Integrated Financial Management Information System and budgetary control nexus: anempirical analysis of the 47 Kenya’s county governments

Abstract

Integrated Financial Management Information System (IFMIS) implementation by government and public sectors always intended to promote efficiency, enhance accountability and transparency in the public finance management. However, despite it wide adoption in most public institution and entities globally where the system has been implemented, significant challenges still persist ranging from poor expenditure tracking, budgeting control and lack of fiscal discipline. This rises concern whether IFMIS implementation is really effective in promoting financial management. Therefore, this study examined the role of integrated financial management information system in budgetary control among the 47 counties in Kenya. The dependent variable of the study was budgetary control measured as budgetary variance between fiscal years and accountability while the independent variables were cash management, internal control system, pending bills management and public policy implementation. Secondary panel data for 47 counties sourced from financial report and audited statements between 2015 and 2022 was collected for analysis. . The collected data was analyzed using correlation analysis technique and fixed effect regression analysis to ascertain the nature and the relationship between dependent and independent variables. The study established a positive and significant relationship between cash management, pending bills accumulation and public policy implementation and budgetary variance. On the other hand a negative and significant relationship between internal control systems development and budgetary control established meaning the system development reduces budgetary variances. Based on these findings, the study recommends implementation of IFMIS in the public sector’s financial management through monitoring cash management, pending bills accumulation and public policy implementation in the counties to control greater budget variation. Second the study recommends increase in internal control mechanism in order to control budget variation and practice sound fiscal discipline.  Unlike prior studies along this line which have focused on the theoretical benefits of IFMIS implementation, the current study disaggregates its components into internal control, cash management, pending bills management and public policy implementation and quantified their individual effect on budgetary allocation which helps policy makers to identify which specific of the system to enhance or control, this forms the novelty of the current study.