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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.
LONDON COLLEGE OF BUSINESS, UNIVERSITY OF WALES , 6A MONTEAGLE COURT, WAKERING ROAD BARKING, LONDON, IG11 8PL, UK
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.
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 This study is dedicated to the almighty Allah, my sponsor Mr Nazir Ahmad who made my study in UK possible.
Table of Contents
Uni.No. 0911867093897 Abstract Acknowledgement Dedication CHAPTER 1 1.0 1.1 1.2 1.3 Introduction Background information Statement of the problem Research objectives 9 9 13 14 15 16 16 2 3 4
1.3.1 Specific objectives 1.4 1.5 Research questions Significance of the study
CHAPTER 2 2.0 2.1 2.2 2.3 2.4 Literature review Theoretical review Empirical review world wide Empirical review from Tanzania Conceptual framework 19 20 25 26 27
2.4.1 Independent variables 2.4.2 Dependent variables
Uni.No. 0911867093897 2.5 Test hypothesis 30 31
2.5.1 Research hypothesis CHAPTER 3 3.0 3.1 Research methodology Introduction
34 34 34 35 35 36 36 37 37 38 38 39
3.1.1 Research aim and objectives 3.1.2 Specific objectives 3.2 Research design
3.2.1 Population 3.2.2 Sampling procedure and sample size 3.3 Types of data and data collection methods and procedure
3.3.1 Data collection methods and procedure 3.4 Data analysis and testing model
3.4.1 Analysis benchmark indicators 3.4.2 Analysis testing model CHAPTER 4 4.0 41 Research findings and
Uni.No. 0911867093897 4.1.1 4.1.2 Field work execution Historical background of University of Dar es salaam of Dar es Salaam 41 41 41 42 43 43 43 45 46 47 47 Skills and Knowledge of Projects Staff
184.108.40.206 Historical background of the UDSM Main campus 220.127.116.11 Historical background of the MUCHS 18.104.22.168 Historical background of the UCLAS 4.2 4.2.1 4.2.2 4.2.3 4.2.4 4.3 4.3.1 47 4.3.2 50 4.3.3 4.3.4 Training of projects staff Participation in the preparation, Implementation and control of projects budget 4.4 4.4.1 Descriptive Statistical Results and testing of hypothesis Evaluation of projects accounting and internal control systems Computer knowledge of projects Institutional analysis Donor support to the University of Dar es salaam Transparency and accountability in the use of donor funds Projects personnel recruitment Computer application in the management of projects funds Specific findings Specific
53 54 54
Uni.No. 0911867093897 4.4.2 4.4.3 4.4.4 4.5 4.6 General view on projects organisational based self esteem Audit reports of the projects accounts Projects who’s accounts are not subjected to local audit Hypothesis testing Interpretation of the results 61 67 68 70 74
CHAPTER 5 5.0 5.1 5.2 5.3 Summary, Conclusion, Recommendations Summary Conclusion Recommendations References Bibliography 78 78 81 85 86 89
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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 2002/20032006/2007 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
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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. 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 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.
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 • 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.
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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
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.
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.
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
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 25
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 StudyTanzania’’ 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 26
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.
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.
Figure 1. The Conceptual Framework
Some of the factors Influencing SFMS
of Mgt Outcomes Financial Information
Knowledge, Skills, Experience, Attitudes Job complexity/Challen ges Budget discipline Proper keeping Timely production Financial Accounting Manual Govt Policy and Regulations Intrinsic motivation Source: Personal perception report record SFMS Accounting System -Strong Internal Strong
Control System -Positive org.
Based Self Esteem
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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. 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 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
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 Table 1 Benchmark Indicators Variable Knowledge Experience Timely Indicator At least Findings Advanced
Diploma in accountancy At least two years To produce Accounts within three months after year end Receiving
Report -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.
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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 22.214.171.124 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.
Uni.No. 0911867093897 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). 126.96.36.199 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).
188.8.131.52 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
Uni.No. 0911867093897 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
Uni.No. 0911867093897 Tanzania Government NORAD SIDA/SAREC MHO VLIR NUFU CARNERGIE Others Total 11,493,644 2,682,851 3,785,714 1,241,472 643,789 475,844 1,011,942 21,335,256 11,740747 1,185,641 3,989,571 2,148,438 601,643.3 500,137.9 1,010,800 21,176,978 15,134,016 14,601,845 15,171,591 1,250,000 4,166,000 3,286,964 339,772 755,344 1,237,742 26,207,413
906,500 1,241,529 4,685,714 4,4450,400 2,148,438 613,513.5 931,804.4 1,964,410 2,045,454 613,513.0 332,902 1,288,848
360,228 26,744,623,9 2,4574,491
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 Tanzania 2002/03 11,493,644 2003/04 11,740747 2004/05 15,134,016 2005/06 14,601,845 2006/07 15,171,591
Uni.No. 0911867093897 Government NORAD SIDA/SAREC MHO VLIR NUFU CARNERGIE Others Total 2,682,851 3,785,714 1,241,472 643,789 475,844 1,011,942 21,335,256 1,185,641 3,989,571 2,148,438 601,643.3 500,137.9 906,500 4,685,714 2,148,438 613,513.5 931,804.4 - 1,964,410 1,010,800 360,228 21,176,978 26,744,623, 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 1,241,529 4,4450,400 2,045,454 613,513.0 332,902 1,288,848 2,4574,491 1,250,000 4,166,000 3,286,964 339,772 755,344 1,237,742 26,207,413
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
Uni.No. 0911867093897 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. 46
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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 Percent Valid Ordinary Diploma Advanced Diploma/Degree Postgraduate Diploma/Degree NA Total 20 52 38.5 100 38.5 100 100.0 7 13.5 13.5 61.5 20 38.5 38.5 48.1 5 9.6 9.6 Cumulative Percent 9.6
Source: Field data results, 2008
Table 4. Professional Status of the Projects Accountants
Uni.No. 0911867093897 Frequency Valid NBAA ATEC 2 Professional Level 1 Professional Level 2 Professional Level 3 CPA Holder NA 6 2 6 14 4 20 52 Source: Field data results, 2008 Table 5 Registration Status with NBAA Frequency Percent Cumulative Percent Valid Approved Not Registered 5 27 9.6 51.9 9.6 61.5 Percent 11.5 3.8 11.5 26.9 7.7 38.5 100 Cumulative Frequency 11.5 15.4 26.9 53.8 61.5 100
Source: Field data results, 2008
Table 6. Staff Experience in Working with the Projects
Uni.No. 0911867093897 Frequency Percent Cumulative Frequency
Less than 2 yrs
More than 4 Years Total
Source: Field data results, 2008 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
Uni.No. 0911867093897 Frequency Valid Able assistance Work comfortably Not Familiar NA Total 1 20 52 1.9 38.5 100 61.5 100 26 50 59.6 with 5 Percent 9.6 Cumulative Frequency 9.6
Source: Field data results, 2008 Table 7b Knowledge of Projects Accountants on working with an Accounting Package Frequency Percent Cumulative Percent Valid Little Knowledge Familiar Conversant Not Familiar NA Total Source: Field data results, 2008 6 20 52 9.6 38.5 98.1 60.8 100 and 19 36.5 51.0 7 13.5 13.7
4.3.3 Training of Projects Staff
Uni.No. 0911867093897 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 Valid Yes No Total 19 33 52 Percent 36.5 63.5 100 Valid % 36.5 63.5 100 Cumulative Frequency 36.5 100
Source: Field data results, 2008
Table 8b Training computer discipline 52
Uni.No. 0911867093897 Frequency Percent Valid % Cumulative Percent Valid Yes 21 40.4 40.4 40.4
Source: Field data results, 2008 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
Uni.No. 0911867093897 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 Participate POSITION Coordinators Assistant coordinators Accountant 13 2 5 20 Source: Field data results, 2008 4.4 DESCRIPTIVE STATISTICAL RESULTS AND TESTING OF 5 9 14 18 18 Partially Participate Only receive Total Instructions 13 7 32 52
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.
Uni.No. 0911867093897 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 Frequency Valid Strongly Disagree Disagree Agree Strongly agree Total 2 7 33 10 52 Percent 3.8 13.5 63.5 19.2 100.0 Valid Percent 3.8 13.5 63.5 19.2 100.0 Cumulative Percent 3.8 17.3 80.8 100.0
Source: Field data results, 2008 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.
Uni.No. 0911867093897 Table 11. Coordination and Participation in the Preparation of the Projects Budgets Frequency Valid Strongly disagree Disagree Agree Strongly agree Total 7 10 20 15 52 Percent 13.5 19.2 38.5 28.8 100.0 Valid percent 13.5 19.2 38.5 28.8 100.0 Cumulative Percent 13.5 32.7 71.2 100.0
Source: Field data results, 2008 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
Uni.No. 0911867093897 Frequency Valid Strongly disagree Disagree Agree Strongly agree Total 1 8 30 13 52 Percent 1.9 15.4 57.7 25.0 100 Valid percent 1.9 15.4 57.7 25.0 100 Cumulative percent 1.9 17.3 75 100
Source: Field data results, 2008 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 Frequency Valid Strongly Disagree Disagree Agree Strongly agree Total 2 6 31 13 52 Percent 3.8 11.5 59.6 25 100.0 Valid percent 3.8 11.5 59.6 25 100.0 Cumulative Frequency 3.8 15.4 75 100.0
Source: Field data results, 2008
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.
Uni.No. 0911867093897 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 Frequency Valid Strongly Disagree Disagree Agree Strongly Agree Total 3 5 32 12 52 Percent 5.8 9.6 61.5 23.1 100.0 Valid Percent 5.8 9.6 61.5 23.1 100.0 Cumulative Percent 5.8 15.4 76.5 100.0
Source: Field data results, 2008
Table 15. Chi-Square Results for Projects Operations Environment Vs Audit Reports for 2007 Chi-Square Test Projects Operation Audit reports 2007
Uni.No. 0911867093897 Chi-Square Df Asymp.Sig 40.462 3 .000 25.680 3 .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 Frequency Valid Strong disagree Disagree Agree Strongly agree Total 2 7 24 19 52 Percent 3.8 13.5 46.2 36.5 100.0 Valid Percent 3.8 13.5 46.2 36.5 100.0 Cumulative Percent 3.8 17.3 63.5 100.0
Source: Field data results, 2008 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 59
Uni.No. 0911867093897 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 Frequency Valid Strongly Disagree Disagree Agree Strongly agree Total 13 23 12 4 52 Percent 25.0 44.2 23.1 7.7 100.0 Valid Percent 25.0 44.2 23.1 7.7 100.0 Cumulative Percent 25.0 69.2 92.3 100.0
Source: Field data results, 2008
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.
Uni.No. 0911867093897 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. Frequency Percent Valid Percent Valid Strongly disagree Disagree Agree 15 23 28.8 44.2 28.8 44.2 42.3 86.5 7 13.5 13.5 Cumulative Percent 13.5
Uni.No. 0911867093897 Strongly agree Total 52 100.0 100.0 7 13.5 13.5 100.0
Source: Field data results, 2008 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 Frequency Percent Valid Percent Cumulative Percent
Uni.No. 0911867093897 Valid Strongly disagree Disagree 8 15.4 15.4 26.9 6 11.5 11.5 11.5
Strongly agree Total
Source: Field data results, 2008 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 Frequency Valid Strongly disagree Disagree Agree 23 16 12 Percent 44.2 30.8 23.1 Valid Percent 44.2 30.8 23.1 Cumulative Percent 44.2 75 98.1
Uni.No. 0911867093897 Strongly agree Total 1 52 1.9 100.0 1.9 100.0 100.
Source: Field data results, 2008 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 Frequency Percent Valid Percent Cumulative Percent
Uni.No. 0911867093897 Valid Strongly disagree Disagree Agree Strongly agree 5 27 17 9.6 51.9 32.7 9.6 51.9 32.7 15.4 67.3 100.0 3 5.8 5.8 5.8
Source: Field data results, 2008 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
Uni.No. 0911867093897 Frequency Percent Valid Percent Cumulative Percent
Source: Field data results, 2008 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
Uni.No. 0911867093897 Frequency Percent Valid Percent Cumulative Percent
Strongly disagree Disagree
Strongly agree Total
Source: Field data results, 2008 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
Uni.No. 0911867093897 Year Clean Qualified Disclaimer Adverse
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
Uni.No. 0911867093897 Frequency Valid Accountable reports Progress Reports to 17.3 17.3 19.2 donors Financial and 9 Progress reports and accountable doc to donors Financial and 5 progress reports donors Only Progress reports Donors N/A to 35 67.3 67.3 100 to 2 3.8 3.8 32.7 9.6 9.6 28.8 and 1 Percent 1.9 Valid Percent 1.9 Cumulative Percent 1.9
Source: Field data results, 2008 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
Uni.No. 0911867093897 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 70
Uni.No. 0911867093897 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:
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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 Knowledge Experience Timely Accuracy Usefulness Indicator At least advanced Diploma in Accountancy At least two years working experience To produce Accounts within three months after Findings 75% 88.5% 30.8%
year end Receiving Clean Audit Report 72.6% - 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) Source: Field data results, 2008 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. up to 9 months
Uni.No. 0911867093897 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?
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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.
Uni.No. 0911867093897 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
Uni.No. 0911867093897 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
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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