Assessment of Budgetary Control Mechanism of foreign charities operating in Addis Ababa Ethiopia

Abstract

The purpose of this paper is to assess the budget control mechanism of foreign charity organizations operating in Addis Ababa Ethiopia. The study used a descriptive research design to explore the assess budget controlling mechanisms of selected foreign charity organizations. Out of the total number of 334 organizations the researcher used statics formula to determine sample size on Yamane (1967). As per the result of the formula 77 organizations selected the researched adopted convenience sampling method the data collection instrument was a questionnaire which adopted from literature reviews.5o (fifty) Organizations respond the questionnaire means the total of 100 (hundred) questionnaire was analyzed to this thesis. Reliability test was conducted to previously done piloting the instrument & the validity checked the consistency of the instruments in Cronbach’s Alpha result was 0.831 for questionnaire prepared to finance departments and management questionnaire was 0.649. The result from the analysis shows on budget formulation approach has participatory approach, some of the organizations there is the tendency of preparing budget with no operational plans, budget realignment in selected organization they are doing realignment of budget, there is the tendency of budget overstating budget lines amounts. This study recommends organizations include in their policies and procedures sections that make action plans the compulsory prerequisites for any budget setting, design and implement internal control procedures to ensure that budget preparation requirements are strictly adhered to by administrative and management staff involved in the process and that any instances of breaches of these procedures are identified, recorded, communicated and at last corrective actions are taken, design and implement control activities to monitor and investigate the actual reasons for such variances to take action , Include internal control procedures designed and implemented to prompt finance and management staff involved in the budget preparation process to realistically and exhaustively identify all the relevant assumptions for the preparation of the budget.