Safeer Sajid Dissertation

Uni.No.
0911867093897
Title
Supervisor
Mr John Waites
A dissertation submitted in partial fulfilment of the requirement for the degree of Master of
Business Administration of university of Wales.
By
23/06/2010
Date: ______________________
LONDON COLLEGE OF BUSINESS, UNIVERSITY OF WALES ,

6A MONTEAGLE COURT, WAKERING ROAD BARKING,
LONDON,
IG11 8PL, UK
Abstract
Uni.No. 0911867093897
The study focuses on the efficiency and effectiveness of financial management in a

donor funded project.
This research work was undertaken to critically examine how individual behavioural
and social consideration play part in the design of project organisation structures and
operations of effective –donor- funded project accounts with the focus on timeliness
accuracy and usefulness of financial reports.
The study will further assess how efficient and effective are the donor-funded projects
financial management system in achieving projects programme goals in Tanzania
context, with reference to donor support of university of Dares salaam.
Acknowledgement
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I give Allah the glory for this wonderful opportunity to develop myself and to
contribute my quota to the growth of this great nation.
The completion of the research work has been carried out with the assistance of some
personalities who are worth acknowledging.
I am highly indebted to my able supervisor, an erudite, conscientious scholar Mr J.

Waites, who with all cautions, patience and indefatigable efforts assisted in the
successful completion of this study. He was a painstaking and selfless in his
supervision of the study.
I am also grateful to LONDON COLLEGE OF BUSINESS through where my vision

and desire to pursue MBA has been made possible .Finally, I will not forget to
acknowledge the effort of my friend ,Mr Ojo Darlington Oluwasegun for his assistant
and my sponsor, Mr Nazir Ahmad who facilitates my coming to study in UK.
Dedication
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This study is dedicated to the almighty Allah, my sponsor Mr Nazir Ahmad who
made my study in UK possible.
Table of Contents
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Abstract 2
Acknowledgement 3
Dedication 4
CHAPTER 1
1.0 Introduction 9
1.1 Background information 9
1.2 Statement of the problem 13
1.3 Research objectives 14
1.3.1 Specific objectives 15
1.4 Research questions 16
1.5 Significance of the study 16
CHAPTER 2
2.0 Literature review 19
2.1 Theoretical review 20
2.2 Empirical review world wide 25
2.3 Empirical review from Tanzania 26
2.4 Conceptual framework 27
2.4.1 Independent variables 28
2.4.2 Dependent variables 30
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2.5 Test hypothesis 30
2.5.1 Research hypothesis 31
CHAPTER 3
3.0 Research methodology 34
3.1 Introduction 34
3.1.1 Research aim and objectives 34
3.1.2 Specific objectives 35
3.2 Research design 35
3.2.1 Population 36
3.2.2 Sampling procedure and sample size 36
3.3 Types of data and data collection methods and procedure 37
3.3.1 Data collection methods and procedure 37
3.4 Data analysis and testing model 38
3.4.1 Analysis benchmark indicators 38
3.4.2 Analysis testing model 39
CHAPTER 4
4.0 Research findings and analysis

41
4.1 General findings 41
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4.1.1 Field work execution 41
4.1.2 Historical background of University of Dar es salaam of Dar es Salaam 41
4.1.2.1 Historical background of the UDSM Main campus 41
4.1.2.2 Historical background of the MUCHS 42
4.1.2.3 Historical background of the UCLAS 43
4.2 Institutional analysis 43
4.2.1 Donor support to the University of Dar es salaam 43
4.2.2 Transparency and accountability in the use of donor funds 45
4.2.3 Projects personnel recruitment 46
4.2.4 Computer application in the management of projects funds 47
4.3 Specific findings 47
4.3.1 Specific Skills and Knowledge of Projects Staff

47
4.3.2 Computer knowledge of projects accountants

50
4.3.3 Training of projects staff 52
4.3.4 Participation in the preparation,
Implementation and control of projects budget 53
4.4 Descriptive Statistical Results and testing of hypothesis 54
4.4.1 Evaluation of projects accounting and internal control systems 54
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4.4.2 General view on projects organisational based self esteem 61
4.4.3 Audit reports of the projects accounts 67
4.4.4 Projects who’s accounts are not subjected to local audit 68
4.5 Hypothesis testing 70
4.6 Interpretation of the results 74
CHAPTER 5
5.0 Summary, Conclusion, Recommendations 78
5.1 Summary 78
5.2 Conclusion 81
5.3 Recommendations 85
References 86
Bibliography 89
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CHAPTER 1
1.0 INTRODUCTION
1.1 Background information
This chapter introduces the basis of this study; it forms the foundation of for the rest
of other chapters. The core issue of the study is financial management system in
donor funded Projects.
Financial management system is a group of activities by which an organization or

institution manages its finances. It encompasses what traditionally referred to as
Financial and management accounting. The very justification for a sound financial
management system and good accounting system rests on the assumption that
information and reports emanating from there improve the quality of decision making.
A sound financial management system can be referred to as a system that provide
accurate information and correct deviation in projects execution and allow the
monitoring of a project’s progress towards its agreed objectives. A sound financial
management system is well backed up with a sound accounting system which is a
system that provides reliable records and reports of good financial management.
The emphasis is therefore on providing a timely, accurate and picture of the past
events as a consequence of proper implementation of the agreed set of activities in
accordance of the approved budget. The benefits derived from this kind of practice
include; to serve the management with information for control purposes, to serve as
reliable framework for projecting and planning for future economic activities and to
give the picture that can build the confidence of donors on the safety of their funds. At
this juncture, it is imperative that financial management is the system like others,
which is an integrated whole entity consisting of functionally independent parts. The
concern is on the entire organization on how it will implement the effective financial
system.
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In this regard, financial management system can be grouped into two branches, which
are administrative system and accounting system. Administrative systems play
various roles which include: assisting all project coordinators, project managers or
accounting officers in decision making, planning, communicating, controlling and
evaluating performance objectively. However, accounting system tend to financial
information, expressing the information in numeric terms and communicating this
information to interested parties.
‘Colin Drury (2000) describes accounting as process of identifying, measuring and

communicating economic information to permit informed judgements and decision by
users of information’. Both financial and non-financial information provides a strong
management control device that assists the management to be objective when making
decision. The emphasis is now on providing a timely, accurate and reliable picture of
the past events as consequences of proper implementation of the agreed set of
activities in accordance with approved budget.
With the rapid changes in the world, financial management control is looked to be a
continuous monitoring process. Herbert, et al, (1987), suggests that financial
management control, among others, considers the following aspects
• Setting performance standard in line with objectives.

• To give feedback.
• Compare actual performance with the predetermined standards
• Take any action to correct deviation if arises.
Since the economy, both at National and global level, consists of customers,
employees and investors, a good financial management system contributes to both
individuals benefit and the welfare of the general community. Weston, (1987) argues
that proper financial management within the firm will help the business to provide
better products at lowers prices to its customers, pay high salaries and wages to its
workers and managers and still provide greater returns to the investors. It is so
obvious that in order to achieve any panned goals, one of the essential pillars is a
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sound financial management system. Thus well administrative and accounting

systems are very important in today’s world, in both developed and developing
countries.
The need for sound financial system as a tool for achieving government, organisation,
or institutional goals rests on the centre role contributed by finances. Finance is the
one of the most required scarce resources in both developed and developing countries
and requires proper management of it. The developed countries are at high level on
achieving their goals to the extent that they are in a position to support financially
developing countries. It is true that finances for many of the development projects in
developing countries like Tanzania rely much on donor funds.
Experience abound has shown that most of the development projects in developing
countries get up to 90% of their finance from donors. Development and non
development projects at University of Dar es salaam are not exceptional to this. While
this is the Reality, one major challenge facing most of the developing countries today
is dwindling resources from developed countries to finance their development and
non development projects. The reasons that put forward are growing rates of
unemployment and the loss of social security net that creates a political atmosphere,
within which public opinion suggests to put own problem first. In addition tax payers
have recently put pressure on their governments to hold the responsible and
accountable recipients countries. Because of that, like in other many other institutions
across the world, institution in developed countries are forced to cut projects funds
and reduce their own organisation structure as the effort to cut costs. To secure funds
from the donor today, a higher degree of accountability and transparency in financial
management system of recipient counties is a prerequisite. This is even crucial for the
growing number of institution and organizations like the University of Dar es salaam
or countries like Tanzania that compete for donor fund support. It is therefore
imperatively important to have in place a sound financial management system in order
to be able to genuinely convince the donor for support.
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University of Dar es Salaam comprises of three campuses which are Main campus,
Muhimbili College of Heath Sciences (MUCHS) and the University College of Land
and Architectural Studies (UCLAS). Precisely will talk little bit about what each
campus is doing. The UDSM main campus was first established in 1961 as constituent
college of the University of London. In 1963 it becomes a constituent College of East
Africa, where by in August 1970, it becomes a national University of Dar es Salaam.
Like other Universities all over the world, the establishment of UDSM was an
institution which train people at highest level. University of Dar es salaam, which
heavily relies on donor support to finance its development and non-development
projects, to continue to receive donor support, it has to compete with these dwindling
resources. According to the UDSM Five-Year Rolling Strategic Plan 2002/2003-
2006/2007 the major donor who support UDSM includes NORAD(Norway),
SIDA/SAREC(Sweden), DANIDA(Denmark), NUFU(Norway), CARNEGIE(United
States of America), MHO(Netherlands), DAAD(Germany), GTZ(Germany), Irish
Aid/HE (Ireland), International Development Research Centre of Canada (IDRC,
CANADA), United Nations Centre for Human Settlement(UNHCHS-HABITAT),
Commonwealth, British Council(UK), VLIR(Belgium) etc. These donors mainly
support various projects and activities related to research and publications, teaching
and learning, infrastructure, Staff development and reform of organization culture and
management etc, the support covers various projects carried out at the UDSM Main
Campus, University College of Land and Architectural Studies (UCLAS), Muhimbili
University College of Health Sciences (MUCHS).
Many of these donor funded projects have been experiencing different type of
problems related to financial management issues. To continue receive both the public
and donor fund support under this new competing environment, a university has put
in place a very sound financial management system. The overall assumption at the
moment, given the fact that the University is the centre of excellence, is that it
practices a sound financial management system. However, this study is to review and
assess how efficient and effective has been donor funded projects financial
management system at the University in achieving projects programme goals. It is
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hoped that such finding are instrumental in helping to shape the financial management
system at the University so as to meet government and donor expectations. This study
is going to be carried out at University of Dar es salaam as a case study, giving its
capacity of handling varieties of projects supported by several donors.
1.2 Statement of the Problems
Dar es Salaam University is a public institution whose most of its projects rely much
on today’s declining donor finances. Using UDSM as a model this study sought to
review and assess the efficiency and effectiveness of donor-funded financial
management system, in attempt to establish the factors behind poor financial
management system in these donor-funded projects. In addition, it is intended to
suggest ways for strengthening the current financial management system.
Management of Public and Donor funds in most of development projects in Tanzania

remains to be one of the common problems for many years now. According to the
pre-feasibility study report on European Commission (EC) support to Good
Governance (Bray and Brusset, 2001) one of the most important ingredients of an
effective governance programme is an effective administrative structure with reliable
accounting system. The report further revealed that, historically, Tanzania’s
government accounting system have been rudimentary, meaning that it is/was too
easy for funds to go astray, either because they were deliberately diverted, or on
account of administrative inefficiency. The report emphasized that good financial
administration is vital if Tanzania is to achieve its development goals. Such a
comment came when the EC and other donor started putting more funds into
budgetary aid rather than specific projects.
Financial management deficiencies, both for public and donor funds, are well
documented in the Controller and Auditor General (CAG) reports of the government
as presented for the period covering 1995/06 to 2006/07. These reports highlight
weaknesses in administration of projects, wastage, inefficient procurement, poor
supervision and/or execution of works. The main thrust of CAG has been to
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encourage through audit reports and other official instruction, public accountability in
government and donor funded financial operations, with overriding concern being to
promote efficient and effective discipline in the use of government and donor funds.
While that has been intention, little has been done to rectify the recurring weakness in
government and donor funded projects accounting system controls in Tanzania.
It is against this backdrop that the government has recently been taking a number of
measures to address the deficiencies within the accounting system. For instance, The
Public Finance Act, 2001, directs that the minister for finance shall supervises the
finance of the fund to ensure that full account reports are submitted to the National
Assembly and proper financial control are maintained. Parallel to that, The minister
for finance on that time(Mr B.P. Mramba) in his speech during the fourteenth
Consultative Group Meeting (2002) pointed that elaborate system for management of
public resources have been put in place in Tanzania and would continue to be
improved with the support of development partners. These include Integrated
Financial Management System (IFMS), IN LINE WITH NEW Public Finance Act of
2001, and other processes that ensure transparency, accountability and sound
reporting requirements. He further mentioned that the Government of Tanzania is
striving to ensure transparency and accountability in the use of both domestic and
external resources. His argument was that a sound financial management system is
critical for poverty reduction, since poverty reduction programme requirement are
higher than available resources. The government therefore seeks to strengthen
management of both public and donor funds so as to use resources more efficiently
through implementation of the public financial management reforms. All these efforts
are imperatively important today than ever, given the declining the resources from
donors and by the demands by the same on the accountability and transparency of the
money they disburse to developing countries.
1.3 Research Objectives
The main objective of this research is to study the efficiency and effectiveness of
financial management systems as applied to various projects on day to day activities.
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It will also examine how individual behavioural and social considerations play part in
the design of project organisation structures and operations of effective donor-funded
project accounts with the focus on timeliness, accuracy and usefulness of financial
reports.
context, with reference to donor support at University of Dar es Salaam. It is
important to note that adequate knowledge, skills and experience on financial
management discipline, as well as supportive attitudes towards having a sound
financial management system in work organisation, and behavioural factors
emanating from organisational based self esteem are the mostly key element that
enables availability of timely, accurate, reliable and useful financial information.
Despite the fact that the financial management system includes both administrative
and accounting systems, the limitation of time, funds and other resources, made the
focus of this study concentrate on accounting system only.
1.3.1 Specific Objectives
The specific objectives of the study will be;
1) To assess the extent to which the accounting and internal control systems at
UDSM to Ensure the conduct of an orderly and efficient payment and procurement
process, adheres to the budget discipline, segregation of duties, proper record keeping,
and safeguarding of assets and resources.
2) To establish whether the finances of the projects are handled by an adequate

number of knowledgeable, Skilled and experienced financial management staff and
the extent to which the organisational based self esteem of donor funded project staff
affects timeliness, accuracy and usefulness of accounts.
3) To establish the extent to which organisational based self esteem of individual

donor funded projects staff affects timeless, accuracy and usefulness of accounts.
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1.4 Research Questions
From the stated problem and research objectives, the study is designed to answer the
following question;
• Is the existing financial management system in donor funded projects

sufficient to enable delivering of timely, accurate, reliable and useful financial
information for efficient and effective achievement of projects objectives?
More specifically, i will try to answer the following questions
1) Do the accounting and internal and control systems ensure the conduct of an
orderly and efficient payment and procurement process, adherence to the budget
discipline of the project, segregation of duties, proper record keeping and
safeguarding of assets and resources? This question is intended to determine the
possibility as to whether the system produces timely, accurate, reliable and useful
financial information.
2) Do the projects have adequate number of knowledgeable, skilled and experienced

financial management staff? This question inquired whether the donor funded projects
are well supported with staff members who are conversant with discipline of financial
management.
3) Does the level of organisational based self esteem of donor funded project staff
have an effect on timeliness, accuracy, reliable and usefulness of the donor funded
projects accounts? This question inquired whether there is any quantifiable
relationship with regard to the timeliness, accuracy, reliable and usefulness of donor
funded projects accounts.
1.5 Significance of the Study
The importance of higher learning education to any country in the world is well
known. The demand for such education in a developing poor country like Tanzania is
even more critical. Such education requires tremendous resources, which a poor
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country like Tanzania cannot manage alone without support from the donors. The
only way to convince donors to continue financing the institution offering higher
education in Tanzania is by having a sound financial management system. Therefore
this study is worth undertaking.
Since the problems affecting quality the financial reports/information/accounts is not

only government accounts, it is right time now to have an economical and workable
ways of thoroughly addressing these problem. Our economy highly depends on donor
support and it is wise and rational to show our appreciation of that support. Also, it is
our responsibility to prove the correctness and reliability of the information we offer
as a feedback on the use of money made available to us. Always we have to
remember those donors are generally under pressure from their home constituencies
(tax payers) to demonstrate that funds have well spent. It will be difficult for them to
do so if funds appear to be misappropriated. This research aimed at assessing the
efficiency and effectiveness of donor funded projects programme goals, with
reference to donor support at UDSM. The findings of this study are significant in the
following grounds;
• Will positively contribute on improving the quality of donor-funded project

financial management system, which is the key element in enhancing the
donor’s confidence for further funding and support the UDSM projects.
• UDSM, being a centre for Excellences, Government ministries and
departments as well as other interested parties will have a room to seek and
• Receive a practical advice to solve related or similar problems once the
findings of this study are made public.
• Further, to the academicians and researchers in Tanzania, the research brings
the widely considered financial management aspects with the mostly forgotten
important side of human behavioural aspects of self esteem that may
determine success or failure in achieving the expected results of financial
management system in donor funded projects.
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• Will enable UDSM management to understand the organisational based self

esteem behavioural aspects that may be considered alongside others if
effective and efficient performance of donor funded projects is to be achieved.
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CHAPTER 2
2.0 LITERATURE REVIEW
It elaborates the growth of financial administration theory and practical with the help
of empirical literature and theoretical approach. Keeping in mind of donors interest in
financial management system. Hypothesis test was carried out to identifies reviewed
literature gaps, focusing in the current literature which this study is making it
contribution.
Contingency Approach to Management
This approach has no set of rules and method for leading, organizing, forecasting,
governing and operation of any administration for any potential threats and challenges
assign by the association. Managers should have cleared certain questions and keep
updates its ideas accordingly such as what is the right time? Financial and divisional
structure? Chain of control mechanisms? Problem identification and solving
structure? Structural models that includes simple or complex control mechanisms?
Should task based, time based, target based, leaderless approach, or people oriented
style use? Chain of command, who reports to who? Target set and progress checking
and identification methods? Training and development programmes? Motivational
and incentive programmes used? Providing friendly and safe working environment
and keeping updates with new inventions for health and safety? The contingency
approach for administration has no universal answer for all questions because all the
queries change form situation to situation and have market, organizational, cultural,
political, geographical and global financial effects. Timely and correct decision in
complex variety of critical environment and internal contingencies are required.
It includes certain administrational theories developed in 1960s. They recommend

that previous theories such as Weber’s bureaucracy and Taylor’s scientific
management were failed because they ignore the organizational structure and
management style influenced by different characters and factors.
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There could not be "one best way" for leadership or business. Historically,
contingency theory has sought to formulate broad generalisations about the proper
structures that are typically associated with or best fit the use of different
technologies. The perspective originated with the work of Joan Woodward (1958),
who argued that technologies directly determine differences in such organizational
attributes as span of control, monopolization of authority, and the formalization of
rules and procedures. Fred Fiedler's contingency model focused on individual
leadership. Other researchers including Paul Lawrence, Jay Lorsch, and James D.
Thompson were more interested in the impact of contingency factors on
organizational structure. Their structural contingency theory was the dominant
paradigm of organizational structural theories for most of the 1970s.
2.1 Theoretical review
The Loan Department of the World Bank describes project financial management as
‘the procedure which brings collected planning, budgeting, accounting, financial
reporting, internal control, auditing, procurement, disbursement and physical
performance of the project with the goal of handling projects resources accurately and
succeeding project goals’ (Project Financial Management Manual, Loan department,
The World Bank)
It is therefore logically to appreciate that the major component of the project success
is a sound financial management. In bank industry it is understood that policy or
procedure requires sound financial management in Bank funded projects. It is
believed that good financial management provides;
• Required information needed by those who manage, implement and supervise
projects, including government monitoring agencies and financing institutions.
• A deterrent to fraud and corruption, since it provides internal controls and

ability to quickly identify unusual occurrences and deviation.
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In other words, a sound financial management system can be referred to ‘as a system
that is able to provide timely and reliable information, give early warning of problems
in project implementation and allow the monitoring of projects progress towards its
agreed objectives’.
Operations situation with sound financial management enables smooth discharge of

the projects aims. Timely, dependable, and useful financial data thus speeding up the
growth and preventing delay and administrative bottlenecks.
It is further argued in different studies that the essential need of a good financial
management ensure exact or reliable and timely information concerning project
resources and overheads. In additions, a financial management system confirms that;
 There proper planning, control, monitoring and audit exercise relating to the
project.
 The project activities carried out relates to the whole project as specified in the
project appraisal document.
 The reporting entity, where it is commercial or non-commercial, provides
information which adheres to acceptable accounting standards and to be
flexible to generate information acceptable to the fund provider.
One of the attribute of good financial management system is transparency (Kinsella

R, 1995). Thus a financial management system provides rooms for formal ways of
effective communication of project activities for internal and external requirements.
According to Welsch et al (1992) effective communication and mutual understanding
include formalisation of objectives, goals, policies and procedures of the projects.
Formalisation requires the establishment and observance of deadlines for making
decision and control actions. These support basic objectives of financial management
systems, which are timely and accurately furnishing of financial information.
On the other hand, a sound financial management system is an essential tool in both
donor funded projects and public funds. In government operations, the role of
financial management system is so wide (Hopwood, 1974). For instance, ‘public
financial management includes all phases of the budget cycle, including the
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preparation of the budget, internal control and audit, procurement, monitoring and
reporting arrangements, as well as internal audit. The broad objectives of public
financial management are to achieve overall physical discipline, allocation of
resources to priority needs, and efficient and effective allocation of public services’.
In modern information society, an improvement in the general level of material well

being largely depends on improvement in productive uses public resources both
material and human effort. A well established financial management system and
accounting system is a necessary tool of measurement in any effort to improve
productivity in any society. Many laws and Government regulations with important
impact on economic development are based on financial information as presented in
accounting figures.
Normally, accounting procedures that are used to satisfy many important

organisational functions has become highly technical in nature. However, with
commitment attitudes, provisions of timely and reliable financial reports become
possible. In the accounting profession researchers seems to have left behind simple
behavioural issues that could make major improvements in the accounting goals.
Literature provides evidence that a lot has been written about auditors behavioural
aspects with much said about accountant. The auditor provides a post-ante
examination on accounting records while the accountants do the ex-ante decisions in
generating the accounting information (Herman son et al (1989). With regard the
accountant’s actions seem more relevant to the users of accounting statistics.
Notwithstanding the increased sophistication in accounting procedures, the

information that is provided is never an end itself. The technical sophistication must
never prevent us from recognising the importance of accounting and its procedures
which relies on how it influences the behaviour of the intended users. Hopwood
(1974) concludes that human and social factors are part of important aspects of any
accounting system as the accountants have never operated in vacuum.
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Control is not only achieved by formal means but also the pressure exerted by
individual staff over one another. Controller and the controlled have a cordial
relationship with one another. The motivations, expectations and personal relationship
of all the members of the organisation expect a significant effect on the outcome of
control process and managers need to be concerned with the improving the
performance of organisations even if at the same time they may be satisfying more
basic human needs.
Helms, Latortue and Goronja who are the CGAP Donor Team (CGAP Focus 21)
summarised the benefits resulting from proper accountability and transparency on
management of donor fund as follows;
• It improves performance. A right and timely financial report or information

helps the project management to identify the areas for improvement within
reasonable time and hence, make better decision. Again accurate, timely, and
useful financial reports of various projects under the institutions,
organisations or Government may also provide opportunity for the
management of each project to compare themselves to the institutional
benchmarks, giving them strong incentives to boost their performance.
• Protects donors and institutions/government. Donors and institutions or
government deserve clear, straightforward disclosure of financial results of
the performance of the project at a given a period of time. Accurate, timely
and useful financial reports on the performance of the projects inform donors
about the quality of financial management systems in force and, consequently,
give them safety of their funds.
• Attracts donors. An accurate and timely useful financial report enables donors
and interested parties such as government, institutions to understand the
performance of the projects and making the objective funding decision. The
practices of accountability and transparency is to track financial and project
performance indicators and determine whether the expected results are
forthcoming and whether the value of money can be realised.
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According to Rouse N, (1992) in order to be more effective and efficient in producing

sound financial reports for donor funded projects, various ways can be taken into
consideration, which includes (a) a strong emphasis on project specific reporting that
focuses on how donor funds were used along the approved budget of each planned
activity; (b) to closely monitor the project indicators as might be shown in the project
document; (c) to ensure adherence effective an efficient budget and budgetary control
system; (d) whenever possible to reach agreement with other donors on common
reporting formats; (e) to ensure that transaction are systematically and correctly
recorded in books of accounts in accordance with general accepted principles and
guidelines that may be provided by the donors; (f) to get periodic confirmation of
performance reports by an independent party, such as external auditors.
A productive financial management system requires an understanding of decision

making process and an awareness of the users of accounting information (Drury
2000). On the other hand attention must be given to the way in which people collect,
communicate, interpret and use accounting information/data, and how is translated
into decisions and actions (Hopwood 1974).
Accounting information is presented in two different phases to fulfil two fold

objectives. First, computing and analysing economic data regarding the organisation
activities within a fixed period, and Secondly, to make these results known to the
parties directly or indirectly related in the working of the organisation (Pradhan,
1994).
Accounting operations are designed and expected to add to the knowledge of

person/organisation for which the accounting statements are prepared. Accounting
theory and practice is developed and refined by the process of accounting research.
Since the motives, wants, behaviour and needs of individuals are within the field of
psychology, sociology and other social sciences, it is evident that basic research,
theory, and practice need to be concerned with the appropriate parts of these areas
(Prince, 1963). Accounting studies therefore require and should be based on some
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knowledge of the ways in which people act individually and collectively (Chambers,
1969), gradually analysing the relationship between accounting systems and other
forms of control, social behaviour which assists us to be more concisely on the
underlying conflicts and contradictions which characterise so many undoubted
organisational and social potential of accounting itself (Hopwood, 1974).
A good financial management system is a corner stone of effective and efficient

financial management of public resources and donor funds, which is amongst the
essential components required for an organisation to realise the objective of
development programmes. In addition, it promotes accountability in developing
counties and hence assures donors on their funds. In recent years, the percentage of
donor funds made available by government financial management system (through
treasury) has increased significantly. It is believed that, for nearly every topic and
every area one can name, there are probably some behavioural researchers trying to
analyse it and figure out a way to improve it. (Sloane 1992).
2.2 Empirical Review World Wide
Financial information or Accounting Information in the modern world is planned to

work as the source for most significant decision making processes both outside and
within the organisation. It is planned to assistance in designing, managing and
governing difficult and interrelated happenings and also encouraging publics at all
level of organisation to design and execute those decisions, which will boost more
organisation goals (Hopwood, 1974).
In his article, Walker (1999) described the mission of United States Government
Accounting Office (GAO) as to help the congress maximise the activities and assure
the reliability of American Government for the benefit of her people. The key themes
and core values that lead GAO in doing its job include (1) Accountability (2) Integrity
(3) Reliability.
Accountability describes what is to be done in government or donor funded project

accounting system. It also assists the Government or project management to do its job
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with facts and analysis that can help them to deal with issues before they become
crises. Actually, this is what a sound financial management system fulfils in the
organisation. Its ability to provide timely and reliable financial information always
enables the management to make rational decision.
Reliability is concerned with how the work is received and perceived in terms of
being timely, accurate, useful, clear and truthful. In other words, it advocate the
essence of transparency.
According to Walker (1999) ‘many Governments around the world tend to have fairly
consistently defined culture. Those cultures tend to be described in general as being
hierarchical, process oriented, and soloed or stove piped’. The challenge around the
world is trying to transform and make the government more patrimonial and results
oriented.
2.3 Empirical Review from Tanzania
Within the Tanzania Assistance Strategy, among the issue with strong appeal is the
need for a sound financial management system for prudent management of
government and donor funds. This appeal is made under spirit of good governance. In
addressing this essential tool as one of the priority areas, the management has totally
change its public financial management setting in the previous 7 years. On the returns
side, a government independent agency Tanzania Revenue Authority (TRA), was
established to oversee their budget. A Computerised Integrated Financial
Management System (IFMS) named the Ministry of Finance has replaced the manual
accounting system. IFMS facilitate prompt and accurate preparation of account and
audit reports.
In their report titled "Results-Oriented Expenditure Management Country Study-

Tanzania’’ working paper 204, Ronsholt, Mushi, Shallanda, and Assey (2003)
highlight that Tanzania, like other low income countries which have prepared Poverty
Reduction Strategy Papers (PRSP’s) for scrutiny by the international donor
community, expect that future development assistance through national machineries
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for budgetary resources allocation, public management, public procurement and

accountability. It is further mentioned that donors are likely to be more willing to rely
on these national processes and procedures if they have confidence in the financial
accountability, efficiency, effectiveness and relevance to poverty reduction of national
system, which will assure delivery of the targeted goals.
The Independent Monitoring Group (IMG), a body design to analyse Government

donor relations in Tanzania, said ‘that following the ‘dire situation’ in mid 1990’s
major improvement have been made in recent years. In its first report (2003), which
was made public, IMG said that donor now had greater trust to the government, which
had responded in various ways to improve its policies and practices in the
Management of the US$ 1 billion in annual foreign aid’.
In the mid-1990’s there was a feeling that the Government wasn’t doing enough to
mobilise domestic resources, collect input support funds. Indeed, it indicated some
elements of corruption, (Wangwe the Chairman of IMG). In addition, Wangwe said
‘that his group had found increased openness, transparency and accountability on the
part of the Government’.
However, the IMG said that there was room for improvement on both sides. It called
on donors to continue the transition towards programme support as opposed to project
support, reduce the amount of tied aid, most importantly, to focus more on capacity
building so as to improve further the level of productivity on the management of
resources.
2.4 Conceptual Framework
Financial Management is one of many human responses to the problem of organising

and controlling complex activities, especially those relate with funds. Its functions are
complementary to those of other vital processes of influence in the organisational and
social settings, and its impact depends on the inter-connections between a whole
series of personal, social, and management strategies for control.
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Bedford and Dopuch (1961) argued that study of the current accounting structure
necessarily requires recognition of the inter-relatedness of three structural elements
which are functional objectives, behavioural relations and measurement. In order to
understand the connections those influence the key players’ action in the donor
funded projects activities it is necessary to recognise the full variety of forces, human
and social as well as technical and economic, which culminate into the quality of the
subsequent records keeping and reports produced thereon. This requires great social
as well as technical thorough assessment. A single minded focus on the technical
issues alone can too easily result in a diversion of effort from the identification of the
other important aspects of that might influence the quality of expected results from
the activities carried out of the donor funded projects.
2.4.1 Independent Variables
Based on the literature reviewed, the environment of the study has come out clearly as
a frame within which certain factors are responsible for influencing the end outcome.
Chambers, R.J (1969)
Figure 1 below depicts the indicators and consequences of a Sound Financial

Management System (SFMS). On the left hand side of a model are the factors that
influence the strength or weakness of SFMS. The middle part of the model presents
the three primary indicators of a Sound Financial Management System. On the other
hand, the right hand side of the model shows the outcomes that are positively
influenced by strong SFMS or negatively influenced by weak SFMS. The stronger the
SFMS the timely, accurate and useful are the Donor-Funded project accounts. The
weaker the SFMS the untimely, inaccurate and useless are the Donor funded project
accounts.
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Figure 1. The Conceptual Framework
Some of indicators of
Some of the factors Outcomes
Sound Financial Mgt
System (SFMS) Financial
Influencing SFMS
Information
 Knowledge, Skills,
Experience,
Attitudes
 Job
- Strong
complexity/Challen
Accounting
ges
System
 Budget discipline
 Proper record -Strong Internal
keeping Control System
SFMS
 Timely report
-Positive org.
production
Based Self Esteem
 Financial
Accounting
Manual
 Govt Policy and
Regulations
 Intrinsic
motivation Source: Personal perception
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Knowledgeable, skilled, experienced staffs that are conversant of with the discipline
of financial management, and backed with their positive attitude towards change,
have a vital role in influencing outcome of the project activities. SFMS tend to be
more realised when there’s good relationship where by projects staff work as a team
toward achieving the targeted goals of the projects. Flexible organic organisation
structures generate higher SFMS than mechanic (Rigid bureaucratic) structures. Fair
performance appraisal contributes a lot on improving the general performance of the
project. Again, complex and challenging jobs foster higher SFMS than do simple,
repetitious, and boring jobs (Kreitner and Kinicki, 1992).
2.4.2 Dependent Variables
The assumption that an efficient and effective accounting systems, internal control
system and project management style provide timely, accurate and a useful picture of
the past economic events justify the dependent variables.
Timeliness refers to the availability of donor funded project financial reports as

stipulated in the project document, or as may be required from time to time by the
prudent user of it.
Accuracy refers to the number of errors found in the accounts ie the degree of
reliability of the project financial information produced from the financial
management system. The number of audit queries per account (project) per year shall
measure this.
Usefulness refers to the usage of financial information for control, correction and
planning purposes. The error correction trend on the use of funds and budgetary
allocation trends shall be used to measure this.
2.5 Test Hypothesis
Much of the literature reviewed has provided a basis forming up the importance of
considering, establishing, and implementing a sound financial management system
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towards realising targeted goals. Furthermore, the literature reveals that donors are
willing to assist developing countries if they will be convinced to gain confidence on
the prudent use of the money that they are giving, which is their taxpayers money.
In general, it has been observed that smooth management of government and donor
funds are only realised where a sound financial management system is used in the
execution of the agreed and approved activities towards achieving the targeted output.
So far, there is no available literature or a study made to assess the status of the
management of funds made available by donors to support various projects, which are
under institutions, including UDSM. Therefore the need for study to be carried out, so
as to come up with the analysis of the current status of financial management system
in donor funded projects within institutions, as compared to that of the government, so
as to derive better improvement that will be beneficial for both sides. Basing on the
above information, the null hypothesis tested in the study is here under
H0: University of Dar es salaam as a centre of excellence produces timely, accurate

and useful donor funded project financial information/reports as a result of its
sound financial management system in the most of the donor funded projects
Against the Alternative one that is;
H1: besides being the centre of excellence, University of Dar es salaam produces
Untimely, incorrect and useless donor funded project financial information/reports
as a result of unsound financial management system in most of its donor funded
projects.
2.5.1 Research Hypothesis
It has been observed that for about twenty years now Tanzania has been undertaking a
number of political and economic reforms in different phases. Alongside other
economic sub-system, the environment of government accounting system and
parastatals accounting system is expected to have concurrently undergone direct or
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indirect reforms in order to serve the new political and economic needs. So far, the
Government has been introducing IFMS at the Treasury.
Accounting System
H01: Donor funded projects have a good accounting system, which enable the
project to produce timely, accurate and useful financial information, which are
necessary for achieving the project targeted goals.
Some of the features of a good accounting system includes; equipped with

knowledgeable staff, proper record keeping, adherence to the budget discipline, use
of approved/financial manual, timely production of reports, etc.
The objective of this hypothesis was to find out the extent to which the existing
accounting system supports the donor funded projects staff on discharging their
responsibility towards achieving the targeted goals of the donor funded projects. The
financial report that comes out of a good accounting system of a project needs to be
timely, accurate and useful to reflect features of a sound financial management system
in force.
Internal Control System:
H02: Donor funded projects have a good Internal Control System which
facilitates the management of the project to produce timely, accurate and useful
financial reports.
Features of a good Internal Control System includes; Segregation of duties equipped

with knowledgeable and experienced staff. It also has approved financial/accounting
manual, proper implementation of agreed rules, regulations and procedures, etc
The hypothesis aim is to know the extent to which the existing internal control system
assists the donor funded project management to be rational on discharging their
routine responsibility towards achieving the targeted goals. The status of internal
control system in place forms the basis of the external Auditor.
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More ever, a strong Internal Control System contributes highly to the implementation
of a sound financial management system.
H03 Donor funded project organisation based self esteem supports good
Accounting and Internal control system towards achieving the targeted goals
and support the production of timely, accurate and useful financial reports.
The objective of this hypothesis is to assess the extent to which project organisation
based self esteem allows staff to carry out their responsibility comfortably with a
common mission of fulfilling the donor funded project targeted goals. The
implementation of a sound financial management system needs to be well supported
with motivated staff who can work as a team.
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CHAPTER 3
3.0 RESEARCH METHODOLOGY
3.1 Introduction
As established in the preceding chapters this study is concerned with assessment of

the effectiveness and efficiency of financial management system in donor funded
projects towards achieving targeted goals. Thus i sought to establish the existent to
which the financial management system in donor funded projects is effective and
efficient in achieving projects programme goals. This chapter therefore, present the
research methodology adopted in this study
In any research and by deriving from the preceding chapters the following things
should be covered according to. (Chow and Knight 2002), Research Design,
Population, Sampling procedure and Sample size and type of Data collected. Also, it
includes method of data collection and data analysis technique.
3.1.1Research Aim and Objectives
The main objective of this research is to study the efficiency and effectiveness of
financial management systems as applied to various projects on day to day activities.
It will also examine how individual behavioural and social considerations play part in
the design of project organisation structures and operations of effective donor-funded
project accounts with the focus on timeliness, accuracy and usefulness of financial
reports.
context, with reference to donor support at University of Dar es Salaam. It is very
essential to note that required experience, skills and knowledge on financial
management discipline, as well as supportive attitudes towards having a sound
financial management system in work organisation, and behavioural factors
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emanating from organisational based self esteem are the mostly key element that
enables availability of timely, accurate, reliable and useful financial information.
Despite the fact that the financial management system includes both administrative
and accounting systems, the limitation of time, funds and other resources, made the
focus of this study concentrate on accounting system only.
3.1.2. Major Objectives
The major objectives are as fallows;
1) To assess the extent to which the accounting and internal control systems at
UDSM to Ensure the conduct of an orderly and efficient payment and
procurement process, adheres to the budget discipline, segregation of duties,
proper record keeping, and safeguarding of assets and resources.
2) To establish whether the finances of the projects are handled by an adequate

number of knowledgeable, Skilled and experienced financial management staff and
the extent to which the organisational based self esteem of donor funded project staff
affects timeliness, accuracy and usefulness of accounts.
3) To establish the extent to which organisational based self esteem of individual

donor funded projects staff affects timeless, accuracy and usefulness of accounts.
3.2 Research Design
This research is cross-sectional and descriptive aiming at assessing how effective and
efficient are the donor-funded projects financial management system in achieving
projects programme goals at UDSM. The survey tools employed included
observation, where by the researcher will directly observe the facts-this is an excellent
vehicles in measuring individual attitudes. (Babbie 1989). In some cases I will
administered the questionnaires, and carried out some interview in order to minimise
the number of unreturn questionnaire.
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3.2.1 Population
The population studied includes financial management system of all donor funded
projects responsible at University of Dar es Salaam, i.e. at Main Campus, UCLAS and
MUCHS. The person contacted includes seniors which are projects Accountants,
Projects Coordinators, Assistant coordinators, and juniors which involve Staff at the
low rank.
3.2.2 Sampling Procedure and Sample Size
Due to time constraints and other resources, the study will not exhaustively cover
each project; rather representative projects were studied on behalf of the entire
population. More ever i will assume that procedures and work environment for all
donor funded project financial management system are homogeneous and only
individual differ. Thus in all donor funded projects at UDSM environment allows the
implementation of an effective financial management system that is necessary for
achieving the targeted donor funded project goals.
Selecting a sample is a fundamental element of a positivistic study. A representative

or a good sample is one who results can be taken as a true picture for the whole
population; i other words, results can be generalised. A good sample must be (a)
chosen at random, (b) large enough to satisfy the needs of the investigation being
undertaken, and (c) Unbiased (Hussey, 1997). Sampling analysis the most important
question is what should be the sample size of the sample or how large or small should
be. (Koritsas, 1990).
In view of the fact that i aimed at assessing how efficient and effective are donor
funded projects financial management system in achieving projects programme goals
at UDSM, It is therefore important to use a sample that is adequate and representative
as possible. Sekeram (1984) argued that a sample size larger than 30 and less than 500
is appropriate for any research. On judging on the sample size, Koritsas (1990)
concluded that in any sampling analysis the most important question is what should
be the size of the sample or how large or small it should be. Due to resources
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constraints, which include money, time and other facilities, a judgement sample of 60
projects were selected randomly. This number is is considered to be large enough for
this study.
3.3 Types of Data and Data Collection Methods and Procedure
In this study, primary and secondary data were collected. The primary data gave the
views and suggestions of respondents in relation to the current financial management
system in use for meeting the project goals. On the other hand, the secondary data
revealed among others, the trends and the status of the reports produced by the
existing financial management system.
3.3.1 Data Collection Methods and Procedure
The following methods and procedures were applied in collection of intended

information;
(a) A semi-structured questionnaire is used to gather information prepared

constituting primary data. The questionnaires will be distributed to project’s
accountants, Coordinators and Assistant Coordinators and any staff who participate
direct or indirect in the project. For the purpose of having a chance of elaborating
some of the questions, some of the questionnaires are personally administered. I had
sent those questionnaires through mail and made calls for those staff concerned who
seems to me need personally administered.
(b) In order to complement the data collected through questionnaire in (a) above, a
discussion and structured interviews with some project accountants and Coordinators
were contacted through phone calls though its not face to face interview during the
course of data collection. This help to increase the level of validity and reliability of
data that are relevant to the objectives and question of this study.
(c) Collection of Secondary Data: - Secondary data were collected from Audited
project’s accounts, minutes of project reviewing meetings, accounts records and
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project document. Other sources were published and unpublished research/ reports
collected from University Officials, Office of the Controller and Audit General,
Treasury and from Libraries.
In this regard, data are collected for the period back to the year 1998 whereby in this
10 years time i thought is sufficient time for providing the real picture of financial
management system used by projects in achieving their goals. The collected data are
analysed to establish the most applicable element that influence sound financial
management system in the donor funded projects as being implemented at the UDSM
3.4 Data Analysis and Testing Model
In order to test the level of the explanatory variables generating the individual staff
perception on the effectiveness and efficiency of donor funded project financial
management system, descriptive and statistical analysis will be used on the data
collected from primary and secondary sources.
The collected data for independent and dependent variables are both ordinal and
derivate. The distribution of data can be put into pairs of measurement. The objective
of the research was to investigate the association between the factors determining the
effective financial management system and the observed practice that implementing
the effective financial management system of donor funded project and its end result
that are measured in terms of timely, accurate and useful financial reports are
observed at UDSM.
3.4.1 Analysis Benchmark Indicators
In order to assess the achievement of the objective of this study, the matrix table as
shown in Table 1 was employed as a benchmark (standards) for comparing some of
the results with the established standards.
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Table 1 Benchmark Indicators
Variable Indicator Findings

Knowledge At least Advanced
Diploma in accountancy
Experience At least two years
Timely To produce Accounts
within three months after
year end
Accuracy Receiving Clean Audit
Report
Usefulness -Decreasing Audit queries
by more than 50% of the
previous audit
-Prompt disbursement of
funds (within one month
after due date as per
agreement stated in the
project document)
3.4.2 Analysis Testing Model
Descriptive statistical frequency of the SPSS is going to be run to generate tables for
various aspects of independent and dependent variables of this study, where by
percentage of respondents will be displayed. Spearman’s Correlation coefficient (rs)
is non parametric technique used to obtain the measure of linear association between
two variables where it is possible or it is not possible to measure accurately, but where
ranking is possible (Hussey, 1997). The collected data are bivariate and of ordinal
status and hence the spearman’s rank correlation will be an appropriate tool for
measuring the relationship between the independent and dependent variables as well
as table of percentage comparisons.
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The data collected were given weights from 1 – 4. The purpose of ranking is to give
the variables in each data set a number according to its relative level of opinion for the
independent and dependent variables and relative levels of timeliness, accuracy, and
usefulness. For the sake of having sound interpretation, the ranking is done in an
ascending orders from strongly disagree to strongly agree, based on the prevailing
situation of the project financial management system.
Spearman’s correlation coefficient measures the strength of association between

ordinal variables (Hussey 1997). A Chi squared (Х²) test will be used in some cases to
assess the significance of the findings by testing for goodness of fit. All three
hypotheses were set as null hypothesis (H0). The (Х²) will help us to find out if there
are any significant differences between the actual frequencies and hypothesised
frequencies (Hussey, 1997).
CHAPTER 4
4.0 RESEARCH FINDINGS AND ANALYSIS
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4.1 GENERAL FINDINGS
4.1.1 Field Work Execution
The field work assignment which includes distribution of questionnaires, interviews

and collection of secondary data in some ways is done for four to five weeks.
Three campuses of University of Dar es salaam which are the Main Campus, UCLAS
and MUCHS, were visited during the exercise of Data collection. All of these
campuses are in Dar es Salaam with the exception of the Institute Marine Sciences
under Main campus which is allocated in Zanzibar.
Distributions of questionnaires were made to various projects coordinators, projects

assistant coordinators and projects Accountants who were selected randomly from the
three campuses. These questionnaires aimed at collecting information to aspect that
has an impact on the efficiency and effectiveness of the financial management system
in donor funded projects. Interviews with some projects coordinators and accountants
were conducted and the information collected gave an in depth understanding of the
operations of the projects.
Out of the total 30 questionnaires distributed 25 (90%) were filled and collected. This
number is considered to be satisfactory for this study.
4.1.2 Historical background of University of Dar es salaam of Dar es Salaam
4.1.2.1 Historical background of the UDSM Main Campus
The UDSM main campus was first established in 1961 as Constituent College of the
University of London. In 1963 it became a constituent College of East Africa, where
by in Aug 1970, it became a National University of Dar es Salaam.
Like all Universities all over the World, the establishment of UDSM was meant to be
an institution people are trained with the highest level of clear and independent
thinking, for analysis, and for problem solving at highest level.
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Due to a number of factors, by the late 1970’s, the economic problems of Tanzania
had become complex, leading to a sharp decline in resources and investment flow
from the Government to the Universities. This affects the efficiency and effectiveness
of the Institution. (UDSM Five-Year Strategic Plan 2003/2004-2007/2008 Vol 1:
Main Document, January 2004).
Despite the fact that the University was facing a hard time, it managed to continue
growing in various areas of specialization regardless of many challenging problems
facing it and the country at large. Through serious commitments, vision and mission
in 1984 then the faculty of Agriculture, Forestry and Veterinary Science was
converted and upgraded to the Sokoine University of Agriculture. Furthermore,
amongst major development made by UDSM is the birth of two constituent
University Colleges, namely the MUCHS (1991) and UCLAS (1996).
4.1.2.2 Historical Background of the MUCHS
The Muhimbili College of Health Sciences (MUCHS) of the UDSM was founded in
July 1991 when the Faculty of Medicine was upgraded to constituent college. The
faculty begin as school of Medicine in 1963, within the premises of the Princess
Margaret Hospital. The school was started to augment the meagre supply of doctors
then being produced for the country from Makerere University College as part of
University of East Africa. With the creation of the UDSM in 1970, the faculty became
the faculty of Medicine of the UDSM.
While MUCHS continued to be a constituent college of the UDSM it remained

incorporated in Muhimbili Medical Centre (MMC) until April 2000 when the
Parliament of the United Republic of Tanzania enacted a law to establish MUCHS
from MMC and establish the Muhimbili National Hospital (MNH).
4.1.2.3 Historical Background of the UCLAS
The University College of Lands and Architectural Studies (UCLAS) were

established by upgrading the former Ardhi Institute into a constituent college of the
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UDSM in 1st July, 1996. An act of the Parliament had established the Ardhi Institute
as Institution of higher learning under the Ministry of Land, Housing and Urban
Development on 24th October 1974. Formerly, it was a centre for training land
surveying technicians.
4.2 INSTITUTIONAL ANALYSIS
4.2.1 Donor Support to the University of Dar es salaam
The resources for operations and development of the UDSM flows three major
sources which are Tanzania Government, Donors and Internal generating Resources.
Table 2 gives the trend picture for some of the donors and their support from
2002/2003 to 2006/2007 financial years. The donor resources mainly used for
financing university activities related to capacity building and institutional
strengthening which are so crucial for its expansion and development
Table 2. Donor support to the UDSM from 2002/03 to 2006/2007 (In US$)
Source 2002/03 2003/04 2004/05 2005/06 2006/07
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Tanzania 11,493,644 11,740747 15,134,016 14,601,845 15,171,591

Government
NORAD 2,682,851 1,185,641 906,500 1,241,529 1,250,000
SIDA/SAREC 3,785,714 3,989,571 4,685,714 4,4450,400 4,166,000
MHO 1,241,472 2,148,438 2,148,438 2,045,454 3,286,964
VLIR 643,789 601,643.3 613,513.5 613,513.0 339,772
NUFU 475,844 500,137.9 931,804.4 332,902 755,344
CARNERGIE - - 1,964,410 1,288,848 1,237,742
Others 1,011,942 1,010,800 360,228 - -
Total 21,335,256 21,176,978 26,744,623,9 2,4574,491 26,207,413
Source: UDSM Five- Year Rolling Strategic Plan 2003/04 – 2007/08 Vol 1: Main
Document, January 2004
From the data given above, it is clear that the donor support at UDSM is of great
impact on the formulation and implementation of its Corporate Strategic Plan. In
other words, it will be so difficult for the University to achieve its goals without this
valuable support. It is Important for the University Management to ensure proper
utilization of this scarce resource from donors.
Figure 2 is derived from table 2 shows in summary form the five year trends of the
donor support as well of that of the government grants. This trend in percentage is
46.1%, 44.6%, 43.4%, 40.6% and 42.1% from 2002/03 to 2006/07 respectively for
donor support and the remaining percentage is from the government. Again, these
data justify how donors and Tanzania government are concerned in supporting the
operations and development activities at the University.
Figure 2. Trends of Donor and Government Support to the UDSM (In USD)
Source 2002/03 2003/04 2004/05 2005/06 2006/07

Tanzania 11,493,644 11,740747 15,134,016 14,601,845 15,171,591
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Government
NORAD 2,682,851 1,185,641 906,500 1,241,529 1,250,000
SIDA/SAREC 3,785,714 3,989,571 4,685,714 4,4450,400 4,166,000
MHO 1,241,472 2,148,438 2,148,438 2,045,454 3,286,964
VLIR 643,789 601,643.3 613,513.5 613,513.0 339,772
NUFU 475,844 500,137.9 931,804.4 332,902 755,344
CARNERGIE - - 1,964,410 1,288,848 1,237,742
Others 1,011,942 1,010,800 360,228 - -
Total 21,335,256 21,176,978 26,744,623, 2,4574,491 26,207,413
9
Source: UDSM Five-Year Rolling Strategic Plan 2002/03- 2006/07 Vol 1: Main
Document, January 2004
As hinted earlier, donors support is mainly for capacity building and institutional
strengthening activities. Therefore, funds from the government are mainly for
personnel emoluments of the university employees and other operations. The positive
trend of donor support is an indication that the university has managed to implement
its corporate strategic plan to the satisfaction of the donors.
4.2.2 Transparency and Accountability in the use of Donor Funds
In the implementation of the agreed programmes and projects activities, the UDSM
has the culture of having various steering committees. These commitments have the
task of monitoring the implementation status of those programmes and projects so as
to ensure attainment of targeted goals.
In additional to the existing steering committees, there are in place midyear and
annual review meeting, which are attended by the respective donors and some
government officials. In these meeting, technical and financial reports of the projects
are discussed in details and decisions are made on next plans of action, together with
budgets.
Apart from having mid and annual review meeting for each individual programme
together with its set of projects, there are annual consultative meetings well known as
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the Institutional Transformation Programme (ITP) Annual Consultative Meeting. This

is the meeting that draws its participants from all support donors to the University,
Officials from Diplomatic missions, Government officials, NGO’s, member of staff
and public in general. It is in this meeting where the University submits the
implementation status of the agreed activities and plan for the future. These
submissions are made open for discussion. The aim of this meeting includes the needs
to have views, comments and challenges from stakeholders and other members who
participate on how to address more effectively and efficiently implementation of
Institutional Corporate Strategic Plans.
The donors support on Institutional Strategic Plan has a great impact on its
implementation. Therefore it is from meeting where donors and stakeholders can see
the level of transparency and accountability in general within the institution.
4.2.3 Projects Personnel Recruitment
Most of the programmes and projects recruited their staff on part time basis from the
University salaried staff. Thus, staff member carry out programmes and projects
activities as extra work to their normal duties. Only few programmes and projects
have employed some of their staff on contract. Examples are Gender Dimension
Programme and DANIDA funded project (REDET).
The staff engaged by programmes and projects are those with high qualifications.
Such qualifications include Professors, Doctors-‘PhDs’, Masters holders, First
degrees, advanced diploma’s and with ordinary diploma certificates. For example 20
Accountants holds advanced diploma/First degree, 7 holds postgraduate
diploma/Masters and five holds ordinary diploma (Table 3). This skilled manpower
attracts competitive pay packages in the open Market and it might be difficult for
programmes and projects to manage this without jeopardising the targeted objectives.
This may be the reason why many of the staff are salaried employees of the
university, Also, this arrangement can be explained by the fact that the University has
staff capacity and wants to strengthen it.
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4.2.4 Computer Application in the Management of projects Funds
Most of the projects use the Microsoft excel spread sheet for keeping their cash book
records, Fixed Assets register and Imp rest ledgers. This programme facilitates the
work of the preparations of various reports from time to time. On the other hand, few
projects use professional accounting packages. For example REDET use NAVISION,
while CARNEGIE projects use SCALA.
4.3 SPECIFIC FINDINGS
This research work take into consideration some significant areas that has impact in
organisation of donor funds.
4.3.1 Specific Skills and Knowledge of Projects Staff
In this aspect of skills, knowledge and experience of staff, the study judged education,
professional stages and professional registration status of the accountants involved in
the project activities as shown in Table 3, 4, and 5. Table 6 highlights the experience
status of the projects staff.
As mentioned earlier in chapter one, the required skills and experience illustrates
some of the essential requirements for attaining sound performance of the project
Table 4, on the other hand, gives their professional status as recognized by the
National Board of Accountants and Auditors (NBAA). From this table, the
professional status of the projects accounts personnel is in the categories ranging from
ATEC-2 TO CPA level. The study found out that those with ATEC-2 are 6 (18.75%),
with Professional level 3 are 14 (43.75%) while 4 are CPA holders (12.5%).
Furthermore, Table 5 shows that a total of 5 Accountants have been registered with
the NBAA as Approved Accountants while the 4 others who are CPA holders are due
for registration as Certified Public Accountants. The existing good number of
qualified Accountants may be explained by the adherence of the law governing this
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profession as administered by the NBAA. The NBAA requires accounts personnel to

possess qualification that are required by the board.
Irrespective of knowledge of the staff handling the projects, Table 6 shows a overview
of 52 respondent staff in various department at levels of Coordinators, Assistant
coordinators or accountants. Their skills vary from those with less than 2 years to the
group with more than 4 years. In this table we see that only 6 (11.5%) have less than
two years, 20 (38.5%) have 2-4 years, while 26 projects (50%) have more than 4
years. To take over the assignments.
Table 3 Education Profile of Projects Accountants
Frequency Percent Valid Cumulative

Percent Percent
Valid Ordinary 5 9.6 9.6 9.6

Diploma
Advanced 20 38.5 38.5 48.1

Diploma/Degree
Postgraduate 7 13.5 13.5 61.5

Diploma/Degree
NA 20 38.5 38.5 100.0
Total 52 100 100
Source: Field data results, 2008
Table 4. Professional Status of the Projects Accountants
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Frequency Percent Cumulative

Frequency
Valid NBAA ATEC 2 6 11.5 11.5
Professional 2 3.8 15.4

Level 1
Level 2
Level 3
CPA Holder 4 7.7 61.5
NA 20 38.5 100
52 100
Table 5 Registration Status with NBAA

Percent
Valid Approved 5 9.6 9.6
Not Registered 27 51.9 61.5
NA 20 38.5 100
Total 52 100
Table 6. Staff Experience in Working with the Projects
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Frequency
Valid Less than 2 yrs 6 11.5 11.5
2-4 Years 20 38.5 50
More than 4 Years 26 50 100
Total 52 100
4.3.2 Computer Knowledge of Projects Accountants
In order to establish the status of the computer literacy among the projects
Accountants, the summary contained in Table 7a reveals that out of the Total of 32
respondents, 5 are able to work with an assistant, 26 can work comfortably while 1 is
not familiar. In additional to this information, Table 7b position on the ability of using
accounting packages. The displayed information indicates that 7 out of 32 have little
knowledge, 19 are familiar and work comfortable, and 6 are not familiar. This
encouraging situation may explain how the projects accountants were dynamic
towards moving with changes in science and technology. Also, this may suggests kind
of recruitment requirements for projects Accountants.
Table 7a. Computer Knowledge of Projects Accountants
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Frequency
Valid Able with 5 9.6 9.6
assistance
Work 26 50 59.6
comfortably
Not Familiar 1 1.9 61.5
NA 20 38.5 100
Total 52 100
Table 7b Knowledge of Projects Accountants on working with an Accounting

Package

Percent
Valid Little 7 13.5 13.7
Knowledge
Familiar and 19 36.5 51.0

Conversant
Not Familiar 6 9.6 60.8
NA 20 38.5 100
Total 52 98.1
4.3.3 Training of Projects Staff
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It was the aim of this study information concerning the training status of the projects
personnel in the areas of financial management, accounting and computer. These
areas were thought to be important for all project staff, since each should be equipped
with the basic element of financial management. In addition there are the needs for
exposure by attending workshops and seminars so as to be aware of the changes and
developments that are important for smooth carrying out of the projects activities. As
shown in table 8a and 8b, this study revealed that during the period of three years,
only 36.5% obtained the chance to attend training o the areas of financial management
and accounting. During the similar period, training in computer discipline 40.4%
accessed training. The explanation to this outcome may be lack of the spare time of
the staff for attending training, lack of budget line for training, lack of observed
importance, etc. However, demand of training had proved to be required by projects
staff.
Additionally, it had been established that, for those who managed to attend training
related to Financial Management and Accounting such training were in a form of
short courses, workshop and seminars. The themes covered were not precisely
mentioned. While in computer, there were a wide ranges of issues covered, including
training in Accounting Packages like PASTEL, NAVISION, SCALA, PLATNAM,
HOGIA an TALLY, Computers for Managers and Executives, MS Word, Excel,
Power Point, Publisher, Access Database, Micro Model, MYOB and SPSS.
Table 8a. Training Financial Management and Accounting
Frequency Percent Valid % Cumulative

Frequency
Valid Yes 19 36.5 36.5 36.5
No 33 63.5 63.5 100
Total 52 100 100
Table 8b Training computer discipline
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Frequency Percent Valid % Cumulative

Percent
Valid Yes 21 40.4 40.4 40.4
No 31 59.6 59.6 100
52 100 100
4.3.4 Participation in the Preparation, Implementation and Control of Projects

Budget.
Coordinators and Accountants have a great role in the implementation of projects

activities according to the approved budgets. Glenn, et al (1992) emphasize that
objectives, plans, and goals, if not written in terms of foreseeable future have financial
impacts on the enterprises, frequently turn out to be vague and excommunicated ‘’half
thoughts’’ and rumours of one or more individuals. It is important to note that for
smooth operation of a project, effective communication and mutual understanding,
formalisation of certain objectives, goals, policies and procedures are essential.
Table 9 shows that a total of 20 (38.5%) of the respondents fully participated in the
preparation, implementation and control of projects budgets. Out of this, 5 are
Accountants while the rest are coordinators and Assistant Coordinators. A total of 14
(26.9%) of whom 9 are Accountants and 5 are assistant coordinators partially
participated and 18 (34.6%) all being Accountants only receive instructions. This may
be explained by the possibility that the projects coordinators are the ones who writ the
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proposals of the projects. It therefore reflects the sense of ownership on the sides of
the projects Coordinators, which is indication of limited participation.
Table 9: Participations in the preparation, Implementation and Control of

Projects Budget. Cross Tabulation Count
Fully Partially Only receive Total

Participate Participate Instructions
POSITION Coordinators 13 13
Assistant 2 5 7
coordinators
Accountant 5 9 18 32
20 14 18 52
4.4 DESCRIPTIVE STATISTICAL RESULTS AND TESTING OF

HYPOTHESIS.
4.4.1 Evaluation of Projects Accounting and Internal Control Systems by

Projects Accountants and Coordinators.
Proper Accounting and Internal Control System constitute an important foundation

that safeguards clear Implementation of project activities. Management of project
resources need smooth operations that observe high discipline to the approved budget,
guidelines, rules, regulations and procedures.
Respondents were asked to evaluate their Accounting and Internal Control systems in
place by ranking them from strongly disagree to strongly agree. A range of 1-4
attitude rating scale for a single item was used to measure 7 items that are associated
with features of proper accounting and Internal control systems. Strongly disagree
was scaled 1, Disagree 2, Agree 3 and Strongly agree 4. Evaluation summary for each
item are shown in table 10-16.
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Projects Rules, Regulations, and Procedures for Guiding Smooth

Implementation of the Projects Activities.
The evaluation responds on this aspect is as shown in Table 10. The result reveals that
19.2% of respondents are strongly satisfied with current the system, 63.5% are
satisfied with the system. On the other hand, 13.5% are not satisfied and 3.8% are
strongly dissatisfied with the current system.
Table 10. Projects Rules, Regulations and Procedures

Percent Percent
Valid Strongly 2 3.8 3.8 3.8
Disagree
Disagree 7 13.5 13.5 17.3
Agree 33 63.5 63.5 80.8
Strongly 10 19.2 19.2 100.0
agree
Total 52 100.0 100.0
With these results, majority (82.7) of respondents rated the current rules, regulation
and procedures which guide the smooth implementation of the projects activities as
satisfactory though there were few (17.3%) who expressed dissatisfaction.
Good Coordination and Participatory Approach in the Preparation of Projects

Budget
As shown in Table 11, some 28.8% of the respondents are strongly satisfied with the
current procedures of the preparations of the projects budgets. 38.5% are satisfied
with procedures, while 19.2% are not satisfied and 13.5 are strongly dissatisfied.
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Table 11. Coordination and Participation in the Preparation of the Projects

Budgets

percent Percent
disagree
Disagree 10 19.2 19.2 32.7
Agree 20 38.5 38.5 71.2
Strongly 15 28.8 28.8 100.0
agree
Total 52 100.0 100.0
Given these results, the majority of the respondents (67.3%) are satisfied with the
current Coordination and participatory approach in the preparation of the projects
budgets. 32.7% are not happy with the current practice of coordination and
participation in the preparation of the projects budgets. This dissatisfaction can b

explained by the status of involvement in the preparation, implementation and control
of projects budgets where 18 out of 32 Projects Accountants indicated that they only
receive instructions (Table 9).
Effective Accounting System for proper Implementation and Control of the

Projects Budgets.
The evaluation on this aspect as given in Table 12, shows that the Majority (82.7) of
the respondents are comfortable with the existing system. However, a total of 15.4%
are not satisfied and 1.9% is strongly dissatisfied with the current system. This
dissatisfaction may be associated with the level of participation in the execution of
projects budgets.
Table 12. System for Implementation and Control of the projects Budgets
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percent percent
disagree
Disagree 8 15.4 15.4 17.3
Agree 30 57.7 57.7 75
Strongly 13 25.0 25.0 100
agree
Total 52 100 100
Proper Segmentation of Duties and Checking of all Payments within Projects.
Respondents to this area show that 59.6% support the current practice and 25%
strongly support it as given in the table 13. This evaluation gives a total of 84.6% of
the respondents that are pleased with the way projects exercise segregation of duties.
Table 13. Segregation of Duties within the Projects

percent Frequency
Disagree
Disagree 6 11.5 11.5 15.4
Agree 31 59.6 59.6 75
Strongly 13 25 25 100.0
agree
Total 52 100.0 100.0
Although the majority of the respondents were satisfied with the current practice, few
were not comfortable. These are 15.4% of the total respondents. This may be
explained by the time span for waiting the completion of the transactions.
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The Projects Operations Environment and the Implementation of Procurement

act of 2001.
Although sources of funds for the projects are from the donor, al the projects are
required to adhere to financial regulations of the institution, which clearly
accommodate the requirements of the Procurement Act of 2001. The respondents on
the projects operation environment and Audit reports have shown a high degree of
adherence to the requirement of the Law against institutions as the two proves to have
positive relationship (Table 15). Table 14 discloses that 84.6% of the respondents are
comfortable with the Implementation environment and only 15.4% express their
discomfort. Again, this situation of discomfort may be explained by time spend on
attending the transactions.
Table 14. Projects Operations Environment

Percent Percent
Disagree
Disagree 5 9.6 9.6 15.4
Agree 32 61.5 61.5 76.5
Strongly 12 23.1 23.1 100.0
Agree
Total 52 100.0 100.0
Table 15. Chi-Square Results for Projects Operations Environment Vs Audit

Reports for 2007
Chi-Square Test
Projects Operation Audit reports 2007
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Chi-Square 40.462 25.680

Df 3 3
Asymp.Sig .000 .000
Financial Reporting Format as Required by the Donors.
The issue of reporting formats for donor funds seems to be one of the challenging
aspects in the management of the donor funds. This is due to the fact that there is no
common reporting format for all donors. Each donor has distinct requirements need to
be adhered to. Table 16 the evaluation summary derived from 52 respondents.
Table 16. Donors financial reporting Format

Percent Percent
Valid Strong 2 3.8 3.8 3.8
disagree
Disagree 7 13.5 13.5 17.3
Agree 24 46.2 46.2 63.5
Strongly 19 36.5 36.5 100.0
agree
Total 52 100.0 100.0
The evaluation indicates that 82.7% (46.2% agree and 36.5% strongly agree) are
comfortable with a format. The rest of the respondents (17.3%) are not comfortable
with the format. This may be associated with the frequent changes of the reporting
format whereby there is no stable agreeable format.
Production of Quarterly Financial Report For Smooth Project Monitoring
Monitoring of project can be referred to as the activities involved in recording

progress in project Implementation. It is therefore required for those managing a
project to operate on the basis of a plan, with accurate and up-to date reliable
information on progress made in implementation. This practice of having up-to date
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reliable information to those who need to know the progress of the project. Also, work
plans can be adjusted to ensure that the implementation is efficient and likely to be
completed on time.
Responses on this important aspect are given in table 17, where by 64.2% (25%
strongly disagree and 44.2% disagree) supports the presence of quarterly financial
reports for projects and 30.8% are pleased with the way projects produce quarterly
financial reports.
Table 17. Projects Quarterly Financial Reports

Percent Percent
Disagree
Disagree 23 44.2 44.2 69.2
Agree 12 23.1 23.1 92.3
Strongly 4 7.7 7.7 100.0

agree
Total 52 100.0 100.0
This result may be explained by the way each donor requires the flow of information
from the projects. In this study, it has been revealed that some of the projects produce
their financial reports at the interval of six months. And this has been agreed with
their donors. The question that may remain is on how such a long interval of time can
ensure that the implementation of the projects plan is efficient an effective and likely
to be completed on time.
4.4.2 General View on Projects Organisational Based Self Esteem.
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The need for having motivated staff is strongly emphasized by Maslow (1970). With
Staff members who are not motivated to perform their work it is difficult to get team
work for the achievement of targeted goals. Thus the project organisation based self
esteem is supposed to allow the staff to carry out their responsibility comfortably with
a common mission of fulfilling the donor funded project targeted goals. The
implementation of a sound financial management system needs to be well supported
with motivated staff who can work as team.
The following features are some of the essential components for creating motivated
team work for the success of projects objectives.
Staff’s Views on Projects Financial Management Activities.
As to whether the projects financial management activities gives challenges to

Coordinators, Assistant Coordinators and Accountants, the respondents were required
to give their views on this aspect, the summary of which is as shown in Table 18.
Table 18. Projects Financial Management Activities.

Percent Percent

disagree
Disagree 15 28.8 28.8 42.3
Agree 23 44.2 44.2 86.5
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Strongly 7 13.5 13.5 100.0

agree
Total 52 100.0 100.0
This result indicates that 57.7% of the respondents consider the existing projects
financial management activities as challenging, while 43.2% consider it as simple and
repetitive. This can be explained by lack of training in financial management and
accounting as shown in table 8. Also, this may reflect the situation of doing things
partially due to lack of what there is really contained in the package of projects
financial management.
Projects Management Recognition of their Staff’s Importance and usefulness.
As given in table 19, responses in this component shows that 73.1% of the
respondents are happy with the level to which project management recognize their
importance and usefulness in the projects. A total of 26.9% are of opinion that the
project management do not positively consider their importance and usefulness. This
may be contributed by the other factors of motivation such as poor working tools,
poor remuneration, lack of training opportunities etc. It is dangerous for a staff
member to work with negative perception on the appreciation of his/her effort by
project management. Some staffs who are disappointed may sabotage the
performance of the project.
Table 19 Recognition of Project Management

Percent Percent
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disagree
Disagree 8 15.4 15.4 26.9
Agree 24 46.2 46.2 73.1
Strongly 14 26.9 26.9 100.0

agree
Total 52 100.0 100.0
Payments of Staff Working with Donor Funded Projects (Staff Perceptions)
The study reveals that monetary appreciation plays a great role in getting maximum
concentration of staff on discharging their responsibilities. Table 20 confirm that
majority (75%) of the respondents express dissatisfaction with current remuneration.
Out of this total, 44.2% are strongly dissatisfied and 30.8% are at the level of being
dissatisfied.
Table 20 Remuneration of Projects Staff

Percent Percent
disagree
Disagree 16 30.8 30.8 75
Agree 12 23.1 23.1 98.1
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Strongly 1 1.9 1.9 100.

agree
Total 52 100.0 100.0
A total of 25% of the respondents were comfortable with the projects pay package. In
this total, 23.1% are of the opinion that the current compensation payment is
satisfactory, while one (1.9%) was strongly satisfied with the payment received.
This situation may be associated with the fact that most of the projects staff are
salaried staff of the institution and therefore their assignments to the projects may be
considered as the part of their workload. Other explanations may be due to lack of
budget line for the staff compensation, due to lack of recognition of the work
performed, or due to the existing competition in the market where some comparisons
are carried out, etc.Given the rapid increase of the cost of living and expansion speed
of open market, the unsatisfied staff may be forced to look for alternative green
pastures that will fairly compensate their input to the project activities.
The projects Management team Cooperation with Projects Staff
The summary of respondents on this component is as shown in table 21. A total of

84.6% of the respondents expresses their appreciation on the existing cooperation
amongst projects staff. In this number, 32.7% strongly agreed with the cooperation
status and 51.9% are happy with the level of cooperation in running the project.
Table 21. Projects Management Cooperation with Staff

Percent Percent
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disagree
Disagree 5 9.6 9.6 15.4
Agree 27 51.9 51.9 67.3
Strongly 17 32.7 32.7 100.0

agree
Total 52 100.0 100.0
On the other hand, a total of 15.4% of the respondents are not happy with the status of
cooperation in the project. Again, this situation may be related with other factors of
motivation as mentioned earlier.
Status of the projects Financial Reports
Opinion results shown in table 22 indicate that 86.5% of the respondents are
comfortable with the projects financial performance report. A few respondents
(13.5%) are of the opinion that the project financial reports are not in the ceremonial
status. This may be supported by the need for training in order to be able to address
the charges with the dynamic environment of science and technology, in which more
improvement required.
Table 22. Status of the Projects Financial Reports
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Percent Percent
Valid Disagree 7 13.5 13.5 13.5
Agree 28 53.8 53.8 67.3
Strongly 17 32.7 32.7 100.0

agree
Total 52 100.0 100.0
Feelings of Staff Working with the Projects
Findings on this component are shown in table 23, we see how workers in project
conclude their attachment motivation to the project activities. The majority of the
respondents (82.7%) express their feelings for being proud working with the project.
This is a positive indicator on the future of the project. However, 17.3% of the
respondents were not happy with working in the projects. This may be a reflection of
a combination of various component of motivation, whereby the projects do not
manage to meet the individuals’ staff level of satisfaction.
Table 23 Comfortability of Staff Working with the Projects
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Percent Percent

disagree
Disagree 8 15.4 15.4 17.3
Agree 23 44.2 44.2 61.5
Strongly 20 38.5 38.5 100.0

agree
Total 52 100.0 100.0
4.4.3 Audit Reports of the Projects Accounts
Views of the independent external Auditors, during the period of five years as from
2002 to 2007 show improvements as years goes on. As shown in Table 24, the
majority (an average of 72.6% of the project obtained clean reports and only few (an
average of 27.4%) obtain qualified audit reports. It is important to note that as number
of projects under auditing increases, the number of qualified audit reports tends to
decrease as revealed in figure 3. This may be explained by the improvements of the
accounting and internal control system of the projects financial management system.
In addition, staff working with the projects may be of the calibres that exercise high
degrees of responsibilities.
Table 24. Outcome of the Audit Reports on the Projects Accounts
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Year Clean Qualified Disclaimer Adverse
2002 13 6
2003 17 7
2004 19 8
2005 22 8
2006 25 9
2007 26 10
% 72.6% 27.4%
Figure 3 Audit Trend of the Audited Projects
4.4.4 Projects who’s Accounts are not subjected to Local Audit
This study reveals that some of the projects do not prepare projects accounts for
Auditing with local external auditors as shown in Table 25. Instead, there are four
ways that are used to fulfil attached agreements with the donors. Those ways are
forwarding al accountable documents and technical progress reports to donors (1
project); furnishing financial and technical progress reports and all accountable
documents to donors (9 projects); submitting financial and technical reports to donors
(5 projects) and submitting only progress reports to donors (2 projects)
Table 25. Projects who’s Accounts are not subjected to Local Audit
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Percent Percent
Valid Accountable 1 1.9 1.9 1.9
reports and
Progress
Reports to
donors
Financial and 9 17.3 17.3 19.2
Progress
reports and
accountable
doc to donors
Financial and 5 9.6 9.6 28.8
progress
reports to
donors
Only 2 3.8 3.8 32.7
Progress
reports to
Donors
N/A 35 67.3 67.3 100
Total 52 100 100
The explanation given to this practice is that some of the projects are considered as
sub projects of the main projects with the donors, whereby the main projects are the
ones that are responsible for the preparation of final accounts for auditing. With this
kind of arrangements, it was further explained that, before release of funds evaluation
of institution capacity on handling funds is carried out, and upon satisfaction, the
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agreement become operational. It is believed that such an arrangement is so wide and

it goes even to an individual’s credibility as long as he/she obtains the support of
his/her institution on the security of the funds that are expected from the donor. The
success and growth of all these arrangements depend on whether the funds are
managed to the satisfaction of the donors.
4.5 HYPOTHESIS TESTING
Descriptive Statistical results of findings obtained in the field in relation to the

hypothesized statements and discussion of each tested hypothesis is presented in this
section.
Hypothesis testing
Accounting System:
H01: Donor funded Projects have a good accounting system, which enable the
projects to produce timely, accurate, and useful financial information, which are
necessary for achieving the project targeted goals.
This hypothesis was tested by analysing the skills, knowledge and experience of the
project staff members, status of record keeping, coordination and participation in the
preparation of the project budget and the use of clear rules, regulation and procedures
which guide the smooth implementation of the project activities according to the
project budgets. Being conversant with the financial reporting format as required by
the donors and status on the production of quarterly financial reports are also
necessary for smooth monitoring of project activities. Information used to test this
hypothesis was collected from the projects coordinators, assistant coordinators,
Accountants and projects records.
The analysis of data as obtained from the participants in the projects activities were
carried out by using SPSS software and Descriptive Statistics Frequency were run to
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establish whether there is clear evidence to support the current status of the projects
accounting system.
The results from the analysis shows that qualified personnel whose qualification range
from ordinary diploma to full professor manage the projects. Projects Accountants are
professionally adequately equipped as the majorities (75%) are at professional level 2
and above. On the experience side, 88.5% of the projects staff has been at work for
more than two years. The coordination and participation in the projects budget was
ranked at 65.4%.
Regarding projects operations, the use of clear rules, regulations, and procedures
which guide the smooth implementation of the projects activities, implementation and
control of the project budget were ranked on the average of 82%, while being
conversant with the financial reporting format as required by donors was ranked at
82.7% level of satisfaction.
On the status on the production of quarterly financial reports for smooth project
monitoring, 69.4% revealed that the project do not produce quarterly financial reports.
The explanation given to this effect reveals that some projects produce their reports at
interval of six months as based to donors’ instruction.
Most of the projects keep their records in hard and soft copies in Microsoft excel,
especially cash books, imprest registers and fixed assets registers. In general, the
records and documents are safely kept for easy preparation of various reports and
audit works.
Based on the results obtained from the above summary, there is enough statistical
evidence to conclude that the donor funded projects at the UDSM have a good
accounting system which enables the projects to produce timely, accurate, and useful
financial information, which are necessary for achieving the projects targeted goals.
With these results, the null hypothesis is accepted and the alternative is rejected.
Internal Control System:
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H02: The donor- funded projects have a good Internal Control System and this
facilitates the Management of the projects to produce timely, accurate and useful
financial reports of the Donor funded projects.
Analyzing critically the operations of the projects activities tested this hypothesis by
looking at segregation of duties, staff skills, knowledge and experience,
financial/accounting manual, proper implementation of agreed rules, regulations and
procedures and status of Audit reports.
A similar approach was carried out as we did for testing the accounting system. In this
case, the result from the analysis shows that the projects segregation of duties is
ranked at 84.6% level of satisfaction. Staff skills, knowledge and experience is as
evidenced during the testing of the accounting system, rated at the level of 75% for
skills and knowledge and 88.5% experience of the above two years.
As the use of financial/accounting manuals adherence to the rules, regulations and

procedures, the result was 82.7% are comfortable with the application of financial
regulations as required with the institution. Also, the projects operations environment
allows the procurement of equipment and supplies to be implemented in accordance
with the approved budget line and Procurement Act of 2001. This was evidenced by
the testing, whereby this aspect scored a total of 84.6% satisfactory level of
implementation.
Going through the status of auditing reports of the projects accounts, the results
revealed that majority of the projects obtained clean audit reports with few only
obtaining qualified reports. Also, the trend shows that the number of clean audit
reports increases as years go on and new projects come in with less audit queries. This
is practical reflection/outcome of how internal control system of the project is
efficient and effective.
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Again table 15 the asymptotic significance obtained by the chi-square was zero
which is less than critical value of 0.05. This result evidenced that there is
positive relationship between projects operation environment and audit reports.
Based on the above results the null hypothesis was accepted and the alternative was
rejected. There is sufficient statistical evidence to conclude that the donor funded at
UDSM have a good Internal Control System and this facilitates the management of
the projects to produce timely, accurate and useful financial reports of the donor
funded projects.
H03: The Donor funded projects organization self based esteem supports good
Accounting and Internal Control System on achieving the targeted goals of the
donor funded projects and supports the production of timely, accurate and
useful financial reports of the donor funded projects.
The data obtained from the participants in the projects activities were analysed and
Descriptive Statistic Frequencies were run to establish the level of satisfaction of the
staff working with the projects. The approach adopted was to analyse each component
thought to be of great influence separately in order to get the status of each
component for easy decision making in case of need.
The results obtained from the analysis as given in table 18-23, proved that the donor
funded projects staffs are motivated to carry out projects activities. Those identified
components ranked at 57.7% (in one component) and 73.1%-86.6% in four
components. The exception was observed in one component out of six components
where staffs members are not satisfied to the level of 75%.
Given these results, the null hypothesis was accepted and the alternative was rejected.
There is enough statistical evidence to conclude that the perception of project staff on
the donor funded projects organisation based self esteem supports good Accounting
and Internal Control System for achieving the targeted goals of the projects, which
facilitates the production of timely, accurate and useful financial reports on the donor
funded projects.
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4.6 INTERPRETATION OF THE RESULTS
This section discusses the results obtained from Descriptive Statistical Frequency
analysis and their importance in this study.
Transparency and Accountability on the use of Donor Funds
The observed culture of transparency and accountability at UDSM on the use of donor
funds is very important practice for building donors confidence. It is possible to see
the value for money in terms of economy, efficiency and effectiveness of the activities
carried out during the period under review. Also, it helps improvements in the
implementation of donor funded programmes and projects.
Skills, Knowledge and Experience of Donor Funded Project Staffs
The analysis of descriptive statistical results on the capacity of staff members working
with the donor funded projects evidenced that these staff have satisfactory
qualifications. The importance of having qualified personnel for carrying out project
activities it is obvious since it forms the foundation of Sound Financial Management
System. Human input in project activities is the most expensive resources in the
management of project funds, since it is the one controlling other resources.
Qualified and Experienced staffs members are capable of discharging their daily
responsibilities without waiting to be pushed from the others. On discharging their
duties, these staff members are assumed to be responsible for observing the project
work plan and promptly advising the higher authority of the project management on
any issue that needs their attention.
Training of Projects Staffs
Though the projects have competent personnel, the need for training is still valid. The
current training status is not favourable and there is possibility of staff reaching a
point where they work mechanically, based on experience rather than on what is
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required to be done as a result of current practices in the market. Exposure is

important for updating working capabilities and abilities to have proper interpretation
of the requirements of the projects objectives.
Participation in the Preparation, Implementation and Control of Projects

Budget
The test reveals that there is good participation on the side of Coordinators and
Assistant Coordinators and least participation of project Accountant. It was revealed
that majority (56.25%) of projects Accountants only receive instructions from
coordinators. These results evidenced that the role of Accountants to the projects was
underestimated. Findings also revealed that in some cases project coordinators are the
ones who wrote the proposals for the projects and thus there is an element of
ownership, hence less consideration for the role of an Accountant.
Status of Donor Funded Projects Accounting and Internal Control System
The descriptive statistical test carried out on the various aspects of good accounting
and internal control systems as exercised in the donor funded projects accounts
indicates that there is strong Accounting and Internal Control Systems. The status also
supported by the reports of the external auditors where the majority of audited
projects received clean reports, with only few receive qualified audit reports. With
these results, the credibility of instruction increased and donor’s confidence increased
for more support.
For those projects who’s Accounts are not subjected to local external auditors there
are for ways that are used to fulfil their agreement with the donors. Those four ways
relate to the sending to the donors the technical/progress reports, financial reports and
all accountable documents depending on their agreement and requirements of the
donors. This practice had been facilitated by the fact that some of the projects are
considered as sub projects of the main projects with the donor whereby the main
projects are the one that are responsible for the preparation of final accounts for
auditing.
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The role of a sound financial management system of an institution was seriously

considered on this kind of arrangements before release of funds. Thus, evaluation of
institution capacity in handling funds are carried out, and upon satisfaction, the
agreement becomes operational. The institution becomes the guarantor of the
agreement, and hence provides a wide source of donors support even to the credibility
of an individual’s capacity. Again, the existence of such an arrangement is additional
proof of good accounting and internal control systems of the institution.
The status of donor funded Projects Organisation Self Based Esteem on Support
the Existing Accounting and Internal Control Systems
The results obtained from the analysis evidenced that are donor funded projects staff
members are motivated to carry out projects activities. This indicates that there’s team
work/ cooperation in discharging projects activities. All components tested received
high positive perception from the projects staff, with only one component received a
high degree of negative perception. Negative perception observed would surly attract
less concentration on the projects activities and hence, less performance of the
projects. This calls of the attention of the projects top management.
Awareness of People Involved in Projects Activities on Production of Timely,

Accurate and Reliable Projects Financial Reports and observing Budget
Disciplines
The study reveals those projects staff members are aware of the consequence to the
project if they perform correctly/badly. If projects do not follow rules, regulations and
procedures, definitely its performance will be poor and hence negative results.
To mention a few negative consequences that highlighted by the respondents

includes; Project objectives may not be achieved and hence, poor performance of the
project, delay/Late disbursement of funds by the donor, creating rooms for reduction
of funds compared to initially agreed budgets. This may lead to termination of project
or the donor may stop funding the project pending clarification. Furthermore,
financial control and monitoring of projects activities become difficult/harder, Donors
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confidence to the project is minimized or donor may become disappointed etc. The
opposite of it will reflect success of the project. Rational people struggle for positive
results, hence better performance of the projects.
Benchmark Indicators
From the evidenced statistical results, the following Matrix Table was employed to
assess some of the achievement of the project of this study. This benchmark
(standards) compares some of the results with the underlying standards. The statistical
finding support the established benchmark indicators as shown in table 26.
Table 26 Benchmark Indicators and Field Findings
Variable Indicator Findings

Knowledge At least advanced Diploma in Accountancy 75%
Experience At least two years working experience 88.5%
Timely To produce Accounts within three months after 30.8%
year end
Accuracy Receiving Clean Audit Report 72.6%
Usefulness - Decreasing of Audit queries by more than Implementation
50% of the previous audit is up to 85%
- Prompt disbursement of funds ( Within one Late

month after due date as per agreement stated disbursement
in the project document) up to 9 months
These results suggests that the existing Financial Management Systems in Donor
Funded Projects at UDSM are effectively and efficiently adequate for the
achievement of the projects goals.
CHAPTER 5
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5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS
This chapter presents the summary and conclusion of the study, as well as
recommendations for areas of further in topic understudy, financial management
system in donor funded projects at UDSM and other interested parties.
5.1 SUMMARY
This study assess how efficient and effective are the donor funded projects financial
management system in achieving programmes and projects goals in Tanzania, with
reference to the donor support at the UDSM. The study was planned to have an
insight status necessary for assessing the financial management system in donor
funded projects at UDSM Main campus, MUCHS and UCLAS. The study only
assessed the financial management system based on general evaluation of accounting
system, which includes Internal Control System and left administrative system of
financial management system un-assessed.
The study was designed to answer the following questions:
1. Do the Accounting and Internal Control Systems ensures the conduct of an orderly
and efficient payment and procurement process, adherence to the budget discipline of
the projects, segregation of duties, proper record keeping and safeguarding of assets
and resources?
2. Do the projects have available and adequate number and mix of knowledgeable,
skilled and experienced financial management staffs?
3. Does the projects organisational based self-esteem of donor funded projects has an
effect on timeliness, accuracy, reliability and usefulness of the donor funded projects
accounts?
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Answers to these questions were obtained through thorough analysis of the existing
financial management system in donor funded projects under the control of UDSM
Main Campus, UCLAS and MUCHS.
The study revealed that the UDSM has a place in culture of transparency and
accountability on the use of donor funds. This is carried out through various
programmes and project steering committees, as well as mid and annual review
meetings that are attended by the donors. Also, there is Institutional Annual
Consultative meetings which draw members from donors, government officials, and
officials from diplomatic missions, member of staff and members of public in general.
It is possible to see the value for money in terms of economy, efficiency and
effectiveness of activities carried out during the period under review. Also, it helps to
install improvements in implementation of the donor funded programmes and projects
as well as increasing donors’ confidence. This culture is an investment for attracting
more donor support funds.
It has been established that the projects have qualified personnel who have
satisfactory skills, knowledge and experience. Most of the projects staffs are salaried
staff of the institution and only few projects have contracted personnel. Training
programme for project staff will be a room for additional success to provide
performance.
In the preparation, Implementation and Control of projects budget, the projects have
good participation of Coordinators and Assistant Coordinators, but less participation
of projects accountants. It was revealed that the majority of Project Accountants only
receiving instruction from the coordinators. These finding also reveal that in some
cases projects coordinators are the ones who write the proposals for the projects thus
there is an element of ownership and less consideration for the role of an Accountant.
This situation needs to be addressed for the improving further performance of the
projects Accountants.
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The assessment carried out on various aspects of good Accounting and Internal
Control systems as exercised in the donor funded projects accounts indicated that
there is strong Accounting and Internal Control Systems. The status also supported by
the reports of the External Auditors where majority of audited projects received clean
reports with only a few that received qualified reports. The results are sufficient, but
there is still a room for more improvement.
The study observes that some projects accounts are not subject to local external
auditors. Instead there are four ways that are used to fulfil their agreements with the
donors. Those four ways include sending the donors the technical/progress reports,
financial reports and all accountable documents depending on their agreement with
their donors. This practice has been necessitated by the presence of some projects
which are considered as sub projects of the main projects with the donor, where by the
main projects are the ones that are responsible for the preparation f the final accounts
for Auditing.
Before releasing funds on this kind of arrangements, the evaluation of an institutions

capacity of handling funds is carried out by the donors, and upon satisfaction, the
agreement becomes operational. Thus, the institution become at the guarantor of the
agreement. These arrangements provide wide room for donor support.
The assessment revealed that the majority of the projects do not produce quarterly
financial reports for smooth project monitoring. Instead, some of the projects produce
their financial reports at the interval of six months as agreed by the donors.
Monitoring of the projects requires those managing it to operate it on the basis of a
plan and they need accurate and up to date information on progress made in
implementing the agreed plan. This practice of having up to date reliable information
enables the project management to furnish with confidence such information to those
who need them. Further, work plans can be adjusted to ensure that the implementation
is effectively and likely to be completed in time. Thus, attention is required in this
practice for more realization of projects goals.
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The results obtained from the analysis evidenced that the donor funded projects staff
members are motivated to carry out the project activities. This indicates that there is
team work cooperation in discharging projects activities. However, there is negative
perception on the remuneration for time input to the projects activities.
This is an area that needs the attention of the top management of the projects for the
success of the projects
5.2 CONCLUSION
The donor support to the developing countries, including Tanzania, is highly needed
for the struggle against poverty. These supports are from the Tax payers of the
developed countries who also need to see that their funds are properly managed.
However, there are many reported problems on management of donor funds to the
extent that some donors terminate some of the contracts.
Since it will be extremely difficult to manage development without donor support, the
need for a Sound Financial Management System in donor funded programmes and
project becomes inevitable. Such discipline of management is not only for the donor
funds but also for the scarce resources that are locally generated. It is therefore crucial
for the Government Ministries, Departments, Institutions, Parastatals and NGO’S to
build a culture of seeking proper ways of management of funds.
At the UDSM, the donor support are mainly used for financing University activities
related to capacity building and institution strengthening which are so important for
its expansion and development. Thus, these donor supports are hot cakes to the
University, and that why need to be thoroughly/properly managed.
The concern of this study was to assess how efficient and effective are the donor
funded projects Financial Management System in achieving programmes and projects
goals in the Tanzania context with the reference to the donor support at UDSM. The
study on the assessment of financial management system in government has shown
some improvement compared to some years back where the situation was
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discouraging. The study on the financial management in donor funded programmes

and project had not consolidated to give the picture of implementation status.
The UDSM was taken the model of this study, thus the study was planned to have an
insight status necessary for assessing the financial management system in donor
funded projects at three Campuses (Main Campus, MUCHS and UCLAS). The study
only assessed financial management system based on general evaluation of
Accounting System, which include Internal Control System and left administrative
system unassessed. This needs to be evaluated for more comprehensive picture.
The culture of transparency and accountability was observed at UDSM on the use of
donor funds. This is carried out through various programmes and projects steering
committee; as well as mid and annual review meetings for reviewing the progress of
implementation. In these meeting donors also attend. In addition, there is Institutional
Annual Consultative meetings that draw members from the donors, government
officials, and officials from diplomatic missions, member of staff and member of
public in general. The progress reports are tabled and are open for discussion. With
this culture, it is possible for donors and other to see the value for money in terms of
economy, efficiency and effectiveness of activities carried out during the period under
review. Also, views, comments and challenges from contributors during discussion
help improvement in implementation of the donor funded programmes and projects,
and hence increase donors’ confidence. This culture is an Investment for attracting
more donor supports at the University.
The project management adequately considered recognition for the need of qualified
manpower for the projects activities. The project has qualified personnel who have
satisfactory skills, knowledge and experience. Most are projects staff are salaried staff
of institution and only few have contracted personnel. However, it was noted that
there is inadequate training programmes to take care up to date of the projects staff
members especially on the area of financial management. Training of the projects
staff in financial management is very important for better performance of the projects.
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It was revealed that most of the projects do not use professional Accounting Packages,
though the majority of the project staffs are computer literate. Given the rapid change
in science and technology this situation appeals for an appropriate accounting
packages for all projects.
In this study, it was noted that the Project Coordinators and Assistant Coordinators
participate in preparation, implementation and control of project budget. However,
projects Accountants have poor participation and it was revealed that the majority of
them receive instruction from Coordinators. Furthermore, it was noted that in some
cases project coordinators are the ones who write proposals for the project and thus
there is element of selfishness. This sort of ownership is not bad at all, but the role of
Accountant should not be undermined. This situation calls for prompt action for more
improvement in the projects performance.
Assessment on various aspects of a good Accounting and Internal Control Systems as

exercised in the donor funded projects accounts indicated that there is strong
Accounting and Internal Control System. The status was supported by the reports of
the external Auditors, whereby the majority of the audited projects received clean
reports, with only few received qualified audit reports. The results are encouraging,
but there is still room for more improvements.
It was noted that the majority of the projects do not produce quarterly report for
monitoring of the projects activities. Monitoring requires those managing a project to
operate on the basis of a plan and they need accurate and up to date information on
progress made in implementing the agreed plan. Having up to date and reliable
information enables the project management to disclose that information confidently
to those who need them and at the same time work plans can be adjusted to ensure
that the implementation is efficient and effective and likely to b completed in time.
The explanation given to this situation was that there are some agreements by each
donor on the requirement of information from the projects. It was noted that some of
the projects produce their financial report at the interval of six months. However, the
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question that may remain is how such a long interval of time ensure that the
implementation of the project plan is effectively and efficiently and likely to be
completed on time. This situation needs to be revised for attaining better performance
of the projects.
It was further revealed that for some of the projects, their accounts are not subject to
the local external auditors. Instead all accountable documents and technical reports
are forwarded to donors, submit financial and technical progress reports to donors and
submit only progress reports to donors. The explanation given to this practice is that
some of the projects are considered as sub projects of the main projects with the
donors’ whereby the main projects are the ones that are responsible for the
preparation of final accounts for auditing.
It was further explained that before the release of funds, the donor evaluate the
institution capacity on handling funds, and upon satisfaction the agreement becomes
operational. It is believed that such an arrangement is so wide and it goes even to an
individual credibility so long as she/he obtains the support of her/his institution on the
security of the funds expected from the donors.
Again, this is an additional source of donor support to the institution for its
development programmes and an evidence for the role of institutions Sound Financial
Management System. It will be advantageous for those projects in this group to ensure
that all the time they prepare their accounts according to the requirements of the
institution financial regulations as good as those when is due for local auditing. This
will definitely maximize the performance of the projects and allow more assurance for
the continuation of the support.
The study reveals that donor funded projects staff members are generally motivated to
carry out the project activities. Further, it was noted that there is good cooperation in
discharging project activities. However, it was noted that there is negative perception
on the remuneration for time input on the projects activities. Though no exactly
84
Uni.No. 0911867093897
figures were made available for what would be fair consideration, this situation
attracts attention of the top management of the projects for more security and bright
success of the projects. Human input to the project is special compared to the rest of
the inputs, since it is the one controlling all other kind of resources.
5.3 RECOMMENDATIONS
In the course of this research, the researcher makes the following recommendations;
That a sound financial management system is an essential tool in both donors funded
projects and public funds.
That the broad objectives of public financial management are to achieve overall
physical discipline, allocation of resources to priority needs, and efficient and
effective allocation of public services.
That a good, financial management system will promotes accountability within

developing countries and provides donor with assurance on the use of their funds.
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Uni.No. 0911867093897
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Uni.No.

LONDON COLLEGE OF BUSINESS, UNIVERSITY OF WALES ,

The study focuses on the efficiency and effectiveness of financial management in a

I am highly indebted to my able supervisor, an erudite, conscientious scholar Mr J.

I am also grateful to LONDON COLLEGE OF BUSINESS through where my vision

1.1 Background information 9

1.2 Statement of the problem 13

1.3 Research objectives 14

1.3.1 Specific objectives 15

1.4 Research questions 16

1.5 Significance of the study 16

2.0 Literature review 19

2.1 Theoretical review 20

2.2 Empirical review world wide 25

2.3 Empirical review from Tanzania 26

2.4 Conceptual framework 27

2.4.1 Independent variables 28

2.4.2 Dependent variables 30

2.5 Test hypothesis 30

2.5.1 Research hypothesis 31

3.0 Research methodology 34

3.1.1 Research aim and objectives 34

3.1.2 Specific objectives 35

3.2 Research design 35

3.2.2 Sampling procedure and sample size 36

3.3 Types of data and data collection methods and procedure 37

3.3.1 Data collection methods and procedure 37

3.4 Data analysis and testing model 38

3.4.1 Analysis benchmark indicators 38

3.4.2 Analysis testing model 39

4.0 Research findings and analysis

4.1 General findings 41

4.1.1 Field work execution 41

4.1.2 Historical background of University of Dar es salaam of Dar es Salaam 41

4.1.2.1 Historical background of the UDSM Main campus 41

4.1.2.2 Historical background of the MUCHS 42

4.1.2.3 Historical background of the UCLAS 43

4.2 Institutional analysis 43

4.2.1 Donor support to the University of Dar es salaam 43

4.2.2 Transparency and accountability in the use of donor funds 45

4.2.3 Projects personnel recruitment 46

4.2.4 Computer application in the management of projects funds 47

4.3 Specific findings 47

4.3.1 Specific Skills and Knowledge of Projects Staff

4.3.2 Computer knowledge of projects accountants

4.3.3 Training of projects staff 52

4.3.4 Participation in the preparation,

Implementation and control of projects budget 53

4.4 Descriptive Statistical Results and testing of hypothesis 54

4.4.1 Evaluation of projects accounting and internal control systems 54

4.4.2 General view on projects organisational based self esteem 61

4.4.3 Audit reports of the projects accounts 67

4.4.4 Projects who’s accounts are not subjected to local audit 68

4.5 Hypothesis testing 70

4.6 Interpretation of the results 74

5.0 Summary, Conclusion, Recommendations 78

1.1 Background information

Financial management system is a group of activities by which an organization or

‘Colin Drury (2000) describes accounting as process of identifying, measuring and

• Setting performance standard in line with objectives.

sound financial management system. Thus well administrative and accounting

1.2 Statement of the Problems

Management of Public and Donor funds in most of development projects in Tanzania

1.3 Research Objectives