Effect of Financial Reporting Practices on Budget Absorption in the County Government of Nakuru

Abstract

Abstract Effective budgetary process in the county government is important because it helps the county treasury to estimate revenue and expenditure of the funds received from the national government and funds collected from the county government. However, the budgeting process in the county governments in Kenya has been faced with challenges therefore posing a difficulty in achieving the anticipated development. Therefore, this study sought to determine the effect of financial management practices on budget absorption in the County Government of Nakuru. Specifically, the study sought to determine the effect of financial reporting practices on budget absorption in the County Government of Nakuru. The study was anchored on agency theory. The study adopted descriptive research design with a target population of 80 participants involved in budgeting process. The study adopted census technique to incorporate all the 80 targeted respondents. The study relied on primary data collected through questionnaire. A pilot study was done in Kericho County Government where 8 questionnaires were distributed to officers in the county treasury. Both descriptive and inferential statistics were utilized. Descriptive statistics involved the use of percentages, frequencies, mean and standard deviation. Inferential statistic involved the use of regression analysis. After analysis data was presented in form of a table. The findings revealed a unit increase in financial reporting practices would lead to 0.093 units increase in budget absorption in the county government of Nakuru. The study concluded that there was a positive and statistically significant correlation between financial reporting practices on budget absorption in the county government of Nakuru. From the findings this study recommended that the County Government of Nakuru should strengthen its financial reporting practices by ensuring timely, transparent, and accurate reporting systems that enhance accountability and contribute to improved budget absorption.