ASSESSMENTOF FINANCIAL MANAGEMENT EFFECTIVENESSIN INTERNATIONAL NON-GOVERNMENT ORGANIZATIONS IN ADDISA ABABA, ETHIOPIA

Abstract

This paper seeks to expose the practices of financial management effectiveness systems in international NGO sector in Addis Ababa, Ethiopia, based on the key effective financial management components and reporting requirements; namely Financial Planning, Budgeting, Accounting Records, Internal controls and Financial Monitoring. To achieve this purpose descriptive method of assessment with qualitative and quantitative research approach wereused and data were collected by applying randomsampling technique, five INGO`s were selected from the total population of twentythree. Interviews with finance managers and questionnaires framework comprising of general information data for background assessment and a Likert scale of 5 levels listing effective financial management assessment questions were distributed to sample selected. The questionnaire responses were analyzed using statistical tools of means and standard deviation as well as frequency tables and the findings of the assessment showed a relatively strong level of good practice in the area of effective financial planning, budgeting, recording, internal controls and financial monitoring. The major find wasthe issue of meeting the administrative vs program ratio on yearly plans that gets submitted to the ChSA as well as inclusion on yearly audits. This paper is expected to provide the INGO’s working in different development sectors detailed assessment tools to monitor each category of the effective financial management building blocks based on the results to better strengthen their system and work out an enabling environment with governing bodies. Finally, theresearcher recommended: as means to discharge responsibility & accountability and to showservice giving efforts, operational efficiency and effectiveness to contribution to the developmentendeavor of the country, INGO`s should establish a well-organized effective financial management systems:budget management, accounts record keeping, internal control, reporting and monitoring.Senior management groupshouldmonitor regularly the financial management system andshall give due attentionfor strengthening internal control activities. Additionally, it is better for ChSA to make development partners/international NGOs to involve in policy making which govern them.