Goverment Budget

CHAPTER ONE

1.0 Background of the Study

The success of any organization either non-profit organization or profit oriented entities is generally influenced by its planning and control mechanisms. The two concepts of planning and controlling must be balanced so as to attain success and development in an organization. At the planning stage an organization usually stipulates its objectives, missions, visions, goals and means of attaining those objectives with formulation of policies and strategies. While at the controlling stage an organization will concentrate on comparing the actual performance with the budgeted performance and then take any appropriate corrective actions to secure organizational goals or to provide basis for policy revision. Sometimes the planned targets become difficult to be attained due to uncertainties ie;inflation,scarcity of materials, increasing transport costs, natural hazards,etc.Such uncertainties may enforce an organization to alter or adjust its plans and performance standards. Therefore planning and controlling are inseparable processes that are continuously maintained in an organization .Having good plans while the controls are not effective will not enable the organization to perform well, this is the same as having good controls while the plans are poor. The effective performance in an organization is attained when good plans are married with effective control systems. Most organizations conduct their planning and control processes through implementation of budgetary control system. Budgetary control system is the system of using budgets as a means of planning and controlling all aspects of producing or selling commodities and services (By J.Batty) An organization will never lose direction and means of measuring performance if it will implement the budgetary control system. The budgetary control system is useful to all managers in planning and controlling all activities of the organization. The effective budgetary control system is influenced by proper establishment of objectives, strategies and policies, provision of budget education to all employees, planning the standards of performance that are attainable, good communication and co-ordination system etc. The budgetary control systems exercised in non profit organizations i.e. central and local governments, schools, colleges, hospitals and a range of other organizations is slightly different as compared to trading entities. Lucey (2004) agreed that, although many of the principles of budgeting apply equally to NPO’s and profit seeking organization, a key different is that the latter organization’s budget focus on the relationship between input (expenditure) and output (sales revenue). In NPO’s output are much more difficult to measure so traditionally budgeting has been concerned with making sure that for each expenditure heading actual spending does not exceed the budget authorized cash limits. This has been criticized by Farry for concentrating on what the money is spent rather than what is obtained from the money. Another problem for NPO’s is that many of their activities and the level of costs are determined elsewhere and thus are much less controllable. Take for example a budget for a local managed school. A major item, often accounting 70% of costs, is teacher’s salaries. The level of salaries is determined nationally and legislation and norms largely govern the number of teachers. As a consequence, a high proportion of costs are not controllable to any significant degree at the school level. Different is that in trading entities managers are able to control their inputs and outputs in terms of quantity and quality this is due to fact that trading entities have precious objectives and goals to be attained in a given financial year i.e. producing a certain level of output with a specified quality standards. But NPO’s and government sectors are mostly services oriented organizations, hence they lack precious goals (that are quantifiable) to be attained in a given financial year. Due to this intrinsic problem there is high need of effective budgetary control systems in government sectors and in NPO’s in order for them to become economical and efficiently in spending and collection of revenue. Despite of having budgetary control systems in all government sectors and NPO’s in Tanzania but still most of them are faced with serious problems of overspending, poor control over resource, poor achievement of targets etc.this happens because most of these organizations do not implement effectively the budgetary control system. From 199O’s most of government co-operatives and companies had been privatized because they failed to control themselves. Therefore this study is aimed at identifying the effects of budgeting policies, procedures, methods and controls processes at the MFAIC and assess the effectiveness of the overall budgetary control system. In addition a researcher will provide a valuable recommendations and opinions at any angle where the study will reveal weakness in the budgetary control system at the MFAIC.

1.1 HISTORICAL BACKGROUND OF MINISTRY OF FOREIGN AFFAIRS AND INTERNATIONAL COOPERATION

The history of ministry of foreign Affairs and International cooperation dates back soon after independence in 1961.Up to December 1963 it was department under prime minister’s office, and the first minister was Hon.Oscar.S.Kambona In 1964 it becomes a fully fledged ministry under the name of Ministry of External Affairs and its first minister was Hon. Stephen Mhando. Since the election of 1975 the name of the ministry has changed twice from External Affairs to Foreign Affairs and Foreign Affairs to current Foreign Affairs and International Cooperation. During this period the following ministers have led the ministry; Hon. Israeli Elinewinga, Hon.Ibrahim kaduma, Hon. Benjamin William Mkapa, Hon.Salim Ahmed Salim, Hon. Joseph Rwegasira, Hon.Ahmed Hassan Diria, Hon.Jakaya Mrisho Kikwete, and Hon.Dr Asha Rose Mtengeti Migiro
And currently under the leadership of Hon. Benard Membe

1.1.1 The Organization Structure of the MFAIC.

The MFAIC is among the potential Ministries of the URT Government structure. The MFAIC is headed by the Minister of Foreign Affairs and International Cooperation (currently Hon. Bernard Membe ) assisted with two deputy Ministers (Deputy minister on Political affairs & Deputy minister on Economic affairs ). Adjacent to this level there is Permanent Secretary who is assisted by Deputy Permanent Secretary.

The MFAIC consists of thirteen departments i.e. Administration & Human Resource, Finance and Accounts, Protocol, Legal Unit, Internal Audit, Procurement Management, Africa department, Middle East department, Europe & America department, Asia & Australia department, Regional Cooperation department and Multilateral Cooperation department.

Departments are headed by heads of departments. Other departments had been further classified into Divisions and Sub-divisions e.g. Africa department, Multilateral department e.t.c. (For more detail on organization structure see-Appendix 3, 4 & 5)

1.1.2 Vision, Mission and Core Values of the Ministry.

Through its Foreign Policy, the Ministry of Foreign Affairs and International Cooperation has its Vision, Mission and Core Values which are as follows:

Vision of the Ministry:

To become an effective promoter of Tanzanian’s economic and other national interests abroad

Mission Statement:

“To conduct an active diplomacy which will generate economic activities and facilitates Tanzania’s rapid transformation and sustainable development. The Ministry of Foreign Affairs and International Cooperation is a coordinator of the country’s foreign policy will timely and effectively cooperates with other ministries and institutions in ensuring the achievement of Tanzania’s Foreign Policy”
Core Values:

The Ministry of Foreign Affairs and International Cooperation has the following core values:
1. To provide excellent services, to be creative, innovative and continuously strive to improve performance by enhancing knowledge and skills.
2. Impartiality
3. Integrity on exercise of powers within specified boundaries.
4. Accountability to the public.
1.1.3 Background of the New Foreign Policy of the URT of 2001 The URT has undergone tremendous changes since its union in 1964. These changes are evident in the social, political and economic spheres as the country has moved to consolidate its unity, foster greater political pluralism and promote economic liberalization. There have been equally significant changes in the international system. The end of the cold war and the emergence of a single super- power, the global shift towards market-led economies and the processes of regionalization, globalization and liberalization which are powering it, the shift from development aid to trade, the resurgence of intra-state and inter-state conflicts, the movement towards greater embrace of democracy, human rights and good governance, the emergence of new shared challenges such as international terrorism, illegal migration, drug trafficking, the preservation of the environment, the phenomenal advances in science and technology as well as the end of Apartheid in South Africa, have combined to fundamentally alter the international system and created the imperative for adjustment in the URT. Central to that imperative for adjustment is the mainstreaming of economic considerations in the formulation and conduct of URT’s foreign policy, while at the same time consolidating the fundamental principles of freedom, equity and justice, sovereign equality, territorial integrity and political independence, good neighborliness, non-alignment, non-interference into the internal affairs of the states, the promotion of African Unity as well as support for the United Nations (UN) in its development and peace agenda which have traditionally been its cornerstone since independence. The conduct of a country’s foreign policy has to find context in the international environment in which it operates. It is altruism that, the present international environment has changed so radically that some of the assumptions on which the URT’s foreign policy had been predicated, no longer hold full relevance All those mentioned changes and other contemporary issues that have emerged in recent times have compelled the URT to review its foreign policy in 2001 in order to accommodate the emerged changes

The URT New Foreign Policy of 2001 Given the economic and socio-political shift that has occurred in the domestic and international scene, The URT adopted a Foreign Policy focusing on economic diplomacy to secure the core national interest as a sovereign state. The Policy manifest itself in active international engagement, which is basically leveraged upon the pursuit of economic objectives, while at the same time preserving the gains of the past and consolidating the fundamental principles of Tanzania’s traditional foreign policy. The principles of the new foreign policy shall be:

1.1.4.1 Principles

• Safeguard the sovereignty, territorial integrity and political independence of The United Republic of Tanzania.
• Defense of freedom, justice, human rights, equality and democracy.
• Promotion of good neighbourliness
• Promotion of African Unity
• Promotion of deeper economic cooperation with or without development partners.
• Support for the practice of the policy of non-alignment and south- south Cooperation and
• Support for the United Nations in its search for international economic development, peace and security

1.1.4.2 Objectives

The URT’s New Foreign Policy has the following main objectives.

• To project, promote and protect URT’s political, economic, social and cultural interests through active and sustainable economic diplomacy
• To ensure that URT’s relation with other nations and international entities are also driven inline with economic interests,
• To build a self sustaining economy, preservation of national peace and security as well as supporting regional and international endeavor for the creation of better and peaceful world.
• To accelerate the political and social economic integration for the region and
• To create the necessary conditions which shall enable URT to participate effectively in the regional and international negotiations

1.1.4.3 Strategies

• Buildings Facilitative Internal Environment
• Forging International Partnership,
• Redefining Bilateral Diplomacy,
• Strengthening Multilateral Diplomacy,
• Promoting Good Neighborliness,
• Enhancing Regional Peace and Security,
• Strengthening Regional Economic Integration (EAC, SADC,IOR-ARC),
• Upholding African Union (AU),
• Reaffirming Non-Alignment,
• Promoting South-South Cooperation,
• Enhancing the Commonwealth Organization,
• Promoting the United Nations Organization,
• Readdressing Financial Issues and external Debt,
• Cooperating with Multinational Corporations and
• Supporting Effective NGOs

Therefore the ministry of Foreign Affairs and International Co-operation, as a coordinator of the country’s foreign policy shall cooperate with other ministries and institutions in ensuring the principles and the objectives of the policy are implemented and function.

1.2 Statement of a Problem

Most of government sectors in Tanzania are still facing great problems in managing and controlling their financial and non-financial activities. Since1990’s to date most of government entities had been privatized to foreigners due to failure in controlling and managing their affairs. Most of government sectors and non-profit organizations in Tanzania are hindered with problems of overspending, poor control over scarce resources, low rate of target achievement, poor financial control, and failure in meeting operating expenses, poor coordination of activities e.t.c. The essence of all above problems in government sectors and NPO’s is traced within the planning and controlling mechanisms of these entities The process of planning and controlling of organizational activities is done through implementing the budgetary control system. The budgetary control system is the system that uses budget as a means of planning and controlling all aspects of producing or selling commodities and services in an organization. The effective implementation of budgetary control systems in government sectors and NPO’s will results into high performance and economic use of public fund as well as target achievements. Therefore we may agree that most of government sectors and NPO’s in Tanzania perform poorly because they fail to give due importance on the implementation of the budgetary control system. Budgetary control system requires coordination, communication and interaction among different departments of the organization. As a tool of planning the budgetary control system will enable the government sectors and NPO’s to forecast the future uncertainties that might affect the entity i.e. inflation, scarcity of potential materials/resources, rise of production cost, situation changes e.t.c. Such predictions enables an organization to adjust plans in terms of objectives and standards of performance-so as to ensure that the planned targets are met. Good planning in an entity is of great importance because it enables an organization to predict the cost of future operations (activities to be done) and setting of standards of performance that are attainable. As a tool of controlling, the budgetary control system assists organizations to arrest any adverse situation that might emerge and implicate the achievement of planned targets. In Tanzania most of organizations are faced with great problems in controlling and effecting the planned targets-thus, they have good plans but control measures are weak .Effective control requires continuous comparison between actual and planned targets so as to ensure that the current operations is inline with the planned targets and objectives. Therefore having good plans without effective controls is the same as “building good house without occupying it” The effective implementation of budgetary control system in government sectors and NPO’s in Tanzania could be the only solution of eradicating the problems of overspending, poor control over resource, failure in meeting targets etc. Therefore within this context and by considering the past and contemporary performance of government sectors and NPO’s in Tanzania, this study is set out to assess the effectiveness on implementation of the budgetary control systems in government sectors and NPO’s in Tanzania.

1.3 Objectives of the Study

1.3.1 General objective The study is generally intending to assess the effectiveness of implementing budgetary control system at MFAIC.

1.3.2 Specific Objectives

Specifically the study would broaden into the following issues;

 To identify whether the implementation of the budgetary control system at the MFAIC leads to effective performance.

 To analyses the extent of awareness on budget and budget education among employees at the MFAIC.

 To reveal the relationship that exists between top management and lower level employees during budgets preparation and implementations.

 To identify the extent at which the MFAIC operations and decisions are adhered to the budget stipulations

 To identify the weak spots in the budgetary control systems at the MFAIC.

1.4 Research Questions  Does the implementation of budgetary control system at the MFAIC results to effective performance?

 Are the employees at the MFAIC well equipped with budget education?

 Is the budgeting process at the MFAIC participatory?

 Does the managers and employees at the MFAIC adhere to budgets stipulations?

 Is there any limitation on the budgetary control system at the MFAIC?

1.5 Significance of the Study

To the host organization

The study provides information that will help the management at the MFAIC to adopt corrective measures in terms of methods procedures and policies that are applied by the MFAIC to implement the budgetary control system. Furthermore, the study provides the basis for future policy formulation regarding budget implementation at the MFAIC.

To the researcher

It helps the researcher to gain knowledge on Accounting professional. Apart from that also the study enables the researcher to fulfill part of the requirements for the award of Bachelor of Accountancy and Finance offered by Mzumbe University

To academicians

The study acts as a stimulus to other researchers who wish to conduct a research on the topic under study or any other related topic to this study

1.6 Limitations of the Study

The researcher faced the following problems in conducting this research;

 Shortage of time The total time allocated to complete this research study was 15
Weeks, the allocated time was too short to collect the reliable and adequate data. Therefore the results of this finding may not be very accurate as intended.

 Shortage of fund

The total fund allocated to the researcher for furnishing this research study was not sufficient. This was highly contributed by the rising prices of goods and services due to the emerged inflation.

 Poor transport facilities

The researcher faced a great problem in traveling from his domicile area to the field centre. There were few commuter buses and high car congestions on the road that moves to the field centre.

 Poor cooperation

Some of respondents failed to return the questionnaires; also other documents were not available when needed by the researcher. Moreover, most of potential respondents were busy while others were reluctant in conducting interview.

CHAPTER TWO

2.0 Importance of literature Review

It has been established that literature review is of crucial significance to the researcher as it makes him understand the concepts and theories in the area of the study and other related fields. It helps the researcher to discover what other researchers have researched on and what remains to be researched thus avoiding duplication. Furthermore, it is agreed that by reviewing literature –the researcher will be able to plan and establish theoretical basis for their project and obtain empirical evidence on their hypothesis and assumptions. Forgetting not to mention the fact that literature review marks the starting point for the research work and hence a point of departure for research topic from the rest of the fields.

2.1 Definition of Budget

Budgeting means deciding or estimating in advance the courses of action to achieve a particular target or objectives in a given period of time, along with numerical expression on the input and output to be achieved. The budget statement is expressed in quantity and financial terms. According to the Oxford Advanced Learners Dictionary(2000) the word budget means any of the following;

 Estimate of plan on how money will be spent over a period of time in relation to the amount of money available
 Annual Government statement of country expenditure and how it will be financed.Amount of money needed or allotted for specific purposes

According to Cambridge International Dictionary of English the word budget means any of the followings;

 A plan to show how much money a person /organization will earn and how much they will or be able to spend
 Plan on how to spend
 To save money in a planned way

Also Mwisho (2002), defined budget as a short term financial plan or an action plan to guide managers in achieving the objectives of the firm, alternatively it may be defined as a comprehensive and coordinated plan expressed in financial terms, for the operations and resources of the firm for some specific period of time. According to Mwisho the basic elements of budget are;  It is comprehensive and coordinated plan
 It is expressed in financial terms
 It is plan for the firms operations and resources
 It is a future plan for a specified period

Drury (1990) defines budget as a detailed plan that coordinates various activities within company for further action. On other hand, Edey (1964), has defined budget as statement about what is expected or planned to happen while Owler and Brown (1975) said budget is a financial or quantitative statement, prepared or approved prior to the defined period of time of the policy to be pursued during that period for the purpose of attaining the given objectives. It may include income expenditure and the employment of capital.

2.2 Objectives of Budgeting

The annul budgeting has several objectives as pointed out by Shillinglaw & Mayers (1982). The following are outlined objectives of budgeting in NPO’s and profit oriented organizations. o To compel planning and formulating the expected standard of
Performance
o To provide framework for evaluation of performance. o To enhance Coordination and communication within the
Organization
o To force the managers to analyses Companies activities critically and creatively. o To provide a reference point for control purpose, thus it becomes the basis for evaluating actual results. o To enable the management to anticipate problems and deal with them effectively o To reinforce managers motivation to work effectively in order to achieve organizational goals and objectives o It acts as a remainder to the plan for managers o To promote cost conscious and cooperation altitude towards budgeting control.It must permits all levels of management. Top management must understand and atheistically support the budget and all aspect of control system

Therefore budget assists the managers as constant remainder of the plan they have adopted. Hence it gives the photographic print they can consult from time to time as they implement the plan. It also saves as a general instruction to departments and divisional managers to take the results they have accepted to make great efforts for.

2.3 Types of Budgets

There are several types of budgets depending on the activities of the
Organization. The following are examples of the budgets one can find in an
Organization.

Master Budget According to Pyle et-al (1977) when the main budget is to be formalized it has to comprehensive within the overall plan for business and the resulting budget is called a master budget. Thus the master budget for the business consists of several sub budgets, all of which articulates or join with each other to form the overall budget- it includes financial and operational budgets.

An Operating Budget Is the one that used for cost of products produced or service rendered. It examines the manufacturing and operating aspects of the organization e.g. direct labour budget, R & D cost budget, administrative cost budget etc.

Capital Budget Meigs (1987) defined capital budget as a long –range budget, which incorporates plans of major expenditure for plant and equipment or the addition/inclusion of product lines or services, which might be prepared to cover plans for a long period i.e. 5 to 10 years

Cash Budget This is the one which is used for cash planning and control purposes. It includes the expected cash inflow and outflow for a stated time period. The cash budget help the manager to maintain cash balances in reasonable relationship to business/organization, also assist the managers in avoiding idle cash and possible cash shortages

Basically, the government have two types of the budgets. These are;

Recurrent Budget This is concerned with current operations covering revenues, collections and acquisition of goods and services which are consumed within a single accounting period –that is one year Development Budget This is the type of budget that covers the collection of development revenues for the acquisition of goods, services and investments that are to be used for more than one year

As NPO’s vary considerably in size, structure and objectives it is inevitable that the budgets prepared also vary, however a major influence on budgeting for NPO’s comes from the typical budgets prepared in local authorities and government departments. This typically include the
Followings;

I)The capital budget covering capital expenditure during the year ii) The revenue budget covering the running cost of the authority iii)The manpower or personnel budget iv) The cash budget usually combining short term cash control and longer term financing sources (including taxes,grants,sales etc)

Therefore in NPO’s budget become the key tool of financial management.Control is exercised during budget preparation and during the operating period (Lucey 2004)

2.4 Importance of Budgets

According to Mwisho (2002) budget is a management tool; it is a way of managing. It is a feed forward process; it makes an evaluation of the variable likely to affect future operations of the firm. It predicts future with reasonable precision and removes uncertainty to a great extent. The following are advantages of budgets. Forced planning; budgeting compels management to plan for future. It instils into managers the habit of evaluating care fully their problems and related variables before making any decision. Coordinated operations: Budgeting helps to coordinates, integrate and balance the efforts of various departments in the right of the overall objectives of the firm. This results into goal congruency and harmony among the departments. Effective communication: budgeting improves the quality of communication. The firm objectives, budget goals, plans, authority and responsibility and procedures to implement plans are clearly written and communicated through budget to all individuals in the firm. This result in better understanding and harmonious relations among managers and subordinates. Performance evaluation and control: budget facilitates control by providing definite expectations in the planning phase that can be used as a frame for reference for judging the subsequent performance. Optimum utilization of resources: budgeting helps to optimize the use of the firms resources –capital and human, it aids in directing the total efforts of the firm into the most profitable channels. Profit mindedness: budgeting develops an atmosphere of profit mindedness and cost conscious. Productivity improvement: budgeting increase the morale and thus the productivity of the employees by seeking their meaningful participation in the formulation of plans and policies ,bringing the harmony between individual goals and the firms objectives and by providing incentives to perform more effectively. Management by exception: budgeting permits to focus the management’s attention on significant matters through budgeting report thus it facilitates management by exception and there by saves management time and energy considerably

Classification of authority and responsibilities: budgeting process makes it necessary for the organization to be organized into responsibility centers with clear statements of the responsibilities of each manager who has a budget. Thus the full budgeting process forces the organization to clarify roles and responsibility of its plans.

2.5 Decision Criteria in Budgeting

The budgets are proposed, discussed and frequently revised as they go towards final approval. An executive seldom receives budget proposal from surbodinates without having discussed vital aspects of it ahead of time.Through intensive communication within the management, the plans should be re-adjusted until they become the reliable objectives consistent with the authorities policies.According to Wood & Allan, budgets are drawn up for control purpose that is an attempt to control the direction the firm is taking many people, however, look upon them, not as a guide but a straitjacket.

2.6 Conflicting Roles in Budgeting

Because a single budget system is normally used to serve several purposes there is a danger that they may conflict with each other. For instance the planning and motivation roles may be in conflict with each other. Demanding budgets that may not be achieved may be appropriate to motivate maximum performance, but they are unsuitable for planning purposes. For these, budgets should be set based on easier targets that are expected to be attainable.

2.7 Approval of Budgets in Government sectors and NPO’s. The executive council of the NPO shall upon advice of the budget and Finance Committee Consider and approve the annual programme of activities within the time limits Specified in the budget manual. The Finance Committee shall Consider and approve the organization annual budget .The executive council of these organization shall Consider and approve annual budget of its department and its institution also. As soon as the budget has been approved it shall be divided into cost centre and departmental budgets. Monthly budget/target for each coast centre as regards to service levels, Revenues and expenditure will be fore casted.

2.8 Budgeting Policy and Procedures

Budgeting policy and procedures are the foundation of the displine of budgeting.Usually large organization have the budget manual that is constantly updated. As one of the objectives of budgeting is to improve communication and coordination hence it is important that the manual is produced so that everyone in the organization can refer to the manual for guidance and information about the budgeting process.The budget manual contain information about the way budget operates in a certain organization and the reasons for having budgeting.Contents usually vary from organization to organization but the following is an example of the information such a manual should contain.

A/. Fore word - Preferably by chief executive/managing director

B/. Explanation of the Budgetary process -Explanation of budgetary planning and control -Objectives of each stage of the budgetary process -The relationship to long term planning

C/. Organizational structure and responsibilities -Structure of the organization showing tittles,responsibilities and relationship -Tittles and names of current budget holder

D/. Main budgets relationship -Outline of all main budgets and their accounting relationship -Explanation of key budget i.e. master budget, cash budget etc

E/.Budget development -Budget committee, membership and terms of reference -Sequence of budget preparation -Timetable for budget preparation and publication F/. Accounting procedures -Name and term of reference of the budget officer -Coding lists -Sample forms -Timetable for accounting procedures, production of reports, closing dates etc According to Sweeny and Rallin (1987) the budget manual is the vehicle for communication for all levels of the organization on the policies and procedures by which the budget is prepared.Budget manual stipulates those responsible for various places of preparation, reporting and evaluation.

2.9 Preparation of Budgets in Government sectors and NPO’s

The budgeting process in NPO’s and government sectors begins with managers of various activities calculating the expected cost of maintaining current ongoing activities and adding to those costs any further development of the services that are considered e.g.; education, health, housing etc departments of municipal authority will propose specific activities and related costs for the coming year.These budgets are coordinated by the accounting departments into an overall budget proposal (master budget). After proposal then they find means of finance or they reduce activities so as to be financed by internal sources available Therefore budgeting process in government sectors is viewed as a process of determining resources and their use for the attainment of government objectives. As a process budgeting in Government sectors starts with;

• Identification of goods and objectives which the government desire to attain in a given fiscal year. The basic policies and measures designed to realize those objectives are set. Usually the objectives and policies to be pursued in any year are those articulated in the medium term and long-term government plan.
• Determination of resource availability and utilization which is presented in a budget guidelines
• Government prepares the budget by estimating revenue and allocating the available resources to various sectors
• Budget implementation or execution, which refers to the collection of revenues and disbursements
• Monitoring, Controlling and Valuation.It involves the making of follow up where by adequate reports are made available to superiors/ supervisors of the budgets i.e. accounting officers. Accounting records, working papers and reports will be needed to show evidence that budget activities have been carried out in conformity with required regulations and procedures.

The problems in NPO’s and government sectors is that precious objectives are difficult to be defined in quantifiable way and the actual accomplishment are even more difficult to measure. In most cases output can not be measured in monetary terms rather than in term of quality .Due to this problem, then budgets in NPO’s tends to focus with inputs while profit organizations will concentrate with the relationship existing between inputs and outputs In NPO’s and government sectors the budgeting process tends to compare what is happening in cash input terms with the estimated cash inputs. There is little measurement or emphasis on the measure of management performance in terms of the result achieved.

2.10 Budgeting Systems Used in Government Sectors and NPO’s. Many approaches are used in NPO’s including zero based budgeting (ZBB), Programme planning budgeting system (PPBS), activity based budgeting system (ABB), Rolling budgets,flexible budgets and incremental budgeting.In spite of the theoretical advantages claimed for ZBB and PPBS,incremental budgeting is traditionally used. In general the new budget tends to be based On the current estimates plus an amount extra for inflation and any known Mandatory extension of service and perhaps with a reduction for planned Cost-Cutting economies. The budgeting systems applied in NPO’s and government sectors are explained and discussed here under.

2.10.1 Line Item (Incremental) Budgeting System.

This is the budgeting system whereas the expenditure are expressed in considered detail, but the activities being under taken are given little attention. In other words it show the nature of spending but not the purpose. The amounts in this type of budget are established on the basis of historical costs that have been adjusted for anticipated changes in cost and activity level. When they are compared with actual expenditure, line item budget provide a basis for comparing whether or not the authorized budget expenditure has been exceeded or under spending has occurred. The disadvantages of line budget are that it fails to identify the cost of activities and the programmes to be implemented. Also the Compliances with line item budgets provide no assurances that resources are used wisely, effectively or efficiently in financing the various activities. Furthermore, line (incremental) budget fails to provide a sound basis for deciding how the available resource should be allocated. But despite of its shortcomings still line item budgeting is used because they are easier to be prepared compared to other budgeting system.Also the line item budgeting system is seems to be appropriate for NPO’s and government sectors due to the following facts concerning these entities (lucey 2004);

• Most activities in NPO’s and government sectors are fundamental or determinate by legislation so will continue year after year.
• A thorough analysis each year of all policies, activities and cost in NPO’s and government sectors it is impossible and probably unnecessary anyway.
• Also in NPO’s and government sectors the marginal changes in the budgets tends to be the only controllable part.
• Interdepartmental conflicts are avoided by narrowing down the areas open to the incremental changes.

2.10.2 Planning, Programming Budgeting System (PPBS)

The objectives of this system is to ensure that NPO’s become more informed decisions about the allocation of resources to meet the overall objectives of the organization. The following procedures are normally followed in the PPBS;

(a) The overall objectives is established.
(b) The plans to achieve these objectives are established/identified.
(c) The cost and benefit of each programme are determined so that budget allocation can be made on the basis of the cost benefit of each programme.

Therefore, PPBS involves the preparation of the long term corporate plan that clearly establishes the objectives that the organization aims to achieve. These objectives do not necessarily follow the existing organizational structure. PPBS require a sophisticated information system able to monitor progress towards meeting system objectives. The PPBS reporting system should be able to report upon results in term of the programmes of activities unlike convectional reporting which is geared to existing sub-divisions, and usually deals only with expenditure. For example, one objective of the local authority may be a care of elderly.The following objectives may contribute to these objectives;

 Provision of sheltered accommodation
 Erection of aged-persons dwellings
 Provision of domestic health services
 Provision of home nursing services
 Provision of social recreational facilities

The provision of these activities may be undertaken by separate departments i.e.; Housing department, Social services department, Health department etc. However, PPBS relates the estimates of total cost to the care of the elderly programme, rather than relating cost to the various departments. It provide information that will enable management to assess the effectiveness of its plans e.g.; If the provision of elderly service it should develop by X-Thousand pound-then the programme structure should corresponds to the principal objectives of the organization and enable to focus on the organizational output (The objectives to be achieved) rather than just input. Therefore, the use of PPBS will lead to more effective allocation of scarce resources.

2.10.3 Zero Based Budgeting (ZBB)

It requires that all activities are justified and prioritized before decision are taken relating to the amount of resources allocated to each activity.ZBB works within the premise that projected expenditure for existing programmes should start from base zero. The budgetees should present their requirements for appropriation in such a fashion that all funds can be allocated on the basis of cost benefit or some similar kind of evaluative analysis. ZBB is highly applied in local and government sectors where predominant costs are of a discretionary nature. The following are the stages involved in ZBB;

I. A clear description of each organizational activity in a decision package.
II. Evaluation and ranking of decision package in order of priority.
III. Allocation of resources based on order of priority up to the spending cut off level.

The use of ZBB in government sectors and NPO’s may be of advantageous due to the following facts;

• ZBB pays attention on output in relation to value for money
• ZBB creates a questioning altitudes rather than one that assumes that the current practice presents value for money.
• ZBB represents a move towards the allocation of resources by need.
• ZBB improves efficiency of management. Every manager will have to justify the demand for resources. Only those activities will be undertaken which will have justification and will be essential for the organization.
• Budget will relate to the organizational goals. Something will not be allowed on the plea that it was done in the past. Only those things will be allowed which will help in realizing organizational goals. Generally ZBB is of more advantageous to government sectors and NPO’s , however this system is encountered by the followings shortcomings ;

• The computation of cost- benefit is not possible for non financial matters.
• Difficult in formulating and ranking of decision package as every manager may not have the necessary expertise.
• The method is too costly and time consuming.
• Evidence show that necessary information to enable managers to rank their decision packages is unobtainable.

2.10.4 Activity Based Budgeting (ABB)

Is the method of budgeting based on activity framework and utilizing cost drivers data in the budget setting and variance feedback process. The main aim of ABB is to authorize the supply of only those resources that are needed to perform activity required to meet the budgeted production and sales volume. In ABB the cost objects are the starting point, their budgeted output used to estimate the resources that are required for the budgeted period. It involves;

 Estimation of the production and sales volume by individual products
 Estimation of demand for organizational activities
 Estimation of each resources the amount that must be supplied to meet the demand
 Take action to adjust the capacity of resources to match the projected supply

Activity based budgeting provides stronger link between organizations strategic objectives and the objectives of the individual activities within an organization for which departmental managers are responsible. However, ABB may not be suitable for month to month monitoring because of short term fluctuations e.g., If the number of purchase order goes up by 20% in a month and resource stay the same, the cost per order will decrease, however if the increase in activity last long enough there is likely to be the needs for more staff, overtime etc.

2.10.5 Rolling Budgeting System

This is the budgeting system where by a budget is continuously updated by adding a further period, say a month or quarter and deducting the earlier period. The need to prepare rolling budgets arises due to the elements of uncertainty in budgeting particularly price level changes. Rolling budgets also known as continuous budgets, are prepared for a short term as the degree of uncertainty is much lower and these budgets are continuously modified for the next period keeping in view the changes that might have taken places. Thus, control become more effective with the use of rolling budgets as it based upon recent plans. In rolling budgeting system during the first quarter of operation, then the budget for the second quarter will be prepared, and during the second quarter the monthly budget for the third quarter will be prepared. The quarterly budgets may be reviewed e.g., during the first quarter the budget for the second quarter may be changed as new information become available. Therefore the use of rolling budgets it ensure that planning is not something that takes place once a year when budget is being formulated, instead budgeting is a continuous process throughout the year at every quarterly end. Furthermore, the use of rolling budgets will reduce the work load of the budget staff because the work is spreaded out through the year rather than the whole budget process being concentrated to few month. Also the use of rolling budget will compare targets with actual results with more realistic view due to constant review and updating of the budgets. Apart from above benefits derived from the use of rolling budget system, the following bottlenecks may threaten the usefulness of this system. Due to frequent review upon budgets and adaptation of changes, this may bring danger when a new quarter’s budget is added that staff will not give sufficient attention in preparing these budgets because they know it is likely to be changed in the revision process. Also too much attention might be given to the continuous short term aspects of budgets at the expense of the long term planning. Lastly, the compliance with rolling budgets will increase work load comparing with preparing annual budgets once per year.

2.10.6 Flexible Budgeting System

Is the one which by recognizing the distribution between fixed and variable cost, is designed to change in response to changes in output. A flexible budget is set at the beginning of the period, based on estimated production. This is the original budget. This is then flexed to correspond with the actual level of activity. The results are compared with the actual costs, and variances are reported to the managers responsible. The concept of responsibility accounting requires the use of flexible budgets for control purposes. Many of the cost under manager’s control are variable and will therefore change if the level of activity is different from that in the budget. It would be unreasonable to criticize a manager for incurring higher cost if these were a results a higher than planned volume activity. Flexible budgets have many uses, the following are some of their uses. At the end of every review period the flexible budgets can be used as a tool for performance review/evaluation. This is often achieved through a system of responsibility accounting- Responsibility Accounting is the system of accounting that segregates revenue and costs into areas of personal responsibility in order to assess the performance by the person to whom responsibility has been assigned. Flexible budgets may also be used in budgetary control process- Budgetary Control is the establishment and relating the responsibilities of executives to the requirement of the policy, and the continuous comparison of actual with budget results, so as collective actions may be taken either to secure by individual action the objectives of that policy or to provide a basis for its revision. At the planning stage, flexible budgets used as a tool for profit planning. In this regard is an extension of C-V-P analysis.

2.11 Limitations of Budgets

Budgeting is a systematic approach to the solution of problem but it suffers from certain problems and limitations. The following are the major limitations of budgets as stipulated by lucey .T (2004)

i. The very existence of well documented plans and budgets may cause inertia and lack of flexibility in adopting change.

ii. Budgets are developed round existing organizational structure and departments which may be inappropriate for current conditions and may not reflect the underlying economic realities.

iii. There may be too much reliance on the technique as a substute for good management. iv. The budgeting system perhaps because of vague, pressure or poor human relations may cause antagonism and decrease motivation

-Other problem includes;

Uncertain future: Despite of best estimates made for the future the prediction may not always come true future is always uncertain and the situation which is presumed to prevail in future may change. This future uncertainty reduces the usefulness/utility of budget. Conflict among different departments: Budget may lead to conflict among functional department worries for his department goal without thinking of organizational goal. Every department tries to get maximum allocations of funds and this rise conflicts among different departments.

Discourage efficient person: Under budgeting system the targets are given to every person in the organization. The common tendency of people is to achieve the targets only. There may be some efficient person who can exceed the targets but they will also feel contended by reaching the targets. So budget may serve as constraint on managerial initiatives. Other problems facing budgets include frequently budgeting revision and less support from top management.

2.12 The Concept of Budgetary Control

J.Batty defines budgetary control as the system which uses budgets as a means of planning and controlling all aspects of producing or selling commodities and service, On the other hand welsch relates budgetary control with day to day control process, according to him budgetary control involves the use of budgets and budgetary reports, through the period to coordinate, evaluate and control day to day operation in accordance with the goal specified by the budgets. Other scholars who have discussed the concept of budgetary control system include Brown & Howard they said that budgetary control includes the preparation of budgets, coordinating the departments and establishing responsibilities, comparing actual performance with the budgeted and acting upon results to achieve maximum profitability. Also Wood (1993) said that budgetary control system is a communication network that monitors activities within a company and provide the basis for corrective action in the future deviation from the desired output. Here the control reports must be regular issued in order to enable the corrective action to be taken. Furthermore, Lucey .T ( 4th edition) said that budgetary control should not be viewed merely as penny pinching, cost saving exercise but as a positive and integral part of the organization planning and control activities which should give due regard to organizational objectives the needs and aspirations of the personnel involved, and to longer term as well as short term consideration . From above definitions it’s clear that budgetary control involves the following;

 The objectives are set by preparing budgets
 An organization is divided into various responsibility centers for preparing various budgets
 The actual figure are recorded
 The budgeted and actual figures are compared to study the performance of different cost centre
 If actual performance is less than the budgeted standards remedial action is taken immediately.

Thus the three cardinal features of budgetary control system are;

 Planning
 Coordinating
 Control

2.13 Meaning of Effective Budgetary Control

It is the process of carrying out what has been approved in the budget in order to meet organizational objectives. The budgetary control is said to be effective if and only if;

 Plans are made with great care and are properly followed
 Conditions likely to affect the business are to be known in advance.
 Comparison of actual results against planned results to be done frequently.
 Any variance observed is to be investigated and appropriate action to be taken without delay
 Each month copy of organizational budget report is to be issued showing all significant variances with brief strong explanations on cause of each variance.
 Activities of the organization are well controlled and coordinated
 Approval and authorization of expenditure.

2.14 Objectives of Budgetary Control System The budgetary control system is essential for policy planning and control. It also acts as an instrument of coordination. The main objectives of the budgetary control system are as follows,

• To coordinate the activities of various departments
• To centralize the control system.
• To anticipate capital expenditure for future
• To operate various cost centers and departments with efficiency and economy
• Elimination of wastes and increase in profitability
• To ensure planning for future by setting up various budgets. The requirements and the anticipated performance are expected.
• Correction of deviation from the established standards.

2.15 Pre- requisites of Effective Budgetary Control The successful and sound budgetary control system is based upon certain prerequisites; represent management altitude, organizational structure and managerial approaches necessary for the effective and efficient application of the budgetary control system. The following are some of the important essentials for a successful budgetary control system as stipulated by Mwisho A.M (2002).

Top Management Support Top management should realize that budgeting is not merely an accounting tool, but it is an important management tool. Top management must o Understand the nature & characteristics of budgeting o Be convinced that this particular approach to managing is preferable for their situation o Be willing to devote the effort required to make it operative o Support the programmes in all its ratification o View the results of the planning process as performance commitments

Therefore top management should have positive altitude towards budgeting and devote necessary time and resources to the preparation and implementation of budgets. Clear and Realistic Goals Budgetary control system will not succeed if the goals to be achieved are not clear; budget implementation will not be systematic. in the absence of clarity ,employees will lack a proper direction ;the effort of management will be wasted .the financial manager ,therefore must ensure that objectives and goals have been properly laid down .as far as possible ,objectives and goals should be written in formal terms however too much formality can make budgeting system inflexible hence it should be avoided. Assignment of Authority and Responsibility A sound organizational structure is essential for the success of a budgetary system. Authorities and responsibilities of each manager should be clearly identified and established. A sound organization structure and clear cut assignment of authorities and responsibilities provides an effective means to archives the firms objectives and budget goals in a coordinated and efficient manner. The budgeting system should be established in terms of the assigned authorities and responsibilities; the performance of each manager should be evaluated accordingly if there are no synchronizations between the budgeting system and the organization structure of the firm the planning and control system would not be effective.

Full Participation Managers and their subordinates at all levels should be sought in developing the budgetary control system. The participation should be meaningful and real. If employees have effectively participated in developing the budget goals and targets, they will make special efforts to see that the budgeting process succeeds. A meaningful participation creates a positive motivation while a non-serious participation will demotivate employees.

Effective Communication The effective budgetary control system requires effective communication of firm’s objectives and budget goals and means of implementing budgets through the organization so that a unified effort may be directed to accomplish those objectives and goals. The flow of information regarding budgets should be quick so that those are implemented. The upward communication will help in knowing the difficulties on implementation of budgets.

Budget Education.

The line Managers who actually prepare the budgets, should not only be confident to their ability to plan for future with reasonable precision, but should understand the technicalities of budgeting. They should know how to re adjust budget when the circumstances change. They should be able to sell the idea of budgeting to their subordinates in order to seek their meaningful participation and involvement. This requires a continuous budget education. Employees of the firm must be educated about the nature, characteristics, value and method of budgeting. They should also be taught on how to interpret the budget results and how the performance is evaluated through budgets. Written materials should also be distributed. Flexibility The budgeting system should be flexible enough to take advantage of all opportunities that a rise from time to time. Inflexibility impairs the initiative and freedom of managers and subordinates in making decision. Inflexible budgets impose straitjackets in implementing the budget. On the other hand, if the budgeting process is administered in flexible way managers feel free and relaxed in implementing the budgets. Therefore a flexible and comprehensive budgeting permits management to re-adjust plans when a new situation arises.

2.16 The Budgetary Control Process

Essentially the budgetary control process consists of two distinct elements that is planning and control process. 2.16.1 PLANNING This involves the setting of the various budgets of the appropriate future periods. The management at various levels in an organization/government should be involved in the budgetary planning stages for its own area of responsibility. According to maolfel at the planning stage the organization should establishes goals and objective (what you want to do and why you want to do it) also the means of attaining those goals and objectively should be developed through a decision model

2.16.2 CONTROL Once the budgets have been set and agreed for the future period under review, the formal element of budgetary control is ready to start. According to lucey.T (4thed), control is activity which measures deviations from planned performance and provides information upon which corrective action can be taken (if required) either to alter future performance so as to conform to the original plan or to modify the original plan. The following are essential elements of control,

A. A standard specify the expected performance for example: budget, stock level e.t.c.
B. A measurement of actual performance should be accurate, speedy, unbiased manner and use relevant units.
C. Comparison of (a) and (b).frequently, the comparison is accompanied by analysis which attempts to isolate the reason for any variations.
D. Feedback of deviation to a control unit- in an organizational context the control unit would be a manager
E. Action by the control unit to alter performance in accordance with the plan.
F. Feedback to the higher level control unit regarding large variations between performance and plan and upon the results of the lower level control units action

2.17 The Budgetary Control System The budgetary control system provides some of the feedback necessary to be able to make correcting to current operations and activities in order to meet the original objectives and plans (i.e. single loop feedback) and also some of the feedback upon which alterations to the plans are made if necessary (i.e. double loop feedback), essentially the budgetary control system involves the followings;

• Identification of key executives who must be committed to the proposed budget(budget supervisors)
• Defining the long term objectives of the organization
• Accumulation of adequate data on which to base a forecast and costs
• Clearly defined areas of authority and responsibility (budget centers)
• A budget Committee and a Budget Manual
• Identification of limiting Factor (Budgeting key Factor).

2.17.1 The Budget Officer In order to co-ordinate the budget of different departments in an organization; a budget officer is appointed. In some organization this person is called budget controller or budget director. Whatever the name given but the functions of the budget officer remain the same at any organization. The following are some of the function of a budget officer, as stipulated by Welsh (1964)

 To advise the chief executive, appropriate top management committee, and others on all aspects of the budget planning and control program
 To provide overall technical supervision on the budget planning and control program
 To design and recommend essential forms, schedules and reports relevant to the planning and control program
 To prepare performance report by responsibility and by other relevant classification
 To analyze and interpret variance between actual and planned goals

The functions of the budget officer indicate how he plays an important role in making sure that the budget process succeeds in his organization. the position that the occupies in the company is the staff responsibility, and his duty embodies the rendering technical assistance as far as budgeting is concerned to the respective heads of development in performing his responsibilities the budget officer coordinates with the budget committee

2.17.2 Budget Committee

According to Drury (1990), the budget committee should consist of high level executives who represent the major segments of the organization. The task of the committee is to ensure that plans and budget are systematically established and should aim in achieving the objectives of the organization .Gleinn. A. Welsch summarizes the functions of the budget committee as follows;

 Receive and review budget plans from major responsibility centers and make appropriate recommendations for their improvement.
 Recommend decision on major item incorporated in the budget plans where there may be conflict or lack of co-ordination between functional subdivisions of the company
 Consider various alternatives and make recommendation and decision for corrective action
 Receive and analyses periodic performance reports from all responsibility centers in the enterprises

The role of the budget committee is that of watchdog. Before the budget are presented to higher authorities for approval; the management should seek the consent of the budget committee

2.17.3 Determination of Budget Key Factor

The principle budget key factor is a factor that limits the activities of an organization. it may be customer demands, production capacity, shortage of labour, material space of finance etc.because such constrains will have pervasive effects on all plans and budgets the key factor must be identified and its effects on each budget carefully considered during budget preparation process. The limiting factor can and does change when one constraint is removed some other limitation will occur otherwise of course, the organization could expand to infinity.

CHAPTER THREE

3.0 Research Methodology This refers to those procedures and ways that were applied by the researcher on solving the research problem. It includes not only the research methods but also it involves consideration on logic behind the methods used in the context of any research study. This chapter also explains why the researcher has used a certain technique or method. Thus, it allows other researchers to evaluate and assess the relevance and reliability of this report in terms of methods and techniques that was used in preparing this report.

3.1 Research Design

A case study research design was used due to; -Flexibility in data collection -Intensive study -Shortage of time, fund etc. The use of a case study research design limits the relevance of this report finding only to the organization where this study was conducted.

3.2 Area of the Study

This study was conducted at the MFAIC in Dar-es-salaam.The MFAIC in Dar-es-salaam is the headquarter of more than 30 embassy centers of Tanzanian republic all over the world, as the headquarter the MFAIC is responsible for preparing and administering budgeting activities in all embassy centers of Tanzanian republic. Therefore the area was selected due to its predominance in budgeting activities.

3.3 Population of the Study

The targeted population included members in the department of accountancy and finance, operating officers in policy and planning department, and others employees from different department i.e. internal audit, procurement, etc. The estimated sample consisted of fifteen employees.

3.4 Sampling Techniques

Purposive sampling technique was used to select right interviewee in the department of accountancy and finance and planning department. This method was used due to it’s relevance on selecting right respondents for specific information. Also simple randomly sampling technique was applied in distributing questionnaire to various employees at the MFAIC.This method was selected because it avoid biasness on selecting sample; it was applied by the researcher in order to capture general picture on the level of budget education among employees and the general understanding on budget procedures and controls.

3.5 Data Collection Methods

Both primary and secondary data were collected. Primary data were obtained through questionnaire, interview and observation while the secondary data were obtained through reading various documents and books that were disclosed to the researcher during the whole field period. 3.5.1 Questionnaire

The researcher prepared a questionnaire with total of 24 questions. The questionnaires were randomly distributed among employees of different departments. By the use of this method the researcher was able to analyses the understanding of employees on budget education, procedures and limitations of the whole budgetary control system at the MFAIC.

3.5.2 Interview

Both normative and re-informative interviews were prepared. Unstructured interview questions were prepared to collect data. The method was applied because it is cheaper and reliable on obtaining adequate data. The interviewee included members in policy and planning department, members in accounts and finance department, internal auditors etc. 3.5.3 Observation The researcher was also involved in daily activities at the organization and hence become part and parcel of it for the whole period of field study. This provided an opportunity to observe physically how things were operated at the MFAIC hence acquired more additional information to supplement the questionnaire, documentary sources and interviews.

3.5.4 Documentary Sources

The researcher also passed through various documents while he was working at the field center .Due regards was given to documents that are of interest to the research study. Such documents include the followings;

 Monthly accounting and budget reports from different embassy. Each embassy submitted books of accounts(Vote,Revenue,Deposits) which are enclosed with -Payment vouchers -Copies of revenue receipts -Bank reconciliation statements -Analysis sheets -Summary sheets -Revenue reports -Expenditure reports -Utilities reports
 Past budgets
 Website; www.foreign.go.tz
 A note book of New Foreign Policy of the URT(2001)
 Medium Term Strategic planning and budgeting manual of the URT (February,2007)

3.6 Data Analysis Techniques

The collected data were processed and analyzed by the use of statistical methods. At the first stage data were edited by the researcher in order to ensure accuracy and completeness. Thereafter, data were coded and analyzed by the use of descriptive and inferential statistical methods. Basically data analysis and interpretation techniques enabled the researcher to address the research problem and eventually recommend on possible policy implications in constructive manner.

3.7 Dissemination of Findings

The main objective of conducting research is to produce knowledge which is scientific and reliable. Scientific knowledge needs to be communicated in order to ensure that the findings of the research are replicated. The researcher will adopt the following ways to disseminate the research findings;

o One copy of the research report will remain at the MFAIC as a Reference to the management. o Another copy of this report will get stored as a display in the library at MU. o Another copy will remain with the researcher for future reference. o Presentation at MU

CHAPTER FOUR

4.0 Data Analysis

4.1 Introduction

This chapter focuses on observation, data discussion and presentation from all research findings. By considering the hypothesis to be tested, research questions, research design and data analysis techniques, attempts are made to asses the effectiveness of implementing the budgetary control system at the MFAIC. All data were collected for research study only, and not otherwise, and it should be noted that, data collections was confined to MFAIC strategic planning and budget manual, monthly accounting reports from all missions, past budgets, parliamentary reports and employees explanation. The researcher used statistical tables, percentages, inferences and descriptive techniques to test and answer the hypothesis, research questions and research problem respectively.

4.2 Analysis of Research questions

In order to capture the profound understanding on the effectiveness of the budgetary control system , the extent of budget participation, level of budget education, budget adherence and limitation of the budgetary control system at the MFAIC, the researcher prepared several questionnaires which were distributed to various staff members at the MFAIC. Total number of questionnaire distributed were 12, however only 9 respondents who gave a reply- which is about 75% of the total number of questionnaire distributed. Also the researcher undertook both Re-informative and Normative interviews with some of employees at the MFAIC. Therefore research questions are analyzed here below according to respondents’ replies.

Whether the budgetary system at the MFAIC allows all employees to participate in giving advice, opinions and recommendations on preparing and control of budgets. As an indicator of effectiveness of the budgetary system- the study had revealed that the budgetary system at the MFAIC it is participatory. The respondents replied this question as follows;

Statistical Table-1
Type of Answer Number of Respondents Percentages (%)
Very True 0 ----
True 7 78
Untrue 2 22
Very Untrue 0 ----
Total 9 100

Generally I can conclude that the budgetary system at the MFAIC it is participatory given that 78% of respondents agreed that. However, we can not ignore the feeling of 22% of respondents who said that it is untrue- thus the system is not participatory. Since each department is responsible for forecasting and preparation of its own budget under the administration of the head of department, there is a problem at this level of budget preparation process, heads of departments especially those which are not of accounting nature- they view the budgetary system as a task of heads of departments, Policy & Planning department and accounts & Finance department only within this context, they ignore to devote their efforts to ensure that they harvest properly the potential ideas of their subordinates during budget preparation process. The inclusion of subordinates during budget preparation improves motivation and control processes and hence results into high performance on the implementation of budget stipulations. If subordinates are well participating on budget preparation process they will work hard to ensure that what they have planned is achieved and thus they will be ready to utilize their surplus efforts on the process of budget implementation.

Whether employees at the MFAIC are well equipped with budget education.

Budget education is among the potential indicators of effective budgetary system. The study had revealed that, its true there is sufficient budget education among employees at the MFAIC. Under this question the respondents’ replies were as follows;

Statistical Table-2
Type of Answer Number of respondents Percentages (%)
Very True 2 22
True 6 67
Untrue 1 11
Very Untrue 0 ----
Total 9 100

From above analysis I can conclude that, its true there is sufficient budget education among employees at the MFAIC. The information captured from Policy & Planning (through interview) explained that the MFAIC have a special programme pursued each year on March that aimed at giving budget education to its employees. During this period all accountants from all missions are called for participation, include accountants at the headquarter- hence this improves technical ability of employees on matters related to budgetary system at the MFAIC i.e. Budgetary Methodology, Procedures, terminologies, Implementation, reporting and Monitoring.

On the other hand 11% of respondents said that they are not equipped with budget education. The researcher had revealed that the MFAIC has made an extensive recruitment of pioneers employees at the end of last year and thus this group was not equipped with budget education before executing them task and responsibilities. Therefore it is undoubtedly that the 11% represents this group of employees. The MFAIC should take considerable measures to ensure that any newly employed worker is trained on the budgetary systems before executing responsibilities to them.

Budget education to employees is of great importance since it makes employees to be aware of the objectives, procedures, methods of budgets and their responsibilities on affecting the budgetary control system.

Whether the Managers and Employees are adhered to budget stipulations.

The budgetary process involves two aspects i.e. Planning and Controlling. The budgetary control requires managers and employees to adhere strictively on the budget plans- thus, day to day operations and decisions should correspond to the budget plans and not otherwise. The study had revealed that managers and employees at the MFAIC are adhered to budget stipulations/requirements. The results from respondents were as follows;

Statistical Table-3
Type of Answer Number of Respondents Percentages (%)
Not Adhered 0 ----
Less Adhered 1 11
Average 6 67
Adhered 2 22
Total 9 100

Therefore, from above analysis its true that managers and employees at the MFAIC are adhered to budget stipulation. However 11% of employees disagreed on this, the reason behind disagreement is that sometimes it occurs the situation where by Funds allocated for a certain activity on the budgets are reallocated to other uses which are different from the intended ones. This often occurs where there is an emergence trip of seniors i.e. Ministers, executives e.t.c. Such trips are financed by MFAIC through funds that were allocated for other activities.

The MFAIC should incorporate such emergence activities in its budget so as to avoid the extraction of funds from the pocket of other budgeted activities. Therefore managers should adhere strictively on budget stipulations- however, where necessary they should adjust plans and accommodate for changes depending on the nature of the environment, because budget is a plan for future and future is always uncertain (situation presumed to prevail might change), management should note that budget is a managerial tool that assist them to control their activities and not a tool to limit their activities.

Whether there are Limitations on the Budgetary Control System at the MFAIC.

In order to build a condusive ground for giving recommendations to the MFAIC, the researcher had passed a question that requires employees at the MFAIC to mention and explain any problem, irregularities and weak spots on the budgetary control system at the MFAIC. The following are the limitations of the budgetary control system at the MFAIC as given out by respondents;

 There is a problem of budget ceiling. Often the funds provided to finance budgets are not satisfactory. Also the budget ceilings of different department sometimes are exceeded.

 Also there is a problem of time constraints for planning and preparation of budgets.

 There is a problem of Funds reallocation from planned activities to other uses.

 Sometimes when the payment order had been made it is difficult to countermand the payments since higher authorities can dictate the terms.

Apart from the above mentioned problems, also the researcher had used the observation technique to understand how things were operated at the MFAIC, through this technique the researcher had revealed further problems concerning the budgetary system at the MFAIC as follows;

 Delay on submission of monthly reports from Missions/Embassies. The monthly reports from missions are used for budgetary control purpose- They use them to compare the actual expenditure for each month with the budgeted expenditures.

 Low level of budget education among subordinates who are not accountants, - the budget education programme that is conducted on March each year it includes only accountants from Missions and Headquarter. Therefore this programme excludes other subordinates who are working in other departments.

 Also there is a problem in keeping books of accounts- books from different Missions are mixed up together hence this bring problems when searching a certain book that might be needed immediately

 The MFAIC does not keep budget manual into offices for quick reference to employees. The budget manual is kept as confidential document at the Policy and Planning department only.

 Also the department of Policy & Planning is understaffed. The workload in this office is too big compared to the human resource available at this office.

 Lastly, the lower level employees are not well motivated to implement the budgetary control system.

Whether the Implementation of the Budgetary control System at the MFAIC results into Effective Performance.

The main aim of the budgetary control system is to direct employees into goal achievement and better performance. Given this, the researcher imposed a question that demanded employees to appraise and examine their budgetary control system and state whether it is effective and helpful to them in achieving organizational objectives. The results were as follows;

Statistical Table-4
Type of Answer Number of Respondents Percentages (%)
Very Effective 0 ----
Average 8 89
Not Effective 1 11
Not Effective at All 0 ----
Total 9 100

By considering the above analysis, I can conclude that the Budgetary Control System at the MFAIC it is effective and helpful to employees on attaining the organizational Goals and Objectives. However, the 11% of employees who said it is not effective should not be ignored. The answer of the 11% of employees is built on the context of the above explained limitations of the system.

4.3 OTHER OBSERVATIONS.

4.4 Management of adverse variances at the MFAIC

When it occurs there is adverse variances, the MFAIC management observes the variances and then queries are written to implementers, thereafter the management examines the response of queries and then head of department is informed. After examination of variances, then the variances are taken to the MOF in the form of application for reallocation of funds from another Ministry, Region, or interdependent department.

4.5 National Planning Framework That Govern the Planning and Budgeting Processes at the MFAIC.

The current national frameworks are the Tanzania Development Vision 2025, MTP, MKUKUTA, Sector Policies and Strategies, Decentralization by Devolution, and Plan and Budget Guidelines. These frameworks provide direction and guidance to public and private sectors on national priorities for socio-economic development. Below are some basic information on each one of the main frameworks.

4.5.1 The Tanzania Development Vision 2025

The Vision is an articulation of a desirable future condition or situation which Tanzania envisages to attain and the plausible course of action to be taken for its achievement. The Vision was adopted by the Government in 1999 and its implementation started in 2000. The objective of the vision is to awaken, coordinate and direct the people’s efforts, minds and national resources towards those core sectors that will enable us to attain our development goals.
Attributes of the Vision

The Vision envisions that Tanzania will have the following attributes by the year 2025:

High quality livelihood: a nation’s development should be people centered based on sustainable and shared growth and be free from abject poverty;
A strong and competitive economy: this emphasizes the need to have an economy which can effectively cope with the challenges of development and which can easily benefit from global economy;

Good governance: this entails to strengthen a culture of accountability, rewarding good performance and effectively curbing corruption and vices in the society;

A well educated and learning population: this envisages a nation whose people are engrained with a developmental mindset and competitive spirit. It is driven by education and knowledge; and

Peace, stability and unity: peace, political stability and national unity and social cohesion are important pillars for realization of vision. Therefore, they should continue to be cultivated, nurtured and sustained.

4.5.2 Medium Term Plan

In 2000, the Government approved for implementation the MTP as a vehicle to operationalise the Vision’s aspiration. The intention is to phase the Vision’s long-term development aspiration into implementable short and medium term.MTP provides the framework for the policy options, sector objectives, strategies and targets. Implementation of MTP is based on the following principles:-

 Empowerment and Enhancing Grassroots Participation
 Private sector development
 Social and Gender equity
 Environment and Sustainability
 Democracy and Good Governance
 Capacity Building
 Effectiveness and Efficiency
 Balanced Regional Growth Therefore, the MFAIC is taking into account the MTP framework in preparing its plans.

4.5.3 MKUKUTA

MKUKUTA is the national framework which accords high priority to poverty reduction in Tanzania’s development agenda. It identifies three cluster outcomes aiming at achieving the Vision 2025 and the Millennium Development Goals (MDGs). The three clusters are: (1) growth and reduction of income poverty (2) improvement of quality of life and social wellbeing and (3) good governance and accountability. MKUKUTA builds on the Poverty Reduction Strategy Paper (PRS [P]) (2000-2003) which was linked to debt relief under the Highly Indebted Poor Countries (HIPC) initiative. The PRS (P) identified a few priority sectors (education, health, agriculture, water and sanitation, roads, judiciary and HIV/AIDS) through which resources (debt relief) were channeled. Lessons from the implementation of PRS (P) and the recognition of multidimensional nature of poverty informed the approach and focus adopted by MKUKUTA. MKUKUTA adopts an outcome approach and requires all sectors, ministries and institutions to contribute to the poverty reduction agenda. It also encourages inter-sector collaboration. 4.5.4 Sector Policies and Strategies

While Vision 2025, MTP and MKUKUTA provide guiding frameworks on cross-sector and general issues, sector policies and strategies provide guidance on sector specific issues. These sector policies and strategies should be linked to the national frameworks and in a specific and systematic way show how to achieve the national goals and objectives by identifying sector interventions. For instance, some of the sector policies and strategies include:

 National Energy Policy.
 Rural Development Strategy (RDS).
 Agricultural Sector Development Programme (ASDP).
 National Anti-Corruption Policy (NACP).
 National Multi-Sectoral Strategy for HIV/AIDS.
 National Policy on HIV/AIDS.
 National Health Policy (NHP).
 National Water Policy (NWP).
 National Social Security Policy (NSSP).
 Tanzania Trade Policy (TTP).
 Rural Development Policy (RDP).

4.5.5 Decentralization by Devolution

The decentralization policy of 1998 spells out government’s objective of devolving powers and responsibilities to autonomous local authorities.
The devolution of powers, authority and responsibilities has four main dimensions:-

 Political decentralization
 Financial decentralisation
 Administrative decentralisation
 Central government – Local governments’ relationships – central government role becomes more of facilitating (i.e., policy making, regulation, supporting and monitoring to ensure quality of service in line with national policies and standards).

4.5.6 Plan and Budget Guidelines

The PBGs are instructions or guidance to Ministries, Departments, Agencies, Regions and LGAs on how socio-economic policies as approved by the Cabinet are to be translated into workable plans and programmes and how they are implemented through budget preparation processes. The PBGs are prepared annually by the Budget Guidelines Committee comprised of representatives from central ministries. The PBGs contain the following information:

 A summary of the macro economic performance in the previous year.
 Policy commitments and strategies.
 The influence the government intends to exert on the credit system and general liquidity, inflation and employment levels.
 Forecasted resources envelope and expenditure framework on recurrent and development budget.
 Expenditure ceilings to guide Ministries, Departments, Agencies, Regions and LGAs by using SBAS Macro Version.
 Instructions and formats to Ministries, Departments, Agencies, Regions and LGAs that should be adhered to during preparation and implementation of their plans and budgets. On the basis of the PBGs, management at the MFAIC issued internal guidance on how to prepare their plans and budgets.

Key messages
 In the PBGs, the MFAIC translates the economic policies into budget policies, objectives and operational priorities.
 The MFAIC Institutional ceilings have to be adhered to the PBGs’ ceiling since they are dictated by the predicted resources availability.
 The PBGs are issued for the purpose of putting in place the coordination process that must begin at the divisional level.
 The Budget Committee at the MFAIC provides the technical support required by the Paymaster General for coordination of budgetary activities of the MFAIC.
 The MFAIC guidelines, which is prepared by their respective Budget Committee, help the Accounting Officer in coordinating the institutional budget
4.6 The Preparation of Strategic Plans at the MFAIC

Strategic planning is a process that charts an institution’s broad direction forward. The process help the MFAIC to decide what it wishes to achieve and the main actions it will need to undertake in the future. Strategic Planning is a collective and participatory process, involving senior management, employees, and consultation with a wide range of stakeholders. It looks at the big picture from a longer-term perspective. A strategic plan clarifies the MFAIC priorities and unifies the staff in the pursuit of shared objectives. It also provides an opportunity to address fundamental questions, to focus away from day to day operations, and to take initiatives to improve performance.

4.6.1 Purpose of Strategic Planning

Strategic planning focuses on the forests, not the trees. Strategic Planning forces the MFAIC to think about the future. This is extremely important since many institutions are inward thinking, focusing too much on the short-term. It has been documented that institutions that focus on the long-term through strategic planning outperform those that do not do so. The main purposes of Strategic Planning at the MFAIC are:

 To improve performance
 To create more relevant institutional structure
 To increase levels of departmental and individual accountability.
 To improve transparency and communication between management, employees and stakeholders.
 To establish priorities for efficient and effective resource allocation.
4.6.2 The Relationship of Strategic Plan to MTEF

The Strategic Plan serves as a communication device. As such it explains the reasons why the MFAIC has selected a particular course of action. It provides the context for decisions made and outlines their logic.
On the other hand, the MTEF takes the objectives and targets developed in the SP and prepare activities and budgets.
The link assures resources are allocated according to the Strategic Plan and thus reflects the priority needs derived by the institution and its stakeholders.

4.6.3 Periodicity, Updating, and Revision of Strategic Plans at the MFAIC

The Strategic Plans at the MFAIC are prepared in a 3-year cycle. The first (or base) year is very intensive and includes a comprehensive situation analysis, in-depth planning sessions, and end with the preparation of a detailed document. The second and third years (the “off years”) include a revision and updates of the main plan in order to capture key changes. However, when circumstances change drastically, the MFAIC can revamp its strategic plans, regardless of where they are in the cycle.

4.6.4 The Strategic Planning Cycle used at the MFAIC
The strategic planning cycle at the MFAIC consist of seven key steps, these are

 Situation Analysis, which is a process of critical thinking and understanding. During this stage, planners aim to identify the main issues and problems that need to be addressed in the future. They try to “put themselves in their client’s shoes” and to better understand the environment in which they operate.

 Strategic Plans chart an institution’s broad direction forward. It focuses on the big picture from a longer-term perspective. Because it is prepared collectively, the strategic plan helps clarify priorities and unify staff in the pursuit of shared objectives. Strategic Planning provides an opportunity to address fundamental questions and to undertake bold initiatives and reforms. Ultimately, Strategic Plans serve as communication instruments for both staff and external stakeholders.

 Budgeting. Involves a projection of revenue, the costing of Strategic Plans, and a costing of personnel. The budget is made according to a clear set of priorities established both nationally and within the MFAIC. During the preparation process, the budget is scrutinized to ensure costs are within existing resource envelopes. The budget is ultimately approved by Parliament.

 Action Planning. During this stage, the MFAIC schedule their activities for the up-coming year and prepare subsidiary and detailed documents to translate their broad plans into reality. This may include disbursement schedules (or cash flows), detailed departmental plans, procurement and training plans, and individual performance agreements.

 Implementation. During this stage financial control and financial monitoring takes place through the Government’s IFMS (Integrated Financial Management System). The IFMS enforces the budget.

 Monitoring and Evaluation. Internally, institutions track its progress in implementing its plans. This may focus on activity completion or on the level and quality of the services they provide. Periodically, they may undertake more detailed evaluations, for example to assess whether their objectives are being fulfilled, and if not, why. Oftentimes this involves undertaking special studies or surveys.

 Reporting. Within this cycle, results are communicated to management so that actions can be taken to adjust direction and improve performance. This may involve an alteration to the plan or a change in strategy. Ideally, progress and performance (assessed through M&E) is communicated or reported to clients, politicians, regulators, and other interested parties, including the general public. The entire process can be expressed as an iterative cycle, including learning, feedback, and adjustment (see the adjacently figure)

4.7 The Adoption of MTEF System at the MFAIC

The Medium Term Expenditure Framework (MTEF) is a prioritised three-year integrated performance budget to implement the Strategic Plan. MTEF starts with the review of performance of the previous year and the current mid-year budget. It takes cognisance of available resources both local and foreign and establishes the cost of implementing activities which will produce targets and meet objectives.

MTEF is intended to carry forward earlier planning and budget reforms including the Rolling Plan and Forward Budget (RPFB) and Performance Budgeting (PB). RPFB was aimed at introducing some forward planning and predictability in resource allocation by moving away from budgeting on a one year basis to three years. PB was introduced in the government system on a pilot basis in 1998/99 and on a full scale basis from 2000/2001. PB re-oriented incremental input budgeting to an output (target) basis. It was initiated as a logical extension of the Organization and Efficiency Reviews within the framework of the Civil Service Reform Programme (CSRP), currently known as the Public Service Reform Programme (PSRP). The PB framework was made up of vision, mission statements, objectives, policies and strategies, targets, activities and inputs.

4.7.1 Purpose of MTEF

MTEF is a resource management tool which aims at:

 Improving the predictability of budgets by enhancing domestic resource mobilization, extending the integration of donor finance into the budget frame, ensuring consistency and compliance to agreed allocations which are based on priorities.
 Enhancing budget sustainability by ensuring that the costs of implementing activities to attain set targets are affordable within the current and future resource envelopes.
 Ensuring increased shift of donor finance towards general budget support to enhance flexibility of allocation across investment and other expenditures.
 Strengthening an output oriented budget that focuses on service delivery improvements.

4.7.2 Legal Basis for Preparation of MTEF Budgets The legal base is the body of laws, regulations and administrative procedures that govern the budget system giving formal powers and responsibilities to various actors. They also provide an accountability framework as well as timing in the budgeting process. The legal base of the budget is as outlined below:

 The Constitution of Tanzania; Chapter Seven of the Constitution of the United Republic of Tanzania contains the provisions regarding the finances of the United Republic. It stipulates the need to prepare estimates of revenue and expenditure of the Government on a yearly basis and submit to Parliament.

 The Public Finance Act 2001 provides; a legal framework of the budget regarding revenue, expenditure control and accountability. The Act has repealed the former Exchequer and Audit Ordinance of 1961.
 The Public Procurement Act No.21 of 2004 (which repealed the Public Procurement Act 2001); which stipulates rules, regulations and procedures governing the public procurement process.
 Annual Finance Act; grants powers to the Minister for Finance to raise money by imposing taxes to finance the Budget.
 Annual Appropriation Act; gives authority to the Government to appropriate funds from the Exchequer Account for government expenditures. It provides powers to the Minister for Finance to draw money from the Consolidated Fund and allocate it to various votes. It also provides powers for reallocation of funds between votes.

 Local Government Finance Act No.9 of 1982 (As amended by Miscellaneous Act No. 6 of 1999) stipulates the requirements and procedures to be followed by Local Government Authorities in preparing annual estimates of revenues and expenditures.

 Government Circulars; From time to time circulars are issued by the Government outlining regulations and procedures to be followed on budget and financial matters.

4.7.3 Key Features of MTEF at the MFAIC

MTEF is characterized by a number of features as outlined below:

 It operationalise the strategic plans of MFAIC
 MFAIC prepare its budgets within known resource ceilings in a three year timeframe;
 The activities are phased out in three year time frame instead of attempting to implement all activities in one year;
 Performance budgeting is embedded in the budget preparation, implementation, monitoring and evaluation. In this regard, MTEF facilitates moving from the shopping list approach (input based budgeting) to output based budgeting;
 Emphasis is placed on the need for MFAIC to priorities between competing demands and on service delivery to key stakeholders; and
 Managers at all levels are required to be involved through out the budget process to ensure ownership.

4.7.4 Steps in the MTEF Process at the MFAIC

To develop the MTEF, MFAIC use the targets from its strategic plans to;

1. Identify the activities to be carried out under each target;
2. Establish and cost the inputs required for implementing activities, which will ultimately result in three-year budget estimates;
3. Prioritize the activities and identify those which could be scaled down, dropped or postponed in order to fit in the plan within the available resources;
4. Prepare the institutional MTEF document for submission to the Ministry of Finance and other key stakeholders.
4.7.5 The Format Adopted by MFAIC for MTEF Presentation
The MTEF documents that are prepared at the MFAIC adopt the following format:

 Foreword by Minister.
 Statement by Permanent Secretary.
 Executive Summary
 Chapter 1 – Overview of the Strategic Plan
 Summary of Situation Analysis
 Mission, Vision, and Objectives
 Strategies and Targets (Note: This chapter gives a brief summary of the more detailed SP document).

 Chapter 2- Budget Performance Review,
 Last Year’s Performance Review
 Current year’s Mid Year Review (Note: This chapter covers revenue and expenditures).
 Chapter 3- Estimates for MTEF
 Summary Cost of Institutional objectives
 Summary Cost of departmental targets
 Estimates for Revenue
 Budget estimates for three years
 Summary Forms as prescribed in the Plan and Budget Guidelines
(Note: Proposed Year 1 and Two Outer Year’s Budgets).

4.7.6 Submission and Scrutiny of MTEF

Institutional Level

Final phase of budget formulation at the MFAIC takes place between January and March and the Estimates are submitted to the Ministry of Finance (MOF) in Mid-March. The submissions are made as stipulated in the PBG. Prior to submission of the estimates, the MFAIC Budget Committee does the followings;
 Review and scrutinize the budget proposals of units, divisions and departments to ensure correctness and relevance of the financial demands
 Undertake the consolidation and finalization of the institutional budget by ensuring that the departmental budgets are consistent with ceilings and institutional priorities.
 Prepare budget MTEF memorandum and submit the estimates to the MoF. Central Level

Final phases of budget preparation at the central level includes scrutiny of MFAIC estimates, Government Consultations, submission of estimates to Inter – Ministerial Technical Committee (IMTC) and submission of the budget Cabinet Paper for approval. Scrutiny and dialogue also takes place to ascertain the accuracy of the budget figures and GFS coding. The institutions involved at the centre for scrutiny are;  Ministry of Finance;
 President’s Office - Public Service Management (for PE issues);
 President’s Office - Planning and Privatization (for macro policy issues);
 President’s Office - Regional Administration and Local Government (for issues related to Regions and Councils) Donor and Government consultations facilitate the budget process by confirming donor financial commitments in the coming annual budget and MTEF period. These discussions take place between Ministry of Finance and Development Partners. The timing for the final interventions is between March and April. The Estimates are then submitted to the Cabinet Secretariat and Inter-Ministerial Technical Committee (IMTC), which is a committee of all Permanent Secretaries, vested with a role to scrutinize National Plan and Budget proposals and advises the Cabinet before the approval. Where the approval is granted with amendments, the MFAIC will be required to make final adjustments to its estimates as well as its MTEF Budget Memorandum using facilities in the IFMS. The Ministry of Finance consolidates the final estimates and prepares printouts of the budget books. The printouts are then sent to the Government Printer for full production. The timing for scrutiny, Cabinet discussion and printing of budget documents is between March and May.

4.8 The Budget Frame at the MFAIC

The Budget Frame is comprised of total resources and total expenditures. Brief explanations of the two follows:

Revenues;

Revenues as an element of budget frame consist of domestic and foreign funds. The main sources of revenue at the MFAIC are made of visa collections. The MFAIC is responsible to forecast its revenue. The estimates are submitted to the MoF in time using prescribed forms in the Plan and Budget Guidelines for consolidation, inputting to IFMS and production of Revenue Estimates Book.

Expenditures;

The expenditure framework at the MFAIC consists of recurrent expenditure only there is no development expenditure. The recurrent expenditure is made up of Consolidated Fund Services (CFS) which is broken down into domestic and foreign interest payments, amortization of foreign and domestic debts and other expenditures; Personnel Emoluments (PE) and Other Charges (OC).

Resources are allocated to MFAIC based on budget frame and requests. These requests are essentially the aggregation of activities into targets through SBAS Micro version submitted by the MFAIC to the MOF.

4.9 The Process of Estimating Personal Emoluments Budgets at the MFAIC

PE budgeting is an annual event through which employers carry out assessment, determination and approval of HR requirements. Its ultimate objective is to determine the number of employees required to enable organizations to implement their strategic plans and their financial implications. PE budgeting is carried out by every public organization in accordance with Section 8 of the Public Service Act No.8 of 2002.
4.9.1 Rationale for PE Budgeting

The rationale for undertaking PE Budgeting is as follows;

 Ensure optimum utilization of resources as PE is the largest single expenditure component in the MFAIC Budget. Effective utilization of allocated resources will have an impact on the implementation of MKUKUTA.
 The criticality of HR in the implementation of institutional plans.
 The need to blend human resources, strategies and skills for smooth implementation of agreed activities.
4.9.2 Factors influencing establishment and PE Budget at the MFAIC are:
 Organization’s Strategic Plans as translated into objectives and targets for each position holder.
 Workload for each post and skill mix requirements based on Strategic options chosen
 Availability of resources or budget ceilings for PE.
 Employees’ advancement through training geared to enhance civil servants’ skills and competencies to levels required to manage and perform their roles based on performance standards.
 Need to involve the private sector in the public service delivery of services.
 Changes in scheme of service due to job evaluation and analysis, and changing role of public institutions.
 Policies and guidelines such as the implementation of medium term pay policy and MKUKUTA.
 Incentives and benefits for better performance.
 Technological changes especially in the areas of ICT with its impact on skill requirements, training and productivity.
 Need to right size the public service to affordable levels necessary to perform government functions.
 Availability of employees within the organization and in the labour market with required skills and qualifications to undertake organization functions
 Impact of new organization structures or merger of ministries/ departments to number of positions to be abolished or established.
 Impact of natural attrition and absenteeism.
4.9.3 Establishment and PE Budgeting Process

Establishment is job listing or staffing levels. It is the number of posts approved to a position based on anticipated performance needs of the MFAIC. The process for determining establishment levels is;
 Definition of the number and types of employees needed at a particular point in future to implement plans taking into consideration new practices, procedures and mandates.
 Establishment of existing workforce including rate of utilization e.g. number of hours worked as overtime which might justify requirements for additional post.
 Identification of levels of new skill requirements. This will be influenced by strategic options chosen during preparation and review of strategic plans.
 Identification of anticipated demand in the institution and forecasted supply in the labour market.
 Development of a plan to close the gap between demand and supply of labour force and where appropriate redeploy to eliminate surpluses.
 Identification of options of training as a mechanism of making effective use of existing employees instead of recruiting new staff.

4.9.4 Institutional Framework for PE Approval

Basic requirements for PE approval at the MFAIC are outlined below:

 Availability of staffing levels or job lists reflecting institutional strategic plans.
 Quantified workload for each post in a position taking into consideration basic skills requirements and availability of skills in the labour market.
 Presidential Circular No.1 of 1998 on cost cutting measures together with other circulars issued from time to time emphasizing the need to create new posts based on value for money.
 Approved institutional structures and positions reflecting current schemes of service.
 Properly aligned job positions, salary grades and schemes as per job evaluation and re-grading exercises, Medium Term Pay targets and budget ceilings.
 Completion of Form No.2 – PE Annual Estimates – Staff Specification. This form is generated from the Integrated Human Resource and Payroll System database.
 Completion of Form No.1 - Schedule of Approved Personnel Emoluments and Annual Estimates – Establishment and Strength for the period. This form is a summary of Form No.2 above.
 Completion of Form No.3 - Schedule of Approved Personnel Emoluments and Annual Estimates – Establishments, Strength, Approved and Planned Estimates.
 Completion of Form No.4 - Summary of Personnel Emoluments Estimates including statutory contributions.
 Authorization of establishment levels by the Permanent Secretary – PO-PSM.
 Authorization of Salary structures by PO-PSM, in consultation with the Ministry of Finance.
 Incorporation of PE establishments and associated costs in the institution’s MTEF using forms No. 8(a)-8(d) and No. 9, prescribed in the Plan and Budget Guidelines.

4.10 The Process of Budget Implementation at the MFAIC

Following the approval of the national budget by the parliament, a number of steps is undertaken by the MFAIC prior to implementation. These focus on the upcoming year and include the preparation of;

 An Action plan, which is a schedule of activities. This describes when each activity is planned to start and finish. Action plans are sometimes termed “work plans.” Typically action plans assign responsibility for who will initiate and manage each activity. Action plans incorporates procurement plans, since an activity can be considered to have two broad stages: a procurement stage and an implementation stage. For example, it may take 3 months to select a consultant and 2 months for the consultant to complete the work. Action plans cover one year only.

 A procurement plan, which describes when procurement steps are expected to start and finish. It links the cost of an activity to the procurement process to be undertaken. Procurement processes (for example, National Competitive Bidding) are determined by the size and type of expenditure, and are guided by the Public Procurement Act (2004).

 Monthly disbursement or cash flow plan, this describes when funding or disbursement of funds is required by the institution. This is based on the schedule and procurement plan.

 Quarterly Physical Target, though targets in MTEF may cover 3 years, they should be monitored on a more continuous basis. In order to monitor longer term targets, they should be broken into annual and quarterly figures for the current year.

 Training Plans provide more detail about training events. This may include coordination of training activities and initial efforts to identify courses and possible participants.

 OPRAs (Open Performance Review and Appraisals). OPRAS extends the SP, Action Plan and Budget to the individual level. All employees want to know what is expected of them, how well they are doing, and how they can improve their work. OPRAs are a process which helps meet these needs, by improving communication between superiors and sub-ordinates. The process is annual, and consists of three main steps:

 Performance Agreement: supervisors and subordinates agree on what the sub-ordinate will do, what his or her objectives are, how performance will be assessed, and what resources will be available. Performance agreements are signed during July.

 Mid-Year Review of progress, which should occur in December-January. During this stage, the initial agreement is reviewed and, where necessary, revised

 End Year Appraisal, which assesses the subordinate’s performance. Prior to 2003/04 appraisals in Tanzania were done confidentially and subordinates did not have access to their superior’s assessments. In general, OPRAs serve several the following purposes:

1. To improve institutional performance, by aligning the institutional plan to individual responsibilities.
2. To establish an environment of feedback, exchange and communication between supervisors and sub-ordinates.
3. To help identify the sub-ordinate’s strengths and areas for development
4. To link performance and compensation

Completing OPRA Forms The OPRAS manual describes the OPRA process in more detail, including the completion of OPRAS forms.

4.11 Tools used by MFAIC to Implement Plans and Budgeting Processes

Several tools have been developed to assist the MFAIC to implement the planning and budgeting processes .Three important tools include;

 SBAS (the Strategic Budget Allocation System) is a computerized database that facilitates the preparation of budget ceilings by the Plan and Budget Guidelines Committee. SBAS has two versions: SBAS Micro and SBAS Macro. SBAS Micro creates a link between an institution’s targets (from its Strategic Plan) and MKUKUTA cluster strategies. SBAS Macro then analyses institutions’ requests and strategically allocates ceilings according to available resources.

 The MTEF Submission Forms standardize data submission, so budget figures can be entered into the IFMS, via the Enhanced MTEF model.

 IFMS (Integrated Financial Management System) is used to monitor and control expenditures, and to produce accounting and expenditure reports.

4.12 The Processes Followed to Report Performance at the MFAIC

There are three types of performance reports prepared by the MFAIC, these are;

4.12.1 Quarterly Progress Reports

The Quarterly Progress Report is intended to provide an overview of implementation progress on a cumulative basis against an institution’s set targets and budget. The report will also provide information on the implementation of a sub-set of high profile or priority interventions. At mid-year, reports should also focus on budget variations and justifications for adjustments. The following three quarterly reports are produced;

 Quarter 1 Progress Report, summarizing implementation during Quarter 1
 Mid Year Progress Report, summarizing cumulative implementation (Quarter 1 + Quarter 2) together with a focus on budget variations
 Quarter 3 Progress Report, summarizing cumulative implementation (Quarter 1 + Quarter 2 + Quarter 3)

In terms of submission and dissemination:

 Quarterly reports do not submitted to Parliamentary Committees or disseminated to the public; they are mainly used to adjust implementation.
 The MFAIC submits its reports by the 15th of each month following the end of a given quarter.

4.12.2 The Annual Performance Report

The Annual Performance Report is intended to provide a detailed description of an institution’s main achievements in terms of the targets reached and the progress it is making in realizing its outcomes and in improving its service delivery. The report should also address performance on revenues and expenditures as well as HR (Human Resources). Responsibility for the preparation and accuracy of the report lies with the Accounting Officer of the MFAIC.

The report is usually prepared and submitted to MoF by the 1st of October following the completion of each financial year. It also made available to other stakeholders, including appropriate Parliamentary Committees and members of the public (on the MFAIC web site or through other relevant media).

4.12.3 Three Year Outcome Report

The outcome report is prepared at the end of the Strategic Planning cycle. It focuses on assessing the degree to which the MFAIC is meeting its planned objectives, that is, whether it is achieving the envisioned results or outcomes documented in its Strategic Plan. The report summarizes the findings of the main evaluations, analytical studies, and reviews undertaken during the period. For each objective the report describes what the expected achievements were, how they were measured, and what the main findings or results of the assessments were. These assessments are linked to the goals and operational targets of MKUKUTA.

The report is submitted to MoF by the 1st of October following the completion of the Strategic Planning cycle. As was the case with the Annual Performance Report, the 3-Year Outcome Report is made available to stakeholders, including appropriate Parliamentary Committees and members of the public (on the MFAIC web site and other relevant media).

By providing feedback in terms of plans and budgets, performance reporting serves a number of key functions. It:

 Assists management to identify problems, assess progress, and take corrective action at an early stage. Performance reporting contributes towards more systematic decision making.
 Satisfies accountability requirements both within and outside the organization. Within Government, performance reporting can support an environment for enhancing transparency and accountability to the public.
 Stirs debate about key issues both within an institution and across society.
 Shapes organizational culture by communicating a common story, documenting an organization’s history, and thus unifying an organization and contributing towards its institutional memory. By achieving these functions, effective reporting contributes towards improved institutional performance.

CHAPTER FIVE

5.0 Recommendations, Summary and Conclusion.

5.1 Recommendations.

By considering the limitations of the Budgetary Control System at the MFAIC as revealed in chapter four, attempts are made to provide comments, advise and giving opinions to MFAIC management so that they can correct and rectify their future operations in order to conform to the original objectives of their Budgetary System and Organization at large. Here adjacently are the recommendations given out by the researcher;

• More powers should be given to accounting department so that payments are made only to the intended objectives.

• The MFAIC should include all employees on the Budget Education programme so as to improve their knowledge on budgeting techniques and methods.

• The accountants from Missions should be enforced to prepare and submit their monthly reports on time so as to improve the budgetary control processes.

• The Government should provide sufficient Fund to finance the MFAIC budgets so as to avoid some departments to run out of budget ceiling.

• The books of accounts should be kept properly. Books from each Mission should be kept independently and in series so as to avoid the lost of important information.

• The MFAIC Budget Manual should be reproduced and kept at every office so that employees could be accessible to make reference at any time they want.

• The objectives, targets and goals that are set by the MFAIC should be Specific, Measurable, Achievable, Realistic and Timely.

• More employees should be employed to join the Policy & Planning department. This will improves the operations of the department on the processes of preparation and submission of budget estimates and budgetary reports on time.

• Lower level employees should be highly motivated to implement budgets. This can be achieved by educating them properly on budgetary systems and giving incentives to those who perform better.

5.2 Summary and Conclusion

This research study was set out to assess the effectiveness of implementing the budgetary control system at the MFAIC. Budgetary Control System is the managerial tool that assists management to; implement plans, detect deviations from plans, monitor implementation, measure performance of employees, improves coordination and communications, clarifying responsibilities and enhance accountability through performance reports, adjusting plans depending on actual situation, e.t.c.

The effective Budgetary Control System demands top leaders support, proper setting of objectives and clarification of responsibilities, better communication system, effective Accounting system, good coordination, budget education to employees and full participation of all members on budget preparation and control.

The study had revealed that there is effective budgetary control system at the MFAIC because responsibilities are properly clarified, there is good coordination and communication system, expenditures are approved and examined before payments are made, high accountability of employees and executives through performance reports, satisfactory level of budget education among employees, profound analysis and forecast of future through strategic planning, effective control through monthly reports, e.t.c.

Conclusively, I can say that the budgetary system at the MFAIC it is effective, however, there are some angles of weaknesses in the system that must be watched out. For the weak spots revealed- the researcher has provided the valuable recommendations that are to be considered by the MFAIC management so as to strengthen and improves future operations in order to become more effective on implementation and control of their Budgetary System.

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Mashall A.H. (1974), Financial Management in Local Government, George Allen & Union Ltd.

Terry L. (2003), Management Accounting, 5th edition, TJ International, UK.

APPENDICES

Appendix-1………………………..Questionnaire & Respondents Register

Appendix-2……………………….Interview Guide

Appendix-3………………………Organization Structure of MFAIC

Appendix-4…………………….…Finance and Accounts Department Structure

Appendix-5…………….…………Functions of each section in Finance and Accounts Department

Appendix -1

INTRODUCTORY INFORMATION ABOUT THE ATTACHED QUESTIONNAIRE.

NAME OF THE RESEACHER: Yohana Luhui
RESEACHER CENTER: Mzumbe University
LEVEL OF EDUCATION: A 3rd year student in Bachelor of Accountancy and Finance at Mzumbe University
RESEARCH TOPIC: “The effectiveness of implementing budgetary control system in Government Sectors and Non-Profit Organization”
AREA OF THE STUDY: Ministry of Foreign Affairs and International Cooperation
PURPOSE OF THE QUESTIONNAIRE: To enable the collections of raw data for further analysis, so as to prepare a research report on the above mentioned topic. The questionnaire comprises four printed pages with total of 24 questions that are subdivided into section A, B, C, D and E.
DISSEMINATION OF FINDINGS: The collected data will enable the production of research report of which three copies will get produced; one copy will remain at the Ministry of Foreign Affairs and International Cooperation for reference, another copy will remain with the researcher for reference while the last copy would get submitted and presented at Mzumbe University.

DUE DATE: Before 10/ January/2008

REQUEST; Please don’t hesitate to consult me through the under mentioned contacts for any matter you think is unclear to you. The completed questionnaires are collected at the Mission Account Office. Also you are requested at the end of the questionnaire to add your name and Title.
Mobile no; 0763902373 E-mail; [e-mail]

Appendix -1

SECTION A; FILL IN THE BLANKS
Please you are requested to write the correct answers in the space provided. Each question has instructions that guides you what to do;
1. How many departments are consisted at your organization/ministry? {Please list them}
………………………………………………………………………………………………………….
……………………………………………………………………………………………………………. …………………………………………………………………………………………………………
……………………………………………………………………………………………………………
2. In which department are you working? {Please mention name)…………………………………..
…………………………………………………………………………………………………………
3. What are the objectives/functions of your department? {Please list them}
…………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………………………………………………………………
4. What are the functions of your division/office? {Please list below)
…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

SECTION B; MULTIPLE CHOICES.
Please, you are requested to circle a letter of the right answers and follow any further instructions as instructed at respective questions.
5. For how long you had been working at this organization?
A. Less than one year B. One year C. Many years
6. Do the budgeted activities at your office/division and department correspond with the organizational goal?
A. Yes
B. No
C. I don’t know

7. Does the fund provided to finance Budgets satisfactory?
D. Yes
E. No
F. I don’t know Appendix -1

7. Does the expended amounts and collected revenue supported with proper evidence i.e. vouchers?
A. Yes
B. No
C. I don’t know
8. Are the top leaders at your organization bringing sufficient co-operation on the process of budgeting and implementation of budgets?
A. Yes
B. No
C. Average
9. Is there any problem of over lapping activities among different departments at your organization?
A. No
B. I don’t know
C. Yes
{Please, if yes: list the departments and explain the nature of a problem)
………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...
SECTION C; RATING SCALE ITEMS
Please tick in the correct answer box in the following rating scale items,
11. Is the budgetary control system at your organization effective?
Very effective average not effective not effective at all

12. Does the budgeting control system helpful to you on the attainment of organizational goals?
Not helpful at all not helpful helpful very helpful

13. Is it true that budgeting process at your organization allow all employees to participate in giving advice, opinions and recommendations?
Very true True Untrue very Untrue

14. Do employees and managers adhere to budget stipulations/requirements?
Not adhered Less Adhered average Adhered

Appendix -1

SECTION D; LIKERT SCALE ITEMS.
Please you are requested to fill the {x} mark in the box that presents the right answers.

15. I understand the objectives and importance of budgets that are prepared at my organization.
Strongly disagree disagree neither agree nor disagree agree strongly agree

16. Its true that my organization provides Budget education to its employees. Very true True Untrue very untrue

17. I have acquired a profound knowledge on the budgetary control procedures at my organization.
Strongly agree agree neither agree nor disagree disagree strongly disagree

18. I am well motivated to fulfill Budgets requirements Strongly disagree disagree agree nor dis agree agree strongly agree

19. I know all my responsibilities on implementing the budgetary control system in my organization.
Strongly dis agree Disagree Agree Strongly Agree

SECTION E; ATTEMPT THE FOLLOWING QUESTIONS; Attempt the following questions by filling the right answers in the space provided as instructed at each question.
20. What are the procedure that are followed on implementing budgeting control system at your organization {please mention steps}
………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….…
21. How do you communicate a problem of adverse variance at your division/department? Explain.
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

Appendix -1

22. What are the normal procedures that are followed at your organization in solving a problem of adverse variances? Explain
…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
23. Are there any limitations on the budgeting control system at your organization? {Please list them}
…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

24. Do you have any comment on the budgetary control system at your organization? Please Comment here under;
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

Respondent Name………………………………………………………
Title..................................................................................

Appendix-1
QUESTIONNAIRE RESPONDENTS REGISTER

NO
RESPONDENT NAME
OFFICE NAME
CONTACTS SENDING DATE COLLECTION DATE
1 Cossato Chumi Protocol 0784272411 20/12/2007 8/01/2008
2 Mr. Simba Internal Audit 0754911883 20/12/2007 10/01/2008
3 Mr. Madebe Final Account 0773838404 20/12/2007 10/01/2008
4 Mr. Gwasa Mission Accounts 0784228225 20/12/2007 05/01/2008
5 Justin S. Kisoka Policy & Planning 0786254774 20/12/2007 10/01/2008
6 G.B. Shoo Salaries Box-9000 DSM 20/12/2007 10/01/2008
7 Halidi J. Lusekelo Examination --------------- 20/12/2007 10/01/2008
8 Sir. Richard Bills & Imprest --------------- 20/12/2007 10/01/2008
9 Toba Horombo Epicor --------------- 20/12/2007 10/01/2008
10 Mr. Ngao Assistant Chief Accountant --------------- 20/12/2007 ---------------
11 Mr. Chua Examination --------------- 20/12/2007 ----------------
12 Sister Beta Examination --------------- 20/12/2007 ----------------
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Appendix-2 INTERVIEW GUIDE

1. .When do you prepare your budget?

2. What types of budget do you prepare at your Organization?

3. Is there any problem of overlapping activities among departments?

4. What are steps followed on approval of budgets?

5. Do you have budget manual? What is its content?

6. How do you ensure that other employees are properly educated on budget? 7. What are the contents of your budget committee?

8. Do you involve all employees in the process of preparing and implementation of budget? 9. What are the sources of finance at your organization?

10. Does provision of funds satisfactory to fulfil the planned/budgeted activities?

11. How do you prepare your budget?

12. What steps do you follow to implement the budgetary control system at your organization?

13. How do you communicate and solve problems of adverse variance?

14. What are the limitations of budgetary control system at your organization? 15. Do budgets help you to achieve organizational goals?

Supporting Documents Required

 Performance reports for the previous 2 years
 Budget manual

Appendix-3

ORGANIZATION STRUCTURE OF THE MINISTRY OF FOREIGN AFFAIRS AND INTERNATIONAL COOPERATION

Appendix-4

MINISTRY OF FOREIGN AFFAIRS & INTERNATIONAL COOPERATION-ACCOUNTS & FINANCE DEPARTMENT STRUCTURE

Appendix-5

FINANCE AND ACCOUNTS DEPARTMENT

The Accounting Department is one of the among several departments forming the organization structure of the Ministry of Foreign Affairs and International Cooperation present, the ministry has thirteen departments.

The Accounting department is headed by the Chief Accountant and it has the following accounting sections, the Cash Office, Salaries, Pre-Audit, Payments Office (EPICOR), Final Accounts, Bills & Imprests, Audit Query and the Missions Accounts. Each section has a minimum of two accountants at the level of a Senior Accountant grade I, II or III. Except for the Mission Accounts which is headed by the Assistant Chief Accountant.

Missions Accounts Section: This section is tasked to oversee the financial and accounting reports coming from over thirty missions abroad, therefore it has more than seven accountants working to examine and scrutize overseas missions return of accounting informations.

Most of sections do the accounting functions except for the Missions Accounts and the office of Chief Accountant which do the financial management aspects. Those doing the financial management work are entrusted in making use of the accounting data available to them from overseas Missions accountants. Their role is to evaluate the accounting information produced and establish proper managerial information for the Ministry’s Management Team comprising of the Permanent Secretary, Directors and Head of Units. Therefore the accounting informational avails data for managerial informations and hence the two move together and simultaneously
The unit is under the Chief Accountant and is responsible for the following tasks.

Cash office Section: This section is headed by a senior Accountant and its main tasks are the handling of cash transactions with respect to; Submission of voucher lists to the treasury, Collection of cash and cheques, Banking cash and Cheques, Preparation of monthly flash reports, Payment of cash /cheques to employees/customers( services Providers) and Batching of Paid payment vouchers.

Salaries Section: This section is entrusted with the preparation of monthly salaries to employees and other associated benefits. It does routine salary adjustment, computation of Foreign Service allowances to employees working to Mission abroad and the payroll deduction arising in employee salaries.

Pre Audit section: This one does the prepayment examination of payment vouchers and their supporting documents. It ensures the payment made is in conformity with the financial regulations of the government. Apart from this prepayment, the section is doing the funds allocation through Warrant of Funds.

Payment Office (EPICOR)

This section habours the Integrated Financial Management System the computer based program for government payments and receipts. The section is headed by an accountant who is well trained in the operation of the EPICOR program in use in government expenditures. The system is integrated to the Treasury and hence it allows operators stationed at the ministry to access the system through special passwords. The system is capable of printing report of various forms according to customer’s requirements.

Final Accounts Section: The section is responsible with the preparation of annual appropriation accounts pertaining to the ministry. These are the accounts which give the real picture of financial position persistent in the ministry. The main financial statements are the statement of Vote Account, the Itemized Statement of Expenditure, the List of Outstanding Commitments and Debts, the List of Assets and Liabilities, statement of Outstanding Advances and Imprests. All these statements are geared to portray the financial and performance position of the ministry at any given time of reporting.

Bills and Imprest section:

The duties assigned to this section is the preparation of payment documents, computation of amount to be paid, keeping a Register of Payments and issuance and retirement of all types of Imprests issued to members of staff for specific purposes.

Audit Query Section: This section does the postmortem work by providing replies to auditors for all audit queries raised during the period. It keeps a register of Audit Queries, liaise with overseas missions with matters related to audit queries and keeps records of all vital meetings related to replies of the audit queries.

Internal Audit Unit The internal audit is headed by chief Internal Auditor and will perform the following services. o Preparing strategic audit Plan. o Coordinating audit Programs. o Providing proper financial advice to the accounting officer on the use of fund o Carrying inspections of records of the sub warrant and receivers of revenue in the ministry. o Scrutinizing the existing system of accounting and examination of payment and collection of receipts. o Conducting performance Audit on appraisal of Development project. o Receiving internal and External Audit report including concern to senior. Management of the ministry, Agency or Development including the identification and dissemination of good practices. o Conducting operational/ Value of Money Audit.

Bibliography: Lucey T. (1996) Management Accounting 4th edition, D.P Publishers Mwisho A.M, (2002) Financial Planning and Forecasting, Mzumbe University, Morogoro, Tanzania. Glenn A.W (1964) Budgeting; Profit planning and Control, Prentice-Hall Inc, Englewood Cliffs New Jersey. Harlod C. Edey (1964) Business Budgets and Accounts, Hutchinson and company Ltd. Brown J.L & Owler L.W.J (1975) Cost Accounting, Replica Press, Pvt Ltd England. Drury C. (2004), Instructors Manual- Management and Cost Accounting, 6th edition, Thomson Learning UK. Maheshwari S.N (1993) Principles of Management Accounting, 9th edition, Sultan Hand & Sons Publishers, New Delhi, India. Kothari C.R. (1990) Research Methodology, K.K Gupta Pub, 2nd edition, New Delhi, India. Meigs W.B & Meigs R.F et al (1981) Accounting the Basis For Business Decision, 3rd edition, Mac-Gaw Hall Ryerson Publishers. Mashall A.H. (1974), Financial Management in Local Government, George Allen & Union Ltd. Terry L. (2003), Management Accounting, 5th edition, TJ International, UK.