CHAPTER FOUR

DATA PRESNTATION, ANALYSIS AND DISCUSION

4.1. Introduction

This chapter presents the data analysis and interpretation part of the research. The study
attempted to examine the Role of budgeting and budgetary control practices on effective budget
utilization performance of Adama city administration. The collected data were presented and
analyzed using SPSS version 22.0 statistical software. The study used Descriptive Analysis,
correlation analysis, specifically Pearson correlation to measure the degree of association
between different variables under consideration. Regression Analysis was used to test the effect
of independent variable on dependent variable.

4.2. Response Rate

From a total of 196 questionnaires which were distributed to employees Adama city
Administration budget holders and users (Government sectors under Adama city administration)
144 (73.47%) questionnaire were obtained and identified as valid and used for analysis. Based on
these, the response rate is 73.47%.
4.3. Demographic Characteristics
The demographic data is crucial in understanding whether the given sample of the respondents in
the specific research study represents sufficiently the target population. The demographic data
also enables the researcher to find out the suitability of the respondents in providing the answers
to the research questions for the purpose of generalizing the results of the study. In this research,
age, educational qualification and work experience were considered as demographic
characteristics. The purpose of assessing respondents’ age is used to determine whether the
researcher considered heterogeneity of sample units. On the other hand assessing the work
experience and education level of the respondents’ is that, when the respondents are more
experienced and educated they have better opportunity to understand the case and give better
response than else. Therefore, the respondent’s demographic characteristics age, educational
qualification and work experience in the field presented in the following figures.
Figure 4.1 Respondents’ frequency distribution of Age
 12.5% 9.7%
Below 25 years

26-35 years
31.9%
36-45 years
45.8%
Above 46 years

Source: Research Data, (2023)

As it is shown in the figure 4.1, the researcher divided the age of the respondents in to four
categories, starting from Below 25 years of age to above 46. Therefore, respondent’s age below
25 years covers 9.7%, from 26 up to 35 years covers 31.9%, age of 36 up to 45 covers 45.8%,
and age of above 46 are 12.5% of respondents. Therefore, out of 144 respondents 130
respondents (90.3%) of respondents were above age of 26 years. Thus, it can be implied that the
respondents were matured enough which can ensure the value of the study, and the responses
obtained are valid.
Figure 4.2: Respondents’ frequency distribution of Educational Qualification

EDUCATIONAL QUALIFICATION
95
85
75
65
55
45
35
25
15
5
certificate College Diploma First Degree MA/MSC/MBA or
Above
Frequency 7 42 89 6
Percent 4.9 29.2 61.8 4.2

Source: Research Data, (2023)

Regarding figure 4.2 the result indicates educational qualification of respondents, 42 respondents
(29.2%) were Diploma holders, 89 respondents (61.8%) have 1st degrees and 6 respondents
(4.2%) have 2nd Degree (MA/MSC/MBA or above). From the educational background of
respondents, 137 respondents (95.1%) were Diploma, 1st and 2nd degree holders. According to
the response, the respondents provide relevant and reliable information needed for the study and
they are fit in line with the response of the questionnaire.
Figure 4.3 Respondents’ frequency distribution of Work Experience

WORK EXPERIENCE
65
55
45
35
25
15
5
less than 2 years 2-5 years 6-10 years 10 years and above
Frequency 15 60 53 16
Percent 10.4 41.7 36.8 11.1

Source: Research Data, (2023)

From the total respondents, 15 respondents (10.4%) fall at a work experience of less than 2
years, 60 respondents (41.7%) fall at a work experience level of 2-5 years, 53 respondents
(36.8%) were with 6-10 years’ experience and the rest 16 respondents (11.1%) were at a work
experience of more than 10 years. From this it can be concluded that the majority of respondents,
129 respondents (89.6%) fall at a work experience above two years. This implies that most of the
respondents have sufficient knowledge and experience about their firm and the subject matter of
the study.
4.4. Descriptive Analysis
As quoted by Girma Kumsa (2018), Mesfin (2016) used a kind of rule of thumb to create equal
gaps for a level of five points Likert scale (that ranges from strongly disagree to strongly agree in
the survey questionnaire). According to Hair et al. (2006), the calculated mean value that ranges
from 1 to 1.80 implies strongly disagreement (Very Low Performance), a mean range from 1.81
to 2.6 implies Disagree (Low Performance), from 2.61 to 3.4 implies Neither Agree Nor
Disagree (Moderate Extent), from 3.41 to 4.2 implies Agree (Good Performance) and from 4.21
to 5.00 Strongly Agree (High Performance). The difference between two scale values 0.8 used as
delimitation for each factors of the measurement in the questionnaire. The result 0.8 was found
by dividing the difference between the minimum (1) scores to the maximum score (5) of the
questionnaire.
In the method of evaluation of the data, standard deviation was also used. Small standard
deviation (relative to the value of the mean itself) implies that data are close to the mean whereas
a large standard deviation (relative to the mean) implies that the data points are distant from the
Mean. According to Field, (2009) Standard deviation is a measure of how well the mean
represents the data. Based on the response of the respondents Mean and Standard deviation
computed on the following tables.
4.4.1. Budget Planning and Preparation
Schiavo-Campo (2007) stated that a successful budget preparation process consolidating top-
down direction and bottom-up planning/depending on top direction with Bottom Interest.
Maitland (2001) mentions that the process of preparing and agreeing on a budget is a means of
translating the overall objectives of the organization into detailed, feasible plan of action. In
order to collect respondents’ perception towards the Budget Planning and Preparation dimension
of budgeting and budgetary control practices ten questions were provided and the results of the
finding are presented in the following table.
Table 4.1: Descriptive Statistics for Budget Planning and Preparation practices
Budget Planning and Preparation Std.
Budget:- N Mean Deviation
BP1 Budgets are prepared with reference to the organization annual
144 3.65 .546
plans, strategic plan and overall goal.
BP2 The budget demand prepared by the office is based on approved
144 3.38 .514
plans and programs
BP3 The office has adequate number of professionals (budget officers)
144 3.29 .500
who prepare plan and budget.
BP4 The staffs have adequate understanding in preparing plan and
144 3.47 .528
budget
BP5 All responsible staffs or functions of the organization are involved
144 3.69 .762
in budget preparation.
BP6 The organization key stakeholders engage in budget preparation
144 3.59 .521
decisions
BP7 The budgeting process starts with preparation of forecasts of the
144 3.50 .515
expected confirmed income/Awards.
BP8 The organization has documented budgeting process (budget
144 3.44 .564
notes) which is referenced during the process
BP9 Budget is prepared based on reliable data and estimates. 144 3.54 .646
BP10 All the necessary information (past experience, future expectation,
variances, factors leading to budget variances and etc.) are 144 3.27 .505
assessed before preparing the budget
Valid N (listwise) Grand Mean 144
Source: Research Data, (2023)

4.4.2. Budget Utilization and Implementation

According to Tommasi (2007), is the process in which resources are used to execute budget
policies. ‘A well-formulated budget can be executed poorly, but a badly formulated budget
cannot be implemented well,' he said. Budget utilization success is determined by factors such as
the organizations' ability to cope with changes in the macroeconomic climate and their execution
abilities, as well as assurance of successful expenditure management, addressing issues that arise
during implementation, and effectively managing the procurement and usage of resources (Allen
and Tommasi, 2011). In order to collect respondents’ perception towards the Budget Utilization
and Implementation dimension of budgeting and budgetary control practices ten questions were
provided and the results of the finding are presented in the following table.
Table 4.2: Descriptive Statistics for Budget Utilization and Implementation practices

Budget Utilization and Implementation Std.

Budget:- N Mean Deviation
BI 1 The organization always presents timely, explanatory, and
144 3.45 .667
complete budget implementation report.
BI 2 The organization utilizes the approved budget based on its plan 144 3.17 .571
BI 3 The organization had to break down the budget in activities and
144 3.58 .535
time, all expenditures are charged to the proper accounting period
BI 4 Budget allocated each activity is sufficient to address essential
144 3.31 .840
needs
BI 5 All expenditures are sufficiently documented 144 3.27 .505
BI 6 Coordination among the various departments’ or\and sectors
during budget execution is achieved through clear communication 144 3.47 .566
and consultation.
BI 7 Payment is implemented always based on full documents and
144 3.40 .628
evidences.
BI 8 Budget is reasonably distributed to different programs 144 3.58 .664
BI 9 New reforms in budgeting guidelines keep on changing and come
with new set of rules which take time to learn and can be a 144 3.49 .719
challenge to budget implementation
BI 10 The organization has a mechanism to implement the audit
144 3.59 .752
comments
Valid N (listwise) Grand Mean 144
Source: Research Data, (2023)

4.4.3. Budget Monitoring and Controlling

Budget process monitoring and control is a determinant of effectiveness; once budgets have been
enacted, they must be monitored and managed to ensure that they are successful in aligning
budgets over a given period of time (Horngren & Dater, 2006). If the organization ensures
effective monitoring and control of the budget process, a competent and open approach to budget
preparation will help persuade investors, development banks, and national or foreign donors to
make financial resources available. This is accomplished by ensuring that the projected budget
does not differ from the actual result, allowing for the requisite steps to be taken (Otley and Van
der Stede, 2003). In order to collect respondents’ perception towards the Budget Monitoring and
Controlling dimension of budgeting and budgetary control practices ten questions were provided
and the results of the finding are presented in the following table.
Table 4.3: Descriptive Statistics for Budget Monitoring and Controlling practices

Budget Monitoring and Controlling Std.

Budget:- N Mean Deviation
BM1 The approved budgets are shared with all departments and budget
144 3.76 .661
holders and ensure they are understood.
BM2 Leadership and support provided by managers to the subordinate
144 3.58 .535
throughout budget execution is effective.
BM3 While striving to implement project the budget holder consider
how their action affect achievement of the set target of the 144 3.54 .553
organization as a whole.
BM4 There is always reference to budget before any request to
undertake an activity is approved to ensure that there are adequate 144 3.60 .607
funds.
BM5 Recording of actual result is accurate and timely. 144 3.18 .816
BM6 Budget vs actual comparison and identification of variances is
144 3.58 .522
done regularly.
BM7 Budgets are reviewed as need arises to capture the reality during
144 3.59 .521
implementation.
BM8 Reports on budget variance are shared with budget holders and
144 3.19 .729
senior management.
BM9 Variances are investigated and justified to take timely corrective
144 3.34 .786
actions.
BM10 The organization develops solutions to problems revealed by
144 3.53 .554
budgetary control.
Valid N (listwise) Grand Mean 144
Source: Research Data, (2023)

4.4.4. Budget Evaluation

According to Drury, (2001) budgets have been extensively used by numerous organizations as a
framework for performance assessment Budgets are a useful tool for managers to evaluate their
own and the organization's performance by comparing budgeted plans to actual results to see if
planned objectives were met. In order to collect respondents’ perception towards the Budget
Evaluation dimension of budgeting and budgetary control practices ten questions were provided
and the results of the finding are presented in the following table.
Table 4.4: Descriptive Statistics for Budget Evaluation practices

Budget Evaluation Std.

Budget:- N Mean Deviation
BE1 The management of the organization review the budget and make
144 3.56 .498
adjustment
BE2 The organization review the process of budget allocation,
144 3.55 .589
implementation and monitoring
BE3 The organization conducts regular audit to evaluate
implementation and report the result for the audited department 144 3.65 .508
and the head of the organization on time.
BE4 The management team discusses the results of the audit report for
144 3.41 .584
taking corrective actions.
BE5 The organization’s budget performance evaluation reports are
144 3.62 .555
prepared frequently
BE6 The organization always take timely corrective actions when
144 3.41 .630
adverse variances are reported
BE7 The financial statement of your office is audited regularly by an
144 3.58 .621
independent auditor.
BE8 There is a proper involvement of auditor in all office major
144 3.51 .542
projects.
BE9 There is effective evaluation of each Budget activities in your
144 3.48 .603
sector.
BE10 Auditing performance is not challenge on budget Utilization in
144 3.40 .628
your sector.
Valid N (listwise) Grand Mean 144
Source: Research Data, (2023)

4.4.5. Effective Budget Utilization Performance

Performance is an indicator of an entity's improvement in financial position or the financial
consequences that arise from management decisions and implementation of such decisions by
employees of the organization in the light of corporate financial performance (Carton and Hofer,
2006). In order to collect respondents’ perception towards the Budget Utilization Performance
ten questions were provided and the results of the finding are presented in the following table.
Table 4.5: Descriptive Statistics for Budget Utilization Performance

Budget Utilization Performance Std.

Budget:- N Mean Deviation
UP1 The budget utilization reports are consistent with the plans, there is
144 3.76 .661
no over utilization and underutilization of the approved budget
UP2 The organization always presents timely, explanatory, and
complete budget implementation report to Adama city Finance 144 3.58 .535
and Economic Development Bureau.
UP3 The implemented budget is the same with the approved budget 144 3.63 .576
UP4 Sectors haven’t a trend of submits repeatedly a request for
144 3.53 .554
adjustment of budget portions after it is approved.
UP5 The organization utilizes its fund through continuous utilization
144 3.64 .598
control.
UP6 The organization utilizes its Budget based on continuous
144 3.47 .689
monitoring & evaluation system
UP7 Budgets are utilized for the purpose it was meant according to
144 3.65 .640
their objectives and compliance.
UP8 Management always takes timely corrective actions when advance
144 3.42 .743
variances are reported
UP9 The city administration has a system of regularly reviewing
144 3.76 .614
expenditures against approved budgets.
UP10 Budgets are utilized for the purpose it was meant according to
144 3.47 .566
their objectives and compliance.
 Valid N (listwise) Grand Mean 144
Source: Research Data, (2023)

4.5. Inferential Statistics

The collected data were used to make the inferential analysis of the study. In this study
inferential analysis consisted correlation analysis, multiple regression model assumption and
result of regression analysis.
4.5.1. Correlation Analysis
Correlations are the measure of the linear relationship between two variables. A correlation
coefficient has a value ranging from -1 to 1. Values that are closer to the absolute value of 1
indicate that there is a strong relationship between the variables being correlated whereas values
closer to 0 indicates that there is little or no linear relationship. The sign of a correlation
coefficient describes the type of relationship between the variables being correlated. A positive
correlation coefficient indicates that there is a positive linear relationship between the variables:
as one variable increases in value, so does the other.
Table 4.6: Correlation matrix between effective budget utilization and explanatory variables

BP BI BM BE UP
BP Pearson Correlation 1 .291** .304** .536** .474**
Sig. (2-tailed) .000 .000 .000 .000
BI Pearson Correlation .291** 1 .399** .456** .599**
Sig. (2-tailed) .000 .000 .000 .000
BM Pearson Correlation .304** .399** 1 .445** .575**
Sig. (2-tailed) .000 .000 .000 .000
**
BE Pearson Correlation .536 .456** .445** 1 .607**
Sig. (2-tailed) .000 .000 .000 .000
**
UP Pearson Correlation .474 .599** .575** .607** 1
Sig. (2-tailed) .000 .000 .000 .000
**. Correlation is significant at the 0.01 level (2-tailed).
b. Listwise N=144
Source: Research Data, 2023
The correlation table revealed that there was a positive significant relationship between
explanatory variables (i.e. Budget Planning and Preparation (BP), Budget Implementation (BI), Budget
Monitoring and Controlling (BM) and Budget Evaluation (BE) ) and the dependent variable effective
budget utilization or performance of Adama city administration with (0.474**, p<0.001)
(0.599**p<0.001), (0.575**,p<0.001) and (0.607**,p<0.001), respectively. This implies that the
four independent variables have the potential to influence effective budget utilization or
performance of Adama city administration in this study.
4.5.2. Multiple Regression Assumptions Tests
Before applying regression analysis, some tests were conducted in order to ensure the
appropriateness of data to assumptions. Therefore, to come up with a reliable model for this
survey the researcher carried out appropriate diagnostic tests. As an outcome of the data
obtained, diagnostic tests had to be conducted to ascertain the degree of normality,
multicollinearity, heteroscedasticity and autocorrelation before applying it in running a
regression model.
4.5.2.1. Multi-colinearity Test
In this section the correlation between effective budget utilization and explanatory variables;
Budget Planning and Preparation (BP), Budget Implementation (BI), Budget Monitoring and Controlling
(BM) and Budget Evaluation (BE) have been presented and analyzed.
The term multi co-linearity means existence of a “perfect” or exact linear relationship among
some or all explanatory variables of regression model. According to Field (2009) multi co-
linearity exists when the r value greater than 0.80 in the correlation matrix, tolerance value below
0.10, and Variance Inflation Factor (VIF) greater than 10 in the collinearity statistics.
Table 4.7: Collinearity Statistics
Collinearity Statistics
Model Tolerance VIF
1 Budget Planning and Preparation (BP) .706 1.416
Budget Implementation (BI) .743 1.346
Budget Monitoring and Controlling (BM) .749 1.335
Budget Evaluation (BE) .574 1.743
a. Dependent Variable: UP
Source: Research Data, (2023)
The result in table 4.7 shows that the co linearity between independent variables had no series
problem since the value of tolerance for all independent variable is greater than 0.2 and all VIF is
less than ten (VIF<10) (Pallant 2005). From the above table hence, we can conclude that there is
no co linearity between the data of the study.
4.5.2.2. Autocorrelation Test
Autocorrelation test can be undertaken with the Durbin-Watson that test for serial correlation
between errors and the value closer to 2 is acceptable (Field, 2009). Therefore the table (4.8)
presents Durbin-Watson value of (1.951) is closer to 2 it indicates there is no series
autocorrelation problem among error terms.
Table 4.8: Autocorrelation analysis

Model R R Square Adjusted R Square Std. Error of the Estimate Durbin-Watson

a
1 .765 .585 .573 .09349 1.951
a. Predictors: (Constant), BE, BM, BI, BP
b. Dependent Variable: UP
Source: Research Data, 2023
4.5.2.3. Linearity Test
Linearity refers to the degree to which the change in the dependent variable is related to the
change in the independent variables. To determine whether the relationship between the
dependent variable Effective Budget Utilization and the independent variables Budget Planning
and Preparation (BP), Budget Implementation (BI), Budget Monitoring and Controlling (BM) and Budget
Evaluation (BE); plots of the regression residuals through SPSS software version 22 had been
used.
Figure 4.4: Normal Point Plot of Standardized Residual
Source: Research Data, (2023)
The scatter plot of residuals shows no large difference in the spread of the residuals as you look
from left to right on figure 4.4. This result suggests the relationship we are trying to predict is
linear.
4.5.2.4. Normality Test
As per the Classical Linear Regression Models assumptions, the error term should be normally
distributed or expected value of the errors terms should be zero (E(ut)= 0).
Figure 4.2 shows the frequency distribution of the standardized residuals compared to a normal
distribution. As you can see, although there are some residuals (e.g., those occurring around 0)
that are relatively far away from the curve, many of the residuals are fairly close. Moreover the
histogram is bell shaped which lead to infer that the residual (disturbance or errors) are normally
distributed. Thus, no violations of the assumption normally distributed error term.
Figure 4.5: Frequency Distribution of Standardized Residual

Source: Research Data, (2023)

 4.5.2.5. Homoscedasticity vs Heteroscedasticity Assumption
In Homoscedasticity assumption, the variances of error terms are similar across the independent
variables. At each level of the predictor variable(s), the variance of the residual terms should be
constant. This just means that the residuals at each level of the predictor(s) should have the same
variance (Homoscedasticity); when the variances are very unequal there is said to be
Heteroscedasticity (Field, 2009). According to the statistical solution (2017), to test the linear
relationship assumption, Intellect’s in the statistics plot the standardized residuals verses the
predicted Y' values can show whether points are equally distributed across all values of the
independent variables or not. Biased standard errors lead to biased inference, so results of
hypothesis tests are possibly wrong. For a basic analysis, we first plot *ZRESID (Y-axis) against
*ZPRED (X-axis) on SPSS because this plot is useful to determine whether the assumptions of
random errors and Homoscedasticity have been met (Field, 2009).
Figure 4.6: Scatter plot based on Residual

Source: Research Data, (2023)

The graph of *ZRESID and *ZPRED should look like a random array of dots evenly dispersed
around zero. If this graph funnels out, then the chances are that there is Heteroscedasticity in the
data. If there is any sort of curve in this graph, then, the chances are that the data have broken the
assumption of linearity (Field, 2009). As can be seen in the scattered plot on fig 4.6 above, the
residuals at each level of explanatory variables look like they are evenly dispersed and that the
graph do not assume any type of shaped. Therefore, it is safe to say that this study has no
Heteroscedasticity problem.
4.5.3. Results of Regression Analysis
In this section regression analysis for determinants of effective budget utilization have been
undertaken to understand the relationship between effective budget utilization and explanatory
variables.
4.5.3.1. Regression Analysis Model Summery
A multiple regression model R-squared is determined by pair wise correlations among all the
variables, including correlations of the independent variables with each other as well as with the
dependent variable. The multiple correlation coefficients (R) are a measure of the strength of the
relationship between customer satisfaction and the four construct variables i.e. Budget Planning
and Preparation (BP), Budget Implementation (BI), Budget Monitoring and Controlling (BM) and Budget
Evaluation (BE). Large values of the multiple R represent a large correlation between the
predicted and observed values of the outcome.
Adjusted R2 is a measure of the loss of predictive power or shrinkage in regression. The adjusted
R2 tells us how much variance in the outcome would be accounted for if the model had been
derived from the population from which the sample was taken Adjusted R-squared is always
smaller than R-squared, but the difference is usually very small unless you are trying to estimate
too many coefficients from too small a sample in the presence of too much noise. Statistical
solution (2017)
Table 4.9: Regression Model Summary

Std. Error of the

Model R R Square Adjusted R Square Estimate
a
1 .765 .585 .573 .09349
a. Predictors: (Constant), BE, BM, BI, BP
Source: Research Data, (2023)
As it is shown in the table 4.9, there is causal relationship between the four explanatory variables
and Effective Budget Utilization. R represents the correlation between the observed values and
the predicted values of dependent values and the value of R produced by the regression
procedure range from 0 to 1. The larger the value of R indicates that there is strong relationship
between the observed and predicted values. Consequently, for this particular case the R value is
0.765 which indicates that there is a strong relationship.

From the table above, the coefficient of determination (adjusted R2) was found to be 0.573
indicating that the four explanatory variables account for 57.3% of the variability in Effective
Budget Utilization or budget utilization performance of Adama city administration. This suggests
that 42.7% of the variation is not explained by budget and budgetary control practices in this
study.
4.5.3.2. Regression Analysis ANOVA Result
The most important part of the table is the F-ratio, which is a test of the null hypothesis that the
regression coefficients are all equal to zero. Because R 2 is not a test of statistical significance (it
only measures explained variation in Y from the predictor Xs), the F-ratio is used to test whether
or not R2 could have occurred by chance alone. In short, the F-ratio found in the ANOVA table
measures the probability of chance departure from a straight line.
Table 4.10 ANOVA Result between study variables

Model Sum of Squares df Mean Square F Sig.

1 Regression 1.712 4 .428 48.966 .000b
Residual 1.215 139 .009
Total 2.927 143
a. Dependent Variable: UP
b. Predictors: (Constant), BE, BM, BI, BP
Source: Research Data, (2023)
For this survey data shown on the table 4.10, F is 48.966, which is significant at p<0.001
(because the value in the column labeled Sig. is less than 0.001). This result tells us that there is
less than a 0.1% chance that an F-ratio this large would happen, if the null hypothesis proposed
about F-ratio were true. Therefore, we can conclude that our regression model results in
significantly better prediction of Effective Budget Utilization and that the regression model
overall predicts the Effective Budget Utilization significantly well.
 4.5.3.3. Coefficients of Regression Analysis
In order to know which of the predictors’ i.e. Budget Planning and Preparation (BP), Budget
Implementation (BI), Budget Monitoring and Controlling (BM) or Budget Evaluation (BE) has
contributed significantly to our understanding of Y (Effective Budget Utilization), the following
table shows Coefficients when we explore each predictor’s beta (i.e., standardized regression
coefficient) and its level of significance.
Table 4.11 Regression Coefficients

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) .963 .212 4.542 .000
Budget Planning and Preparation (BP) .153 .062 .161 2.471 .015
Budget Implementation (BI) .260 .050 .327 5.154 .000
Budget Monitoring and Controlling (BM) .204 .045 .287 4.540 .000
Budget Evaluation (BE) .158 .047 .244 3.386 .001
a. Dependent Variable: UP
Source: Research Data, (2023)
As it is indicated on the table above, based on the finding of this study, all Budgeting and
Budgetary control constructs i.e. Budget Planning and Preparation (BP), Budget Implementation (BI),
Budget Monitoring and Controlling (BM) and Budget Evaluation (BE) had significant and positive
influence on Effective Budget Utilization Performance of Adama city Administration since all
predictors significance level is less than 0.05. Therefore, by improving Budgeting and Budgetary
control, Effective Budget Utilization Performance of the Adama city administration could be
significantly and positively improved.
4.5.3.4. Test of Hypotheses
Once the regression analysis is run and the outputs are obtained, the next step is testing of the
research hypothesis which was formulated at the beginning of the research work. There are four
hypotheses in this study which were developed with the aim of achieving objective of the study.
Therefore, based on the research model developed in chapter two the mathematical relationship
between Budgeting & Budgetary control practices and Effective Budget Utilization Performance
was expressed in the multiple regression equation as:
Y = X0 +X1 (BP) + X2 (BI) + X3(BM) +X4 (BE) + e
Y = X0 +0.161(BP) + 0.327 (BI) + 0.287 (BM) +0.244 (BE) + e
In accordance with this mathematical model the constructed hypothesizes has tested by
considering significance level of each constant parameter and Regression Coefficients in
multiple regression analysis. Consequently, tests for each hypothesis are discussed in the next
paragraphs based on Regression Coefficients output in the above table.
H1: Budget Planning and Preparation Practices has significant & positive effect on Effective
Budget Utilization Performance of Adama city administration.

From the data given in Table 4 above, the standardized coefficients of β-value and the p-value
for Budget Planning and Preparation Practices on Budget Utilization Performance were β=0.161
and the t- statistic value was calculated to be 2.471at p=0.015 respectively. These values showed
that Budget Planning and Preparation Practices had strong significant influences on Effective
Budget Utilization Performance because, according to this data, the p-value, which is p=0.015, is
less than level of coefficient indicated by 0.05. This, in turn indicated that from the standardized
coefficient of β= 0.161 that holding other variables constant as one unit of Budget Planning and
Preparation Practices increases, there would be 16.1% an increase on Effective Budget
Utilization Performance. Therefore, the hypothesis which was stated as Budget Planning and
Preparation Practices has significant & positive effect on Effective Budget Utilization
Performance of Adama city administration was possible to be accepted by the researcher in the
study. This finding is consistent with studies of