Impact of Budgeting Practices on Financial Performance in the County Government of Meru, Kenya

Abstract

The study aimed at investigating how budgeting practices affect financial performance of the county government of Meru. The research was grounded in the financial distress theory and employed a correlation survey research design. The study sample size was 69 respondents, with the study utilizing a census approach. Both primary and secondary data sources were utilized, with primary data collected through questionnaires and secondary data derived from financial statements obtained from County Offices. The validity of the research instrument was assessed through consultation with content experts and supervisors, while reliability was evaluated using Cronbach’s alpha coefficient. Data analysis involved employing descriptive and inferential statistical techniques, with results presented through graphs, charts, frequency tables, and a regression model. The findings indicated a statistically significant relationship between budgeting practices (R=0.539, P<0.05) with the county’s financial performance. The study concluded that budgeting practices positively and significantly affect the financial performance of county government of Meru. The study recommends that Meru County Government should continue to prioritize and strengthen its budgeting practices, such as improving budget planning, execution, monitoring, and evaluation, to further drive the overall performance and efficiency of the county government. This approach would facilitate a comprehensive understanding among management, empowering them to influence stakeholders and make well-informed decisions regarding county government outcomes.