Development
FINANCIAL MANAGEMENT IN THE FINANCIAL SECTOR (FINA 431) 3RD TRIMESTER 2012
KENYA METHODIST UNIVERSITY
END OF 3'RD 'TRIMESTER 2012 (EVENING) EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING & FINANCE
UNIT CODE : FINA 431
UNIT TITLE : FINANCIAL MANAGEMENT IN PUBLIC SECTOR
TIME: 2 HOURS
Instructions: Answer Questions ONE and any TWO other Questions.
Question One
Due to scarcity of resources of the government, the resources must be used economically and efficiently. To this end therefore, choice of projects to undertake should be based on a cost benefit analysis and the chosen programmes should be subjected to the tests of actual performance against their expected standards. This has led the planning programming budgeting system being adopted in the public sector.
Explain the rational of planning and program budgeting system to a developing country like Kenya.
(5 Marks)
Explain THREE steps involved in planning and program budgeting system.
(6 Marks)
What problems do you think a system of budgeting is likely to face in its implementation.
(4 Marks)
According to theories of increasing public expenditure, there is an inherent long-term tendency for state expenditure to go up overtime. Highlight reasons that have been used by advocates of these theories to explain this increasing trend of public expenditure.
(10 Marks)
According to the government budget of 2008/2009, the government will not be able to raise enough funds to meet its expenditure. Highlight FIVE ways the minister for finance may raise funds to meet the expected shortfall.
(5 Marks)
Question Two
Incase of market failure, governments may intervene to correct distortions created by failure and seek to improve the efficiency in the way that the market operates. Explain, citing relevant examples in Kenya setting, FIVE ways in which the government
KENYA METHODIST UNIVERSITY
END OF 3'RD 'TRIMESTER 2012 (EVENING) EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING & FINANCE
UNIT CODE : FINA 431
UNIT TITLE : FINANCIAL MANAGEMENT IN PUBLIC SECTOR
TIME: 2 HOURS
Instructions: Answer Questions ONE and any TWO other Questions.
Question One
Due to scarcity of resources of the government, the resources must be used economically and efficiently. To this end therefore, choice of projects to undertake should be based on a cost benefit analysis and the chosen programmes should be subjected to the tests of actual performance against their expected standards. This has led the planning programming budgeting system being adopted in the public sector.
Explain the rational of planning and program budgeting system to a developing country like Kenya.
(5 Marks)
Explain THREE steps involved in planning and program budgeting system.
(6 Marks)
What problems do you think a system of budgeting is likely to face in its implementation.
(4 Marks)
According to theories of increasing public expenditure, there is an inherent long-term tendency for state expenditure to go up overtime. Highlight reasons that have been used by advocates of these theories to explain this increasing trend of public expenditure.
(10 Marks)
According to the government budget of 2008/2009, the government will not be able to raise enough funds to meet its expenditure. Highlight FIVE ways the minister for finance may raise funds to meet the expected shortfall.
(5 Marks)
Question Two
Incase of market failure, governments may intervene to correct distortions created by failure and seek to improve the efficiency in the way that the market operates. Explain, citing relevant examples in Kenya setting, FIVE ways in which the government