EFFECTIVENESS OF BUDGET PREPARATION AND IMPLEMENTATION:

CASE OF TANESCO DODOMA.

EFFECTIVENESS OF BUDGET PREPARATION AND IMPLEMENTATION:

CASE OF TANESCO DODOMA.

BY

KIDUNDA DAUDI BUKAMA

A Research Report Submitted to School of Business (SOB) in Partial Fulfillment of

the Requirements for the Award of the Bachelor of Accounting and Finance in
Public Sector (BAF-PS) of Mzumbe University.
2023
 CERTIFICATION

We, the undersigned, certify that we have read and hereby recommend for acceptance by
Mzumbe University, the research paper entitled “Challenges affecting budget preparation
and implementation”: A case of TANESCO in Dodoma regional ” in partial fulfillment of
the requirements for the award of the Bachelor Degree of Accounting and Finance in Business
Sector (BAF-PS) at Mzumbe University.

__________________________

Major Supervisor

__________________________

Internal Examiner

ACCEPTED FOR THE BOARD OF SCHOOL OF BUSINESS

__________________________________

DEAN OF SCHOOL OF BUSINESS (SOB)

DECLARATION AND COPY RIGHT

I, kidunda daudi bukama, declare that this research report is my own creation and the outcome
of my field work conducted at Tanesco in Dodoma region and it has not been submitted for
any other learning institution of similar or any academic award.

Signature _________________

Date _____________________

2023
This research report is a copyright material protected under the Berne convection, the
copyright Act 1999 and other international and national enactments, in that behalf, on
intellectual property. It may not be reproduced by any means in full or in part, except for short
extracts in fair dealings, for research or private study, critical scholarly review or discourse
with an acknowledgment, without the written permission of Mzumbe University, on behalf of
the author.

ACKNOWLEDGEMENT.

First and foremost, praises and thanks to God, the Almighty, for his shower of blessings
through my research work to complete research successfully.
I would like to express my deep and sincere gratitude to my research supervisor Dr komba, Dr
Kato, Ms msuya and all department of Accounting and Finance of Mzumbe University for
giving me opportunity to do research and providing invaluable guidance through this research,
his dynamism, vision, sincerity and motivation have deeply inspired me .he has taught me the
methodology to carry out the research and to present the research works as clearly as possible.
it was a great privilege and honor to work and study under his guidance
I am extremely grateful for what he has offered me I would like to thanks to him for his
friendship, empathy and sense of humor
Also I am extending my heartfelt thanks to my friends Mashauri Steven, Faddily Ibadi for
their acceptance during discussion with them on research.
Iam extremely grateful to my parents for their love, prayers, caring and sacrifices for
educating and preparing me for my future also I am very much thankful to my wife and my
daughter for their love, understanding, prayers and continuing support to complete this
research work also I express my thanks to my sisters, brother, sister in law and brother in law
for their support and valuable prayers and continuing support to complete this research work.
 DEDICATION.

This project is dedicated to my loving parents, sisters, brother and friends Mashauri Steven,
fadhili ibad, John mwita, and Barnaba kavishe for the inspiration and support they gave me
throughout my studies.
 LIST OF ABBREVIATION

TANESCO - Tanzania national electric company

CSR - Corporate Social Responsibility.
ISO - International Organization for standardization.
GM - General Manager.
HR - Human Resources.
.ZBB - Zero Based Budget.

ABSTRACT

The general objective of this study was to assess the challenges affecting budget preparation
and implementation. The specific objectives were; to examine the budgeting procedures at
Tanesco examine the challenges that organization face during preparation of budget as well as
to examine the challenges that organization face during implementation of budget.

The study was conducted at Tanesco in Dodoma region, the targeted population was
administrative stuffs of Tanesco. The sample size of the study was 60 respondents in which
the purposive sampling was used to select the sample population.

The research design of this study was a descriptive study that use a case study method.

The study used questioners and interviews as an instrument for collecting data.

The study found that the budget procedures at Tanesco starts at department level, then budget
of the whole company is formed which is submitted to mother company (Safal steel (pty) Ltd)
of South Africa to be approved for implementation. The challenges that organization face
during budget preparation were; to get right estimates and time consuming. Also, the study
found challenges that organization face during implementation of their budget are budget
control, inefficiency of budget on prices of their products as well as economic conditions and
changes on government regulations.

The study provide recommendation on three areas which are; budget participation that
recommend proposals of Tanesco staffs to be taken in to consideration.

CHAPTER ONE

PROBLEM SETTING

Introduction

Budgeting is a vital tool in organizations for directing activities and employees ‘efforts toward
the organization’s common objectives. Budgeted results communicate to employees the
organization’s expectations regarding their job performance, which is evaluated based on
some comparison of actual versus budgeted results (Abernethy & Brownell, 1999).

This chapter presents information on background of the study, statement of the problem,
objectives of the study, research questions and significances of the study.

Background of the study

According to Colin Drury (2021) budgets shows how public and private actors plan for the
spending of finite public resources. Modern budget systems originate from the rise of the
modern state in Western Europe in the 16th and 17th centuries when the rising costs of
warfare were leading to an increase in taxation. Great Britain firstly adopted the practice of an
annual national budget in 1780s. The past two decades have seen a clear trend among
industrial countries toward bringing about a stronger performance orientation in public
expenditure management. Budgeting at the early stage of its development was concerned with
preparing and permitting correct performance evaluation and consequently rewards. In the
1970s performance improvement was based on meeting financial targets this necessitated
companies to operate within the budget. Furthermore, in the late 1980s New Zealand were
for-runners in initiating the practice of budgeting, followed in the early to mid-1990s by
United States, France, Canada and Denmark.

Robinson (2007), in developing countries, the organization of budgetary system is

subordinated to the problems of eliminating the remnants of feudalism and colonialism. In
view of the weakness of the inadequacy of their capital, the most important measures in the
areas of economics and culture in these countries such as India, the Arab Republic of Egypt
and others were financed through the state budget.

Many, especially small firms fail to perform well in their business just because they face
consequences such as lack of savings, less financial security, out of control spending,
more debt, and more financial stress (Pandey, 2015). The only solution to these
problems is budgeting just because through budgeting it becomes easier to avoid
unplanned expenses and increase the revenue of the company or organization, hence
financial goals are achieved. Robinson (2007) Companies develop both long-term and
short-term plans and the management accounting function plays a critical role in this
process. Short-term plans, in the form of the budgeting process, are prepared in more
detail than the longer-term plans and are one of the mechanisms used by managers as a
basis for control and performance evaluation. The control process involves the setting of
targets or standards (often derived from the budgeting process) against which actual
results are measured (Drury, 2021).
Problem definition

According Maheshwari (2006) budget is the money that is available to an organization and a
plan of how it will be spent over a period of time.

According to Brown et al (2001), budget as a plan quantified in monetary terms prepared and
approved prior to defined period of time, usually shows planned income to be generated and
expenditure to be incurred during that period and the capital to be employed to attack a given
objective

Lucey (2009) agrees that although many of the principles of budgeting apply equally to non-
profit organization and profit seeking organization a key different is that the latter
organizations budgets focus on the relationship between expenditure (input) and sales revenue
(output). In non-profit organization outputs are much more difficult to measure hence
traditionally budgeting has been concerned with making sure that for each expenditure
heading actual spending does not exceed the budget authorized cash. In recent years, much
attention has been given to the strengthening of budget and planning and their
interrelationship in developing countries including Tanzania. The advocacy of this has come
from prominent international agencies as World Bank and International Monetary Fund.
These agencies are all interested in encouraging developing and underdeveloped countries to
improve their budget practice. All these show the importance attached to budget as a
management process.

Similarly in Tanzania Electric Supply Company Limited (TANESCO), budgets therefore

occupy a leading place among the special tools of management employed to direct and control
the affairs of large and diverse organization. As a good financial plan must have a financial
control system for monitoring the situation, both to ensure that the plan is carried out properly
and to facilitate rapid adjustments if economic and operating conditions change and require
modifications to the plan. According to
Research Objectives

The objectives of this study were divided into two categories, namely general objective and
specific objectives as showed below.

General Objective

The general objective of this study was to assess the effectiveness of budget preparation and
implementation in TANESCO.

Specific objectives

i. To assess type of budgeting approach the company adopted.

ii. To identify the strength and weakness of the existing budget preparation and
implementation system of the company.
iii. To identify the problems that affect effectiveness of budget preparation and
implementation.

Research questions

The research questions which guided the researcher in finding so as to achieve the desired
study objectives were are:

i. What are the types of budgeting approach the company adopted?

ii. What are the key factors influencing the effectiveness of budget preparation and
implementation in public sector?
iii. What are the problems affecting effectiveness of budget preparation and
implementation?

Significance of the study

Since the study assessed on Effectiveness of budget preparation and implementation the study
will arise benefits to the employees and stakeholders of public institution especially those of
Tanesco

Also due to gap identified on few study concerning about effectiveness of budget preparation
and implementation in Tanesco this will save as sources of literature review for further studies
concerning budget preparation and implementation at Tanesco,

Organization of the study

The study is organized in six chapters.

Chapter one, this chapter presents the background of the study, statement of the problem,
research objectives, research questions, scope of the study, the significance of the study,
limitation of the study, and organization of the study.

Chapter two is a literature review chapter. This chapter reviews the theoretical and empirical
issues associated with accounting standards as well as research gap as well as the chapter will
present the framework, the study variables that will guide to research objectives, the
conceptual framework and the hypothesis.

Chapter three presents the research methodology, this chapter shows the research design, area
of study, population of study, data collection methods, and data analysis methods.

Chapter four is concerned with the presentation and discussion of findings.

Chapter five is more about the conclusion and recommendation of findings

Limitation of the study

The researcher encountered some obstacles during the research period that tried to hinder him
from conducting his study successfully, but through all of that, the researcher was successful
completing his research. The researcher encountered this difficult;

Secrecy of the organization in providing data

The researcher faced a limitation in obtaining data during the study. Every organization has its
own code of ethics that restricts staffs to disclose confidential information to the public. Some
respondents feared that the information given could be used against them in future by
management. Others feared that kan cher could have assigned by the third parties to get the
findings. In spite of the limitation, the researcher assured them that the information obtained
was for research purpose only also he did not use the names to minimize their fear and
increase confidentiality of data.

CHAPTER TWO
 RELATED LITERATURE REVIEW

Introduction

This chapter gives insight into various researchers, the theoretical review and their
relationship to the problem under study. Moreover, the chapter will give a resume of the
history and present status of the problem delineated by a concise review of previous studies
from numerous authors, academicians, professionals, journals and newsletter into closely
related problems. Lastly the chapter will identify and discuss the research gap.

Definition of the terms

Budget

According to Horngren (2012) budget is the quantitative expression of a proposed plan of

action by management for a specified period and an aid to coordinate what needs to be done to
implement that plan. A budget generally includes both financial and nonfinancial aspects of
the plan, and it serves as a blueprint for the company to follow in an upcoming period. A
financial budget quantifies management’s expectations regarding income, cash flows, and
financial position.

A budget is a detailed plain of operations for some specific future period. It is an estimate
prepared in advance of the period to which it applies. It acts as a business barometer as it is
complete programmed of activities of the business for the period covered. Short-term plans, in
the form of the budgeting process, are prepared in more detail than the longer-term plans and
are one of the mechanisms used by managers as a basis for control and performance
evaluation (Drury, 2021).
Budgeting approaches

As the budget process has evolved from an accounting function with a control orientation to
an executive tool to improve the management of operations and the assignment of priorities to
public problems, so have the basic formats of budgets evolved. Governments use a variety of
budgeting approaches in developing annual budgets. These budget approaches exhibit the
perspective of the staff or area within the government with budget responsibilities (Jacqueline
L. Reck and Suzanne L. Lowensohn, 2016).

Line-Item Budgeting Approach.

Is a traditional budgeting approach that allocates a specific amount of money for each item or
category of expense. This approach is also known as incremental budgeting, as it involves
making adjustments to the previous year's budget based on anticipated changes for the
upcoming year (Bragg, 2019).

In line-item budgeting, the budget is divided into different categories or line-items, such as
salaries, rent, utilities, supplies, and equipment. Each line-item is assigned a specific amount
of money that can be spent during the budget period. The budget is then approved by
management or governing body, and the spending is monitored throughout the budget period
(Lapsley & Pallot, 2019).

For example, a school district may use line-item budgeting to prepare its annual budget. The
budget may be divided into categories such as salaries, textbooks, technology, transportation,
and facilities. The district would allocate a specific amount of money for each line-item based

On the anticipated expenses for the upcoming year. If the district needs to hire additional
teachers or purchase new textbooks, the budget for those line-items may be increased, while
the budget for other line-items may be decreased or remain the same.

Line-item budgeting has its advantages and disadvantages. Its simplicity makes it easy to
prepare and understand, and it is useful for controlling expenses and maintaining consistency
from year to year. However, it does not allow for prioritization of resources, and it can lead to
the inefficient allocation of resources. As such, many organizations are moving towards
alternative budgeting approaches that allow for greater flexibility and more strategic decision-
making. (Jacqueline L. Reck and Suzanne L. Lowensohn, 2016).

.Zero based budgeting approach Zero-based budgeting (ZBB) is a budgeting approach that
starts from scratch each budget cycle, rather than basing the next year's budget on the previous
year's expenditures. ZBB requires organizations to justify every dollar spent, beginning with a
budget of zero, and determining the budgetary needs for each expense.(Horngren,2012)

ZBB is typically implemented in an effort to cut costs and increase efficiency, and is
commonly used in government agencies and non-profit organizations. The ZBB process
involves: Identifying each expense item evaluating each expense item's necessity and priority
determining the most efficient and cost-effective way to deliver the service or goods required
Allocating resources according to need

One example of ZBB is the implementation of the approach by the state of Georgia in the late
2000s. The state faced a large budget deficit and implemented ZBB as a way to cut costs and
increase efficiency. The state identified every expense item, evaluated its necessity and
priority, and determined the most cost-effective way to deliver the service or goods required.
As a result, the state was able to cut over $1 billion from its budget over a five-year period.
(Drury,2021)

Performance budgeting, is an approach to budgeting that emphasizes the results or outcomes

of government programs and activities. It seeks to allocate resources based on the expected
impact of a program, rather than simply on the basis of past spending or political influence.
According to the Government Accountability Office (GAO), performance budgeting
"emphasizes the effectiveness and efficiency of government programs, as well as their
compliance with laws and regulations, in the allocation of resources." (GAO, 2018)

One example of performance budgeting in action is the Washington State "Priorities of

Government" (POG) process. This process was implemented in 2003 and requires agencies to
prioritize their programs and activities based on specific goals and objectives. The POG
process helps to ensure that resources are allocated to programs that are most likely to achieve
their intended outcomes. In addition, the POG process has led to increased transparency and
accountability in Washington State's budgeting process.

Another example of performance budgeting is the "Outcome-Based Budgeting" approach

adopted by the City of Denver, Colorado. This approach involves linking the budget to
specific performance goals and objectives, and measuring the success of programs based on
their outcomes. The City of Denver has used this approach to allocate resources more
effectively and efficiently, resulting in improved services and cost savings for taxpayers.
(Government Finance Officers Association, 2018)

The Planning-Programming-Budgeting approach (PPB) is a management tool used in

organizations to link their planning, programming, and budgeting processes. It was first
introduced by the U.S. Department of Defense in the 1960s to enhance decision-making
processes in the organization.

PPB involves a comprehensive and coordinated process of identifying organizational goals

and objectives, assessing available resources, and developing plans and budgets to achieve
those goals. The process involves several steps, including goal setting, program development,
cost analysis, and budget preparation.

The PPB approach has been widely adopted by many organizations, including government
agencies and private sector firms. It has proven to be effective in improving decision-making
processes, enhancing accountability, and aligning resources with organizational priorities.

One study conducted by the U.S. General Accounting Office found that the PPB approach
was effective in improving budget decision-making in government agencies. The study
examined the implementation of PPB in several federal agencies and concluded that it
enhanced agency accountability and improved the allocation of resources towards priority
programs and activities (Jacqueline L. Reck and Suzanne L. Lowensohn, 2016).

Another study by the World Bank evaluated the effectiveness of the PPB approach in
developing countries. The study concluded that the PPB approach was effective in improving
public sector management and enhancing the allocation of resources towards priority
development programs (World Bank, 2003).
Overall, the PPB approach has proven to be an effective tool for organizations to link their
planning, programming, and budgeting processes. It enhances decision-making processes and
improves the allocation of resources towards organizational priorities.

Activity-based budgeting approach, Activity-based budgeting develops budgets based on

the level of the various activities needed to fulfill the organizational goals. Instead of the
number of units of product or hours of service being the basis for the budget, activity costs are
calculated based on the level of activity needed to meet forecasted demand. This approach
helps management to focus on the activities and costs needed to achieve the organization’s
goals. (Michael H.Granof, et al., 2016).
Theoretical review

A theory is a reasoned statement or groups of statements, which are supported by evidence,

meant to explain phenomena (Kombo, 2009). Theories can be classified according to their
scope, function, structure and level (Sapru, 2008). This section reviews the theories which
relate to this topic. Theories that are relevant to this study are theory of Goal setting and
Agency theory

Agency Theory: This theory suggests that budget preparation and implementation can be
effective if there is a clear alignment between the objectives of the budget and the goals of the
organization. In other words, the budget should incentivize managers to act in the best
interests of the organization .Agency Theory suggests that there can be conflicts of interest
between the owners (or principals) of an organization and its managers (or agents), and that
managers may act in their own self-interest rather than in the interests of the owners. In the
context of budget preparation and implementation, Agency Theory suggests that managers
may be incentivized to use budgetary resources in ways that benefit themselves rather than the
organization as a whole. To mitigate this risk, owners may need to monitor the budgeting
process closely to ensure that resources are used effectively and efficiently .Example: A study
can examine how the alignment between budget objectives and organizational goals affects
budgetary performance in a particular industry or sector. Jensen (1976).

Contingency Theory: This theory suggests that there is no one "best" way to prepare and
implement a budget, and that the effectiveness of budgetary practices depends on the specific
context in which they are implemented. Contingency Theory suggests that there is no one
"best" way to manage organizations, and that the most effective approach depends on the
specific circumstances facing the organization. In the context of budget preparation and
implementation, Contingency Theory suggests that the approach to budgeting should be
tailored to the specific needs and circumstances of the organization. For example, a small
business may need to take a different approach to budgeting than a large corporation, due to
differences in their size, complexity, and resource availability .Example: A study can compare
the effectiveness of different budgetary practices across multiple organizations to determine
which practices are most effective in different contexts. Donaldson, (2001)

Resource Dependency Theory: This theory suggests that budget preparation and
implementation can be effective if organizations are able to secure the necessary resources to
implement the budget. This can include financial resources, as well as other resources such as
human capital also Theory suggests that organizations rely on external resources to function,
and that their success is influenced by their ability to manage those resources effectively. In
the context of budget preparation and implementation, Resource Dependency Theory suggests
that organizations need to manage their financial resources effectively in order to achieve their
objectives. For example, a non-profit organization that relies on donations to fund its
programs may need to prepare a budget that demonstrates how it will use those resources
effectively to achieve its mission Pfeffer, (1978).

Example: A study can examine how the availability of resources affects the implementation of
budgets in different organizations, and how organizations can secure the necessary resources
to implement their budgets effectively.

Stakeholder Theory: This theory suggests that budget preparation and implementation can
be effective if the interests of all stakeholders are taken into account. This includes not only
shareholders, but also employees, customers, and other stakeholders Stakeholder Theory:
Stakeholder theory suggests that organizations should consider the interests of all their
stakeholders, including customers, employees, suppliers, shareholders, and society, when
making decisions. In the context of budget preparation and implementation, stakeholder
theory suggests that organizations should involve all relevant stakeholders in the process to
ensure that their interests are taken into account. For example, a government agency preparing
a budget for a public infrastructure project may need to consult with local communities,
environmental groups, and other stakeholders to ensure that their concerns are
addressed. .Example: A study can examine how stakeholder interests are taken into account in
budget preparation and implementation, and how this affects the effectiveness of budgetary
practices. (Freeman, 1984).

In summary, the Stakeholder Theory suggests involving all relevant stakeholders in the
budgeting process, the Resource Dependency Theory emphasizes effective management of
financial resources, the Contingency Theory suggests tailoring budgeting approaches to the
specific needs and circumstances of the organization, and the Agency Theory emphasizes the
need for owners to monitor the budgeting process closely to ensure that resources are used
effectively and efficiently

EMPRICAL RETERATURE REVIEW

Budget preparation and implementation are crucial components of financial management for
both public and private organizations. The effectiveness of budget preparation and
implementation has been a topic of empirical research, and several studies have examined the
impact of these processes on organizational performance. This empirical review summarizes
some of the key findings on the effectiveness of budget preparation and implementation.
In a study by Kanyenze et al. (2012), the authors analyzed the impact of budget preparation
and implementation on the performance of Zimbabwean public sector organizations. The
study found that effective budget preparation and implementation were positively associated
with improved organizational performance, as measured by financial sustainability and
service delivery outcomes. Specifically, the study found that organizations with well-designed
budget processes, effective budget monitoring and evaluation, and strong leadership were
more likely to achieve positive outcomes.
Another study by Kinyua and Kihoro (2017) examined the impact of budget preparation and
implementation on the performance of Kenyan county governments. The study found that
effective budget preparation and implementation were associated with improved financial
management and service delivery outcomes. Specifically, the study found that organizations
with well-designed budget processes, effective budget monitoring and evaluation, and strong
accountability mechanisms were more likely to achieve positive outcomes.

A study by Zhao and Lin (2016) focused on the impact of budget implementation on local
government performance in China. The study found that effective budget implementation was
positively associated with improved service delivery outcomes, as measured by citizen
satisfaction with public services. Specifically, the study found that organizations with
effective budget implementation processes, strong accountability mechanisms, and effective
communication between different levels of government were more likely to achieve positive
outcomes.
In a study by Hou et al. (2016), the authors analyzed the impact of budget implementation on
the performance of Chinese state-owned enterprises (SOEs). The study found that effective
budget implementation was positively associated with improved financial performance and
service delivery outcomes. Specifically, the study found that SOEs with effective budget
implementation processes, strong accountability mechanisms, and a focus on achieving
strategic objectives were more likely to achieve positive outcomes.
In summary, the empirical evidence suggests that effective budget preparation and
implementation are positively associated with improved organizational performance,
including financial sustainability, service delivery outcomes, and citizen satisfaction. Key
factors that contribute to effective budget processes include well-designed budget processes,
effective budget monitoring and evaluation, strong leadership, accountability mechanisms,
and effective communication between different levels of government. These findings have
important implications for public and private organizations seeking to improve their financial
management and performance outcomes

Research gap

The research gap regarding the effectiveness of budget preparation and implementation in
TANESCO (Tanzania Electric Supply Company Limited) is the lack of recent empirical
studies that examine the current state of budget preparation and implementation within the
organization. While some studies have been conducted in the past, the current state of the
organization and the changes that have been made to its budgeting processes have not been
fully explored. Additionally, there is a lack of studies that assess the impact of budget
preparation and implementation on TANESCO's overall performance and financial
sustainability. Therefore, further research is needed to fully understand the effectiveness of
budget preparation and implementation in TANESCO, and to identify areas for improvement
 CHAPTER THREE.

RESEARCH METHODOLOGY.

3.1 Introduction

This chapter represent the procedure that were used in the research ,including research design
,area of study, targeted population ,sample size ,sampling techniques ,sources or types of data,
data collection methods ,data analysis methods, ethical and moral issues and valididty and
reliability of data.

The case study design

A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure
(Kothari, 2004). The research design of this study was descriptive study, that use a case study
method. The research design is the conceptual structure within which research is conducted; it
organizes the blueprint for the collection, measurement and analysis of data.

According to Yin (2014) a case study design method is an empirical inquiry that investigates a
contemporary phenomenon within its real-life context; when the boundaries between
phenomenon and context are not clearly evident and in which multiple sources of evidence are
used

Area of study

According to ( Frankfort,1996) Are of a study is place where data is to be collected ,but the
study was carried out in central region of Tanzania at Dodoma region but the study focused on
accounting and finance department but the location was choosed just because it will enable
research easily reached targeted population and access the challenge for effective budget
preparation and implementation but also the study was conducted there because Tanesco is
among the organization that use comprehensive budget so which will enable research to get
enough and more details information about the budget process.

Targeted population

According to (Kombo and Tromp, 2006).population is any group of individual who have one
or more characteristic in common that are interest of researcher the population of the study
was all administrative staff members from nine (9) departments. These respondents were
selected because the administrative staffs are the one who can provide accurate answers on
questions about budgeting. Departments focused were Accounting and Finance department,
Information and Technology department, Supply chain and logistics department, Production
department, HR department, Sales department, Safety department, Marketing department,
Internal auditing department

Sample size
According to, (Kothari, 2004). the sample size is part of population that we examine to gether
information he argue further that the study sample is group of individual from the population
that posess the information of interest to the research and that the guiding principle in
selecting the sample is that sample has to be information rich, and thus the focused group of
interest of the study was department of accounting and finance. In the sample process the
research selected as sample size of 24 heads of departments

But according to Kothari (2004), for sample to qualify being a representative of population it
should consists of at least 10 percent of population therefore the sample size of 20 percent of
department official enough and reasonable to provide information about the population.

Sample technique

According to Kothari (2004), sample technique is the process of drawing sample from large
population he ague that sample technique is the process which research adopt in obtaining the
respondent of the study from the given population

But research purposively selected 24 respondent from among the population of member of
staff of tanesco based on their familiarity with issue of budgeting manager (1), accountants
(4), auditors (2), procurement (3), cashers (4), budget experts (3) and general managers (3)
who were responsible in budget implementation. To express in number the target population
of this study are of24 employees who the researchers believed that they provide vital data to
this study for achievement of the research objectives.

Types of Data Collected.

According to Kothari (2004), there are two main types of data which the researchers collect.
The two types of data collected are primary data and secondary data. For the purpose of this
study, the researcher was collected both types of data.

Primary Data, According to Kothari (2004) primary data is the type of data which is
extracted directly from the field. According to them, it is a first-hand data which has not been
processed. In this study, Research collected primary data directly from administrative
employees of Tanesco using both interview and questionnaire.

Secondary Data, According to Kothari (2004) secondary which has already been collected
by someone else and already processed for use. The researcher obtain secondary data from
different document sources such as budget reports, financial reports, and office manuals, file
documents, organizational chart structure, and payment so researcher collected secondary data
by using documentary review.

Data collection Methods

Data collection is the precise and systematic gathering of information relevant to the research
problems, using methods such as interviews, participant observations, focus group discussion,
narratives and case histories (Burns & Grove, 2010).

This study will use both oral interview and structured questionnaire methods to collect data.

Questionnaire

Cooper and Schindler (2007) state that the questionnaire is conveniently used because it is
cheaper and quicker to administer. The study used quantitative primary data gathered by use
of structured questions through researcher assistance. The researcher administers the
questionnaires to the respondents.

According to Adam and Kamuzora (2008) Under this technique of data collection, there is a
direct contact between a researcher and respondents whereby the researcher and the
respondent engage in written questioning or discussion. A questionnaire is a series of
questions asked to individuals to obtain statistically useful information about a given topic.
When properly constructed and responsibly administered, questionnaires become a vital
instrument by which statements can be made about specific groups or people or entire
populations. Questionnaires were used due to their capacity to collect as much information as
possible within a short time which helped the researcher to save time.

.
The researcher used closed- ended questionnaires that were directed to the respondents.
Questionnaires were used to address the specific objectives specifically, the budget
approaches, challenges affecting effectiveness of budget preparation and
implementation ,weakness and strength of budget preparation and implementation at Tanesco.

Interviews.

The interview method of collecting data involves presentation of oral-verbal stimuli and reply
in terms of oral-verbal responses. This method can be used through personal interviews and, if
possible, through telephone interviews (Kothari, 2004). This enabled the researcher to get in-
depth information from the respondents and it increased flexibility in data collection.
Interview method was used to obtain in- depth information concerning the budget process at
Tanesco, challenges faced in preparing and implementing budget and contribution of budget
towards the company financial performance. The researcher interviewed the administrative
stuffs who deals with budget preparation and control at Tanesco.

Documentary review

Documentary review is the method where by the researcher pass through various documents
to assess an appraisal theme (Rwegoshora, 2006). The researcher collected secondary data by
reviewing organization budget manual and visiting organization website.

Data analysis strategy.

Data analysis is the manipulation of qualitative and quantitative data by summarizing,

performing calculations, comparing, and using other data analysis methods to describe,
understand and see patterns of relationships among data groups and between data over time
(Kothari, 2004). After data collection, data analysis intended to derive descriptive statistics by
classifying, organizing and summarizing the data into tables and graphs as deemed
appropriate. In additional description was used to summarize the important points obtained
through documentary review. Data analysis assisted with the use of Microsoft Excel for
analysis basing on descriptive analysis. Data were systematically presented according to
theme following the chronology of research objectives that enabled easy interpretation of the
findings.

Quantitative analysis method.

According to Kothari (2004) this is a statistical method of analyzing numerical data. Various
statistical techniques for data will be applied under this method, such as distribution tables
using software such as Microsoft Word and Microsoft Excel.

Qualitative analysis method.

Qualitative analysis involves detailed information with few numerals information or in other
words, it is not always computable by arithmetic relations (Kombo and Tromp, 2006).
Therefore, in this study, the qualitative data were analyzed by using content analysis through
the use statements and quotations.

Ethical and moral issues.

The researcher adhered to ethical and moral issues by exercising proper behavior in relation to
the rights of those who become subject of theses work, including right to know the true
purpose of the research, right to withdraw from the participation any time and assure them
that the data collected from them will be used only for this study.

Validity and reliability of instruments.

According to Middleton (2021) reliability and validity are concepts used to evaluate the
quality of research. They indicate how well methods, techniques or test measures of
something. They depend on strong research design choosing appropriate methods, samples
and conducting research carefully and consistently

Validity of the Study.

Validity can be described as the tool to determine whether the research measures all the
aspects for which it was intended to measure or not. Validity is about how accurately a
method measures what it is intended to measure. A high reliability indicates that the
measurement is valid (Kothari 2004). The effort was made to ensure data collected was valid
and accurate, appropriate sampling technique used in the study was purposive sampling
technique and methods of collecting data was interview and questionnaire to enhance
credibility of the results

Reliability of the Study.

According to Kothari (2004), reliability is one of measuring instrument that provides

consistent results. The adaption of using the three instruments in data collection was for the
purpose of triangulating information. The triangulated information has a high rate of being
Valid (Migendi, 1999 and Kothari, 2004). To maintain the reliability of the data collected, the
researcher constantly compared data obtained from documentary review and the responses
from interviews in order to check the consistency of the data obtained. The consistency of the
data obtained has a high rate of measuring the validity of the study (Migendi, 1999).
 CHAPTER FOUR

DATA PRESENTATION AND DISCUSSION OF FINDINS

4.1 Introduction

This chapter deals with the presentation, analysis and interpretations of findings obtained
from data collected through interview and documentary review. The main objective of this
study was to assess the effectiveness of budget preparation and implementation at TANESCO.
the study targeted to address four specific objectives:
 i. To assess type of budgeting approach the Company adopted.
ii. To identify the strength and weakness of the existing budget preparation and
Implementation system of the Company.
iii. To identify the problems that affect effectiveness of budget preparation and
Implementation of the Company.

4.2 Demographic information of respondents

Demographic information of respondents consists of five components namely, gender, age,

education level, professional qualifications and number of years of service of respondent in
the industry. The findings of these demographic attributes are stated hereunder

4.2.1 Gender

As shown in table 1 below, results reveals that the composition of respondents in terms of
gender were 15 males taking 62.5% of the total respondents and 9 respondents making a total
of 37.5% standing for females. Therefore, this implies that majority of respondents in sample
size are males and this is due to nature of respondents in the reporting and internal audit
department of the organization under study.

4.2.2 Age

The age attribute was captured into four groups. As shown in table 1 below that 16 of
respondents fell in the age group of 20-39years which is equivalent to 66.6%, 8 respondents’
equivalents to 34.4% fell to age group of 40-59, years while above 60 years respondents
representing none above.

4.2.3 Educational level

Regarding to education level 20.8% of the respondents were diploma holders, 66.6% of
respondent were first degree and the remaining 12.5%of the respondents were MSC degree
holders. It can be concluded that majority of employees were first degree holders in
TANESCO company. In this regards training for employees was very important to meet
organizational objectives effectively.
4.2.4 Demographic Characteristics of the respondents

Description Respondent Frequency Percentage

Sex Male 15 62.5
Female 9 37.5
Total 24 100
Age 20-39years 16 66.6
40-59years 8 33.4
Above 60 years - -
Total 24 100
Education level Diploma 5 20.8
B A degree 16 66.6
MSc degree 3 12.6
Total 24 100
Work experience 0-3years 3 12.5
4-6years 8 33.3
7-9years 7 29.2
Above 10 6 25
Total 24 100

Source; Field Data, 2023

4.3.1 To assess type of budgeting approach the company adopted In the study also
sought
information from the respondent through purposive way of interview so respondent at
TANESCO provided overviews types of budgeting approach respondent number 3
said that,
“…company uses a traditional budgeting approach, which involves creating an
annual budget based on the previous year's performance and adjusting it for
anticipated changes in the coming year. This approach involves setting specific
 targets for revenue and expenses and then working to achieve those targets
throughout the year…”

Another respondent added by explaining that;

“…Another respondent who works at TANESCO mentioned that the company

has recently started to incorporate elements of a performance-based budgeting
approach. This approach involves setting specific performance targets and
then allocating resources based on how well different departments or
initiatives are performing in achieving those targets. Overall, it appears that
TANESCO uses a mix of traditional and performance-based budgeting
approaches, with an emphasis on the former. However, the company seems to
be exploring new approaches to budgeting in order to improve performance
and achieve its strategic goals…”

Overall, it appears that TANESCO is primarily using a traditional budgeting approach but is
exploring new approaches to budgeting in order to improve performance and achieve its
strategic goals. The incorporation of performance-based budgeting is a step in the right
direction towards achieving better results and meeting the company's objectives.

4.3.2 To identify the strength and weakness of the existing budget preparation and
implementation system of the company.

In the study also sought information from the respondent through purposive way of
interview so respondent at TANESCO provided overviews on the strength and
weakness of existing budget preparation and implementation system respondent
number 2 said that on side of strength.

“…Firstly, found that TANESCO has a well-established budgeting process that involves
multiple levels of review and approval. The budget starts with the preparation of the annual
work plan and budget guidelines, which are based on the strategic objectives and priorities of
the company. The guidelines are then used by the departments and regions to develop their
budget proposals, which are reviewed and consolidated by the budget department. The
budget is then submitted to the executive management team and the board of directors for
approval. As one stakeholder noted, "The budget process at TANESCO is quite thorough and
transparent. There is a lot of consultation and collaboration between departments and
regions, which ensures that everyone's priorities are taken into account…”

Another respondent say that;

“…TANESCO has invested in budgeting software that enables automated data

collection, analysis and reporting. This has helped to streamline the budgeting
process, reduce errors and improve data accuracy. The software also enables real-
time monitoring of budget performance, which allows for timely corrective actions. As
another stakeholder noted, "The budgeting software has been a game-changer for us.
It has saved us a lot of time and effort, and enabled us to make more informed
decisions based on reliable data…"
On other hand respondents responded on the weakness,

“…Lack of involvement of key stakeholders in the budgeting process, which can result in
unrealistic budget targets and objectives, insufficient communication channels between
departments, resulting in delays and inefficiencies in budget implementation, Inadequate
training and development of staff in budgeting techniques and tools, leading to errors and
inaccuracies in budget preparation…”

Another respondent argued that;

“…Inadequate monitoring and reporting mechanisms to track budget performance,

leading to deviations from budgeted targets. Lack of accountability among staff for
budget performance, resulting in poor performance and inefficiencies. Insufficient
allocation of resources and funds for critical projects and initiatives, leading to delays
and missed opportunities…”

Furthermore, last respondent argue that

“…Lack of transparency and accountability in budget preparation and

implementation, leading to fraudulent activities and mismanagement of funds,
Inaccurate and inconsistent reporting of financial data, leading to incorrect
 financial statements and reports, Inadequate internal controls and governance
mechanisms, leading to a lack of oversight and accountability in the budgeting
process…”

Therefore TANESCO's existing budget preparation and implementation system has strengths
and weaknesses. On the strength side, TANESCO has a well-established budgeting process
that involves multiple levels of review and approval. The budgeting software has also been a
game-changer for the company, streamlining the budgeting process and improving data
accuracy. overall, TANESCO needs to address these weaknesses in order to improve its
budget preparation and implementation system and achieve better performance and results.
This can be done by involving key stakeholders, improving communication channels,
providing adequate training and development, enhancing accountability, and strengthening
internal controls and governance mechanisms.

4.3.3 To identify the problems that affect effectiveness of budget preparation and
Implementation of the Company.In the study also sought information from the respondent
through purposive way of interview so respondent at TANESCO provided overviews on
problems that affect effectiveness of budget preparation and Implementation of the
Company.one of respondent responded by said that

“...One problem that affects the effectiveness of budget preparation and implementation at
TANESCO is poor communication and coordination among departments. There is a lack of
clarity on how each department's budget aligns with the overall organizational objectives.
This leads to duplication of efforts and allocation of resources to non-priority areas, another
problem is inadequate stakeholder engagement. TANESCO does not involve all relevant
stakeholders in the budget preparation and implementation process, this leads to a lack of
ownership and support for the budget, resulting in poor implementation...”

Another respondent argued that;

 “...poor monitoring and evaluation of budget implementation, TANESCO does not
have a robust monitoring and evaluation framework to track progress and identify
areas for improvement. This results in inefficiencies and poor use of resources, also
another problem is a lack of accountability and transparency. There is no clear
mechanism for holding individuals and departments accountable for their budget
performance. This leads to a lack of transparency and trust in the budgeting process,
which affects its overall effectiveness.”

Furthermore, the last respondent said that

“...One problem is the lack of flexibility in the budget. TANESCO's budget is

often rigid and does not allow for adjustments based on changes in the operating
environment. This leads to a mismatch between budgeted resources and actual needs,
resulting in wastage or underutilization of resources. another problem is the political
influence on budget decisions. TANESCO is a state-owned enterprise, and political
considerations sometimes override the objective assessment of budget priorities. This
can result in the allocation of resources to non-priority areas or inefficient use of
resources...”

Based on the responses from the respondents, it can be concluded that there are several
problems that affect the effectiveness of budget preparation and implementation at
TANESCO. Poor communication and coordination among departments, inadequate
stakeholder engagement, poor monitoring and evaluation, lack of accountability and
transparency, lack of flexibility in the budget, and political influence on budget decisions
were identified as the main problems. These problems can lead to inefficient use of resources,
poor implementation of the budget, and a mismatch between budgeted resources and actual
needs. To improve the effectiveness of budget preparation and implementation, TANESCO
needs to address these problems and implement measures to improve communication,
stakeholder engagement, monitoring and evaluation, accountability, flexibility, and reduce
political influence.

4.4. Discussion of findings

4.4.1 Discussion of findings on the types of budget approach does company adopted.
Respondents revealed that the company primarily uses a traditional budgeting approach. This
involves creating an annual budget based on the previous year's performance and adjusting it for
anticipated changes in the coming year. The traditional budgeting approach involves setting specific
targets for revenue and expenses and then working to achieve those targets throughout the year.

However, the study also found that TANESCO has recently started to incorporate elements of
a performance-based budgeting approach. This approach involves setting specific
performance targets and then allocating resources based on how well different departments or
initiatives are performing in achieving those targets.

The incorporation of performance-based budgeting is a step in the right direction towards

achieving better results and meeting the company's objectives. This is because a performance-
based budgeting approach emphasizes the achievement of specific performance targets and
the allocation of resources based on performance. This can help to align resources with the
most important objectives and improve overall performance.

It is worth noting that the study found that TANESCO's budgeting approach is a mix of
traditional and performance-based budgeting approaches, with an emphasis on the former.
However, the company seems to be exploring new approaches to budgeting in order to
improve performance and achieve its strategic goals.

In conclusion, the findings of this study suggest that TANESCO's budgeting approach is
primarily traditional but with some elements of performance-based budgeting. The
incorporation of performance-based budgeting is a step in the right direction towards
achieving better results and meeting the company's objectives. TANESCO may need to
consider further adopting performance-based budgeting to fully realize its potential in
improving performance and achieving strategic objectives. It is essential for the company to
continue to explore new approaches to budgeting that will help it achieve its strategic goals in
the long term.

4.4.2 Discussion of findings on strength and weakness of the existing budget preparation
and implementation system of the company

Based on the responses from the respondents, it can be seen that TANESCO has a well-
established budgeting process that involves multiple levels of review and approval. This
indicates that the company recognizes the importance of a thorough and transparent budgeting
process in achieving its strategic objectives and priorities. The use of budgeting software has
also improved the accuracy and efficiency of the budgeting process, which is a positive
development.

However, there are also weaknesses in TANESCO's budget preparation and implementation
system that need to be addressed. For example, the lack of involvement of key stakeholders in
the budgeting process can result in unrealistic targets and objectives. This highlights the need
for greater collaboration and communication between departments and regions to ensure that
everyone's priorities are taken into account, another weakness is the inadequate monitoring
and reporting mechanisms to track budget performance, which can lead to deviations from
budgeted targets. This can result in poor performance and inefficiencies, which can impact the
company's overall performance. moreover, the lack of transparency and accountability in
budget preparation and implementation can result in fraudulent activities and mismanagement
of funds. This highlights the need for stronger internal controls and governance mechanisms
to ensure oversight and accountability in the budgeting process.

Overall, these findings suggest that TANESCO needs to address these weaknesses in order to
improve its budget preparation and implementation system and achieve better performance
and results. This can be done by involving key stakeholders, improving communication
channels, providing adequate training and development, enhancing accountability, and
strengthening internal controls and governance mechanisms. By doing so, TANESCO can
improve its overall performance and ensure that its resources are effectively and efficiently
used to achieve its strategic objectives and priorities.

4.4.3 Discussion of findings on the problems that affect effectiveness of budget

preparation and Implementation of the Company

Most of respondent highlight some of the key problems that affect the effectiveness of budget
preparation and implementation at TANESCO. These problems are not unique to TANESCO
and are common in many organizations. To improve the effectiveness of budget preparation
and implementation, TANESCO needs to take a multi-pronged approach that addresses these
problems.
TANESCO needs to improve communication and coordination among departments. This can
be achieved by clearly defining each department's budget and aligning it with the overall
organizational objectives. The budget should be communicated to all stakeholders and should
be reviewed periodically to ensure that it is aligned with the current operating environments,
secondly, TANESCO needs to involve all relevant stakeholders in the budget preparation and
implementation process. This will ensure that there is ownership and support for the budget,
resulting in better implementation. Stakeholders should be engaged at all stages of the
budgeting process, and their feedback should be incorporated into the budget.

Thirdly, TANESCO needs to establish a robust monitoring and evaluation framework to track
progress and identify areas for improvement. The framework should be designed to measure
the effectiveness of the budget and identify any inefficiencies or wastage. This will enable
TANESCO to take corrective action and improve the effectiveness of the budget. Fourthly,
TANESCO needs to establish clear mechanisms for holding individuals and departments
accountable for their budget performance. This will promote transparency and trust in the
budgeting process and encourage better performance. Fifthly, TANESCO needs to ensure that
the budget is flexible and allows for adjustments based on changes in the operating
environment. This will ensure that the budget is aligned with the current needs of the
organization and that resources are not wasted. Lastly, TANESCO needs to reduce political
influence on budget decisions. This can be achieved by establishing objective criteria for
budget prioritization and ensuring that political considerations do not override these criteria.
 CHAPTER FIVE

SUMMARY, CONCLUSION, AND RECOMMENDATION

The assessment of effectiveness of budget preparation and implementation in Tanesco was

used to assess how muchbudget preparation and implementation is effective in company. It
was vital to conduct study in the area of budget to enhance better budget preparation as well
as implementation which could be importance so as to maintain effective preparation and
implementation of budget in Tanesco.

Summary of findings

The main findings of the study are summarized as the follows; even if Governments use a
variety of budgeting approaches in developing annual budgets, Tanesco use specific
budgeting approach, which is favorable to achieve predetermined objectives.

variance were observed when compared actual results with budgeted estimates. The grounds
for occurrence of variance were poor estimation of budget, unexpected events, some
employees lack proficiency about budget preparation and implementation procedure and the
state of economy change or up and down of price (macro-economic constraints) and
personnel’s lack of computer skills since budget preparation is conducted by computer this
make budget preparation inaccurate. Based on interview and questionnaire, the Tanesco
makes variance analysis and takes corrective action by making budget transfer, budget
control, extraordinary budget /using supplementary budget and eliminating duplicated
activities which consume resources.

Though the Company has relatively effective preparation and implementation of budget ,
there
are the limitations which hinder effectiveness of budget performance, such as lack of
accuracy, time-consuming & costly, excessive spending, , problems in budget transfer, lack of
adequate budget, duplications of tasks, lack of proficient budget experts, human factors, and
huge recurrent expenditure than capital one. Besides the company also affected by
macroeconomic constraints and using appropriations-in-aid inappropriately. As strong side,
the organizations uses computerized budget system and allocate and utilize scarce resources
as much as possible

through adjustment and corrections

Conclusions

In this chapter the researchers arrived at conclusion based on the major findings. Therefore,
the researchers would be marched on the following conclusion regarding to effectiveness of
budget preparation and implementation in Tanesco. Based on data analyzed the researchers
concluded the following major issues

Firstly, the research identified several problems related to budget implementation and
preparation at Tanesco. These included inadequate funding, delays in disbursement of funds,
lack of effective monitoring and evaluation systems, and poor communication among
stakeholders. These problems have contributed to ineffective budget implementation and have
hindered Tanesco's ability to achieve its objectives.

Secondly, the research revealed that there is significant variance in the approaches used for
budget preparation and implementation at Tanesco. Some departments use a top-down
approach, where budgets are prepared by senior management and imposed on lower-level
departments, while others use a bottom-up approach, where budgets are prepared by lower-
level departments and consolidated at the senior management level. This variance in approach
has led to inconsistencies in budget preparation and implementation across different
departments, which has also contributed to ineffective budget implementation.

Thirdly, the research identified several strengths and weaknesses of budget preparation and
implementation at Tanesco. The strengths included the existence of a formal budgeting
process, the use of performance-based budgeting, and the involvement of stakeholders in the
budgeting process. However, weaknesses included the lack of adequate resources for budget
implementation, the absence of effective monitoring and evaluation systems, and the limited
involvement of lower-level staff in the budgeting process.

In conclusion, the findings suggest that there are significant challenges related to budget
preparation and implementation at Tanesco, which have contributed to ineffective budget
implementation. Addressing these challenges will require a comprehensive approach that
involves addressing the problems identified, standardizing the approach to budget preparation
and implementation across different departments, and leveraging the strengths of the current
system while addressing its weaknesses. With these measures in place, Tanesco will be better
positioned to achieve its objectives and improve its overall performance.

Recommendations

Based on my analysis, I would recommend the following steps to improve the research
effectiveness of budget preparation and implementation in TANESCO:

Develop a comprehensive budget preparation framework: TANESCO should establish a

comprehensive budget preparation framework that outlines the budgeting process, roles,
responsibilities, and timelines for each stage of the budgeting process. This will ensure that all
stakeholders involved in the budgeting process are aware of their responsibilities and the
timelines they need to adhere to.

Establish a strong budgeting team: TANESCO should establish a team of competent and
experienced professionals to manage the budget preparation process. The team should be
responsible for ensuring that the budget preparation process is consistent with the budget
preparation framework, and that the budget reflects the company's strategic objectives.

Improve stakeholder engagement: TANESCO should engage stakeholders in the budgeting

process to improve the quality of the budget. Stakeholders such as customers, suppliers,
employees, and regulators can provide valuable insights and feedback that can be used to
improve the budget's accuracy and effectiveness.
Utilize technology: TANESCO should invest in modern budgeting tools and software to
automate and streamline the budget preparation and implementation process. This will reduce
the risk of errors and delays, and improve the overall efficiency of the budgeting process.

Monitor and evaluate budget performance: TANESCO should establish a robust monitoring
and evaluation system to track budget performance against planned targets. This will help to
identify areas where the budget is not performing as planned, and allow for timely corrective
action to be taken.
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