ASSESSEMENT OF BUDGETADMINSTRATION

PERFORMANCE ANALYSIS IN THE CASE OF ADDIS

ABABA UNIVERSITY

BY

ALAZER ZELEKE

A RESEARCH PROJECT TO THE DEPARTMENT OF ACCOUNTING AND FINANCE,

COLLEGE OF BUSINESS AND ECONOMICS,

ADDIS ABABA UNIVERSITY IN PARTIAL FULFILLMENT

OF THE REQUIREMENTS FOR THE DEGREE OF BACHELOR OF ARTS IN ACCOUNTING AND FINANC

Advisor: Dereje Urgecha (Msc),

ADDIS ABABA JULY 2024

 Acknowledgement
I would like to begin by expressing my heartfelt gratitude to the Almighty God for granting me
the gift of life and the opportunity to complete my academic journey. I am immensely grateful
to my advisor, DEREJE URGECHA (MSc), for their invaluable guidance, support, and
expertise throughout this entire process. Their mentorship has been instrumental in shaping the
direction of my research, and I am truly thankful for their unwavering commitment. I would
also like to extend my deepest appreciation to my beloved family and friends for their constant
support and encouragement. Their love, understanding, and belief in my abilities have been a
continuous source of motivation, and I am truly blessed to have them by my side. I would like
to acknowledge the generous assistance and moral support provided by various individuals and
institutions during the preparation of this research. Their contributions, whether in the form of
resources, insights, or encouragement, have been invaluable, and I am sincerely grateful for
their involvement.
Acronyms
A/C Account

CPA Certified Public Accounting

GAAP General Accounting and Auditing Principle

GASB General Accounting Standard Board

G.C Gregorian calendar

NO. Number

AAU Addis Ababa University

Table of Contents
Acknowledgments......................................................................................................................................................................... i
List of table and chart ................................................................................................................................................................. II
Acronyms .................................................................................................................................................................................... III
CHAPTER ONE
INTRODUCTION ............................................................................................................................................................................ 1
1.1. Background of the study ........................................................................................................................................... 1
1.2. Background of the organization ................................................................................................................................ 1
1.3. Statement of the problems ....................................................................................................................................... 2
1.4. Research questions? ................................................................................................................................................. 3
1.5. Objective ...................................................................................................................................................................... 3
1.5.1. General objective………………………………………………..…..……………………………………………………………………………........3

1.5.2. Specific Objective………………………………………………………………………..….……………………………………………………………3

1.6. Significance of the study ........................................................................................................................................... 3

1.7. Limitation of study .................................................................................................................................................... 4
1.8. Scope of the study ........................................................................................................................................................... 4
CHAPTER TWO

REVIEW OF RELATED LITRATURE ....................................................................................................................................................... 4

2.1.1. The Concept and History of budgets ............................................................................................................................ 4

2.1.2. Budget Process .............................................................................................................................................................. 5

2.1.3. Budget Goals and Objectives......................................................................................................................................... 5

2.1.4. Budgetary Control ......................................................................................................................................................... 5

2.1.5. Budgeting Techniques ................................................................................................................................................... 6

2.1.6. Problems Associated With Budgeting ........................................................................................................................... 6

2.1.7. Budget Review ............................................................................................................................................................... 6

2.1.8. Administration of Budget .............................................................................................................................................. 7

2.1.9. Historical Development of Modern Government Budget.............................................................................................. 7

2.1.10. Effects of budgets on financial performance ............................................................................................................... 7

2.1.11. Budgeting objective and Obstacles ............................................................................................................................. 8

2.1.12. Performance evaluation and management control ..................................................................................................... 9

2.1.13. Performance Report and Communication ................................................................................................................... 9

2.1.14. Management Follow up Procedures.......................................................................................................................... 10

2.1.15. Revenue and Expenditure ......................................................................................................................................... 10

 2.1.16. Budget classification .................................................................................................................................................. 11

2.1.17. Analysis of Budget Variance ...................................................................................................................................... 13

2.2. Empirical Review ............................................................................................................................................................ 14

2.3. Gap of Summary ................................................................................................................................................................. 15

CHAPTER THREE
3. RESEARCH METHODOLOGY .................................................................................................................................................... 15
3.1. Research Design .................................................................................................................................................................. 15
3.2. Research approach .............................................................................................................................................................. 15
3.3. Source of Data and Type ..................................................................................................................................................... 15
3.4. Data collection method ....................................................................................................................................................... 16
3.5. Target population ............................................................................................................................................................... 16
3.6 Sampling techniques ........................................................................................................................................................... 16
3.7 Methods of data analysis…………………………………………………………………………………………………………………………………………………16
CHAPTER FOUR
4. Data Presentation, Analysis, Interpretation And
Summary Of Finding, Conclusion……………………………………………………………………………………………………………………………………………….17
4.1. Budget preparation………………………………………………………………………………………….…………………………………………………………17
4.2. Budget System…………………………………………………………………………………………………………………………………………………………….18
4.3 Budget Performance Report of the Organization………………………………………………………………………………………………………….23
4.5. Summaries of Findings…………………………………………………………………………………………………………………………………………………25
4.6. Conclusion……………………………………………………………………………………………………………………………………………………………….…25
4.7. Recommendatio……………………………………………………………………………………………………………………………………………………..….26
Reference .................................................................................................................................................................................. .23
Appendix .................................................................................................................................................................................... 29
List of Table and Chart
Table 1. Respondents’ Response For Know How About Budgetary Performance ........................ 17
Table 2. Key Priorities .................................................................................................................... 18
Table 3 Budget Performance Report of the Organization 2015E.C ............................................... 23
Table 4. Budget Performance Report of the Organization 2015 E.C………………………………………….23

Table 5. Budget Performance Report of the Organization 2016 E.C …………………………………………24

Table 6. Budget Performance Report of the Organization 2016 E.C …………………………….………….24

 CHAPTER ONE
INTRODUCTION
1.1. Background of the study
A performance budget is a budget that refers to programs, functions, and performance that
reflects the estimated expenses and revenues of the companies, Government, or Statutory
bodies. It is a budget that provide s the objective and purpose for raising funds and proposed
activities and programs to be accomplished. (www.wall street mojo.com/performance-budget/)
A performance budget is mainly aimed at evaluating whether the budgeted task is being carried
out as planned and measuring the performance involved in the budget procedure. The purpose
is to ensure the performance is as per the budgets and workings are being done smoothly and
the persons performing their task with utmost responsibility along with efficient utilization of
the funds rose and achieving the objectives. (www.wall street mojo.com/performance-budget
purpose/)

The budget also provides an important tool for the control and evaluation of sources and the
uses of resources. Using the accounting system to enact the will of the governing body,
administrators are able to execute and control activities that have been authorized by the
budget and to evaluate financial performance on the basis of comparisons between budgeted
and actual operations. Thus, the budget is implicitly linked to financial accountability and
relates directly to the financial reporting objectives established by the GASB.
(nces.ed.gov/pubs2004)

The limitation of performance budget is the potential for disagreement on where spending
priorities should lie, in the case of a government with multiple agencies, the potential for a
department to manipulate data in order to reach a target, which could lead to a need to spend
funds on an independent party to verify results, this study is requests how to administer this
type of obstacle occurs.

1.2. Background of the organization

Addis Ababa University (AAU) is the oldest and largest higher education institution in Ethiopia.
It was established in 1950 as a two-year college, and it has since grown into a comprehensive
and research-intensive university. AAU is located in Addis Ababa, the capital city of Ethiopia.

University College of Addis Ababa which was then the only institution of higher education. The
university college began offering courses in law and engineering as early as the academic year
of 1952/53. In the late 1950s, programs in social sciences such as History, Geography, etc. were
included. At the beginning, in-service programs were in line with regular pre-service programs.
Later on, when Addis Ababa University (which was then called Haile Selassie I University) was

1|Page
inaugurated in 1961/62 academic year, a separate department known as University Extension
was established and started offering continuing education in the evening to adults at diploma
and degree levels.

In addition to evening and weekend programs, continuing education has been offered in the
form of Summer In-service program particularly meant to upgrade the level of qualification of
teachers and other education personnel working in the system of education of the country.

AAU has played a significant role in the development of higher education and research in
Ethiopia. The university offers undergraduate and postgraduate programs in various fields of
study, including natural sciences, social sciences, humanities, engineering, health sciences, and
business. It consists of several colleges, faculties, and institutes, each specializing in specific
disciplines.

The university is committed to providing quality education, conducting research, and

contributing to the socio-economic development of Ethiopia. AAU has been at the forefront of
producing highly skilled professionals and leaders in different sectors of the country. It has
played a crucial role in advancing knowledge, promoting innovation, and addressing societal
challenges through research and community engagement.

AAU has also established collaborations and partnerships with international institutions and
organizations to enhance academic and research activities. These partnerships facilitate
knowledge exchange, joint research projects, faculty and student exchanges, and capacity
building initiatives.

The university is governed by a board of governors and is led by a president. The academic
programs and administrative functions are managed by various faculties, colleges, and
administrative units.

1.3. Statement of the problems

There are a number of serious problems associated with budgeting, which include
gamesmanship, excessive time required to create budgets and budgeting inaccuracy. A budget
is based on a set of assumptions that are generally not too far distant from the operating
conditions under which it was formulated. If the business environment changes to any
significant degree, the company’s revenues or cost structure may change so radically that
actual results will rapidly depart from the expectations delineated in the budget. This condition
is a particular problem when there is a sudden economic downturn, since the budget authorizes
a certain level of spending that is no longer supportable under a suddenly reduced revenue
level. Unless management acts quickly to override the budget, managers will continue to spend
under their original budgetary authorizations, thereby rupturing any possibility of earning a

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profit. Other conditions that can also cause results to vary suddenly from budgeted
expectations include changes in interest rates, currency exchange rates, and commodity prices.

A fundamental challenge for any performance budgeting process was lack of transparency and
accountability, to clarify who are the end users and identify their data needs; these is the
consequence of information over load. The result showed that among the organizational
factors, absence of continuing and systematic evaluation of budget performance at different
organizational structure, delay in approval of project proposal and the absence of full
involvement of the line managers in planning and budgeting process.

1.4. Research questions

 What were the most important elements of developing an annual budget?
 What was the forecasting method of the company
 What was the bases budget for the corporation?
 How to evaluate the planned budget with actual performance
 Which the budget system that adopted by the (AAU)
 How to prepare the budget performance report of the company
1.5. Objective
1.5.1. General objective
The overall objective of this study was to investigate the budget administration performance of
Addis Ababa University (AAU)

1.5.2 Specific Objective

 To assess the budget system that adopted by the AAU.
 To assess the preparation of performance report of the company (AAU).
 To assess the elements of developing annual budget.
 To assess the forecasting method of the company (AAU)
 To describe the evaluation method of planned budget with actual performance
 To assess budget bases for the corporation

1.6. Significance of the study

To measure managerial effectiveness and financial performance, administrative budgets are
often analyzed for trends or patterns. Budget play a significant role by controlling and
protecting the over and understatement of revenue and expenditure of different company
and government units. But much emphasis doesn't give by these entities. There for the
study tries to address the area where emphasis doesn't give with (AAU). Look with due
attention, where the problem of over and understatement where take place within the

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 organizations (AAU). Then the study highlights the solution to control these issues by using
budget and other researcher’s uses as a reference related to the topic.

1.7. Limitation of study

One of the limitations that this study faced was in related with time and cost. Since Addis
Ababa University was the largest having campus. It was time taking and costly to collected
budgeting data. Another limitation of study concerns with related to data collection. The
study used only 2 (two) year budgeting data. This happens because of difficulty to collect
every year budgeting data, as well as, to arrange the data properly and timely. The above
two limitation occurred because of the reason that are beyond the researcher's capacity.

1.8. Scope of the study

The main concern of this study was to see the importance of budget for administration and
control varies activities within the organization (AAU) main campus. More over the study
assess the organization performance evaluation, reporting and its presenting to expecting
focus group and to see the last four years budget performance of Addis Ababa University.

CHAPTER TWO
LITERATURE REVIEW
2.1.1. The Concept and History of budgets
Budgets are financial blue print that qualifies a firms plan for the future. It’s a detailed plan that
outlines the acquisition and use of financial and other resources over a given period of time.
According to Flam Holtz (1983) a budget in an organization acts as a mechanism for effective
planning and controlling. Schick (1999) concurs by stating that the main purpose of a budget in
any organization is for planning and controlling in order to achieve organizational goals and
objectives. A budget is a standard against which the actual performance of an organization can
be compared and measured. A budget stipulates which program and activities should be
pursued. Lucey, (2002) defines a budget as a quantitative statement, for a period of time which
may include planned revenues, assets, liabilities and cash flows.

Budgeting in non-governmental organizations is used as a planning tool. Organizations use a

budget as a guiding tool of its activities. According to Goldstein (2005), a budget is used by
institutions in setting priorities by allocating scarce resources to those activities that are most
important to the organization. The annual budget is commonly referred to as the master
budget and has three principal parts namely the operating budget, cash budget and the capital
budget.

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2.1.2. Budget Process
Budgeting process pushes managers to take time to create strategies, targets and goals before
activity begins. Budget preparation helps management focus on the next month or the entire
coming year. The budgeting process forces managers to assess current operating conditions
and aids in forecasting and implementing needed changes (Anderson, 1996).

Budgets analysis should be a regular and ongoing part of management duties because helps
chart the course of operations and provides a means to evaluate performance once the task
has been completed. If realistic goals have been established comparing the actual results with
budgeted targets can help management assess how well the organization performed (Belverd,
1996).

2.1.3. Budget Goals and Objectives

According to (Anderson, 1996), the following are five groups of budgetary principles and are
explained as follows: First, long Range goal principle: Annual operating plans cannot be made
unless those preparing the budget know the direction that top management expects for the
organization. Long range goals projections covering a five-to-ten-year period must be set by the
top management. In doing so management should consider economic or industry forecast.

The long-range goals themselves should include some information about the expected quality
of products or services and growth rates. Second, 8 short range goals: These short-range targets
and goals form the basis for the organization’s operating budget for the year. Third,
responsibility and interaction principles: Budgeting success or failure is in large part determined
by how well the human aspect of the process are handled from top management down through
the organization all appropriate people must take part actively and honesty in the budgeting
process (Anderson,1996).

2.1.4. Budgetary Control

Planning and control and related resources and their costs are the keys to good management.
The process of developing plans for a company’s expected operations and controlling
operations helps to carry out those plans is known as budgetary control. Objectives of
budgetary control are: To aid in establishing procedures for preparing a company’s planned
revenues and costs. Budgets also aid in coordinating and communicating these plans to various-
to-various levels of management (Kariuki, 2010).

In addition, budgets formulate a basis for effective revenue and cost control. for companies to
benefit from budgetary control, they should first set quantitative goals, define the roles of
individuals, and establish operating targets. Short term or one-year plans are generally
formulated in a set of period budgets. A period budget is a forecast of operating results for a
segment or function of a company for specific period of time (Caldwell, 1996).

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2.1.5. Budgeting Techniques
There are two main techniques for budgeting i.e. Incremental budgeting and zero-based
budgeting. An incremental budget is a budget in which the figures are based on those of the
actual expenditure for the previous year with a percentage added to cover for an inflationary
increase for the New Year. It is an easy technique that saves time but is often inaccurate. This
budgeting technique is only appropriate for organizations where each year is very similar to the
earlier one in terms of activities. In normal situations however, very few dynamic organizations
or projects are so stable as to make this budgeting technique really work for them (Lucey,
2004).

In zero based budgeting scenarios, past figures are not used as the starting point. the budgeting
process starts from „scratch‟ fore posed activities for the year. This results in a more detailed
and accurate budget, although it takes more time and energy to prepare. This technique is most
useful for new organizations and projects but is also probably the best route to go in a dynamic
organization that is proactive in taking on fresh challenges (Kariuki, 2010).

2.1.6. Problems Associated with Budgeting

There may be too much reliance on the technique as a substitute for good management. The
budgetary system, perhaps because of undue pressure or poor human relations, may cause
antagonism and decrease motivation. Variances are just as frequently due to changing
circumstances, poor forecasting or general uncertainties as due to general managerial
performance (David, 1988).

There is a major problem in setting the levels of attainment to be included in budgets and
standards. Although much research has been done in these areas by Sturdy, Becker and Green
and others, knowledge is still incomplete. There are many factors to be considered including
the aspiration level of individuals, group pressures, and the extent of participation and past
performances (David, 1988).

2.1.7. Budget Review

Budgets are one of the accounting measures which are used to assess a company’s
performance. The reward system of the organization (i.e. pay, promotion) is often linked to the
achievement of certain levels of performance, frequently measured in accounting terms. It is
conventionally assumed that by establishing formal performance measurement and rewarding
individuals for their performance they will be encouraged to maximize their contribution
towards the organization’s objectives (Horngren, 2000).

The law of requisite variety states that for full control the control system must have as much
variety as the system being controlled so that concentration on a single measure (Sales budget
level, return on capital employed) cannot hope to control adequately a complex system.

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Numerous organizations have attempted to deal with the problem of assessing managerial
performance using multiple criteria and one of the pioneers was the General electrical
company of America which identified eight key result areas: Productivity, personal
development, profitability, market position, product leadership, employee attitudes, public
responsibility, balance between short term and long-term goals (Horngren, 2000).

The regular systematic monitoring of results compared to plan that is the budget provides
information upon which either, to adjust current operations to bring them into line with the
previous plan or, to make adjustments to the plan itself where this becomes necessary. The
integration of budgets makes possible better cash and working capital management and makes
stock and buying policies more realistic (Lucey, 2004).

2.1.8. Administration of Budget

Budgeting takes a lot of management time top managements want lower-level managers have
valuable knowledge about the day-to-day aspects of running the business. Participation also
creates greater commitment and responsibility toward the budget among lower-level
managers. The widespread prevalence of budgets indicates that the advantages of budgeting
systems outweigh their costs. This can be observed from survey company practice. Budgeting
management at all levels of the company should understand and support the budget and all
aspects of the management control system. Top management support is critical for obtaining
active line management participation in the formulation of budget and for successful
administration of the budget. (Chaples, J.Horngren 2003)

2.1.9. Historical Development of Modern Government Budget

Historical the practice of budgeting generally originated in the central government of Great
Britain at the year of 1217. However, an entirely new approach to government budget was
initiated during the year 1930's economic depression in the advanced capitalist countries.
During that period, new possibilities of using financial measures to regulate the level of
employment one economic activity were recognized. (Hiness, JJ and Edward R.J. 1954)

The historical development of modern budgeting suggests two significant generalizations

concerning the distribution of budgetary responsibility. The budget system developed as an
instrument for democratic control over the executive. The power of the purse comes to raise in
the legislature in order arbitrary tax payments in his subjects. The budget is an expression of
ultimate legislative authority. (Jesse Burkhead 2001)

2.1.10. Effects of budgets on financial performance

Without losing its control and accountability mechanisms, modern budgeting can better
support performance management by integrating known financial outcomes with frequent re-
forecasting of the budget and linked to analysis of performance trends. A manufacturing firm’s

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financial performance management reporting systems will draw on a number of information
sources and reflect the range of stakeholder and departmental perspectives (MelekEker, 2007).

There are a variety of approaches to developing the performance metrics and the reporting of
performance. But without integration of the financial resources consumed, the firm cannot
measure value for money or make informed choices about future resourcing and service
priorities. One way in which the in-year operational performance and financial information can
be integrated more closely is to develop a system which encourages the issues to be considered
together and to develop management reports that provide a rounded picture (Hansen and
Mowen, 2005).

The best management reports detail what has happened and what is expected to happen in the
future. The accounts and report provide the information needed to take any corrective action
required. Such action needs to take place for the firm as a whole, so it is important that all
areas are covered. This implies that the operational data and financial data are presented
together in a comparable and consistent form (Kariuki, 2010).

2.1.11. Budgeting objective and Obstacles

The superficial purpose of the budgeting process is to predict the result of the following year.
In reality, however there are a number of valid objectives and the problem is that they differ
from participant to participant. A single owner of business wants a budget that plans the best
prefix realistically achievable; the main concern of the lowest level functional managers is to
know what is expected to them and to give enough resources to accomplish it. To be successful,
the budgeting process is just responsive to the needs of all participants. Fortunately, the goals
of the different participants are similar enough that a realistic composite set of objectives can
be formulated and used as a basis for budgeting requirements.

Unfortunately, there is a significant conflict between two of the budgeting objectives: the
contradiction between planning the best result achievable and budget that "will be beaten" this
conflict of objective is the first of the inherent problems, the budgeting obstacles that are
fundamental to the activity of budgeting and cannot be avoided or removed.

The fundamental problem of budgeting can be summarized from the obstacles. The budget
deals with next year. Many things about next year are uncertain because.

*. It is in the future and *. Much it is uncontrollable

Of the part that can be known the people who know best the functional management directly
on the firing line are not motivated to be realistic in their budgeting submissions. The finished
budget is then (usually cost in concrete and (always) used to measure the participants (wakjira,
P. 11)

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2.1.12. Performance evaluation and management control
The purpose that needs performance report performance reporting for internal management
use is an important part of a comprehensive profit planning and control system. The
performance reporting phase of comprehensive significantly Influences the extent to which the
organization's planned year and objectives are attained.

The following overview of financial reports indicates the extensive reporting requirements
needed by business firm. Those are:

*. Special extern al reports

These are reports to government agencies regulatory commission’s creditors,

investigative agencies, and other groups external to the active management Such
reports are costly and involve significant management attention.

*. Report to owner

These reports by and large are based on "GAAP" foot not and generally report data that
have been subject to an audit by an independent CPA.

*. Internal report: These confidential reports are prepared within the company for
internal use only this report is subdivided into three different sub classifications;
Statistical report, Special report and Performance report

All companies, regardless of their size, have reporting requirements for all the categories listed
above. (Glenna welshe and ET alp. 543)

2.1.13. Performance Report and Communication

In most business, management must rely to a great extent upon information contained in
reports developed within the business. These internal reports serve as an important means of
communication.

Reports that communicate effectively to all levels of management stimulate action and
influence decisions. (GlnnaWelsch P. 542-43) It has been agreed that a business firm focus
difficulties in making capital budgeting decision under uncertainty. Methods that employee
with risk adjusted discount ration or dollar risk premium suffer from a large of normative
theory. There has been none theoretically accepted method proposed for a business man to
apply in determining the amount by which the time value of money should be adjusted for risk
or the site of the dollar risk premium that should be deducted from the net present value of an
investment that has been computed by using a default. Free discount rate as the time value of
money (Journal of finance Vol.20 No. 51-2 1973)

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2.1.14. Management Follow up Procedures
Well-managed companies use monthly performance report covering call aspects of operations.
These reports give favorable and unfavorable variances between actual and planned
performance for the month just ended and cumulatively for the year to date. Take place for
different company according to their preferred other in written or by conferences to discuss the
causes and corrective action to be taken follow-up procedures should begin at the top
management level to discuss and analyze both unsatisfactory and satisfactory conditions.

Satisfactory condition should be analyzed in order to

>. To determine whether the goals were realistic

>. To comment those responsible for high performance and

>. To transfer some "know-how" to other responsibility centers

Full-up procedures should embody contractive action to correct unfavorable conditions rather
than punitive actions for failure, the result of which obviously cannot be raised. (Ibid p, 554)

2.1.15. Revenue and Expenditure

Revenues should be shown by source and funds. Accurate revenue estimates are dependent up
on a source classification because factors which determine the amount of revenue do not affect
each source uniformly. The revenue side of budget is more likely to be realized if estimates are
segregated by sources and controlled accordingly.

The annual forecast of revenue to be raised by government through taxation and other
discretionary measures amount of revenues raised this way differ from country to country both
in magnitude and structure. (Standard classification of nominal accounts no, 17 in series of
publication July 1953).

Expenditure should be show in the budget classified by the funds from which they are paid by
the departments, bureaus, divisions or other agencies spending the many by the object of the
expenditure are made and by the activities for which the expenditure. The object classification
provides greater detail top judging and controlling estimates but greater emphasis should be
land on activity than on object. (A standard classification of municipal account no.17 in series of
publications July 1953)

In preparing the expenditure the aim was to estimate probable developments, including those
resulting from the effort of government to promote a desirable rate of growth but not all
government programs are included that might be considered desirable in the interest of

P a g e | 10
economic growth or of social objectives or that have been recommended by various gropes of
knowledgeable and responsible export (Gorhord calm and peter WAGNER)

2.1.16. Budget classification

Budget can be classified indifferent way based on the time span they cover the purpose they
serve and the specific level of government or business to which they apply. They are many
classifications

1. The strategic budget 2. The long-range budget 3. The capital budgets

4. The short-term budget 5. Continuous budget 6 the master budget

Budget also classified based on specific level of governmental organization. Over the past many
years, a variety of budget types and formats have been utilized governmental organizations.
The development of more advanced budget philosophies reflects growth in both scope and
complexity of government operations and the need for systems which are capable of
translating the variety of policy decisions into financial plans. The budget that currently being
used by various government organs are:

I. Line-it cm or "traditional" budget III. performance budgeting

II. Planning programming and budgeting (PPB). And IV. Zero-base budget

1. The strategic budget

The strategic budget is forward looking type of budget, which sets the overall goals and
objectives of the organization. Some businesses analyses do not classify the strategic budget as
an actual budget, though because it does not deal with a specific time frame, and it does not
produce forecasted financial statements.

2. The long-range budgets

The strategic budget led to long-range budget which produces, forecasted financial statements
for five-to-ten-year periods. Long-term budgets are prepared to quantify formally the long-term
goals and determining the means to achieve them. The financial statements are estimates of
what management would like to see in the company's future financial statements. Long-term
plan is coordinated with capital budgets that contain detail of the planned expenditures for
facilities, equipment, new products and other long-term investment. Long-range plans and
budgets give the company direction and goals for the future, while short-term plans and
budgets guide day-to-day operations. (Grennuwelshe p. 556)

3. Capital budgeting

P a g e | 11
Capital budgeting is the process of considering alternative capital projects and selecting those
alternatives that provides the most profitable return on available fund. In addition to this
capital budget contain the plans and resource allocations for capital acquit ion to support the
program of the organization. It often governed by low and regulation capital budgets involve
multi-year expenditure projections with approval for ucurrent year expenditure. Capital budget
also consider alternative to purchase, build. Lease, or renovate buildings, equipment, or other
long range. Major items of property, based on the input available on his had managed give
decision. (Her manson p. 1112-38)

4. Short Term budget

Short term budget is prepared to formally express the short-term plan in quantities terns
usually a year is considered as short-term plan period short term planning addresses broader
issue such as developing new product line replacement of plans and equipment and other
issues. Which require year of advance planning Long-term budgets therefore? Could have a
time from 5 year to 10 years even more range.

5. Ending Inventory Budget

This budget reflects the inventory of the firm; manufacturing overhead budget, it is a summary
of overhead material need to product the quantity of finished products indicated in the
production budget, this budget is a schedule presenting a summary of marketing and cost
related that the company incurs over the budget period. , budgeted income statement: this is a
performances statement that presents a summary of the above separate schedules, financial
budget. Focuses on the effect of those operational budgets and other plans such as capital
expenditure and repayment of debt will have on case on the other hand finical decision center
focus on how to obtain the fund to acquire those available resources. (Horgren, 2003)

I. Line-Item budgeting (Traditional Budget)

Line budgeting is a way of allocating fund in a very detailed way. It also a budget list in vertical
columns, each of the government organizations revenue sources and each of the types or
classes of items the government organization will purchase during the Fiscal year.

However, its demerits lie on the fact that if fails to make any relationship between the goods
and services provided and the overall program. (Ibid, p.17)

II. Performance Budget

Performance budget is management-oriented type of budgeting. It has been utilized since 1949
G.C. The focus of this approach is on efficiency (based on the measurement of the cost and
standard process input) and the budget is considered a “performance contract” between the

P a g e | 12
superior and his/. her subordinate”. Performance budgeting must appropriately associate with
a budget classification that emphasizes the things which government does, rather thing which
government buy. Performance budget shifts emphasis from the mean of accomplishment to
the accomplishment itself. Some characteristics of performance budget are listed:

- It stresses on the end product

- It presents the purpose and objectives for which funds are required. Generally, its method is
particularly interested in reducing work cost. blcsseburkhead p. 133)

1. Zero Base Budget

Zero base budget is an emerging process adopted by variety of industrial organizations, as well
as municipal governments in the USA, Governor Jimmy) curter of Georgia first adopted Zero
Base Budget (ZBB) in government for preparation of fiscal 1973 budget. Zero-base budgeting
has many interpretations. "Zero base" means the evaluation of all programs under ZBB all
programs and expenditure are reevaluated every year. (Ibid P.133)

2. Master Budget

Master budget is a comprehensive expression of managements operating and financial plan for
future time period (usually a year) that is summarized in a set of budgeted financial statements.
The master budget is a network consist too many separate budgets which are interdependent.
The master budget can be classified just like impact. It means that as operational budget and
financial budget.

Operational budget: it focuses on operational activities of the firm in case of operating

decisions it can be focus on identified of scarce resource operational budget are accompanied
by the following schedule.

2.1.17. Analysis of Budget Variance

A basic future of performance reports in the reporting of variances between actual results and
planned or budget goals. If a variance is significant careful management study should be made
to determine the underlying cause. The underlying causes, rather than the actual results,
should lead to remedies through appropriate corrective action by management.

Analyzing variances: In studding and evaluating of a variance to determine the underlying

causes. The following possibilities should be considered

 the variance is immaterial

 The variance was caused by reporting errors. Both the planned of budget goal and the
actual data provided by the accounting department should be examined for clerical

P a g e | 13
 errors. The variance was caused by a specific management decision
 . Many variances are explainable in terms of the effect of UN controllable factors that
are identifiable.
 . Those variances for which the underlying causes are not known should be of primary
concern and should be carefully investigated. These are the exceptions that usually
require corrective action. (Ibid 1976)
2.2. Empirical Review
Below is a summary of previous Empirical studies on budget administration performance
analysis in the context of different countries.

Amanuel Meles (2011): The study is to assess the budgetary performance and identify any
problems which affect its effective implementation of budget in general. In collecting data, the
researcher used both primary and secondary source of data. The primary data collected from
questionnaire and through interview. The secondary source of data collected from reference
books, internet and also used the four-year budget report of the organization.

John Mbugua, and Charles Rambo (2020): The purpose of the study was to assess how budgets
influence performance of research projects of public universities in Coast region, targeted
population of 1110 academic and non-academic employees for the two universities were used
for this study. A sample of 285; consisting of 173 from Technical University of Mombasa and
112 from Pwani University was employed through proportionate and simple random sampling
to obtain a representative sample.

Abdullah, (2016) on a study about the effect of budgeting and budgetary control in following
strength; the local government should prepare a meaningful budget so as to adhere with the
central government priorities and its budget preparations should be participatory. Once the
budget has been prepared it should be well monitored and at the end its implementation
should be reported and timely review of its implementation so as to detect deviation for
corrective actions and finally it should be noted that a budget is a working manual of
management and not a substitute for management. The literature has the weakness of
discussing only budgeting and budgetary in general but has not discussed the budget
performance of the development projects. Also, the literature was done in Nigeria and
therefore it sites only the factors that are favorable in Nigeria which is different to this study
which is aimed to be undertaken in Tanzania.

Yanxia Qi (2012), did the study on the analysis of the associated effects of performance-based
budgeting which may occur on state government expenditure. The study was qualitative and a
survey design was used with the sample size of budgets from 50 states for the financial year
2000 to 2009 from the National Governors Association. The study believed that assessing

P a g e | 14
budget performance is aimed increasing the operations of the government in making sure that
services are present to the community. This is done through evaluating the acquired outputs
relatively to the actual expenditure incurred to provide the services (Qi, 2012). The study
indicates that exercising performance-based budgeting in the government is positively
influenced by policies that are political in nature. The results indicated policies of a political
nature that influence budget performance but it has not taken into consideration of other
factors, which this study intends to analyze. The study findings showed that there is a negative
association in exercising a performance-based budgeting with total expenditures from general
fund. Also, it noticed that there is a positive association of budgeting with total expenses that
are incurred with other state budget funds.

2.3. Gap of Summary

The literatures reviewed have been done in other African countries, organizations and globally
at large, many researchers have conducted research in area of budget performance. The
findings from the discussed studies can’t be generalized to Government or the head of the
organization since there is existence of challenges concerning poor implementation of
development budget in implementing development projects. However, there are scant studies
that have been comprehensively done on assessing budget performance of the development
projects, which this study intended to fill those gaps. Conducting research to the population will
help budget implementers to understand clearly the challenges as well as recommended
solutions.

CHAPTER THREE
RESEARCH METHODOLOGY

3.1 Research Design

This study was the case study budget administration performance analysis on Addis Ababa
university. The research design was mainly descriptive. That was used to describe the
characteristics of a population. It collected data that were used to answer a wide range of what,
when, and how questions pertaining to a particular population or group.

3.2 Research approach

These data were organized in quantitative and qualitative method. For the quantitative data
the analysis part was conducted through percentages regarding the qualitative types of data
the explanation take place briefly and sequential manner.

P a g e | 15
3.3 Source of Data and Type
The study used both primary and secondary sources of data for the primary data like. Interview
and observation are conduct, regarding secondary source of data available of organization
documents. The source of the data for accomplishing the study was Addis Ababa university
website. Also used other different research paper for the purpose of full up of the procedure
and system they design.

3.4 Data collection method

The study used some common data collection methods include surveys, interviews,
observations, focus groups, and secondary data analysis. The data collected through these
methods could then be analyzed and used to support or refute research hypotheses and draw
conclusions about the study’s subject matter.

3.5 Target population

The primary data would collect distributed questionnaires to 5 respondents. 5 questionnaires
would distribute to 5 employees.

3.6 Sampling techniques

The researcher used census method; the population number was small. A census was a study of
every unit, everyone or everything, in a population. It was known as a complete enumeration,
which means a complete count.

3.7 Methods of data analysis

After the data collection process completed; the next task would be analyzing and discussing
those data (primary and secondary data) properly. The data would quantify, analyze through
descriptive method. Also, the primary data and secondary source would analyze, quantify and
discuss by substantiate with words, statements and theoretical frameworks and will be
presented in tables.

P a g e | 16
 CHAPTER FOUR

4. DATA PRESENTATION, ANALYSIS, INTERPRETATION AND

SUMMARY OF FINDING, CONCLUSION

This part deals with the data analysis and interpretation to the relevant information was
gathered from questionnaires distributed to the employees of the organization and face to face
interview with finance manager and also the budget report from the organization

Finally, the collected data organizes and arranged in appropriate manner that will be readable
and understandable to the reader by using different analysis and interpretation techniques

Table 1. Respondents’ response for know how about budgetary performance

Type of response No of respondent Percentage (%)

Yes 5 100%

From the above table could observe that all respondents 5(100%) of the organization were
knew about the budgetary performance. According to the respondent the entire employee of
the organization was known budgetary performance.

4.1. Budget preparation

Addis Ababa University (AAU) is the largest and oldest public university in Ethiopia, with over
50,000 students and 5,000 faculty and staff. university's total budget for the 2023-2024 fiscal
year is approximately 12.5 billion Ethiopian Birr (around $375 million USD) budget has seen a
15% increase compared to the previous fiscal year, reflecting the government's commitment to
expanding and improving higher education in the country.

P a g e | 17
Table-2 Key Priorities

Key Priorities

Expanding STEM programs and research capabilities

Upgrading campus infrastructure and technology

Increasing access and scholarships for underprivileged students

Strengthening industry partnerships and entrepreneurship programs

(primary: Source)

4.2. Budget System

Addis Ababa University (AAU) is both operational and capital in nature

Operational Budget:

The operational budget covers the day-to-day expenses and activities of the university, such as:

 Salaries and employee benefits

 Utilities (electricity, water, telecommunications)
 Maintenance and repairs
 Supplies and materials
 General administrative costs

The operational budget is derived from various sources, including government subsidies, tuition
and fees, and other revenue streams.

The operational budget is allocated to the different academic and administrative units based on
their needs and approved plans.

The Finance Directorate closely monitors the utilization of the operational budget and ensures
adherence to established financial procedures.

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Capital Budget:

The capital budget is focused on long-term investments and the development of the
university's physical infrastructure and assets, such as:

 Construction of new facilities (classrooms, laboratories, student housing)

 Renovation and expansion of existing buildings
 Acquisition of major equipment and technology
 Land acquisition and campus development

The capital budget is typically funded through government allocations, grants, and other
external sources of funding.

The capital budget planning and execution process involves extensive feasibility studies, project
management, and coordination with relevant stakeholders.

The university's leadership, in collaboration with the Finance Directorate, is responsible for
prioritizing and allocating the capital budget based on the institution's strategic priorities and
available resources.

The Organization Budgetary Performance

1, Revenue Sources:

Availability and reliability of government funding and subsidies provided to AAU Generation of
own-source revenues through tuition fees, research grants, consultancies, and other income-
generating activities Ability to mobilize additional funding from donors, development partners,
and private sector collaborations

2, Budget Planning and Allocation:

Effectiveness of the budget preparation process, involving input from various stakeholders
Alignment of budget allocations with the university's strategic priorities and needs

Flexibility to reallocate funds between different budget lines as per evolving requirements

3, Budget Execution and Monitoring:

Capacity and efficiency of financial management systems and procedures

Timely release and disbursement of funds to different departments and projects

Robust monitoring and evaluation mechanisms to track budget utilization and performance

P a g e | 19
4, Governance and Accountability:

Clarity of roles and responsibilities in budget administration

Transparency in budget information sharing and decision-making processes

Effective oversight and auditing mechanisms to ensure accountability

5, External Factors:

Macroeconomic conditions, such as inflation and exchange rate fluctuations, which can impact
purchasing power

Changes in government policies and regulations affecting the university's financial operations

Unforeseen events or emergencies that may require budget reallocations

6, Institutional Capacity:

Availability of qualified finance and budget professionals within the university

Training and capacity development programs to enhance budgetary skills

Use of technology and data-driven decision-making in budget management

Addis Ababa University (AAU) appears to effectively implement its budget to support the
institution's operations and strategic priorities.

AAU effectively implements its budget:

Robust Budget Preparation and Approval Process:

The university has a well-established budget preparation process that involves input from
various academic and administrative units.

The Budget Directorate and Finance Directorate work closely to ensure the budget aligns with
the university's strategic goals and available funding sources.

The budget approval process, involving the AAU Senate and the Ministry of Education, provides
oversight and accountability.

Effective Budget Allocation and Utilization:

The Finance Directorate allocates the approved budget to different departments and units
based on their needs and approved plans.

P a g e | 20
Budget holders are responsible for managing and monitoring their allocated funds, ensuring
effective utilization.

The university has established procurement and expenditure procedures to ensure compliance
and efficient use of resources.

Comprehensive Budget Monitoring and Control:

The Finance Directorate closely tracks the university's actual income and expenditures against
the approved budget.

Regular financial reporting and internal audits help identify any variances or deviations,
allowing for timely corrective actions.

The university's budget system allows for some flexibility to accommodate changes in priorities
or unexpected circumstances.

Capacity Building and Financial Management Expertise:

The university provides training and support to budget holders and finance staff to enhance
their budget planning and execution capabilities.

The Finance Directorate works collaboratively with academic and administrative units to build
their financial management skills.

The presence of experienced finance professionals and sound financial management practices
contribute to the effective implementation of the budget.

Alignment with Strategic Priorities:

The budget process and allocation decisions are closely aligned with the university's strategic
objectives, such as expanding STEM programs, upgrading infrastructure, and increasing access
for underprivileged students.

The budget supports the university's efforts to modernize, innovate, and better serve the needs
of students, faculty, and the broader community.

System or techniques used by the organization to reduce budget deficit.

Revenue Diversification:

Expanding the university's sources of revenue beyond government funding, such as:

Increasing student tuition and fees, while ensuring accessibility for underprivileged students

P a g e | 21
Enhancing revenue from research grants, consultancies, and intellectual property

Generating income from campus facilities, services, and entrepreneurial activities

Attracting more external funding from donors, development partners, and industry
collaborations

Cost Optimization:

Implementing cost-cutting measures, including:

Streamlining administrative expenses and overhead costs

Optimizing procurement and supply chain management

Improving energy efficiency and resource utilization

Leveraging technology to enhance operational efficiency

Budgetary Reforms:

Enhancing the budget planning and management processes, such as:

Aligning the budget with the university's strategic priorities and academic plans

Introducing performance-based budgeting and resource allocation models

Improving budget transparency and stakeholder engagement

Strengthening budget monitoring, control, and reporting mechanisms

Enrollment and Tuition Management:

Carefully managing student enrollment, program offerings, and tuition fee structures to
optimize revenue generation

Implementing targeted scholarship and financial aid programs to ensure affordability and
access for students

Asset Optimization:

Maximizing the utilization and commercial potential of the university's physical assets, such as:

Leasing or renting out underutilized facilities and infrastructure

Exploring public-private partnerships for facility development and management

Generating revenue from campus services, accommodations, and commercial activities

Financial Management Capacity Building:

P a g e | 22
Investing in the financial management skills and capabilities of the university's administrative
staff

Adopting modern financial planning, budgeting, and control systems

Intergovernmental and Stakeholder Collaboration:

Engaging with the government, funding agencies, and industry partners to secure additional
financial support and resources

Exploring opportunities for cost-sharing, joint projects, and resource pooling

4.3 Budget Performance Report of the Organization

Revenue Report

Table 3 Budget Performance Report of the Organization 2015E.C

No Heading of Revenue Annual plan

in (birr)

1 Government Subsidies 2.1 billion Birr

2 Tuition and fees 760 million Birr

3 Research Grants and Contracts 230 million Birr
4 Other Income 60 million Birr

Expense Report

Table 4. Budget Performance Report of the Organization 2015 E.C

No Heading of Expanse Annual plan

in (birr)

1 Personnel Costs (Salaries and 1.7 billion Birr

Benefits)

2 Operating Expenses 720 million Birr

3 Academic Programs 440 million Birr
4 Research and Sponsored 220 million Birr

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 Projects
5 Capital Expenditures 150 million Birr

(Source- primary source)

Revenue Report

Total budget approved for AAU in the 2016 E.C. fiscal year was 3.5 billion Ethiopian Birr.

Table 5 Budget Performance Report of the Organization 2016E.C

No Heading of Revenue Annual plan

in (birr)

1 Government Subsidies 2.3 billion Birr

2 Tuition and fees 830 million Birr

3 Research Grants and Contracts 260 million Birr
4 Other Income 800 million
(Source- primary source)

Expense Report

Table 6 Budget Performance Report of the Organization 2016E.C

No Heading of Expanse Annual plan

in (birr)

1 Personnel Costs (Salaries and 1.9 billion Birr

Benefits)

2 Operating Expenses 780 million Birr

3 Academic Programs 480 million Birr
4 Research and Sponsored 240 million Birr
Projects
5 Capital Expenditures 160 million Birr
(Source- primary source)

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Budget Utilization Rate:

AAU utilized 96% of its total approved budget in the 2016 E.C. fiscal year.

Variance Analysis:

Tuition fee revenue was 3% higher than budgeted due to an increase in student enrollment.

Research grant revenue was 4% higher than projected due to the successful acquisition of
several new research projects.

Capital expenditures were 8% lower than planned as a result of delays in the completion of a
major construction project.

Recommendations and Action Items:

Continue to explore ways to diversify revenue sources and reduce reliance on government
subsidies.

Invest in research infrastructure and faculty development to enhance AAU's research

capabilities and competitiveness.

Implement robust project management practices to ensure timely completion of capital

projects.

Expand financial aid and scholarship programs to improve student access and retention.

4.5. Summaries of Findings

AAU has both an operating budget and a capital budget to cover its various expenses and
investment needs. The operating budget covers day-to-day costs, while the capital budget is for
longer-term projects and programs.

The budget process involves individual departments and units at AAU preparing their own
budget proposals based on their annual work plans. These proposals are then consolidated and
reviewed at the institutional level.

The main sources of AAU's revenue include sales of electricity/power, loans and aid, customer
contributions, and government funding. However, there have been challenges in consistently
collecting the expected revenue amounts.

Issues identified include inappropriate budget allocations, poor communication and

coordination between managers and staff, and a gap between planned and actual revenue
collection due to economic instability and lack of enforcement on fee collection.

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4.6. Conclusion
Funding Sources: AAU likely receives funding from a variety of sources, including the Ethiopian
government, tuition fees, research grants, and potentially international donors or development
organizations. The composition and breakdown of these funding sources may be reported in
the university's budget. Budget Transparency: Many universities strive to be transparent about
their budgets, but the level of detail and public accessibility of AAU's budget reporting is
unclear to me without more recent information.

Budget Cycles: Universities typically operate on an annual budget cycle, aligning with the
government's fiscal year. AAU's budget would likely be set, approved, and reported on an
annual basis.

Budget Categories: University budgets often include line items for categories such as
faculty/staff salaries, academic programs, research, facilities, administration, and student
services. The level of detail provided in AAU's budget breakdown is uncertain.

Budgeting Processes: Universities typically have established budgeting processes that involve
various stakeholders, such as administration, faculty, and sometimes student representatives.
These processes often include budget proposal, review, and approval stages.

Budget Reporting Formats: University budgets may be reported in different formats, such as
line-item budgets, program-based budgets, or activity-based budgets. The level of detail and
presentation can vary.

Budget Oversight: University budgets are usually subject to some form of internal and external
oversight, such as review by a board of trustees, audit by the government, or reporting to the
Ministry of Education.

Budgetary Challenges: Universities worldwide often face budgetary constraints and must
prioritize funding allocations. This can lead to discussions around resource allocation, tuition
fees, and the balance between teaching, research, and other activities.

4.7. Recommendation

 Enhance Transparency Public Disclosure AAU should consider making its budget
documents publicly accessible online. Detailed reports can help build trust and
transparency with stakeholders.
 Detailed Breakdown: Provide a detailed breakdown of revenue sources and expenditure
categories. This includes specifying amounts allocated to salaries, academic programs,
research, infrastructure, and student services.

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  Stakeholder Involvement Inclusive Budgeting: Involve a wide range of stakeholders in
the budgeting process, including faculty, staff, and student representatives. This ensures
that the budget reflects the needs and priorities of the entire university community.
 Feedback Mechanisms Implement feedback mechanisms where stakeholders can
provide input on budget priorities and allocations.
 Regular Reporting Annual Reports Publish annual budget reports that summarize the
financial status of the university, including income and expenditure for the year.
 Quarterly Updates Consider providing quarterly financial updates to keep stakeholders
informed about the university’s fiscal health and any mid-year adjustments.
 External Audits Independent Audits Engage independent auditors to review the
university’s financial statements annually. This adds an extra layer of accountability and
credibility to the financial reporting.
 Audit Findings Make the findings of these audits publicly available to ensure
transparency and accountability.
 Training and Capacity Building Financial Training: Provide training for university staff on
budget management and financial reporting. This can improve the accuracy and
reliability of financial data.
 Capacity Building: Invest in building the capacity of the finance department to handle
complex budgeting and reporting tasks efficiently.
 Leverage Technology Financial Management Systems: Implement robust financial
management systems to streamline budget preparation, monitoring, and reporting
processes.
 Online Portals Develop online portals where stakeholders can access budget
information, submit queries, and provide feedback.
 Address Budgetary Challenges Resource Mobilization: Explore diverse funding sources,
including partnerships with international institutions, grants, and alumni contributions,
to mitigate budget constraints.
 Cost Efficiency Regularly review and assess the university’s expenditure to identify areas
where cost efficiencies can be achieved without compromising quality.
 Policy and Governance Clear Policies Establish clear policies and guidelines for budget
preparation, approval, and reporting. Ensure these policies are well-communicated and
adhered to.
 Governance Structure: Strengthen the governance structure overseeing the budget to
ensure effective oversight and accountability

P a g e | 27
Reference
https://etd.aau.edu.et/items/791250d1-d11a-4c3f-abc3-e16b7057f371
https://www.aau.edu.et/documents/budget-and-finance/
https://www.nerdwallet.com/article/finance/what-is-a-budget
https://en.wikipedia.org/wiki/Budget
https://www.accountingcoach.com/blog/what-is-a-budget-2
https://ec.europa.eu/programmes/erasmus-plus/project-result-content/4d828916-38fa-4fb8-
83d0-28f27ccb71be/budgeting%20and%20financial%20planning%20booklet.pdf
https://www.elibrary.imf.org/downloadpdf/book/9780939934256/9780939934256.pdf
David J.C. (1988). Management and Cost Accounting Second Edition: International Thomas
Press London.

https://www.investopedia.com/terms/b/budget.asp
https://msbrijuniversity.ac.in/assets/uploads/newsupdate/Budget1.pdf

Horngren C. T. (2000). Cost Accounting, a Managerial Emphasis. 4th edition, Prentice Hall
India, New Delhi.

JeseBurkhead (1965) Government Budgeting: John Wiley John, Inc New York

Lucy T. (1981). Management Accounting. DP Publishers Ltd, London, Third edition

MacMillan London.Engler, C. (1995). Managerial Accounting First Edition.Mc-Hill Companies

Inc; York

MelekEker (2007) .The impact of budget participation on managerial performance via

organizational commitment.Unpublished PHD Thesis Akdeniz University Faculty of
Economics.

Michael BahunakisGlnna, welsch and etal (2001), Budgets: profit planning and control.

P a g e | 28
 APPENDIX
AAU
COLLEGE OF BUSINESS, ECONOMICS, AND SOCIAL
SCIENCE
DEPARTMENT OF ACCOUNTING AND FINANCE

Questionary

1. During the budget planning process, are key stakeholders actively involved?

A) Yes

B) No

C) Unsure

2. Does the budget align with the strategic objectives of the organization?

A) Yes

B) No

C) Unsure

3. Are revenue and expense forecasts considered accurately during the budget planning phase?

A) Yes

B) No

C) Unsure

4. How frequently are budget reports prepared and reviewed?

A) Monthly

B) Quarterly

C) Annually

P a g e | 29
5. Are budget variances analyzed to identify causes and take appropriate actions?

A) Yes

B) No

C) Partially

6. Are measures in place to ensure adherence to the budget?

A) Yes

B) No

C) Partially

7. How flexible are budget administration processes in accommodating changes or unexpected

events?

A) Highly flexible

B) Moderately flexible

C) Not flexible

8. Are stakeholders actively engaged in the budget administration process?

A) Yes, extensively

B) Yes, to some extent

C) No, limited engagement

9. Are performance metrics used to evaluate the effectiveness and efficiency of budget
processes?

A) Yes

B) No

C) Partially

10. Are training and development initiatives provided to staff involved in budgeting?

A) Yes, regularly

B) Yes, occasionally

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 C) No, not provided

11. To what extent are technology and automation tools utilized in budget administration
processes?

A) Extensively

B) Moderately

C) Minimally

12. How often are best practices and industry benchmarks considered in evaluating budget
administration performance?

A) Always

B) Sometimes

C) Rarely

13. Is there a culture of continuous improvement in budget administration processes?

A) Yes

B) No

C) Partially

14. Are there mechanisms in place to manage financial risks associated with budget
administration?

A) Yes

B) No

C) Partially

15. How effectively is budget information communicated to stakeholders?

A) Very effectively

B) Moderately effectively

C) Ineffectively

16. What recommendations do you have for improving budget administration performance?

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17. Budget Monitoring and Reporting: Examine the frequency and comprehensiveness of
budget monitoring and reporting mechanisms. Evaluate the tools and systems in place to track
and communicate budget performance, such as financial reports, dashboards, or real-time
monitoring.____________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_______________________,

18. How frequently are budget reports prepared and reviewed?

______________________________________________________________________________
_________________________________.

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