Abstract
Despite the significant role played by Budgeting and Budgetary Control in aiding organizational success, many Credit Unions (CUs) within the upper west region of Ghana have neglected this important performance management mechanism. Considering the significant role played by Credit Unions in Ghana in supporting micro and small scale enterprises and agriculture against the backdrop of high mortality rate of Credit Unions in the Upper West Region (where the first Credit Union in Africa was formed) it is important to consider if budgeting and budgetary control functions are being efficiently discharged. The main objective of the study was to identify whether any relationship exist between budgeting and budgetary control on one hand and financial performance on the other hand, of Credit Unions in the upper west region of Ghana. The study used the descriptive and correlational research methods targeting the entire population of eight (8) Credit Unions registered with the Department of Co-operatives and affiliated to Ghana Co-operative Credit Unions Association Limited (CUA). The census survey method was employed due to the small population size and purposive sampling was used to select the study respondents due to the technical nature of the subject and a regression model adopted to determine the association between dependent and independent variables. The study found that financial performance is significantly influenced by the budgeting and budgetary control practices of Credit Unions in the Upper West Region. It was also revealed by the study that the extent of use of good budgeting and budgetary control practices including formal budget planning, use of excel/software, punishments/reward, budget participation, flexibility, zero-base budgeting and budget comprehensiveness was very low among Credit Unions. Those directly responsible for the proper preparing and execution of the budget should be properly trained to equip them with the knowledge and skills to do and better job including the adoption of better budgeting and budgetary control practices to help improve financial performance of Credit Unions. Keywords: Budget, Budgetary Control, Return on Assets, Permanent Income Hypothesis, Effectiveness, Organisational Performance DOI: 10.7176/RJFA/11-12-01 Publication date: June 30th 2020
Highlights
The Judicious management of the resources of every organization by the people entrusted with leadership is one function without which no entity can survive
Most of the Credit Unions were found to prepare documented budgets, with majority of the budgets spanning 1-3 years as against over 5 years which is recommended by the Legislative Instrument (L.I.2225) in December 2015
While Siyanbola (2013) advocates that the budget manual is a central part of ensuring that a quality and achievable budget is crafted, the Credit Unions Association Limited (CUA) Model Financial Management Manual (2009) enjoins Credit Unions (CUs) to ensure that Budget Committees exist to see to the preparation, implementation and control of the budget
Summary
The Judicious management of the resources of every organization by the people entrusted with leadership is one function without which no entity can survive. Since no organization wields all the resources it may need, it is imperative that the planning and control of especially financial resources take center stage in every business entity. Failing to plan and control the financial resources can affect the very survival of an enterprise as this will create a mismatch or absence of inputs at the time they are needed. Budget and Budgetary control constitute important management and internal control systems and are central to the process of planning and control which are major activities of management in all organizations (Beatrice and Thuo, 2013). Leaders and employees will work at cross purposes and there would be no yardstick for determining what has been achieved and whether results are satisfactory or not and disaster will be the ultimate end
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