Abstract:
Budgeting is a form of financial planning and a control mechanism in an organization.
Thus, it is utilized to impose the strategy of an organization. Consequently, a budget
is composed of different functional plans that could help both short and long term
development of an organization. The Kwadaso SDA Hospital is decentralized private
organization and it engages in the preparation of annual budgets to facilitate its
financial operations. However, the budget preparation, implementation and
monitoring seem to face challenges, especially with regards to interferences from
central authority into the activities of decentralized organizations within the Seventh
Day Adventist Health Sector. This study adopts a case study approach in which faceto-
face interviews were extensively conducted to collect information on the budget
preparation, implementation and monitoring as well as the practical challenges that
face these processes. Documentary analysis was also conducted on the annual budgets
of the Hospital in order to determine possible budgetary variances. It was found out
that the budget preparation goes through a bottom-up approach and final approval
given by the Hospital’s Board of Governors. However, the implementation is
sometimes interfered with central authority directives, such as taking on new staff,
which makes it difficult to achieve budget goals resulting in unfavorable variances.
The target populations for the study are the Management and staff of the accounts
department and other senior members of the Hospital involved in the budget
preparation and monitoring activities. Purposive sampling method was chosen for the
study to enable the researcher get to the core targets for the study and eliminate
collection of irrelevant data. The techniques used by the researcher to select the
sample size required prior knowledge of the target population which allowed a
determination of the size of the sample needed to achieve a reasonable estimate with
accepted precision and accuracy of the population. The quantitative data obtained
from the study of the financial information of the Hospitals data were analyzed using
statistical methods such as curves and graphs to describe the extent of variances in
financial figures obtained from budgets over the five year period. Both qualitative and
quantitative methods of investigations were employed in the analysis and
interpretation of data for the study. Based on the analysis and their interpretations,
conclusions were drawn and recommendations given. My findings reveals that, just
like in all other SDA Hospitals, the budget preparation process must be guided by the
Adventist working policies although there is no specific budget manual in place. It has
University of Education,Winneba http://ir.uew.edu.gh
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been found out that the Budget preparation process in the Hospital takes a bottom-up
approach, where information for preparing the budget is obtained from staff of all
departments, channeled through the Head of the Accounting Section, plays the pivotal
role. After all the information are put together by the accountant, they are presented to
the management of the hospital for detailed deliberations. Feedback is taken from the
information if necessary. The final stage of the preparation is where the Board of
Governors for the Hospital would have to give a final approval for it to become
operational. The results of the budget variances analysis indicated that the Hospital
has not been achieving its income target for the past five years and this could be due
to factors such as low turnout of patients, unexpanded services and health insurance
policy implementation challenges. The expenditure variances also recorded adverse
variances in larger portion of the period under analysis and this could be attributed to
interferences from the Central authority that is supposed to supervise the activities of
the Hospital. These interferences tend to result in increase in expenditure levels thus
making it difficult to achieve budget goals. Concerning the budget preparation
process, the hospital is encouraged to incorporate the suggestions and input from the
executives of the Ghana Adventist Health Service during the initial stages before final
approval is given by the Governing Board of the Hospital. Also during the
implementation of the budget it is expected that much more autonomy would be given
to the Hospital in order to minimize or eliminate the adverse impact wrought by
interferences from the central authority (i.e. Ghana Adventist Health Service). In
order to avoid having adverse variances during the implementation of the budget, the
Hospital should ensure that the internal control mechanisms are strengthened and
regularized. This will ensure that the periodic monitoring is effective in terms of
ensuring that strategies are put in place to minimize or overcome all challenges that
militate against the achievement of budget goals. Also new strategies that will
enhance favorable variances i.e. meeting or exceeding income targets and not
controlling expenditure within budget, could then be established.
Description:
A Project Report in the Department of Accounting Studies Education, Faculty of
Business Education Submitted to the School of Graduate Studies in partial
fulfillment of the requirements for the Award of the Degree of Master in
Business Administration (Accounting) in the University of Education, Winneba