financial management on organizational performance in robe
municipality.in order to answer the above mention objectives the study used both
primary and secondary source of data.the primary data s were collect by structure
questionnaire and interviews,where as secondary data from books different
documents collect through document analysis (document review techniques.)The
method of sampling was simple random sampling,because it gives equal chance for
all employees and free from biases.In order to analyze and present the data collect
from different parts,the researcher use descriptive type of data analyze through
percentage and tabulation.On the analysis the finding identifies preparation and
approval of municipality budget.based on the finding the municipality use the budget
code and budget cycle properly.finally the researcher recommended that the
municipality budget of Robe branch is utilized according to plan and budget code

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TABLE OF CONTENT

CHAPTER ONE

1 INTRODUCTION......................................................................................................6

1 .1 BACK GROUND OF THE STUDY......................................................................6

1.2 statement of the problem.........................................................................................8

1.3 Research question..................................................................................................9

1.4 Objective of the study...............................................................................................9

1.4.1 General objective.................................................................................................9

1.4.2 Specific objective ..............................................................................................9

1.5 Significance of the study ........................................................................................9

1.6. Scope of the study.................................................................................................11

The study was delimited to the investigation of financial management on.................11

organizational performance in robe municipality because of time and financial

constraint. It also believe that the study area was available for getting reliable
information from managers and employees of the organization..................................11

1.6.1 Limitation of the study.......................................................................................11

Chapter two..................................................................................................................13

1.7 Review of literature...............................................................................................13

1.7.1 Principles of financial management..............................................................15

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1.7.2.functions of financial management.....................................................................16

1.7.3. Organizational Performance...............................................................................17

Chapter Three...............................................................................................................18

1.8 Methodology of the Study....................................................................................18

1.8.1 Description of the study area.............................................................................18

1.8.2 Population and sampling....................................................................................19

1.8.3 Data source and method of collection ...............................................................19

1.8.4. Instruments........................................................................................................19

1.8.5. Methods of data analysis....................................................................................20

CHAPTER FOUR........................................................................................................23

4. Data Analysis and Interpretation..............................................................................23

CHAPTER FIVE..........................................................................................................31

5. summary,conclusion and recommendations............................................................31

5.1. summary of the finding.........................................................................................31

5.2 conclusion...............................................................................................................32

5.3. recommendation...................................................................................................33

REFERENCES.............................................................................................................34

Questionnaire................................................................................................................35

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CHAPTER ONE
1 INTRODUCTION
1 .1 BACK GROUND OF THE STUDY

Financial management is about planning incomes and expenditure and making

decision what will able you to survive financially.it concern with the acquisition of
financially and management of assets with so me over all goals.it concern with rising
of funds creating value to the asset of the organization by efficient allocation of funds.
(Singh,2008)

Financial ,managements are most concern with managing the flow of fund in to and
out of the organization and help to determine how company’s fund can be most
effectively used individual manager in this functional area are responsible for granting
and using their company’s credit,investigating company’s fund safe guarding
company’s asset,keeping track of the company’s financial health and preparing
budget (plunkett,1999)

To day business are under constant pressure to developed implement and rapidly
revise their financial management strategies(shah,2009)

To do this business need to develop and implement financial strategies to manage risk
and improve financial performance and capabilities as depicted in the resource based
theory.

In terms of business strategy an organization can success if it has suitable competitive

advantage and it is organization employees described in terms of their training,
experience, judgement intelligence,relationship and insights(Etal) .Financial
management in public organizations is concerned with ensuring funds are available
when needed and that they are obtained and used in the most efficient and effective
way to the benefit of the citizens(waddell,2000).

Financial management is the part of total management function which is concerned

with the effective and efficient rising and utilization of funds.it must be operated with
the frame work of clearly under stood objectives and with the basis of logical concept.
Financial management is recognized or every important branch of management it is
dynamic subject, and responsible for operating company’s re source efficiently.

It has also to work among conflicting goals equity and profitability in company and
also financial management covers different functional areas in a firm including supply
function (singh,2008).

The assessment of financial management and its impact on organizational

performance in robe municipality has not been sufficiently assessed or studied by
identifying the impact of financial management on organizational performance.

So this research is vital infilling this gap,beside this in my preliminary study in robe

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municipality I have got there is problem related was proper use of financial
management

1.2 statement of the problem

Financial management in public organizations is concerned with ensuring funds are

available when needed and that they are obtained and used in the most efficient and
effective way to the benefit of citizens (Waddell,2000).Financial manage management
is the part of the total management function which is concerned with the effective and
efficient rising and utilization of funds.it must be operated with the frame work of
clearly under stood objectives and with the basis of logical concept. Financial
management is recognized or a very important branch of management it is dynamic
subject,and responsible for operating company’s resource efficiently.it has also to
work among conflicting goals of equity and profitability in company and also
financial management covers different functional areas in a firm including supply
function (Singh,2008).the assessment of financial management and its impact on
organizational performance in robe municipality has not been sufficiently assessed or
studied by identifying the impact of financial management on organizational
performance.so this research is vital in filling this beside this in my preliminary study
in robe municipality I have got there is problem related was proper use of financial
management system.

The assessment of financial management and its impact on organizational

performance , In Robe municipality has not been sufficiently assessed or studied by
identifying the impact of financial management on organizational performance.so this
research is vital in filling this gap,beside This in my preliminary study in Robe
municipality I have got there is problem related with proper use of financial
management.so this research was conducted so as to fill this gap.In this research,the

research would try to investigate the impact of financial management on

organizational in Robe municipality.

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1.3 Research question

The researcher would try to answer the following basic question.

1. how the financial management work in robe municipality?

2. What is the impact of financial management in robe municipality?

1.4 Objective of the study

1.4.1 General objective

The main purpose of the study is to analyze the impact of financial management in
robe municipality.

1.4.2 Specific objective

√ To assess the financial management practice in Robe municipality

√ To identify problem related to financial management in Robe municipality

√ To assess the source of budget municipality in Robe municipality

1.5 Significance of the study

Primarily this research was conducted as requirement in partial fulfillment to acquire
a bachelor Degree in management.beside this the result of this study,however,were
expected to have the Significance;-it might serve as a stepping stone for further
researcher conducted by interested researchers.

The result of this study expected to have the following significance.it might serve as a
stepping stone for further research conducted by interested researchers.

The study was generate greater awareness among public academic institutions on the
importance of having a proper and financial management frame work as a vehicle to
organizational effectiveness.

Additionally the study would help the municipality to improve financial management
and it would provide information for all level of managers and it may help the
concerned body stake holder to be aware regarding the existing constraints.

Finally the government can modify and make different policies,strategies and to
aware of any service delivery organizations feel a sense social responsibility,and to be
ethical on their activities.

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1.6. Scope of the study

The study was delimited to the investigation of financial management on
organizational performance in robe municipality because of time and financial
constraint. It also believe that the study area was available for getting reliable
information from managers and employees of the organization.

1.6.1 Limitation of the study

√ Budgetary limitation was also among the expected limitation that is result in lack of
stationary typing and editing problems absence of transportation cost and the live.

√ Time was one of the basic limitation that put its restriction on the investigation
area.

√ Lack of adequate data from the organization on was also another problem.

√ During data analysis some respondents gave less attention to the question and it
resulted data lose.

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Chapter two
1.7 Review of literature
Plunkett,(1997)defined as finance is the function of a business that acquires funds
from the firm and manages those funds within the firm and management is the process
of planning,organizing and controlling to achieve the limited resources of the
organizational goals and also financial management is the job of managing a firms
resource so it can meet its goals and objectives.

Financial manager examine the financial data prepared by accountants and make
recommendation to job executives regarding strategies for improving the health
(financial strength )of the firm(MCKUGH,2005).

Financial management is the part of total management function which is concerned

with the effective and efficient raising and uses of funds.it must be operated with the
frame work of clearly understood objectives and on the basis of logical concepts.(Jon
R,1987)

Financial management is broadly concerned with acquisition of and use of funds by

organization. Thus it depends on the system of an organization.(singh,2008)

Financial management in municipality is different from that of business and other

profit makers and organization because it is much concerned with social returns of the
service they provide,and it used to provide information and analyzed to manager
within the organization to assist in decision making and if concerned with measuring
and reporting cost of production,marketing and other function preparing budget
(planning)and checking wither or not units are staying with in their budget
(controlling)and designing strategies to minimize taxes.(Hodder and Stoughton,2001

Financial management is recognized or a very important branch of management and it

is a dynamic subject and responsible for operating accompany efficiently.traditional
financial management subject was treated with a very narrow function but now the
modern concept of financial management has wide coverage.it has turned in to subject
In to bringing about analysis,planning and controlling of funds.financial management
has the work among est conflicting goals of equity and profitability in accompany and
if covers different functional areas in a firm.it has to be part of supply
function,production function,distribution and personal function.

Financial management involved traditionally with the approach of rising funds for an
enterprises.the modern approach of financial management consists of dealing with
managerial problems both of long terms and day to day nature of accompany,and it is
some of functions include determining financial requirements of firms.determining
source of funds,financial analysis,establishing optimum capital structure,profit
planning and control project planning, evaluation and corporate taxation.(singh.2008)

Financial management is largely about making decision.such as what assets or

products to invest in how to manage cash and how to raise funds for growth.the stage

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for the remainder of the text by explaining the basic concepts on which financial
decisions are based the language used to describe the principles of finance,the
arithmetic used to make financial decisions,the world in which financial managers
operate and how this world influences financial decisions making.

The company has been a significant factor on the economic development of

countries.such as Australia.legally this entity functions separately and apart from its
owners,that is a company may operate a business in it is own right.as such the
company can individually sue and be sued,and acquire assets and commit it self to
liabilities.

How ever despite this legal separation,the company is composed of owners who
dictate its direction and policies.

The owners elect a board of directors,whose members in turn select individuals to

serve as the corporate officers,including the manager and the company secretary.If
inventory turn over is much less than industry average it implies that the company is
holding too much inventory.

Excess inventory is unproductive and represents an investment with a low or zero rate
of return.it affects current ratio as well with such a low turn over,the firm may be
holding obsolete goods that are not with their stated value.debt ratio begin higher than
average industry raises a red flag,and this will make it relatively costly for company
to borrow additional funds with out first raising more equity.

Creditors will be reluctant to lend the firm more money and management would
probably be subjecting the firm to too high risk of bankruptcy if it sought to borrow a
substantial amount of additional funds.

1.7.1 Principles of financial management

1.risk and return:-every financial decision has two aspects as risk and return;every
decision involves a risk. This risk may be broad spectrum or market risk, which is
uncontrollable. It can be unsystematical Risk,which is specific to the firm and can be
controlled. The degree of risk with becomes different in each case depending on
weather it is controllable or uncontrollable risk.financial management decision are
taken to optimize return through the calculation of risk and return.

2. Time value of money:-it is evaluate cash flow expected to be generate at different

items.it is the timing of cash flows because money received to day is work more than
the amount received at a future date.

3. Cash flow concept:- financial management is based on the inflows and out flows of
cash.It does not deal with none cash items like depreciation,amortization of
preliminary expense.

It uses cash revenue and each expense to find out the returnee its investment.

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4. Incremental cash flow analysis:-cash flow is measured of the proposal which are
an addition to the already existing projects. The feasibility in terms of cost and
benefits can be considered.

5. Wealth maximization:-maximization of share holder’s wealth considers a cash

flow to measure the economic values of a firm profit maximization may be consider
as a part of wealth maximization.(singh,2008)

1.7.2. Functions of financial management

I. liquidity of funds;-financial manager has to match inflows and out flows and
those create liquidity

Continuously by managing the flow of the funds in the firm continuously.

II. Profitability;-a financial manager has to measure the cost of capital raised with by
him as a source for the funds of company because cost of capital is link with
profitability of the company.

III. Management;-the financial manager has to coordinate different activities of the

company.it has to deal with long term and short term activities of the company.

IV. Balance conflicting goal;-financial management has the scope of financial

decision making for along group of people.this group consists of share
holders,debt investors,employees,suppliers,public,government and management.

V. Economic value adding /EVA/;-is financial tool,which provides to the

organization knowledge of how much value the company is adding above the
total cost of capital

Financial decision making

There are three basic financial decision.these are;-

1.Investment decision;-it is deals with long them and short finance of a firm. This can
be Termed as fixed assets and current asset.

The long term process cover the area of capital budgeting.fixed asset are cost
intensive and the profitability of the firm depends on the composition of fixed assets.

Short term financing is to the day to coverage and usage of techniques for each flows,

Inventory management and bull receivable and payment on a day basis

2. financing decision;-financial management also deals is financing issues,such as

making the Business profitability, by analyzing break even point,fixed costs and
variable costs.

3.dividend decision;-financial management is also applied to the requirement of the

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share Holders.if is concerned with the amount of profit that can and should be with
draw to Declare dividends to the owners of the capitals of the share holders.

1.7.3. Organizational Performance

Organizational performance can be judged by many different constituencies resulting
in many different interpretations of successful performance. Each of these
perspectives of organizational performance can be argued to be unique.

Organizational performance refers to how well an organization achieves its market

oriented goals as well as its financial goals.

Organization performance means attainment of ultimate objectives of the organization

as set out in the strategic plan.organizational performance is based up on the idea that
an organization is the voluntary association of productive assets, including
human,physical and capital resource, for the purpose of achieving a shared purpose.
(Barney,2001)

Those providing the assets will only commit them to the organization so long as they
are satisfied with the value they receive in exchange,relative to alternative uses of the
assets.

Organization is doing things right and hence profitability can be used as the primary
measure of organization success. To measure the performance of the firm, metrics
such as net income,revenue growth,productivity,customer satisfaction and employee
retention have evolved, representing to outcome of performance but not the causes of
them.

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Chapter Three
1.8 Methodology of the Study
1.8.1 Description of the study area
The study was only focus on the role of customer service delivery strategy of the
Robe municipality that exist in Robe town. The growth of urbanization in Bale Robe
town was dramatically increasing now when we comparing with other town,and the
town located at South East of Ethiopia at 430km from Addis Abeba with longitude
and latitude of 100N 38E with elivetion 1570 meters above sea level and the
population Bale zone where mostly Muslim when compared with Orthodox
Christianity additionally the air condition this zone is very confertable for human
being and crops so the Bale zone were very good for living from Oromia zone.

1.8.2 Population and sampling

For this study the researcher used census sampling technique because, the number of
workers in the Robe municipality in Robe town are manageable, the total number of
worker are fourty eight,and the researcher will be used purposive sampling technique
for interview.the researcher was selected fourty worker from whole workers that are
manager and thirty nine worker.

1.8.3 Data source and method of collection

To collected the research data two data source are used these are primary and
secondary source. The primary data provides first hand information,more information
in depth and misinterpretation of the answer for the question is easily avoided.and
these primary data are collected through structure questionnaire and interview.

Additional secondary data is collected by using document analysis(review)techniques.

The questioner method is use so as to get number of populations by using interview
method detailed and adequate information can be collect. Thus I used it so as to get
more and adequate information from managers and subordinates.

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1.8.4. Instruments

To conduct this study the researcher was employed two major data.

Questionnaire
Questionnaire was a research instrument consisting of a series of question and other
prompts for the purpose of gathering information from the respondents.the
questionnaire contains open-ended questions because, to give the respondents free
chance to write their idea,and close-ended questions was used to give chance to all
major workers to gathering information.

Interview
Interview is another research instrument conversation between two or more people
where questions are asked by the interviewer to obtain information from the
interviewers. Interviewer was used to collected data to get relevant information from
the expect respondents.interview was collected from the participants and it was hold
individually to let the participant feel to speak their experience and believe about
factors that affect what we study.

1.8.5. Methods of data analysis

After the data collection activity accomplish the data analysis comes. The data
collected through structure questioner and interviews are analyze by used tabulation
and percentages.

A.)Tabulation:-the already processed data was arranged orderly in table and other
summary forms.

B.) Percentage:-the data was expressed relative variables among categories and
financial statements are analyze by use financial evaluation techniques.

Data collect is purely quantitative and it is analyzed by descriptive analysis. The

descriptive statistical tools use Ms Excel help the researcher to describe the data and
determine the extent use.

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CHAPTER FOUR

4. Data Analysis and Interpretation

This section deals with analysis and interpretation of the information through

Questionnaire from the sampled population of municipality.

The municipality of Robe branch have an over all employees size of 48,out of the
total employees

The sample size taken was 40.questionnaires are distributed for all of them and all are
returned.therefore,the analysis was made based on the information obtained from the
employees of municipality. The gathered data were analyzed by using tables followed
by interpretation.

PERSONAL DATA

Table 4.1 gender of respondents

gender Number of respondents Percentage ％

male 25 62.5％

female 15 37.5％

total 40 100％

Source;questionnaire,2010

According to the above data 25(62.5 ％ ) of the respondents are males while the
remaining 15(37.5％)of

the respondents are females this shows that the number of males is greater than the

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number of females.it can conclude that males are more employed than females.it was
practiced in our country Ethiopia most of the time males participated in different
activity in different direction and they have more job opportunity.

√ To assess the financial management practice in Robe municipality

√ To identify problem related to financial management in Robe municipality

√ To assess the source of budget municipality in Robe municipality

Table 4.2. Age of respondents

age Number of respondents percentage％

19-25year 5 12.5％

26-30year 20 50.％

31-35year 5 12.5％

Above 36 year 10 25％

total 40 100％

Source;questionnaire,2010

As clearly shown from the above table 4.2 from the total number of respondents
5(12.5)are found in between the age of 19-25, 20(50 ％ )are found between 26-
30,5(12.5％)are found between the age of 31-35,and the remaining one is 10(25％)
are above 36 year.

This table indicates that majority age ratio of respondents are lies between the age of
26-30 years.

Table 4.3.martial status of respondents

Martial status Number of respondents percentage％

single 11 27.5％

married 29 72.5％

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total 40 100％

Source;questionnaire,2010

As clearly shown from the above table 4.3 from the total number of respondents
11(27.5 ％ )are single and the remaining 29(72.5 ％ )are married.so from this we can
understand that married employees are highest in number.

Table 4.4 worker experience of respondents

Service year Number of respondent percentage％

1-5 year 3 7.5％

6-10 year 15 37.5％

11-15 year 15 37.5％

16-20 year 4 10％

Above 25 year 3 7.5％

total 40 100％

Source;questionnaire,2010

As shown from the above table 4.4,from the total number of respondents 3(7.5％)0f
respondents do have 1-5 years experience,15(37.5 ％ )of respondents do have 6-
10years experience,15(37.5 ％ )do have 11-15 years experience,4(10 ％)also do have
16-20 years and the remaining 3(7.5％)do have above 25 years of experience.so this
indicates that respondents who do have both 6-10 years and 11-15 years experience
are highest in number.

Table 4.5 level of education

Education status Number of respondents percentage％

certificate 5 12.5%

diploma 12 30％

degree 23 57.5％

other － －

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total 40 100％

Source;questionnaire 2010

As shown from the above table 4.5 out of the total number of respondents 5(12.5 are
certificate holders,12(30 ％ )are diploma holders,23(57.5 ％ )are degree holders and
there is no one having other education status.thus from the above table one can
understand that the majority of respondents are degree holders.

Table 4.6 working section

Working section Number of respondent percentage％

Finance department 7 17.5％

Organizational 25 62.5％
performance

Purchasing department 8 20％

Total 40 100％

Source;questionnaire 2010

As presented from the above the table 4.6 from the total number of
respondent,7(17.5％ ) are finance department workers,25(62.5％ ) are organizational
performance department workers and the remaining 8(20％) reflects that as they are
purchasing department workers. Thus,it indicates that most respondents are working
in organizational performance department.

4.16. Financial practice of Robe municipality

Table 4.7 period of budget preparation during the year

Period of the budget Number of respondents percentage％

At the beginning of the 22 55％

year

At the middle of the year 7 17.5％

At the end of the year 9 22.5％

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I don’t know 2 5%

total 40 100％

Source;questionnaire 2010

As presented from the above table 4.7 from the total number of respondents
22(55 ％ )reflects that the budget is prepared at the beginning of the
year,7(17.5％)states that the budget is prepared at the middle of the year,9(22.5％)
answered that the budget is prepared at the end of the year and 2(5%) answered that I
don’t know when the budget is prepared.so it indicates that period of preparation of
budget plan is mostly at the beginning of the year

Table 4.8 participants in departmental budget preparation

participants Number of respondents percentage％

Budget worker only 13 32.5％

Head oh the department 20 50％

Kebele office － －

other 7 17.5％

total 40 100％

Source;questionnaire 2010

As clearly shown from the above table,from the total number of respondents were
asked about participants in departmental budget
preparation,accordingly,13(32.5 ％ )reflect that participants in budget preparation is
budget worker only,20(50％)depict that participants in budget preparation is head of
department,7(17.5 ％ )says that other(office management committee,leaders budget
workers and society participation,community representatives and management

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committees.This indicates that head of the department prepare the departmental

budget.

Table 4.9 when does the municipality budget approved

Budget approval Number of respondent percentage％

As soon as prepared 22 55％

At the middle of the year 7 17.5％

At the end of the year 11 27.5％

other － －

total 40 100％

Source;questionnaire 2010

As shown from the above table,22(55 ％ )reflect that budget approval is as soon as
prepared,7(17.5 ％ )says that budget approval is at the middle of the year and the
remaining one is 11(27.5％)depict that budget approval is at the end of the year.there
fore the municipality budget is approved as soon as prepared.

Table 4.10 municipality budget is approved by

Budget approved by Number of the respondent percentage％

Management only 9 22.5％

City council 17 42.5％

Federal government 6 15％

Regional government 6 15％

other 2 5%

total 40 100％

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Source;questionnaire 2010

Be sides the reality as clearly shown from the above table,out of the total number of
respondents were asked about municipality budget is approved
by,accordingly,9(22.5 ％ )reflect that budget is approved by management
only,17(42.5％)says that budget is approved by city council,6(15％)depict that budget
approved by federal government, 6(15 ％ )say that the budget approved by regional
government and the remaining 2(5%) said that other.Thus,it implies that municipality
budget is approved by city council.

Table 4.11 do you use the budget code in municipality

Do you use budget code Number of respondent percentage％

yes 31 77.5%

no 5 12.5%

I don’t know 4 10%

total 40 100%

Source; questionnaire 2010

As presented from the above table 4.11 from the total number of respondents
31(77.5%)reflect that municipality use the budget code,5(12.5%)answered that no and
the remaining 4(10%) say that use the budget code you don’t know thus,it implies that
municipality use budget code.

Table 4.12 do they use the budget cycle properly

Use of budget cycle Number of respondent Percentage%

yes 30 75%

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no 6 15%

I don’t know 4 10%

total 40 100%

Source;questionnaire2010

As presented from the above table 4.12 from the total number of respondents 30(75%)
says that the municipality use the budget cycle properly,6(15%)reflect that not use the
budget cycle properly and the remaining 4(10%) depict that use the budget cycle
properly you don’t know so it indicates the municipality use budget cycle properly.

Table 4.13 does the manager lead properly for financial budget

Properly lead of financial Number of respondents Percentage%

budget

yes 27 67.5%

no － －

I don’t know 13 32.5%

total 40 100%

Source;questionnaire 2010

As presented from the above table 4.13 from total number of respondents 27(67.5%)
depict that the manager lead financial budget properly and the remaining
13(32.5%)depict that you don’t know about properly lead of financial budget. This
indicates that the manger lead financial budget properly

Table 4.14 does the manager lead properly for financial budget

Properly lead of financial Number of respondents Percentage%

budget

yes 27 67.5%

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no － －

I don’t know 13 32.5%

total 40 100%

Source;questionnaire 2010

As presented from the above table 4.14 from total number of respondents 27(67.5%)
depict that the manager lead financial budget properly and the remaining
13(32.5%)depict that you don’t know about properly lead of financial budget. This
indicates that the manger lead financial budget properly

Table 4.15 do you think that the budget is utilized according to your plan and budget
code

Budget is utilized Number of respondent Percentage%

according to your plan

yes 23 57.5%

no 11 27.5%

I don’t know 6 15%

total 40 100%

Source;questionnaire 2010

As presented from the above table 4.15 from the total number of respondents
23(57.5%) says that the budget is utilized according to the plan and budget
code,11(27.5%) depict that the budget is not utilized according to the plan and budget
code most of the respondents give the reason that is lack of transparency and
accountability, some of the respondents give improper financial management system
as a reason and one respondent say that the result of the budget is not utilized
according to the plan is being corrupted and the remaining 6(15%) depict that you
don’t know. This indicates that in the municipality the budget is utilized according to

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the plan and budget code

problems related to financial management in Robe

municipality

According to the data obtained from questionnaires there is also other problems in the
municipality.that are the budget assign for the municipality is not enough and it is not
properly,shortage of budget and the plan is good but practice is not good,other
organization interfere in the municipality budget,lack of transparency and
accountiblity and the problem of budget distribution are the main problems.for the
problem listed above their is a solution obtained from the data. Those are the office
management committee,municipality manager,budget officers should make budget
transparency,assign enough budget as much as possible and we use the budget and
budget code properly.

source of budget municipality in Robe municipality

Table 4.16 sources of municipality budget

Source of budget Number of respondent percentage％

Regional state 14 35％

Federal government 4 10%

society 12 30％

NGO 5 12.5％

other 5 12.5％

total 40 100％

Source; questionnaire 2010

According to the data presented in the above table 4.16 among the total number of

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respondents 14(35％) of them depict that sources of municipality budget is regional

state where as 4(10%)of them says that the municipality budget is from federal
government,while 12(30 ％ )pointed that the source of municipality budget is from
society, 5(12.5％) respondent cited that it is from NGO the remaining 5(12.5％)depict
that the source of municipality budget is from other source,that is city
administration,and other fund for capital budget.

Thus majority of the source of municipality budget is regional state.

Table 4.17 yearly budget plan

Is there yearly budget plan Number of respondent percentage％

yes 32 80％

no 4 10％

I don’t know 4 10％

total 40 100％

Source;questionnaire 2010

As indicated in the above table 4.17,among the total number of respondents 32(80％)
reflects that as there is yearly budget plan,4(10％) of respondent reflect that there is
no yearly budget plan and the remaining 4(10%) answered that is I don’t know,this
implies that the municipality have yearly budget.

Analysis of interview questions

Table 4.18municipality budget

Municipality budget for year amount

the past four year

2006 8,071,650

2007 8,086,519

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2008 17,292,611

2009 21,816,241

Source; questionnaire 2010

Table 4.19 proper utilization of budget code

Do you think that all this Number of respondent Percentage%

year budget code properly
utilized

yes 28 70%

no 12 30%

total 40 100%

Source;questionnaire 2010

According to table 4.19, 28(70%)of respondents responded that all this year budget
code is utilized properly where as the remaining 12(30%) of the respondents Said that
all this year budget code is not utilized properly and also they give reasons. Such as
insufficient budget plan and change of one budget code to the other one.

So we can conclude that the municipality of robe branch utilize all this year budget
code properly.

CHAPTER FIVE

5. summary,conclusion and recommendations

This chapter deals with summary, conclusion and recommendation of the study.the
objective of this study was to investigate the impact of financial management on

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organizational performance in Robe municipality.

5.1. summary of the finding

In consistent to the statement of the problem and basic questions and based on the
data analysis the followings are summarized.

1. regarding to the response of the majority of the respondents the major financial
source for

Municipality budget is from regional state.

2. The study pointed out that the usage of financial management is backward.

3. The investigated that the improper financial management make unplanned

recruitment,

Selection,training,development and transfer in municipality due to this they don’t

know

Some of their employees and they don’t control them properly.

4. Based on the response,the department workers and the management bodies have
not Common understanding in financial management.

5. the study pointed out that in the department balancing the daily receipts and
expenses were Exercised regularly.

6. the study pointed out as there was no strong financial rules and regulations.

7. According to the respondents,the organization has strongly budget plan.

8. the study pointed out proper financial management has positive impact on
organizational Performance.

5.2 conclusions
In consistent to the statement of the problem and basic questions and based on the
data analysis regarding to the major finding of the study the following conclusions
forwarded.

1. A major financial source of the municipality is from regional state.This indicates

that the Municipality was mostly dependence for its budget on this source of finance.
This kind of Dependence could create serious problem on municipality program
because the source of the Municipality budget is mostly one way.

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2. The usage of financial management in municipality is backward.This indicates that

they have less controlling and the financial rules and regulations are not applied
properly.

3. The department workers and the management bodies have not common
understanding on Financial management because they have not clear and strong
management system in Municipality.

4. Regarding some of the main problems related to financial management inefficiency

of man Power,lack of trained man power and inadequate training for staff members
who work In finance department were some of the suggestions put forward the
respondents.

Due to lack of transparency,accountability and lack of attention to give rules and

regulations Usually ends up with weak performance.

5.3. recommendation

The following recommendation are forwarded in to the hope that they would Help to
develop effective or proper management of the municipality found and to look in the
major problems that exist in the financial management.

1. since most aspects of the budgeting process involves the effects of all staff
members,each Individuals of the department staff should be seen as a person who can
contribute to the Preparation of budget.therefore,the management of the department
should request all staff Members concerned in budgeting process so as to reduce the
possibility of latter Misunderstanding and to gain individual workers commitment.

2. the proper utilization of the allocated budget source service as one of the most
important Measures that help to achieve the attainment of the municipal program. To
effect this Department has to make great effort to settle those payment which were
accumulate unsettled For the previous year besides this advance to payments should
not be made against the finance Rule and regulation.

3. Robe municipality financial management should strictly control the utilization of

organizational Performance,budget and accounting system of the municipality
through timely reports. It should better take measure quickly to restore many
misrepresentations through investigation and should be alert to investigate and audit
the municipality at least twice a year.

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REFERENCES

The organization by efficient allocation of funds (Singh,2008).

Keeping track of the company’s financial health and preparing budget

(Plunkett,1999).

To develop implement and rapidly revise their financial management strategies.

(Shah,2009).

(2000,Waddell,)financial management in public organization is concerned with

ensuring funds are available when needed ………..

Financial management covers different functional areas in a firm including supply

function (Singh,2008).

(Plunkett,1997),defined as finance is the function of a business that acquires funds

from the firm and manages those funds within the firm and management is the process
of planning ,organizing and controlling.

Recommendation to job executives regarding strategies for improving the health

financial strength of the firm (MCKUGH,2005).

Operated with the frame work of clearly under stood objectives and on the basis of
logical concept (Jon R, 1987).

Financial management is broadly concerned with acquisition of and use of funds by

organization(Singh,20080).

Planning and checking wither or not units are staying with in their budget
(controlling) and designing strategies to minimize taxes,(Hodder and
Stoughton,2001).

Source of funds ,financial analysis,establishing optimum capital structure,evaluation

and corporate taxation (Singh,2008).

Maximization of share holder’s wealth considers a cash flow to measure the economic
values of a firm profit maximization (Singh,2008).

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Including human ,physical resource for the purpose of achieving a shared purpose,
(Barney,2001).

Questionnaire

The aim of this questionnaire is to collect data of the research title “the impact of
improper financial management on organizational performance in robe
municipality”.the response you give for the question have a great value for the
success of the study . so we kindly request to give your response to each question
after reading it carefully also you can indicate your response by putting (x) mark in
box given against the statement you municipality in filling out this
questionnaire.generally will contribute to ward a reason out of the research.

Part one

Questionnaire for Personal Data

1. sex male [ ] female [ ]

2. Age 19-25 [ ] 26 -30 [ ] 31-36( ) above 36 [ ]

3. Material status single [ ] married [ ]

4. Service year 1-5 6-10 11-15 16-20 above 25

5. education status: certificate diploma degree other

If other specify-----------------------------------------------------------

6. working condition

Finance department worker

Human resource worker

Purchasing department worker

Part two

About source and preparation of budget

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1. the source of municipal budget

Regional state

federal

society

NGO

other

If other specify____________________________________

2. is there yearly budget plan ?

Yes no I don’t know

3. period of budget preparation during the year

At the beginning of the year

At the middle of the year

At the end of the year

I don’t know

4. participants in departmental budget preparation

Budget worker only

Head of the department

kebele office

5. human resource capacity for budget preparation in your department is?

High low medium

Part three

Budget approval

1. when does the municipality budget approved?

As soon as prepared

At the middle of the year

At the end of the year

2. municipality budget is approved by?

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Management only

By cit council

By federal government

By regional government

3. do you use the budget code in municipality?

Yes no I don’t know

4. do you use the budget cycle properly?

Yes no I don’t know

Part four

About finance administration

1. how many times finance department fraction of receipts and expenses balance?

Regularly sometimes not practiced

2. financial management system in municipality is

Back ward modern I don’t know

3 if your answer for the above questions back ward, what is the reason?

Lack of skilled manpower

Administration problem

I don’t know

4. municipality attention to improve financial accounting administration system is?

High medium low

5. do you have financial report an time?

Yes no I don’t know

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