EFFECT OF INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM (IFMIS) ON FINANCIAL PERFORMANCE OF COUNTY GOVERNMENT IN KENYA

Abstract

Integrated Financial management information systems (IFMIS) is the computerization of public expenditure management processes including budget formulation, budget execution, and accounting with the help of a fully integrated system for financial management of central government ministries, county governments and other spending agencies. The general objective of this study was to establish the effect of IFMIS on financial performance of County governments in Kenya. The specific objectives were to determine how integrated budgeting system, procurement information system, reporting information system and revenue collection information system affects financial performance of County Governments. The target population of the study included 208 employees of Coastal County Government and a sample of 137 employees taken to be a representative of all employees in Coastal Kenya who use IFMIS. Descriptive survey was used to collect both primary and secondary data. Structured questionnaires were distributed targeting 137 Coastal Kenya County Government employees. The data collected was analyzed with the help of Statistical Package for Social Scientists (SPSS) version 21. Descriptive analysis was done using frequency distributions, percentages, mean and standard deviation to summarize results on individual variables. Inferential analysis was done using correlation and multiple regression models in order to establish the linear relationships between one or more variables and to test the significance of the relationships between the dependent and independent variables. The results were presented in tables and inferences drawn at 95% level of confidence. Results showed that there was a strong positive correlation between use of integrated budgeting system and financial performance of County Governments. Results showed that there was a strong positive correlation between use of procurement information system and financial performance of County Governments. Results showed that there was a strong positive correlation between use of reporting information system and financial performance of County Governments. Results showed that there was a strong positive correlation between use of revenue collection information system and financial performance of County Governments. It was concluded that integrated budgeting system improves credibility and confidence of the budget by ensuring that it is detailed and transparent with all the financial reports adequately prepared. Procurement information system enhanced procurement process that ultimately led to efficiencies in resource utilization. Reporting information system improved expenditure management and control. Finally, it was concluded that revenue collection information system ensured transparency and accountability of collected county revenue. It was recommended that the county management should always embrace IFMIS in budgeting process. In order to improve the procurement process within county level there is need to continually embrace procurement information system. In order to enhance financial reporting process within county, there is need to encourage compliance on policies governing the system. The county governments should ensure that the revenue collection information system is well integrated and efficient so as to increase the revenue collection as this was found to work better than old revenue collection methods.