ASSESSING BUDGETING AND BUDGETARY CONTROL EFFECTIVENESS OF CREDIT UNIONS IN THE UPPER WEST REGION OF GHANA

Abstract

Despite the significant role played by Budgeting and Budgetary Control in aiding organizational success, 50% of Credit Unions (7 out of 14) within the upper west region of Ghana have neglected this important performance management mechanism as 100% of the 43% of total Credit Unions distressed have been observed to operate without budgets. The main objective of the study was to assess the relationship between budgeting and budgetary control and financial performance of Credit Unions in the upper west region of Ghana. The study used the descriptive and correlational research methods targeting the entire population of eight (8) Credit Unions registered with the DOC and affiliated to CUA. The census survey method was employed due to the small population size and purposive sampling was used to select the study respondents due to the technical nature of the subject. The statistical package for social sciences (SPSS) and Stata were used as analyzing tools and a regression model was adopted to determine the association between dependent and independent variables. The study findings revealed that there is a strong positive effect of budgeting and budgetary control on financial performance of Credit Unions as measured by return on assets (ROA). Credit Unions also failed to adopt some good budgeting and budgetary control practices. The study recommends that effective budget preparation, implementation and control should be facilitated through capacity building, robust systems and processes, prioritization, close monitoring and evaluation. Good budgeting practices including flexible budgets, budget committees and the use of budget manuals to guide the entire budgeting process, the preparation of master budgets and effective variance use should be adopted. Budgets must also cover all the operational areas of the business especially marketing and human resources which have been found to be neglected areas by the majority of Credit Unions in the region.