PRACTICES OF FINANCIAL MANAGEMENT IN GOVERNMENT

SECONDARY

AND

PREPARATORY

SCHOOLS

IN

BISHOFTU

ADMINISTRATIVE TOWN.

MA Thesis

SHEBERU ALEMU

OCTOBER 2015
HARAMAYA UNIVERSITY, HARAMAYA

PRACTICES OF FINANCIAL MANAGEMENT IN GOVERNMENT

SECONDARY

AND

PREPARATORY

SCHOOLS

IN

BISHOFTU

ADMINISTRATIVE TOWN.

A Thesis Submitted to the Postgraduate Program Directorate

(College of Education and Behavioral Science)
HARAMAYA UNIVERSITY

In Partial Fulfillment of the Requirements for the Degree of

MASTER OF ARTS IN EDUCATIONAL LEADERSHIP

By
Sheberu Alemu

OCTOBER 2015

Haramaya University, Haramaya

APPROVAL SHEET
HARAMAYA UNIVERSITY
Postgraduate Program Directorate
We hereby certify that we have read and evaluated this Thesis entitled:-"Practices of Financial
Management in Government Secondary and Preparatory Schools in Bishoftu Administrative
Town, in Oromia Regional State" under our guidance by Sheberu Alemu. We recommended
that it be submitted as fulfilling the thesis requirement.
Getinet Demissie (Ph.D)

_________________

Major Advisor

Signature

Mr. Koye Kassa

_________________

Co- Advisor

Signature

_______________
Date
_______________
Date

As member of the Board of Examiners of the MA Thesis Open Defense Examination, We

certify that we have read and evaluated the Thesis prepared by Sheberu Alemu and examined
the candidate. We recommend that the Thesis be accepted as fulfilling the Thesis requirement
for the Degree of MA in Educational Leadership.
__________________
Chairperson
__________________
Internal Examiner
___________________
External Examiner

_________________
Signature
_________________
Signature
_________________
Signature

ii

_______________
Date
_______________
Date
_______________
Date

DEDICATION
This thesis is dedicated to my brother Gedisa Alemu who nursed me with care and affection,
by enabling me to reach this stage of education.

iii

STATEMENT OF THE AUTHOR

By my signature below, I declare and affirm that this Thesis is my own work. I followed all
ethical and technical principles of scholarship in the preparation, data collection, data analysis
and compilation of this Thesis. Any scholarly matter that is included in the thesis has been
given recognition through citation.
This Thesis is submitted in partial fulfillment of the requirements for MA degree at the
Haramaya University. The Thesis is deposited in Haramaya University Library and is made
available to borrowers under the rules of the Library. I solemnly declare that this Thesis has
not been submitted to anywhere for the award of any academic degree, diploma, or certificate.
Brief quotations from this Thesis may be made without special permission provided that
accurate acknowledgement of the source is made. However, requests for permission for
extended quotation from or reproduction of this Thesis in whole or in part may be granted by
the Head of School or Department when in his or her judgment the proposed use of the
material is in the interests of scholarship. In all other instances, however, permission must be
obtained from the author of the Thesis.

Name of the author: Sheberu Alemu

Signature: _______________

Date of Submission: October 2015

Department: Educational Planning and Management

iv

ACRONYMS AND ABBREVIATION

BTEO

Bishoftu Town Education Office

BTEOSG

Bishoftu Town Education Office Supervision Groups

BTFEDO

Bishoftu Town Finance and Economy Development Offices

ESDP

Education Sector Development Program

FDRE

Federal Democratic Republic of Ethiopia

MoE

Ministry of Education

MoFED

Ministry of Finance and Economy Development

NGO

Non -Government Organization

OREB

Oromia Regional Education Bureau

OEB

Oromia Educational Bureau

PTA

Parent Teacher Association

REB

Regional Education Bureau

SGB

School Governing Bodies

TEOSG

Town Education Office Supervision Groups

WEO

Woreda Education Office

BIOGRAPHICAL SKETCH
The author was born on October 1985 in Oromia Regional State, Arsi Zone, Digaluna Tijo
Woreda. When he was seven years old, He joined Waji Gusha elementary and junior school
and then attended his schooling for six years thereafter he joined Tijo upper primary schools
and then attended for two years. When he completed primary level, he joined Asella Chilalo
Secondary school in 2000 and then attended his education for two years. He took Ethiopian
School Leaving Certificate Examination, and then he joined Asella preparatory school in
2002. Up on the completion of preparatory school level, he joined Bahir Dar University in the
department of Mathematics and awarded degree in Mathematics in 2006. After graduation he
has worked as mathematics teacher in government school for three years and then he served
for three years as school principal. After that he served as supervisor of secondary schools and
then joined the summer program of the School of Education and Behavioral science
Department of EdPM of Haramaya College in 2012 to study MA in Educational leadership.

vi

AKNOWLEDGEMENT
Firstly, I would like to express my sincere gratitude to my Major advisor, Getnet Demissie
(Ph.D) and Co-advisor, Koye Kassa (Assistance Professor) for their tireless effort in assisting
me and for being my valuable sources in providing critical comments, encouragement and
inspiration.
Secondly, My heartfelt thanks and great appreciation also goes to my wife, Mulu Fekadu and
my child, Yerosa Shibru for their moral support and unreserved effort and dedication in
helping me complete my graduate program.
Finally I would like to extend my gratitude to all my respondents for their kind cooperation
during the collection of the data for the study. I also wish to extend my gratitude to Ministry of
Education for providing me the financial assistance that was indispensable for the successful
accomplishment of this study. Last but not least, I honor the lord, for giving me such a caring,
lovely and beloved family with whom I am always peaceful and healthy and my soul praises
God for all his wills upon me.

vii

TABLE OF CONTENTS
APPROVAL SHEET

ii

DEDICATION

iii

STATEMENT OF THE AUTHOR

iv

ACRONYMS AND ABBREVIATION

BIOGRAPHICAL SKETCH

vi

AKNOWLEDGEMENT

vii

TABLE OF CONTENTS

viii

LIST OF TABLES

xi

ABSTRACT

xii

1. INTRODUCTION

1.1. Background of the Study

1.2. Statement of the Problem

1.3. Research Questions

1.4. Objective of the Study

1.4.1. General objective

1.4.2. Specific objectives

1.5. Significance of the Study

1.6. Delimitations of the Study

1.7. Limitation of the Study

1.8. Operational Definition of Terms

2. REVIEW OF RELATED LITERATURE

2.1. The Concept of Management

2.2.The Concepts of Financial Management

2.3. Functions of Financial Management in Education

2.4. School Based Financial management

10

2.5.Theoretical Framework of School Finances

11

2.6.The Concept of Budgeting

13

2.6.1. The Purpose of budgeting

14
viii

TABLE OF CONTENTS(Continued)
2.6.2. Principles of budgeting

14

2.6.3. The process of budgeting

15

2.6.4. Budgetary control

16

2.7. Financial Accounting

17

2.8. Financial Controlling and Auditing

17

2.8.1. Definitions of Audit

18

2.8.2. Scope of an audit

19

2.8.3. The objective of auditing

19

2.8.4. Types of audit

19

2.8.5. Principles of audit

20

2.8.6. Internal Financial Control

21

2.9. Sources of Finances in Ethiopian Schools

22

2.10. School Financial Management in Ethiopia

22

2.11. The Role of Stakeholders in Financial Management

23

2.12. Monitoring and Evaluation in Managing Finance

24

2.13. Challenges of Financial Management in Secondary Education

25

3. RESEARCH DESIGN AND METHODOLOGY

27

3.1. Research Design

27

3.2. Sources of Data

27

3.2.1. Primary Sources

27

3.2.2. Secondary Sources

28

3.3. Population size and Sampling techniques

28

3.4. Instruments of Data Collection

29

3.4.1. Questionnaire

29

3.4.2. Interview guide

30

3.4.3. Documents

30

3.5. Methods of Data Analysis

31

32

4. RESULTS AND DISCUSSION

4.1. Demographic Data

32
ix

TABLE OF CONTENTS(Continued)
4.2. Competence, Training and Position of Financial Personnel

36

4.3. Approved Annual Budget, Period of Release and Sources of Budget

39

4.4. Practices and Problems of Financial Management

42

4.4.1. School Financial Management

46

4.4.2. Financial Allocation and Budget Planning.

51

5. SUMMARY, CONCLUTION AND RECOMENDATIONS

69

5.1. Summary

69

5.2. Conclusion

72

5.3. Recommendations

73

6. REFERENCES

75

7. APPENDICES

80

7.1. Appendix-I: Questionnaire

80

7.2. Appendix-II: Interview

88

7.3. Appendix-III: Documents

90

LIST OF TABLES
Table

Page

Sample and Sampling Techniques.

29

Demographic Information of Respondents

33

Academic Qualifications and Services of Respondents

34

Competence and Training of the Respondents

36

Annual Budget, Period of Release and Sources of Budget

39

The practice of finance in the Schools

43

Some Specific Condition of School Financial Plan

46

Some Specific Condition of School Financial Management

49

The Practices of Financial Allocation for School.

51

10 The Practices of Budgeting Process in the Schools

54

11 Practices of Budget Utilization in the Schools.

57

12 The Practices of Depositing Money in the School

59

13 Auditing and Controlling Financial Operation

60

14 Degree of Problems of Financial Management Implementation in Schools

63

15 Challenges of Financial Management Implementation in Schools

66

xi

PRACTICES OF FINANCIAL MANAGEMENT IN GOVERNMENT

SECONDARY

AND

PREPARATORY

SCHOOLS

IN

BISHOFTU

ADMINISTRATIVE TOWN
ABSTRACT
The aim of this study was to assess and examine the practices of financial management of
government secondary and preparatory schools in Bishoftu Administrative Town. Descriptive
survey design was used to investigate the practices of financial management in the secondary
schools. Quantitatively and qualitatively data analysis methods were used in order to answer
the research questions. The study involved a total sample size of eighty two respondents . Two
principals, seven vice-principals, three accountant, three treasures, thirty department heads,
one school supervisor, one education office head, seven supervision group, nineteen PTA
members, one finance office heads, two finance plan and budget experts were used as main
source of data. All participants were selected using available sampling techniques.
Questionnaires, interview and document analysis were the data collection tools for the study.
Questionnaires were conducted with 69 participants and interview with 8 participants. Data
analyses were made using descriptive statistical tools such as frequency, percentages, mean
and standard deviations were used. The study results revealed that most respondents were
aware of the existence of financial management problems in the school. Such as a lack of
skilled and experienced, lack of training; constraint of structured financial guide-line and
procedures, inadequate control systems; lack of budget planning, lack of stakeholder
participation on financial plan and decision making, lack of adequate rule and regulation in
the schools on financial issue and lack of monitoring and evaluation of school finance.
overall, the above problems affected not only the effectiveness and efficiency of financial
management of the schools but also the whole process of educational activities. Taking in to
consideration the above results, it is recommended that all concerned bodies, such as the
Oromia Regional Education Bureau , Bishoftu Town Education Office and Town Finance
Office being together should prepare enough work-shop and training for the school personnel
and for the concerned bodies in the field of financial management. Furthermore, it can be
encouraged to release the allocated schools budget on time, strengthening internal and
external auditing in order to reduce the problems of financial management in the government
secondary schools.

xii

1. INTRODUCTION
This part of the thesis serves as a stepping stone for the researcher and hence, different
issues like the problem, sources, research gaps, objectives, beneficiary of the research,
would discussed in detail. This part has different sub topics, background of the study,
statements of the problem, objectives, significance, delimitation of the study, limitation of
the study and finally operational definition of the key terms.
1.1. Background of the Study
According to UNESCO (2011), Education is a backbone for the overall development of
any society. In addition, it contributes for economic growth, development of science and
technology, education can help change society by improving and strengthening skills,
values and communication skill. Among the priority in the education system in Ethiopia is
quality and internal efficiency (MOE, 2010). Studies revealed that education is strongly
influenced by the resources made available to support the process and by how these
resources are managed effectively. Furthermore, disbursing all the committed resources
and delivering educational services to students under good governance are key for meeting
education challenges successfully despite limited resource (UNESCO, 2011). The
education goals and objectives can be achieved by means of using different resources as
inputs. Among the resources as inputs, finance is a key issue to get and utilize all important
inputs and to run the task of education at all levels in appropriate ways. This is due to the
fact that among the resources (inputs), finance is more commonly used by schools through
a process and mechanism of budgeting (Melaku,2000).
Financial resources provide the support of human resources development and materials
management. Proper management of financial resources is very important in the
management of education (Dash and Nena, 2008). Effective financial management ensures
that all financial regulations and procedures are complied with all financial transactions are
recorded accurately, and adequate controls are incurred (CWL, 2000).
Finance in the school is one of the crucial issues to promote access to education and its
quality (MoE,2002). The expansion of educational systems and provision of quality
education in schools are greatly influenced by the amount of finance available to education
and by the extent to which the available finance is effectively and efficiently managed and
utilized. Therefore, strong relationship exists between finance and educational programs, or

2
the capability of finance is influencing educational programs of schools (Melaku,2000). In
addition to this, finance in the school is a critical issue to accomplish different tasks which
support in insuring quality of education and to expand education (MoE,2002).
According to Bichoff (1997), School Principals should have a basic knowledge and skills
of financial management. Similarly, educational qualification, experience and interest of
employees must be considered in assigning workers. Personnel do a better job if they are
assigned to areas where they have interest, preparation, qualification and experience
(Clarke, 2007). Since Schools perform their functions by receiving and spending public
money, it is a major responsibility of School principals to see whether the money is spent
wisely, accurately and complete financial records.
School financial management is a fundamental to preparing and equipping school
principals with financial skills and competencies that will enabled them to be responsible
and accountable for funds that have been received for specific school objectives. It will
also equip them with managerial skills and competencies that will enable them to make
contribution towards the improvement of the overall productivity of the school (Bisschoff
and Mestry, 2003).
The lack of usage of funds by principals often leads to shortage of critical resources in
schools as money is not available for the purchasing of the necessary books, equipment and
so forth. The planning of school finances usually begins with the drafting of a budget.
Where budgeting is an ongoing and dynamic process that is typically marked by regular
phases, such as, planning, needs assessment and priority setting. Budgeting is a forwardlooking process which should be guided by the school's vision for the future and a realistic
assessment of the risks (Clarke, 2007 and Du Preez et al. 2003).
According to MoE ( 2009/2010), a major challenges identified to meet the ESDPIII targets
set is the inadequacy of education financing. Trends in education expenditure generally,
shows that teachers salaries consume more than 85 percent of the recurrent budget. If this
trends continues, other inputs critically needed for quality improvement such as textbooks
and supplementary reading materials, classroom furniture and equipment, maintenance and
training may fall short of the required budget.

1.2. Statement of the Problem

As suggested by MoE (1994), sufficient budget allocation and proper utilization of the
educational budget for the intended purpose is critical issue. It is stated that the financing
of education must be efficient and appropriate to promote equity and quality of education.
In this connection, many education offices however, do not yet have required capacity to
exercise their responsibilities effectively and schools functioning also need further
improvement (MoE,2010). In Ethiopia, although school principals are expected to be
appointed on the basis of experience, services and qualification related to the position,
many principals do not have directly related field of financial management. In the
requirements recruiting principals, OREB, stated alternative requirement that is any
education subject in first degree (OREB, 2009).
The Program Action Plan of ESDP-III recognized the efforts made to build the capacity of
education personnel in educational planning and management, financial management, and
other fields. And it showed clearly, the continuity of lack of planning capacity in spite of
all the efforts made. Lack of planning capacity in the Ethiopian education system is on top
of the agenda of both the government and donors since 1997 (Tesfaye, 2008). As
described in ESDPIV (2010), many offices that is education however, do not yet have the
required capacity to exercise their responsibilities effectively. Because of these reasons, the
current condition at school level in Ethiopia shows that financial management practice
faced different challenges. The challenges identified by Melaku (2000), was local
community members who contribute to school which are not in the appropriate position to
appraise the efficiency of the school principals and others in managing finance.
Further, UNESCO(2011) stated that, the mismanagement of funds/finance by principals
often lead to shortage of critical resources in school. Corruption occurs in the allocation,
execution and use of government budgets allocated for education. Funds that reach schools
may not be used according to their intended purpose. Many principals face disciplinary
measures due to miss utilization of financial resources, carelessness in managing financial
resources (Dash and Nena, 2008).
The other challenges are because of poor planning and lack of cooperation. Functionaries
do not try to join their heads and hands towards the common goal. Most functionaries show

1.7. Limitation of the Study

The limitation of the study was shortage of time and resources, searching respondents of
PTA members was time consuming, because some of them found out of the schools. They
were only available on weekend to fill the questionnaires. The above key constraints took
more time than the expected period.

1.8. Operational Definition of Terms

Effectiveness: this is the measure of how well financial management will contribute to
achieving educational goals and objectives
Efficiency: refers to a measure of the expected performance (output) for each unit
invested.
Financial control: refers to monitoring actual performance and comparing with target
performance.
Financial reports: refers to financial statement of the transactions which are reported to
the stakeholders.
Financial management: is the process of managing school funds according to the
regulations and guidelines provided by the authorities and relevant legislation.
Financial reports: refers to financial statement of the transactions which are reported to
the stakeholders.
Secondary school: A school for students who have finished their education usually
attended grade 9 to 12.

2. REVIEW OF RELATED LITERATURE

This section deals with topic related to financial management in education. It is concerned
with the concepts of management, Financial management, Functions of Financial
management in Education, Budget, Financial Accounting, Stages in Implementing an
Educational Costing Activity, Financial Controlling and Auditing, Sources of Finances in
Schools, School Finance Management in Ethiopia and Monitoring and Evaluation in
Managing Finance.

2.1. The Concept of Management

The basic objectives of management are handling people or a situation for achievement of
certain goals. As a noun, the word 'management' refers to the person(s) who perform the
act(s)of management. But, from a functional or implementation perspective, management
is a process that involves planning, organizing, resourcing, directing and controlling
different activities for the accomplishment of desired goals. Fayol in Ghuman(2010), the
father of modern management theory, was first management thinker to identify five basic
management functions which are planning, organizing, commanding, coordinating and
controlling. The present widely accepted integrating approach to management classifies
managerial function as planning, organizing, staffing, leading, and controlling
(Ghuman,2010). Management is a distinct process consisting of planning, organizing,
actualizing, controlling, determining and accomplishing stated objectives by the use of
people and other resources (Dash and Nena, 2008).

2.2.The Concepts of Financial Management

Financial management is a system which studies the varies sources of income, areas of
expenditure; it decide priorities, and meets expenditure on priority areas within the
allotment received; it ensures efficient use of financial resources for management of human
and material resources for accomplishment of predetermined objectives (Dash and Nena,
2008). Financial management deals with the planning and controlling of financial
activities; and this also refers to a process of efficient management of finance/ funds for
achieving organizational goals (Kumar, 2005). Financial management processes, such as

financial planning, budget evaluation, controlling, accounting and costing are applicable in
financial management in education.
Thus, it follows that financial management in educational institutions deals with raising
funds from internal and external sources and ensuring its allocation to various educational
activities or programs; monitoring the flow of funds (financial transaction) to the
institution's activities and programs. According to Davies and Boczkd (2006), financial
management has its roots in accounting, although it may be regarded as a branch of applied
economics.

2.3. Functions of Financial Management in Education

The financial function comprises all the financial activity can be defined as the work /tasks
performed (Mestry and Bisschoff, 2009). Similarly, financial management activities in
education institutions are encompassed in this area as in the case of financial management
activities in business organization. Management control is a internal financial management
function that deals with controlling the proper flow of cashes to programmed /per
determined cost unit and activities. In the same way public organization have similar
requirements that are to plan for activities, prepare budget to carry out activities and
reporting to the stakeholders that account systems are established on the use of public
funds and audits are done. Financial management particularly concerned with the planning,
acquiring and efficient use of funds (Chadwick, 2002).The main concern and focus of
financial management in nonprofit institution like education is ensuring the proper use of
financial resources through planning, budgeting and controlling. That is, in public
institutions, the principal financial management is identified with two principal functions.
These are financial planning (budgeting) and financial control. According to Crowther
(2004), management accounting is concerned with the analysis and reporting of financial
information for managers within a business in order to assist them in the performance of
their jobs. Management accounting is essentially a part of management decision making.
It helps managers with decision making in the following areas: planning (what to produce
and how best to meet the objectives of the organization),control (to ensure that the
outcomes correspond to those planned), decision making (to decide between alternative
courses of action by evaluating the consequences), measuring performance or to decide if it

10

matches the expectations set out in the plan and to take corrective action if not( Bischoff
and Mestry, 2003).
Management control is an internal financial management function that deals with
controlling the proper flow of cashes to programmed /per determined cost unit and
activities. In the same way public organization have similar requirements that are to plan
for activities, prepare budget to carry out activities and reporting to the stakeholders that
account systems are established on the use of public funds and audits are done. The two
principal functions (financial planning and financial control) comprise the following
specific functions of financial management in education institutions. These are planning
and programming of activities to achieve the desired educational goals. Financial reporting
relies on accurate and complete financial recording keeping. The accounting system of the
school should be comprehensive, so that the preparation of annual financial statements can
be used for financial analysis (Bischoff and Mestry, 2003). Financial management deals
with the planning, and controlling of financial activities. Financial management assists an
organizations operations management to reach its financial resources. It also assists in the
reporting of financial results to the users of financial information.

2.4. School Based Financial management

According to Mestry (2006), School based management can be explained as an approach
to the management of public schools where in there is a significant and consistent
decentralization to the school level authority and responsibility to make decisions related to
the allocation of resources, in a system of education having centrally determined goals,
priorities and frameworks for accountability.
Similarly, Marishane and Botha (2004), explained School based management as a
mechanism aimed at improving schools by shifting decision making powers regarding the
budget from the central level to the schools. This study further argue that school based
management is the joint responsibility of both the school governing body and the school
management team, which together form the school based financial management structure.
This structure is accountable to the two main sources of school funding namely the state
and the community and is responsible for monitoring and evaluating the financial
management performance of the school based management structure.

11

According to Bisschoff and Mestry (2003), financial management is the performance of

management actions ( regulatory tasks) connected with the financial aspects of schools,
with the main aim of achieving effective education, and carried out by a person in a
position of authority. Hence the scope of school management is very wide. It includes the
following elements: planning, budgeting, controlling, coordinating, decision making,
evaluating and directing (Dash and Nena, 2008).
Similarly, VanWyk (2004), stated that financial management will only be effective if line
managers are competent, committed, outcomes based budgeting is applied and accrual
based reporting is introduced into the public sector. This study further concluded that the
financial administration in the public sector is not attractive due to a lack of up-to-date
technology financial restraint, inadequate financial training and poor internal control
systems. Good governance further seeks to ensure that there is adequate control over the
strategic, tactical and operational planning of the school, especially the schools finances
and resources, to enable it to achieve its overall objectives. The school management team
on the one hand needs to demonstrate and put into practice honesty, integrity,
accountability, responsibility and transparency and the PTAs on the other hand must apply
tests of fairness, accountability, responsibility and transparency and be accountable to both
the school and their community.
According to MOE (2002), Schools are based mainly on two sections: which gives parent
teacher-association power to administer and control the school's property, buildings and
school resources, gives parent-teacher-association extra allocated functions to control their
own finance and extra-curricular activities. This implies that the community plays an active
role in the life of the school specifically in assisting of schools.

2.5.Theoretical Framework of School Finances

There is no single all-embracing theory of educational management. Bush(2004), classified
the main theories of educational management into six major models of educational
management: formal, collegial, political, subjective, ambiguity and cultural. Principals
possess authority legitimized by their formal positions within the schools and are
accountable to school governing bodies for their activities. Formal models give
prominence to official structures, rational processes, the authority of leaders and

12

accountability. These may be linked to the school management tasks identified by Clarke
(2007), namely planning, organizing, leading and controlling. The administration of
school's finances is an integral part of effective school administration (Mestry,2004 and
Ntseto, 2009). Planning is a vital component of effective school financial administration
(Du Preez et al., 2003). The planning of School finances usually begins with the drafting of
a budget (Kruger, 2005).
According to Bisschoff (1997), in an educational organization its financial management
activity means bringing all possible input from staff, parents, students and the community
together to render the service of quality education. This study further stated that leadership
in financial management involves three aspects: sound relationships communication with
all stakeholders and internal as well as external and motivation of all the people concerned
with school finances. In addition, the study revealed that harmonious collaboration
between academic and administration staff is a prerequisite for successfully achieving
financial objectives. The study argues that good communication will ensure that each staff
member who is involved in school finance would be informed about authorizations for
various expenditures, is knowledgably about the financial procedure for expending money,
and knows to whom the results of the expenditure should be reported. Overall, the study
emphasized that all staff members should feel that they have a role to pay in all of the
school's activities, as this will motivates them to work hard and consequently achieve
effective and efficient financial administration, which can be deduced that the same
relationship exists between the budget and control since a budget is planning instrument.
According to Kruger, (2005) and Ntseto, (2009), organization of School finances should
include aspects such as drawing up a school financial policy, setting up a structure within
the School to handle administrative and financial matters, delegating certain functions to
clerks, class teachers and treasurer and coordinating activities. In addition, Niemann
(1997), believed that financial activities are dealt with most effectively when both the
administrative and academic personnel are involved in the process. Communication is the
basis for establishing relationships and for providing motivation. The financial planning of
school finance and its control are interdependent and closely linked with each other
(Ntseto, 2009). This study further defined financial planning as it deals about budgeting
and argues that a budget is a financial control technique as well as a plan.

13

2.6.The Concept of Budgeting

Budget is defined by different scholars in different ways. The following are some of the
definition given by different scholars. According to Chadwick (2002), budget is a plan
expressed in money. It is prepared and approved prior to the budget period and may show
income, expenditure and capital to be employed. A budget is a financial or quantitative
statement prepare in advance of a specified accounting period. The budget normally gives
the income and/or the expenditure, including any capital expenditure, needed during a
financial period to achieve the given objective (Jill and Roger, 1999). According to Croft et
al. (2002), budgets are forecasts that specify the financial resources which have been
allowed to an organizations activities or to the achievement of its objectives for a given
period of time.
A budget is a document that translates plans into money money that will be needed to be
spent to get your planned activities done (expenditure) and money that will need to be
generated to cover the costs of getting the work done or income (www.civicus.org.). A
budget is a tool for both planning and control. According to Prasanna (1999), budget is an
instrument for detailed operational planning and control over a short period of time,
usually one year. According to Stesis et al. (2001), budget is a control mechanism to assure
accountability, financial integrity, and legal compliance; a management tool to achieve
operating economies and performance efficiencies; and a planning component to assess the
overall effectiveness of government programs in meeting public service needs. Budget is a
plan of managements intentions of attaining specified objectives. According to Pandy
(1993), the basic features of a budget are the following. It is a comprehensive and
coordinated plan. It is expressed in financial terms. It is a plan for the organization
operations and resources. It is a future plan for a specified period. Therefore, a budget is an
agreed plan for future action. It is quantitative expression of a plan of action prepared in
advance of the period to which it relates.
According to Ntseto(2009), School financial planning is the task of the principal who has
to see that the schools purpose, mission, goal and methods of attaining these are clearly
understood by all the stakeholders at the school. It is the functional elements of the
principle that predetermines what the school proposes to accomplish. It is the starting point

14

of the financial management process and is the point around which all the school financial
activities revolve.
2.6.1. The Purpose of budgeting
According to Bisschoff (1997), Budget is one of the most popular devices used for
planning and controlling institutions in the use of financial resources. Planning is the
decision on what should be done how it should be done, and by what it should be done .
Hence, budget is an integral part of planning, summaries the purpose of a budgeting as
assisting systematic planning; quantifying objectives and identifying priorities;
coordinating activities and communicating plans within the organization ;motivating and
increasing the accountability of middle management; authorizing expenditure and
activities; controlling ,monitoring and analyzing expenditure; and evaluating performance.
The schools budget is an important financial management tool. This budget is drawn up
using the aims and objectives of the schools appoint of reference, and should always reflect
the policy of the School concerned.
Another study by Condoli et al. (1984), indicated that budgeting establishes a plan of
action for the future. Further, It requires an appraisal of past activities in relation to planned
activities. It necessitates the establishment of work plan. It requires orderly planning and
coordination throughout the organization. It establishes a system of management control. It
serves as public information. Overall, budgeting should be seen as an activity that
facilitates the educational process.
2.6.2. Principles of budgeting
According to Chadwick (2002), the effective principle of budgeting includes the following
points. It should be a team effort. All these involved should work together in harmony and
adopt a common sense approach throughout the budgeting process. Attainable targets;
from a management point of view, it is most important that budget is accepted as being fair
and reasonable. If target are too difficult people may just give up trying to achieve them,
and become de-motivated and /or leave. participation; the people involved may even bring
to the attention of management information that is vital to the success of the budgeting
process, and stop them from going ahead with a development that could have disastrous

15

consequences. overall, the preparation process and meeting held to discuss the budget
direct the attention of management to appreciate the fact that budgets are interrelated, for
example there is a link between the income budget and the expenditure budget. Identify
their principal budget factor, that is limiting factor such as demand, as this will constrain
their activities. Decide upon how they are going to share out the scarce resources which
they have at their disposal between the competing factions.
2.6.3. The process of budgeting
According to Mestry and Bisschoff (2009), the Schools vision and mission is embedded in
the development plan and provides direction to the budgeting process. Further, a budget is
not a balance sheet or simply a list of figures, which cannot be regarded as statement of the
previous years spending and a prediction or projection of spending for the next year. It
should be regarded as a planning instrument, a decision model to assist the management of
the schools during the next financial period and beyond.
As a study by Prasanna(1999) stated that the process of budget determination involves a
great deal of negotiation between the subordinate and his superior at various levels in the
organization. budgeting then, forces the administrator and staff to plan together what needs
to done, how it will be done, and who will do it.
Budgeting in an organization is a systematic design for planning, allocating, and
controlling the use of resources( Koteen, 1989). The budget process provide a framework
for making decisions about the size , allocation, and financing options appropriate to
achieve program and policy objectives (Stesis et al., 2001). Effective financial
management calls for careful preparation of budget for each financial year. The
manager/principal should keep in view the sources of income and the expected expenditure
on various heads. It is healthy practice to invite proposals from various sections, examine
them and consolidate all proposals in the budget. A competent teacher should be remaining
in charge of preparation of budget (Dash and Nena, 2008). Budgeting is a forward-looking
process which should be guided by the schools vision for the future and a realistic
assessment of the risks (Clarke, 2007).

16

According to UNESCO (2006), during budget preparation, tradeoffs and prioritization

among programs must be made to ensure that the budget fits government policies and
priorities. The study further noticed that there are three main phases to budget procedures.
The first one is budget preparation that is the ministry of finance uses the information to
establish budgetary guidelines, which are then taken into consideration by other ministries
as they draw up their own budget. The second is budget adoption which is proposed
budgets are voted upon by government. The third budget execution is the implementation
of budgets is regulated by accounting procedures that may vary from country to country.
MoE (2002), have reported that the school planning process links with woreda budgeting.
This manual revealed that the school submits their plan to town education office and TEO
consolidate and submitted the proposal to TOFED determines and analysis sector proposals
based on performance. Then TOFED prepares the town consolidated budget and submits it
to town cabinet.
2.6.4. Budgetary control
According to Kumar (2005), the term budgetary control is applied to a system of
management and accounting control by which all operations and output are forecast as far
ahead as possible and actual results , when

known, are compared with the budget

estimates. The establishment of budgets relating the responsibilities of executives to the

requirements of Chadwick (2002), actual with budgeted results, either to secure by
individual action the objectives of that policy ,or to provide a basis for its revision.
According to Jill and Roger (1999), the following are the main requirements for an
effective budgetary control system. It is essential that budgetary control is not regarded as
the sole responsibility of the accounting function. The whole management team should be
involved. A sound and clearly defined organization with the managers responsibilities
clearly indicated. Effective accounting, record and procedures are understood and applied.
It needs strong support and commitment of senior managers to the system of budgetary
control. When the revision of the original budgets where circumstances show that
amendments are required to make them appropriate and useful. The recognition throughout
the organization budgetary control is a management activities and not an accounting
exercise. An information system which is provides data for managers so that they can make

17

realistic predictions. Correct integration of budgets and their effective communication to

managers. The setting budgets are reasonable and achievable. The participation of manager
in the budget control system. Educate and train of managers in the development,
interpretation and use of budgets.

2.7. Financial Accounting

According to Davies and Boczkd (2006), the original, basic purposes of accounting were to
classify and record monetary transactions and present the financial results of the activities
of an entity. To look at the current nature of accounting and the broad purposes of
accounting systems it is needed to consider the three questions these days generally
answered by accounting information, how are we doing, and are we doing well or badly?,
Which problems should be looked at? and Which is the alternative for doing a job?
This study further described that accounting uses the bookkeeping system within an
organization, which deals with how data is identified, recorded and presented as
information in the ways required by the user of financial information. All money expended
is expended by check, except for small cash purchases paid from the petty cash. Supporting
documents should be kept for all expenditures made. Bank reconciliation statements should
be made each month. Monthly and yearly financial statement should be prepared. Audits
should be made each year, and copies of the audit should be filed with persons having the
authority (Davies and Boczkd, 2006).
According to Crowther (2004), the key functions of financial accounting are: meeting
statutory requirements, record keeping, production of final accounts and the raising of
finance. Similarly, Greg(1999), described that financial accounting directly or indirectly
affects decision making, planning, organizing, communicating, influencing, coordinating
and evaluating in the process of evaluating to operate effectively.

2.8. Financial Controlling and Auditing

According to MoE (2002), the schools finance come from government income that is the
budget of block grant, internal income of school and community contribution as well as
NGO. The finance obtained from the above sources, schools properly utilize according to

18

their budget plan. In order to implement according to the plan, it needs well managing of
finance and accounting. The schools implement the budget according to plan and timely
report for concerned body. The way of reporting implement according to the following
ways. Schools prepared their report and present for evaluation by school PTA and the
quarter report present for town education office. Then the town education office collect
from schools and present for town education office and training board for evaluation and
approval .Then, the final report of quarter within fifty days present for Town Council. Then
report present for region education bureau. The task of audit manipulate by town finance
economic and development office within year twice at half year and the end of budget year.
The financial management of an institution depends upon how the principal maintains
these accounts systematically. The school budget, the annual report, the receipts and
payments statement made by the head of the institutions indicate his abilities of financial
management.
According to Chalam ( 2003), The head of the institute with the help of financial manager
or accountant has to maintain strict control over the items of expenditure and at the same
time improve the sources of revenue for the institute such as fees, user charges, grants,
donations and other sources). According to Chadwick (2002), financial controls include
audit, budgeting, and cost control. Controls are necessary in order to ensure that plans and
objective are correctly implemented.
2.8.1. Definitions of Audit
The term audit in finance defines in different ways. For example as Chartterjee (1988)
indicated that auditing means a critical examination of the books of accounts to check their
accuracy and also detect and prevent errors and frauds. An audit is conducted objectively.
Almost all educational institutions whether private or government receive one kind fund
from public or/and government. Therefore, audit of the accounts is compulsory.
Further, Audit is necessary to avoid errors of commission, compensating errors, and
fraudulent errors. Auditing is the verification of the accuracy and completeness of the
financial records of the organization and the appraisal of the legality, efficiency, and
effectiveness of the financial management of the organization (Chalam, 2003).

19

2.8.2. Scope of an audit

According to (Shekhar and Lekshmy, 2003), a financial audit is an examination of the
financial planning and reporting process, the conduct of financial operations, the reliability
and integrity of financial records, and the preparation of financial statements. Such a
review includes an appraisal of the systems of internal controls related to financial
functions. In other words, financial statement audit is conducted to determine whether
financial statements are prepared in accordance with GAAP or IFRS.
A properly conducted audit is organized to cover adequately all aspects of the organization
as they are relevant to the financial statements subject to examination. The auditor has to
ensure that information contained in the underlying accounting data and other source data
is reliable and sufficient as the basis for the preparation of the financial statement.
2.8.3. The objective of auditing
The objectives of auditing according to Millichamp (2002), is to produce a report by the
auditor of his opinion of the truth and fairness of financial statements so that any person
reading and using them can have belief in them. Subsidiary, to detect errors and fraud, to
prevent errors and fraud by the deterrent and moral effect of the audit. To provide spin off
effects. The auditor enabled to assist his clients with accounting, systems, taxation,
financial, risk management and other problems. Auditing is a crucial instrument for
monitoring and controlling of budget implementation. It is the essential part of the system
of accountability and oversight in that it ensures compliance of operations with regulations,
rules and procedures.
2.8.4. Types of audit
There are two types of auditing. These are internal audit and external audit. Internal audit is
an important component of financial controls. It is an independent, objective assurance and
consulting activity designed to add value and improve an organization's operations. It helps
an organization accomplish its objectives by bringing a systematic, disciplined approach to
evaluate and improve the effectiveness of risk management, control, and governance
process. Overall, Internal audit system normally envisages a continuous audit carried on

20

throughout the year, as opposed to the periodic audit carried on by the external auditors
(Chartterjee, 1988).
According to Shekhar and Lekshmy (2003), auditing is an examination carried out by the
employees specially appointed for the purpose by an organization. Further, it is defined as
an appraisal activity, independent of other activities, within an organization. This study
further revealed that an external audit is the independent examination and expression of
opinion on the financial statements of an entity. It covers only those operations that have a
contribution at the financial results and the performances of the organization .One may find
government and internal revenue auditors. A government auditor is an auditor working for
the government who is primarily responsible for auditing the accounts of government
organizations. In Ethiopia, Office of the Auditor General represents government auditor.
Their functions are similar to external auditors except that they deal with government
accounts which will be presented to the parliament.
2.8.5. Principles of audit
According to Chartterjee (1988), the basic principles that govern the auditors are the
following:- (a) Integrity, objectivity and independence: the auditor should be
straightforward, honest and sincere in his approach to his professional work.(b)
Confidentiality: the auditor should respect the confidentiality of information acquired in
the course of his work and should not disclose any such information to a third party
without specific authority or unless there is a legal or professional duty to disclose.(c) Skill
and competence: the audit should be performed and the report prepared with due
professional care by competence in auditing.(d) Documentation: the auditor should
document matters which are important in providing evidence that the audit was carried out
in accordance with basic principles. (e) Planning:- The auditor should plan his work in
order enable himself to conduct an effective audit in an efficient and timely manner. Plan
should be to cover among other things:-acquiring knowledge of the clients accounting
system, policies and internal control procedures; establishing the expected degree of
reliance on internal control; determining and programming the nature, timing and extent of
the audit procedures to be performed; and coordinating the work to be performed. (f)
Evidence: the auditor should obtain sufficient and appropriate audit evidence through the
performance of compliance and substantive procedures as to draw reasonable conclusions

21

there from on which to base his opinion on the information. (g) Conclusion and Reporting:
the auditor should review and assess the conclusions drawn from the audit evidence
obtained as the basis for the expression of his opinion on the information.
2.8.6. Internal Financial Control
Harrison and Horngre (2008), stated that, an internal control is a system of methods and
procedures designed to safe guard assets ensure reliable accounting records promote
efficiency and encourage adherence to school policies internal controls can be grouped in
to two categories. (a) Administrative controls and (b) Accounting controls. Administrative
controls: are designed to promote operational efficiency and adherence to school policies.
Accounting controls: are designed to save guard school assets and ensure accurate and
reliable accounting records. An effective system of internal control has four characteristics.
(1) Competent and reliable personal: Paying competitive salaries training thoroughly and
providing adequate supervision help to promote competence. (2) Assignment of
responsibility: All school duties to be performed must be identified and responsibility for
the performance of those duties must be assigned to appropriate people. (3) Proper
authorization: A school generally has a written set of rules that outlines approved
procedures. Proper authorization must be obtained for deviations from standard policies.
(4) Separation of duties: Separation of school duties is designed to limit the possibility of
fraud or theft in the handling of assets.

The school must:-Separate operation from

accounting, Separate custody of assets from accounting, Separate authorization of

transaction from the custody of related assets &Separate duties with in the accounting
function.
Auditors: are evaluating the system of internal control to estimate the reliability of the
accounting system. Auditors also help to spot age as where improvement internal control
can be made Internal Auditors: are employees of the school and external auditors: are
employed by public accounting schools. The positive effects of internal control are a
computer system is increased reliability, speed and efficiency. The negative effects of
includes lack of flexibility and possible outsider access to confidential information. The
limitation of an internal collusion and the resources that school principal devotes to the
system. Collusion between two or more people working together to defraud the school may
go undetected by the system of internal control.

22

An accounting information system is the combination of people procedures and cost

records that the school uses to meet its needs for financial information mostly now a day
computer use the school information system .Accounting information system has its design
stage once the system design is accepted a system installation proceeds installation
includes training employees Local testing the system and modifying it when necessary
(Harrison and Horngre, 2008).

2.9. Sources of Finances in Ethiopian Schools

Dash and Nena (2008) described that the sources of finance in school government grants
are received from state and central government for different components. School may
receive assistance from other agencies such as UNICEF, World Bank and etc for certain
schemes and projects such as assistance is received through the state government. Schools
receive finance from bodies such as municipalities. The schools may also receive
contribution/donation from parents, community members and business houses for
organizing various programs, stipends, purchase of equipment, construction of school
building or extension of building, and etc. Endowments income includes assistance from
religious and charitable agencies; schools landed properties, etc. Every school collects
some fees from students as per state rules .Such fees include admissions fees, tuition fees,
and fees for various activities. Schools may also have other sources of income. These
sources include income from sale of fruits and vegetables produced in the schools garden
and etc. In Ethiopia also the sources of finance for education are government, internal
income of it school self, private investor, community participation and NGO (MoE, 2002).

2.10. School Financial Management in Ethiopia

As it was stated in education and training policy, educational management should be
democratic, professional, coordinated, efficient and effective. Educational management
was decentralized to create the necessary condition to expand, enrich and improve the
relevance, quality, accessibility and equity of education. It is also stated that the financing
of education be just, efficient and appropriate to promote equity and quality of education
(MoE,1994). The finance of school managed by the school governing body that is PTA and
school board and under these umbrella principals, accountants, and casher manipulate the
activities of managing finance and present timely report concerned body. The schools

23

manage the finance of non-salaries and capital budget. The TEO finance budget plan starts
from schools. Schools present their budget plan for TEO. The budget preparation involves
three tasks. These are the listing of plan of activities in unit cost, program review and work
plan development. Schools report finance issues after evaluating by school board to TEO
monthly. Schools also present report finance issues to staff and parent of student. The TEO
coordinating with TFEDO audit twice a year. In Ethiopia also the sources of finance for
education are government, internal income of it school self, private investor, community
participation and NGO. Community contribution is an important source of finance for
schools (MoE,2002).

2.11. The Role of Stakeholders in Financial Management

The parent teacher association is made up of parents of the learners at school, teachers and
local community. People from the community may be co-opted as parent-teacher
association members. For example, an expert on financial matters may be co-opted in the
finance or fund (MoE, 2002). The parent -Teacher -Association is an important element of
democratization in education. Therefore it is essential that the parent -teacher-association
work closely with the school principals as school financial managers.
The Parent- Teacher -Association should find ways of obtaining enough money for school
by approaching business people to sponsor school activities; asking parents to contribute as
they want; and organizing fundraising projects for their schools, allows the parent-teacherassociation to use the school hall for fund-raising. The money raised by the school is paid
into the school account. The school finance should be administered in terms of the rules by
drawn up by (MoE, 2002). This study further reported that principals are not free to use
the school finances as they please and money donated to the school should be used for
educational purposes only. The guidelines on school financial management indicate that
the school principals and Parent-Teacher-Association should open and maintain a single
bank account in the name of the school at a registered bank. Nobody is allowed to keep
money or deposit it into a bank account other than the one that exists in the name of the
school.
According to Leithwood and Stainback (1995), school principals have responsibilities and
duties of their positions; they often find it difficult to keep abreast of changing policies and

24

practices. Murphy and Louis (1999), refered to the popular trend of delegating the
management of school fund to school principals and PTAs as an increase in the allocation
of decision -making, school -based management and participative decision-making.

2.12. Monitoring and Evaluation in Managing Finance

During the period of actual budget operation, records on the use of money or resources
consumed (that is costs) and the actual outputs (achievement) are kept and evaluation is
made on efficiency and effectiveness the of the school .As this, internal, external auditing
procedures and information is necessary. Budgets must be coordinated, monitored and
reviewed. Monitoring is the periodic oversight of the implementation of an activity which
seeks to establish the extent to which input deliveries, work schedules, other required
actions and targeted outputs are proceeding according to plan, so that timely action can be
taken to corrected efficiencies detected. Evaluation is a process which attempts to
determine as systematically and objectively as possible the relevance, effectiveness,
efficiency and impact of activities in the light of specified objectives (Chadwick,2002).
Financial planning alone would not suffice to bring about desirable result, unless modern
techniques of monitoring and evaluation are applied. As mentioned by Corbally (1997), the
three important procedures which are helpful for assuring of the legality, accuracy and
efficiency of financial resources are accounting, auditing and reporting. Accounting
involves complete and accurate recording, classifying and summarizing of all the financial
facts or transaction From this it is possible to understand that accounting help in a better
analysis of financial facts. The importance of accounting and its necessity is well
expressed: Accounting is essentially the maintenance of records of the receipt and
expenditure transactions of an enterprise accounting creates a running record of the fiscal
affairs of an enterprise and should enable to financial position to be ascertained at any time.
Auditing is a formal examination and verification of the accuracy of the accounts
maintained in the accounting system of an enterprise (Corbally, 1997). In addition to this,
the function of auditing is to examine the fiscal efficiency. It also protects the system and
the personnel from illegalities, losses or improper expenditures.
Nieman and Bennett (2002), reported that, in the case of financial management there are
two kinds of reporting. The first is internal reporting which is made for those responsible

25

bodies in the office and the other is the report made for public or government to describe
the financial status of the system relating with the education objectives and it is the final
procedure of accounting and auditing.

2.13. Challenges of Financial Management in Secondary Education

The challenges could be related to financial planning, financial reports and financial
controls. Barasa (2009) recognized that, efficient management of financial resources is an
important task for head teachers. Without adequate financial resources, institutions cannot
carry out their defined tasks effectively. Money must be available to run the different
departments of the school. The available funds will be used to purchase the required
teaching and learning apparatus such as chalks, textbooks, paying of the support staff and
building and improvement of infrastructures.
Financial management in education is concerned with the cost of education, sources of
income to meet the educational costs and the spending of the income in an objective
manner in order to achieve the educational objectives (Okumbe,2001). However,
educational managers are being challenged to justify their financial requests in terms of
educational programs rather than the costs, if education has to compete equitably for public
funds. In the preparation of the budget, the principal or head teacher must seek the
cooperation of the parents, the teachers and other school employees. By enlisting the
cooperation of these people, the principal ensures a comprehensive view of the budget and
a feeling of partnership which contributes to the much needed spirit de corps. Financial
planning involves aspects of accounting which involves the overall process of identifying,
measuring, recording, interpreting and communicating the results of economic activity;
tracking business income and expenses and using these measurements to answer specific
questions about the financial and tax status of the business which is basically a system that
provides quantitative information about finances (Okumbe,2001).
Cole and Kelly (2011), define planning as the formalization of what is intended to happen
at some tie in the future; concerns actions taken prior to an event, typically formulating
goals and objectives and then arranging for resources to be provided in order to achieve a
desired outcome. Planning leads to budgeting which is a statement usually expressed in
financial terms, of the desired performance of an organization (in this case a school) in the

26

pursuit of its objectives over a specified period. A budget is an action plan for the
immediate future, representing the operational and tactical end of the corporate planning
chain. This study further stated that managers responsible for carrying out budgets should
participate in their formulation, and should be flexible to be changed if conditions arise,
and budgets should be seen as means to an end, and not and end in themselves.
Financial reports usually need accounting and its products such as an organization's annual
report as a platform upon which to build many decisions and activities. Organizations must
follow specific rules and formats of presentation for their annual reports and financial
statements. The key accounting event for any organization is the publication of the annual
report which records the financial performance over a book year. Cole and Kelly (2011), in
their study established that organizations may create and adopt a number of statements to
communicate the corporation's view on the subject of ethics. They stipulated common
issues in business ethics to be included are accountability (transparency and reporting)
business conduct (compliance with the law, competitive conduct, and corruption and
bribery conflicts of interest. The existence of a code of practice in ethics, supported by
senior management and made a natural feature of a company's culture, will enable better
distinctions to be made between what is acceptable business practice and what is sharp
practice.
Boddy (2011), reported that financial control process incorporates four elements; setting
objectives or targets, measuring actual performance, comparing this against the standard
and taking action to correct any significant gap between the two. Therefore controlling is
the counterpart of planning and is the process of monitoring activities to ensure that results
are in-line with the plan and taking corrective action if required. The balanced scorecard
supplement measures of financial performance with those of customer satisfaction, internal
process, and innovation and growth which all play a part in an overall assessment of
performance. Further this study revealed that controls can encourage behavior that is not in
the best interests of the organization can encourage people to supply the system with
inaccurate information and people will resist controls that they feel threaten their ability to
satisfy their needs from work. Therefore financial management in schools is at a crisis and
research needed to be carried and help in suggesting strategies for the way forward.

27

3. RESEARCH DESIGN AND METHODOLOGY

This chapter presents the logistical decisions that shaped the thesis and the nature of
participants and how they were selected. It also discusses how the instruments of data
collection were developed and employed. Finally, it outlines the method of analysis
followed by the interpretation of data.

3.1. Research Design

This study employed descriptive design to conduct the study, because descriptive research
is a design used to obtain information relating to the exiting status of an issue or
phenomenon and to describe " what exists" within the variable or conditions of the
situation. Hence, a descriptive survey research was used to investigate the practices of
financial management in Secondary Schools in Bishoftu Administrative Town. Further,
this method

helped to gather various kinds of data using research tools such as

questionnaire, interview and documents analysis. Descriptive survey helps to interpret,

synthesize and integrate data and point out their implications. Overall, it can be used to
obtain information about the current status of the phenomena and the existing financial
management practice in Secondary Schools (Khan, 2004).

3.2. Sources of Data

Both primary and secondary sources of data were used for this study. Primary and
Secondary data were collected from the samples and documents, respectively.
3.2.1. Primary Sources
Primary data sources were collected from principals, vice-principals, school accountant,
PTAs, School supervisors, Bishoftu town education office head, Education office
supervision groups, Bishoftu town finance office head, Bishoftu town finance plan and
budget experts and school department heads. These people have adequate information
because they are directly and indirectly involved in each school financial activities and also
provide accurate information for the study. These primary data were collected through
questionnaires and interviews.

28

3.2.2. Secondary Sources

Secondary data sources were obtained from different documents. This study analyzed
relevant documents like minutes, purchasing procedure, Model 19 and 22, financial reports
like, expenditure report and auditing report, balance sheet, income sheet, town education
office financial reports, town finance economic development office reports and regional
budget proclamations.

3.3. Population size and Sampling techniques

Three government secondary schools of Bishoftu Administrative Town were selected as
area of the study, because the area is not researched before with the problem stated and it is
familiar to the researcher and the problem of financial management seemed high in the
area. The schools are Bishoftu preparatory school, Bishoftu high school and Adea model
secondary school. The schools were selected using available sampling technique. The
reason is that, they are found in one town and were easy to manage.
The study involved a total population size of 82. From this, three principals, seven viceprincipals, three accountants, three treasures, thirty three department heads, seven
education office supervision groups, twenty one PTAs, one education office head, one
finance office head, two finance plan and budget experts and one school supervisor. The
above sample size were selected because of having connection in the administration of
budget that is allocated for Government Secondary Schools. The sampling technique used
to select the participants was available sampling. These participants have been involved in
the issue of financial management directly or indirectly and also their number was
manageable and they were expected to have detail knowledge of the problems in this study.

29

Table 1: Sample and Sampling Techniques.

Respondents

Population Sample Size %

1
2
3
4
5
6

Principals
Vice-principals
PTA Members
Schools supervisor
Education office head
Education office
supervision groups
Town finance office
head
Town finance plan and
budget experts
School accountants
School treasurer
School department heads
Total

3
7
21
1
1
7

3
7
21
1
1
7

100
100
100
100
100
100

100

100

3
3
33
82

3
3
33
82

100
100
100
100

7
8
9
10
11

Sampling Techniques

Available sampling

No

3.4. Instruments of Data Collection

Data for this study were collected on the basis of qualitative and quantitative data types.
Data collecting instruments used for this study were questionnaire, interviews, and
documents. Quantitative data was collected by using questionnaire and qualitative data
were collected by using interview and document analysis. Use of both methods of data
collection helped the researcher to combined the strength and some of inadequacies of any
one of the source of data.
3.4.1. Questionnaire
Questionnaire, close-ended and open-ended items were constructed to collect information
from vice-principals, accountants, treasures, department heads, education supervision
groups and PTA members. This is mainly because questionnaire used as a major
instrument to collect information from the data sources of the study. Primary data from the
above listed respondents were collected from secondary schools to achieve practice of
financial management. Questionnaires were prepared in English. For the validity of the
questionnaires, the questionnaires were commented by advisors before its distribution for
the respondents. Based on the comments given the questionnaires were modified, some
vague questionnaires also restructured. In addition to this, a pilot test have been conducted
before the questionnaire administered by involving non-sample respondents of two

30

principals, two vice-principals, two accountants, two treasures, seven department heads,
four WEO supervision groups, seven PTA members, one WEO Heads, one WFEDO and
two Woreda finance plan and budget experts. For this purpose, Adulala preparatory and
Tullu chukala secondary schools were

purposively selected, which is nearest to the

researcher working site. The main aim of this pilot test is to assure the validity and to
evaluate the clarity of the questions based on the response of the pilot sample by avoiding
ambiguities and making relevant amendments.
3.4.2. Interview guide
In addition to the questionnaire, interview was employed as an instrument for data
collection to complete and obtain relevant data that was not handled by questionnaire and
also to counter check the information already obtained from the open-ended form of the
questionnaire which was prepared to exploit greater depth of response since the
participants were encouraged to answer in their own words. Based on this the source of
data in interview were prepared for, finance plan and two budget experts, one finance
office head, one education office head, one school supervisor and three principals. The
prepared interviews guide were verified and checked by advisor for its authenticity to be
used in this study. The interview was aimed at eliciting information on the practices
financial management in the schools All the interviews were conducted in English
Language. Interview items were prepared for cross checking and substantiate the results of
the questionnaire. Interview provided detailed information for the researcher sets out to
collect some fascinating contextual or other information (Wisker, 2001).
3.4.3. Documents
Document was assessed to secure pertinent information and to know whether there is set of
standards of financial management or not. Further, documents assessed helps to evaluate
and compare the standards set with actual performance and to triangulate the data collected
through the other tools. Overall, documents assessed for this purpose includes, school
budget report (financial statement), minutes, transaction registers, receipt, and town
education office budget report, for validating the research finding. The documents were
enabled the researcher to triangulate the data collected through other tools.

31

3.5. Methods of Data Analysis

In accordance with data types, quantitative and qualitative data analyses were employed.
The quantitative data that were collected through closed-ended questionnaire from all
respondents were tabulated and analyzed by using the Frequency, Percentage, Mean value
and Standard deviation. Quantitative data was analyzed using SPSS version 20.
The data gathered through open-ended items of the questionnaires and interviews were
analyzed qualitatively. It is ongoing activities that take place during data collection
devising of categories and building of theories (Bogdan and Biklen, 1998). Hence the data
collected through interview, open ended questionnaires and secondary data were analyzed
and interpreted in the form of narration. Based on the data analysis, interpretations were
made to reach at certain findings.

32

4. RESULTS AND DISCUSSION

In this chapter, the results of quantitative and qualitative analyses that were conducted to
address specific objectives of the thesis are discussed. The first section of this chapter
provides the actual collected quantitative and qualitative data of the sample distribution
and personal characteristics of the respondents. The second part deals with the analysis and
interpretation of the data obtained through questionnaire, interview and secondary sources
regarding practices of financial management in Bishoftu Town Government Schools.
Questionnaires were distributed to seven vice-principals, three accountants, three treasures,
thirty three department heads, seven education office supervision groups and twenty three
PTA members. Among the seventy four distributed questionnaire, sixty nine were filled
and returned. In addition to these, an interview was successfully conducted with eight
interviewees: three school principals, one school supervisor, one town education office
head and one town finance office head and two finance budget and plan experts. The
responses given to each of the questions were analyzed and interpreted. Most of the data
gathered were organized using tables. Presentation of the data is followed by discussion
and interpretation in line with the basic research questions. For the sake of convenience of
interpretation, related questions were treated together.

4.1. Demographic Data

As it was presented in table 2 and 3 demographic data of the respondents includes gender,
age, academic qualifications and services.

33

Table 2: Demographic Information of Respondents

No
1

Items
Sex

Age

N
6

%
85.7

N
2

%
66.7

Respondents
T
DH
N %
N
%
3 100 22
73.3

Femal
e
Total

14.3

33.3

26.7

21.1

100

100

100

30

100

100

19

100

Below
25
25- 35

14.3

28.6

100

100

12

40.0

28.6

21.1

36-45

28.6

10

33.3

42.9

10

52.6

46-55

28.6

26.7

28.6

26.3

56
and
above

Total

100

100

100

30

100

100

19

100

Categ
ories
Male

VP

EOSG
N
%
7 100

PTA
N
%
15
78.9

Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG=

Education Office Supervision Groups and PTAs= Parent-Teachers-Associations

As indicated in table 2 of item number one, regarding sex, out of the total seven viceprincipals respondents, 85.7% of them were males. In the same table out of 30, twenty
two (73.3%) department heads were male and 15 (78.9%) of PTAs were males. These
statistical data showed that, the school management positions were dominated by males. In
addition to this, out of 3 accountants 2 (66.7%) and 3 (100%) treasurer respondents were
males. This result showed that lower number of females of accountants and treasurers were
represented in secondary schools position in Bishoftu Town.
As indicated in table 2 of second item , 2 (28.6%) of vice -principals, 100 % of accountants
and treasurers, respectively were allocated between 25 and 35 years old. Similarly, 40% of
department heads, 28.6% of education office supervision groups and 21.1% of PTAs were
between 25 and 35 years old. On the other hand, 28.6% of vice-principals, 33.3% of

34

department heads, 42.9% of BTEOSG and 52.6 % of PTAs were between 36 and 45 years
old. Generally, majority of employee were existed on the position between 25 and 35 years
of age and also indicated that most respondents are matured in age.
Table 3: Academic Qualifications and Services of Respondents
No

Items

Academic
status

Service in
current
position

Total
service of
year

Categori
VP
es
N
%
Certifica te
Diploma 1st
degree
2nd
degree
PHD
1-5

N
-

Respondents
DH
%
N
%
-

EOSG
N
%
-

PTAs
N
%
7
36.8

66.7

36.8

N
-

A
%
-

100

33.3

100

29

96.7

100

26.3

3.3

57.1

100

100

27

90

71.4

11

57.9

6-10

42.9

10

28.6

15.8

11-15

26.3

16-20
Above
21
1-5

15.8

6-10

57.2

66.7

66.7

20

66.7

14.3

13

68.4

11-15

14.3

33.3

33.3

16.7

42.9

15.8

16-20

28.6

16.7

42.9

Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG=

Education Office Supervision Groups and PTAs= Parent-Teachers-Associations

As it was presented in table 3 item1, concerning academic status, the qualification

distribution of the respondents revealed that 100 % of school vice -principals were first
degree holders. This result did not agree with MoE (2002), which stated that the position of
principals' and vice -principals' required second degree. On the other hand, 66.7% and
33.3% of accountants were diploma and degree holders, respectively.

35

Concerning years of services on current position, 57.1% of vice-principals, 100%

accountants and 100% treasures served below 5 years. On the other hand, 42.9% viceprincipals, 10% department heads, 28.6% education office supervision groups and 15.8%
PTAs were served 6 to 10 years. whereas, 26.3% of PTAs were served 11 to 15 years.
According to this study 16 to 20 years of service were not identified. This result showed
that the majority of respondent's vice -principals, accountants, treasures, department heads,
education office supervision groups and PTAs

had less work experience on current

position.
Regarding the total work experience, 57.2% of vice-principals, 66.7% of accountants and
66.7 % of treasures had services of years between 6 and 10 years. Similarly, 66.7% of
department heads and 68.4% of PTAs total had services of years between 6 and 10 years.
On the other hand, 14.3% of vice-principals, 33.3% of accountants, 25% of treasures and
16.7% of department heads their total services of years were between 11 and 15 years.

Related
Not related

Response
VP
N %
1 14.3
6 85.7

A
N
1
2

Respondents
T
DH
%
N %
N
%
33.3 2
6.7
66.7 3 100 28 93.3
EOSG
N %
- 7 100

PTAs
N
%
5
26.3
14
73.7

Workshop
5 71.4 3
100 3 100 30 100 7 100 19
100
Seminar
- On job training
2 28.6 - 3
Duration of training
1weeks and blew
7 100 3
100 3 100 27 90
5 71.4 18
94.7
related to financial
1-2weeks
3
10
2 28.6 1
5.3
management
2-4weeks
- 1 months
- 2 month & above
- 4
School accountants
Once in 3 months
- receive training
Once in 6 months
- related to their
Once in a year
5 71.4 3
100 3 100 22 73.3 7 100 14
73.7
current position
Not at all
2 28.6 8
26.7 - 5
26.3
5
The competency of
Very high
4
13.3 - 5
26.3
financial officers in
High
3 42.9 1
33.3 10 33.3 3 42.9 3
15.8
your school
Moderate
4 57.1 2
66.7 3 100 16 53.3 4 57.1 11
57.9
Poor
- Very poor
- Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG= Education Office Supervision Groups
PTAs=Parent-Teachers-Associations

The relation between

the current position
and field of study
The mode of training
attended

Items

No

Table 4: Competence and Training of the Respondents

4.2. Competence, Training and Position of Financial Personnel

36

37

As it was indicated in table 4 of item 1, out of seven 14.3% of vice-principals, 1 (33.3%) of

accountants, 2 (6.7%) of department heads and 5 ( 26.3%) of PTA members responded that
the position assigned were related to their appropriate field of study. On the other hand, 6
(85.7%) of vice-principals, 2 (66.7%) of accountants and 3 (100%) of treasures responded
that they were working on a position different from their areas of field of study. This shows
that the majority of them have not related field of financial management.
As indicated in table 4 of item 2, 5(71.4%) of vice-principals, all accountants, all treasures,
all department heads, all education office supervision groups and all PTAs respondents
reported that they attended a day workshop concerning the financial management.
Moreover, an interview were conducted to achieve efficient capacity for town education
offices head, School supervisor and principals.
There was a capacity gaps at the given levels which is self evident and hence, needs to
be improved continuously in terms of planning, management, monitoring and
evaluation of the education service for effective service provision. Critical training is
important to school principals, vice-principals, accountants and PTAs around financial
management because, they did not take enough training in relation with financial
management.
As it was indicated in table 4 of item 3, all vice-principals, all accountants and all treasures
respondent responded that, they had training in the area of financial management not more
than one week. Similarly, 27 (90%) of department heads, 5 (71.4%) of education office
supervision groups and 18 (94.7%) of PTAs respondent replied that, they had trained in the
area of financial management below one weeks. This implies that the majority of the
school personnel had not obtained enough training on the job they are doing. This needs
furthers task to minimize the gap which exists. The above results did not agree with Mestry
and Grobler, (2002) who reported that, the training and development of school personnel
can be considered as the strategically most important process necessary to transform
education successfully.
As indicated in table 4 item 4, a question was raised to respondents whether or not the
school

accountants

receive

training

related

to

their

current

position.

Accordingly, 5 (71.4%) of vice-principals, 3 (100%) of accountants and 3 (100%) of

treasures were replied that the school accountants had trained related to the current position

38

once in a year.Similarly,22 (73.3%)of departmentheads,7 (100%) of education office

supervision groups and 14 (73.7%) of PTAs replied that the school accountants had trained
related to the current position once in a year. This shows that the school accounts had no
trained as well as possible training related to the current position.
As indicated in table 4 item 5, 3 (42.9%) of vice-principals, 1 (33.3%) of accountants, 10
(33.3%) of department heads, 3 (42.9%) of education office supervision groups and
3(15.8%) of PTAs respondents responded that the competence of finance officers was
high. But the majority, that is,4 (57.1%) of vice-principals, 2 (66.7%) of accountants and 3
(100%) of treasures respondents responded that the competence of finance officers was
moderate. Similarly,16 (53.3%) of department heads, 4 (57.1%) of education office
supervision groups and 11 (57.9%) of PTAs respondents responded that the competence of
finance officers was moderate. Therefore, it implies that the competence of financial
officers in the schools were moderate and this implication may shows that financial
formats are not used properly; financial regulations of budget process are not obeyed,
control and report of budget implementation may not be completed due to the lack of
competent accountants and auditors. The above finding was supported by literature of Van
Wyk (2004), who stressed that, if the school personnel are competent and committed the
financial management would be effective.

VP

N
91-99%
71-90%
3
50-70%
4
Below 50%
Excess
Adequate
Inadequate
7
I don't know
1st quarter
7
2stquarter
3stquarter
4thquarter
Parents
2
Private and other
Government
5
Internal income of the school

Response
%
42.9
57.1
100
100
28.6
71.4
-

N
1
2
3
3
3
-

A
%
33.3
66.7
100
100
100
-

N
1
2
3
3
3
-

T
%
33.3
66.7
100
100
100
-

N
12
18
18
12
7
23
11
19
-

Respondents
DH
%
40
60
60
40
23.3
76.7
36.7
63.3
-

N
1
6
7
2
5
1
5
1

EOSG
%
14.3
85.7
100
28.6
71.4
14.3
71.4
14.3

N
5
14
16
3
6
13
7
12
-

%
26.3
73.7
84.2
15. 8
31.6
68.4
36. 8
63.2
-

PTAs

Teachers-Associations

Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG= Education Office Supervision Groups and PTAs= Parent-

What are the main

sources of finance in
your school?

Percentage of budget
approved in
2006E.C. budget
requested?
Amount of budget
approved for your
school to implement
your annual plan
period of the year
budget is released
from education
office?

Items

No

Table 5: Annual Budget, Period of Release and Sources of Budget

4.3. Approved Annual Budget, Period of Release and Sources of Budget

39

40

As indicated in table 5 item 1, that is 3(42.9%) of vice- principals,1(33.3%) of

accountants,1(33.3%) of treasures and 12(40%) of department heads respondents
responded that the percentage of budget approved covered only 71-90% of the budget
requested. Similarly, 1(14.3%) of education office supervision groups and 5 (26.3%) of
PTAs respondents responded that the percentage of budget approved covered 71 -90% of
the budget requested. On other hand, 4(57.1%) of vice- principals,2 (66.7%) of
accountants, 2(66.7%) of treasures, 18(60%) of department heads, 6(85.7%) of education
office supervision groups and 14(73.7%) of PTAs respondents responded that the budget
approved covered only 50-70% of budget requested. This shows that a shortage of budget
was a serious problem, which causes failure to accomplish the work planned to be done
and difficulty of fulfilling the necessary inputs.
According to, item 2 in table 5, that is all of vice-principals, all of accountants and all of
treasures respondents responded that the amount of budget approved was inadequate.
Similarly,18 (60%)of department heads, all of education office supervision groups and 16
(84.2% ) of PTAs responded that the amount of budget approved was inadequate.
As interview conducted, the majority of interviewees revealed that "the approved budget
for secondary schools would get much less than their request." This implies that it may
influence utilizing the scarce resources and the total teaching- learning process in that
inadequate facility are the results of shortage of finance. The above finding is supported by
Jefferson (2003) states that, adequate financial support underlines every aspect of
educational activity. Therefore, school finance is commonly referred to as a backbone of
school program. Because all other resources are the conversion of financial resources;
education without finance is vehicle without engine. Financial resources purchase
educational materials. For the same item the interviewed, finance office heads and finance
plan and budget experts responded that
our office has responsibility to allocate government budget for all town sector offices
including all government secondary schools. In addition, the ways of allocation budget
is, each sector office formulates its budget proposal based on the budget ceiling and the
instruction it received from our office. As any sector office of town, the town education
office prepares it budget proposal in consultation with the schools in the town. The
schools do not directly participate in the budget preparation. The town education office

41

asks the schools about their needs and plan for the next fiscal years. The sector office
send their budget proposal along with the implementation plan to the town finance
office. The BTFEDO reviews and discuss the budget proposal with each sector office.
BTFEDO may request the sector office to revise its plan and budget if it finds it
necessary. After it received all revised the budget proposal, the BTFEDO consolidate
the BTFEDO budget request. It also prepares a summary of budget request the
BTFEDO sends the consolidated detailed BTFEDO budget and the summary to town
cabinet for approval. The town cabinet review and discuss and then approved by the
town council meeting. Based on this reason, Budget allocation in our town is a large
proportion of government expenditure is used for recurrent items, and among the
recurrent expenditure, about 90 percent is used for teachers' and non-teachers' salaries
while the remaining 10 percent is allocated to other quality improvement measures,
such as teaching and learning materials. Because of this reason, the amount of none
salary budget allocated for schools is not based on student's enrollment, therefore the
approved budget was not enough. The above finding was strengthening by document of
budget report of BTFEDO.
As indicated in table 5 item 3, 7(23.3%) of department heads, 2(28.6%) of education office
supervision groups and 6(31.6) of PTAs respondents responded that, the budget is released
on the 1st quarter. On the other hand, the majority of respondent's that is 7(100%) of viceprincipals, 3(100%) of accountants, 3(100%) of treasurers,23(76.7%) of department heads,
5(71.4%) of education office supervision groups and 13(68.4%) of respondents
respectively reported that the budget was released on the 2nd quarter of the years. This
shows that the budget was released after teaching and learning process started in the school
and also, after some assessment was given for students and also implies that dalliance of
budget has a greater impact on purchasing educational materials on time. As a result, there
was always a gap between approved budget and actual expenditure.
As indicated in table 5 item 4, 2(28.6%) of vice- principals, 11(36.7%) of department
heads, 1(14.3%) of education office heads and 7(36.8%) of PTAs respondents responded
that the main sources of school finance for educational activities was the parents. On other
hand,5(71.4%), 3(100%), 3(100%), 19(63.3%), 5(71.4%) and 12(63.2%) of viceprincipals, accountants, treasures, department heads, education office supervision groups

42

and PTAs respondents respectively responded that the main sources of finance for
educational activities was governments. The above finding was supported by literature, the
educational system of Ethiopia has financial sources either from government or external
aid Providing financial resources to the educational purpose is not only the responsibility
of the government, but also the joint responsibility of different groups: schools, parents,
and community(MoE,1999). In connection to the response, MoE (1999) stated that the
policy directives also clearly indicated that community contributions and involvements in
schooling were important means of financing education.

4.4. Practices and Problems of Financial Management

Practices and problems of financial management was analyzed below in three sections.
Firstly, Finance rule and regulation in the schools, Secondly, The practices of budget plan
and accounting in the schools, and Thirdly, Degree of Problems of Financial Management
implementation in schools. For this purpose, some major indicators of practices and
problems of financial management were presented to respondents to be rated on a five
point Linkert scale: from Very high = 5 to very low = 1. For analysis purpose below; based
on principles of rounding off, mean values were interpreted as: means 1-1.5 =Very
low,1.51-2.50= Low, 2.51-3.50 = Medium, 3.51-4.50 = High and 4.51-5 = Very high
(Fowler,1996).

Respondents
No
Items
Response
VP
A
T
DH
EOSG
PTAs
N
%
N
%
N
%
N
%
N
%
N
%
1
The adequacy of rule
Very High
and regulation in
High
financing education
Medium
2
28.6
1
33.3
10
33.3
2
28.6
5
26.3
Low
5
71.4
2
66.7
3
100
20
66.7
5
71.4
14
73.7
very low
Mean
2.29
2.33
2.00
2.33
2.43
2.47
SD
.488
.577
.000
.479
.535
.513
2
The schools capacity
Very High
7
23.3
9
47.4
directly utilizing their High
7
100
3
100
3
100
23
76.7
7
100
10
52.6
internal income
Medium
Low
without permission
from the BTFEDO
very low
Mean
4.00
4.00
4.00
4.23
4.00
4.00
SD
.000
.000
.000
.430
.000
.000
3
Necessary staff for
Very High
finance work assigned High
in the schools
Medium
3
42.9
1
33.3
5
16.7
2
28.6
5
26.3
Low
4
57.1
2
66.7
3
100
25
83.3
5
71.4
14
73.7
very low
Mean
2.43
2.33
2.00
2.17
2.29
2.21
SD
.535
.577
.000
.379
.488
.419
4
The extent of finance Very High
workers handle the
High
financial activities of
Medium
3
42.9
1
33.3
1
33.3
9
30
3
42.9
9
47.4
the school properly
Low
4
57.1
2
66.7
2
66.7
21
70
4
57.1
10
52.6
very low
Mean
2.43
2.33
2.33
2.30
2.43
2.48
SD
.535
.577
.577
.466
.535
.505
Note: VP=Vice-principals, A= Accountants, T=Treasures, DH=Department heads, EOSG=Education Office Supervision Groups, PTA=Parent-Teachers A

Table 6: The practice of finance in the Schools

43

44

As indicated in table 6 item 1, item was raised on the adequate rules and regulations on
finance issue in education. Majority of the respondents responded that the schools rule and
regulation guide-line on financial issue was low having mean values of vice-principals
(2.29), accountants(2.33), treasures (2.00), department heads (2.33), education office
supervision groups (2.43) and PTA (2.470). Among the listed respondents accountants had
high variation from their mean value (SD = 0.577).

Concerning this, the researcher

conduct interview with BTEO heads and BTFEDO and they described that "the schools do
not have adequate rule and regulation on financial issue". They agree on the presence of
inadequate rule and regulation on school finance. According to researcher when
accomplish documents analysis was not possible to get enough rule and regulation guideline in the schools on financial issue. This indicates that the schools do not have enough
rule and regulation on finance issues.
The presence of adequate finance rule and regulation in the school contributes for proper
running of financial resources by serving as guide-lines for those involves in the managing
of school finance. It also helps more the new schools administrators. It alleviate
misunderstanding and it also help to know their responsibility and how to run the school
finance. Absence of having rule and regulation guide-line on finance issue affects the
tasks of managing finance and caused for wastage of schools finance(Bisschoff and
Mestry, 2003).
As indicated in table 6 item 2, item was raised to respondents the schools capacity directly
utilizing their internal income without permission from the BTFEDO. Accordingly, the
majority of the respondents responded that the schools highly utilize their internal income
without asking permission from the BTFEDO, with the means of vice-principals(4.0),
accountants means(4.0), treasures means(4.0), department heads means(4.23),education
office supervision groups(4.0),and PTAs(4.0). Among the listed respondents department
heads had high variation from their mean value ( SD = .430). This implies that the school
can directly utilizes their internal income without permission from the BTFEDO. In line
with this, according to MoE (2002) the schools use their own internal income directly by
following rule and regulation of finance. This helps and initiates the schools to work more
on generating finance to cover their budget shortage.

45

As indicated in table 6 item 3, item was raised to respondents the necessary staff for
financial work assigned in the school. Based on the responses, the majority of the
respondents replied that there was low attention to assigned financial worker in the schools
with the means value of vice-principals(2.43), accountant(2.33), treasures(2.00),
department heads(2.17) education office supervision groups(2.29) and PTAs(2.21). Among
the listed respondents accountants had high variation from their mean value ( SD = 0.577).
This implies that there was low attention to assigned financial worker in the schools.
As indicated in table 6 item 4, item was raised to respondents the extent of finance
workers handle the financial activities of the school properly. Based on the respondent's
responses

with

the

means

value

of

vice-principals(2.43),

accountants(2.33),

treasures(2.33),department heads (2.30),education office supervision groups(2.43) and

PTA members(2.48) replied that the finance activities had low attention to handling
financial activities. In line with this, the researcher conduct interview with BTEO and
BTFEDO heads and they replied that "school administrators did not properly handle the
schools financial activities because of lack of knowledge and skill related to financial
management, lack of concern of those assigned on the position for time being". This
implies that there was low proper handling of financial activities of the schools.

Items

Response VP
N
%

A
N
%

T
N

Respondents
DH
%
N
%

EOSG
N %

PTAs
N
%

Parent-Teachers-Associations

Does your school have budgeting Yes

7
100 3
100
3
100 30
100 7 100 19 100
system?
No
Total
7
100 3
100
3
100 30
100 7 100 19 100
Is your school annual budget Yes
7
100 3
100
3
100 11
36.7 2 28.6 5
26.3
2
known?
No
19
63.3 5 71.4 14 73.7
Total
7
100 3
100
3
100 30
100 7 100 19 100
Do you think that the school Yes
3
42.9 1
33.3
9
30
2 28.6 8
42.1
3
prepared appropriate budget plan? No
4
57.1 2
66.7
3
100 21
70
5 71.4 11 57.9
Total
7
100 3
100
3
100 30
100 7 100 19 100
Do
you
think
that
allocated
Yes
3
42.9
1
33.3
1
33.3
9
30
1 14.3 4
21.1
4
financial resource is utilized No
4
57.1 2
66.7
2
66.7 21
70
6 85.7 15 78.9
efficiently in the school?
Total
7
100 3
100
3
100 30
100 7 100 19 100
Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG= Education Office Supervision Groups and PTAs=

No

Table 7: Some Specific Condition of School Financial Plan

4.4.1. School Financial Management

46

47

As indicated in table 7 item 1, item was raised to respondents the school annual budgeting
system. Accordingly, all vice- principals, all accountants and all treasures replied that the
schools have annual budgeting system. Similarly, all department heads, all education office
supervision groups and all PTAs replied that the schools have annual budgeting system.
This show that the schools have annual budgeting system.
As indicated in table 7 item 2, item was raised to respondents about the school's annual
budget known. Based on the responses all vice-principals ,all accountants and all treasures
were replied that the school annual budget known. On other hand,19(63.3%) of department
heads, 5(71.4%) of education office supervision groups and 14(73.7%) of PTAs replied
that the school annual budget was not known. The majority of the respondents revealed
that schools annual budget was not known in all stakeholders.
As indicated in table 7 item 3, item was raised to respondents haw the school prepared
appropriate budget plan. Based on the responses, 4(57.1%) of vice-principals, 2(66.7%) of
accountants and all of treasures replied that the schools did not prepare appropriate budget
plan. Similarly,21(70%) of department heads, 5(71.4%) of education office supervision
groups and 11(57.9%) of PTAs replied that the schools did not prepare appropriate budget
plan. The researcher made an interview with the BTEO,BTFEDO, finance plan and budget
experts, school principals and supervisor and they described that "the schools budget plan
do not sufficiently prepared and the school budget was prepared only by school principals
without participation of schools financial management personnel's." According to
researcher when accomplished documents analysis regarding school budget planning
indicated that there was lack of budgeting system in the schools and budget plan was not
sufficiently prepared. This shows that the schools budget plan was insufficiently prepared.
Achieving of objectives and goals of education depend on the preparation of sufficient and
appropriate educational plan.
In line with Tesfaye's (2008) study shows the continuity of lack of planning capacity in
spite of all the efforts made and lack of planning capacity in the Ethiopian education
system is on top of the agenda of both the government and donors' since 1997.According to
Bishoff and Mestry (2003) the budget should reflect the school's prioritized educational
objectives, seek to achieve value for money and be subjected to regular, effective
monitoring. According to the view taken by Knight in Mestry and Bisschoff(2009) are that

48

a budget plan is not a balance sheet or simply a list of figures. The budget should also not
be regarded as statement of the previous year's spending and a prediction or projection of
spending for the next year.
As shown in table 7 item 4, 4(57.1%) of vice -principals, 2(66.7%) of accountants and
2(66.7%) of treasures respondents argued that the financial resources were not allocated
and utilized efficiently in accordance with objective of educational policy. Similarly,
22(70%) of department heads,6(85.7%) of education office supervision groups and
15(78.9%) of PTAs replied that the financial resources were not allocated and utilized
efficiently in accordance with objective of educational policy. In addition to this, as
interview was conducted, most of interviewed respondents admitted this reality and this
more implies no school based budgeting is experienced. Even, regarding the little budget of
the schools, it lacks participation in its preparation. This implies that financial resources
were not allocated and utilized efficiently in accordance with objective of educational
policy.
The above finding was in line with literature (Niemann and Bennett,2002) stated that the
expansion of education and maintaining the required quality in schools are greatly
influenced by the amount of finance available to education and the way these available
financial resources are effectively and efficiently managed. According to Melaku(2000) the
expansion of educational systems and provision of quality education in schools are greatly
influenced by the amount of finance available to education, and by the extent to which the
available finance is effectively and efficiently managed and utilized. The success of
management depends on the extent to which financial resources are utilized efficiently and
for the purpose for which they are meant(Dash and Nena,2008).

49

Table 8: Some Specific Condition of School Financial Management

No Items

Respo
nse

Respondents
DH

VP

N %

Does the
Yes
school have a
No
bank account?
Total

7 100

100

100

- 7 100

100

Does the
school use the
petty cash?

Yes

7 100

100

No

Total

7 100

Yes
No
Total

Does school
use the
payment
voucher?

EOSG

PTAs

20

66.7

71.4

12

63.2

100

10
30

33.3
100

2
7

28.6
100

7
19

36.8
100

100

21

70

85.7

19

100

30

14.3

100

100

30

100

100

19

100

1 100

100

100

19

63.3

100

100

- 7 100

100

100

11
30

36.7
100

100

19

100

Do concerned Yes
3 42.9 1 33.3 1
33.3 3
10
2
28.6 7
36.8
bodies
No
4 57.1 2 66.7 2
66.7 27 90
5
71.4 12 63.2
involve in
Total
7 100 3 100 3
100 30 100 7
100 19 100
monitoring
and
evaluation of
school finance
Note: VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads,
EOSG= Education Office Supervision Groups and PTAs= Parent-Teachers-Associations
As indicated in table 8 item 1, item was raised to respondents whether or not the school
have a bank account. Accordingly, all vice- principals, all accountants and all treasures
replied that the schools have a bank account. Similarly, 20(66.7%) department heads,
5(71.4%) education office supervision groups and 12(63.2%) PTA members replied that
the schools have a bank accountant. This shows that all schools have bank accounts.
As indicated in table 8 item 2, item was raised to respondents whether or not the schools
use the petty cash. Accordingly, all vice-principals, all accountants and all treasures replied
that the schools use the petty cash. Similarly, 21(70%) of department heads, 6(85.7%) of
education office supervision groups and all PTA members replied that the schools use the
petty cash. This shows that the schools used the petty cash.

50

As indicated in table 8 item 3, item was raised to the respondents whether or not the school
used payment voucher. Based on the responses, all vice-principals, all accountants and all
treasures were replied that the school used payment voucher. Similarly, 19(63.3%) of
department heads, all education office supervision groups and all PTA members replied
that the school used payment voucher. This implies that the schools used payment voucher.
As indicated in table 8 item 4, item was raised to respondents whether or not the concerned
bodies involve in monitoring and evaluation of school finance. Based on respondents,
4(57.1%) of vice-principals, 2(66.7%) of accountants and 2(66.7%) of treasures replied
that the concerned bodies did not involve in monitoring and evaluation of school finance.
Similarly,27(90%) of department heads,5(71.4%) of education office supervision groups
and 12(63.2%) of PTAs also replied that concerned bodies did not involve in monitoring
and evaluation of school finance.
From the above data it is possible to say that not appropriately evaluation take place on the
school finance by concerned bodies. Through open ended questions and interview, the
respondents were asked about the reasons for not appropriately monitoring and evaluating
the school finance. As respondents replied the reasons were lack of giving attention to
appropriate monitoring and evaluation, coordination awareness, knowledge and skills on
the issues and no clear guide-line from school contexts. The respondents suggested the
following for accomplishment of appropriate monitoring and evaluating school finance
appropriately. The concerned bodies should give more attention; give training on
monitoring and evaluation of school finance, prepare additional rule and regulation relating
to monitoring and evaluation, make suitable the running and handling of school finance for
monitoring and evaluation. In addition to these, create transparency on school finance;
strength coordination and collaboration among the concerned bodies to work together.

What is the criteria

considered for
allocating budget
for schools

71.4

Standard cost set by

REB
Previous year's
expenditure
Schools internal income
No criteria

71.4

28.6

28.6

N
-

%
-

Number of students in 2
the schools

Teachers/Department
heads
An organized committee 2
or PTAs
Students
Principals
5

Response

100

33.3

%
-

N
-

66.7

33.3

66.7

33.3

%
-

18

12

23

N
-

Respondents
DH

60

40

76.7

23.3

%
-

N
-

85.7

14.3

71.4

28.6

%
-

EOSG

11

16

N
-

57.9

42.1

82.2

15.8

%
-

PTAs

In what form do
In cash only
5
16.7 schools receive the
In kind
7
100
3
100
3
100
25
83.3 7
100
19 100
allocated annual
budget from the
TOFED
Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG= Education Office Supervision Groups and PTAs=
Parent-Teachers-Associations

Who are
participants in your
school budget
planning?

Items

No

VP

Table 9: The Practices of Financial Allocation for School.

4.4.2. Financial Allocation and Budget Planning.

51

52

As indicated in table 9 item 1, 5(71.4%) of vice-principals, 2(66.7%) of accountants,

2(66.7%) of treasures, 23(76.7%) of department heads, 5(71.4%) of education office
supervision groups and 16(82.2%) PTAs respondent responded that schools budget were
prepared by only principals. This shows that there was gap in stakeholders involvement in
school functions. According to Davies (2004) the manner in which stakeholders are
involved in the process is vital for the success of the budgeting process. The findings have
emphasize there were no involvements of stakeholders in the budgeting process. For
example, Parents, teachers/department heads, PTAs and students did not participate in
budget preparation. This implies schools were weak in generating additional ways of
income for expansion of quality of education and also there was low participation of stake
holders in budget planning.
Hence, it can be concluded that if budget is not participatory in its preparation, it is obvious
that it may affect its implementation of objectives of the schools. Also, it could be
concluded that the budget flow from town to schools since there was not school based
budgeting. This may greatly affect the implementation of educational plan in that it may
not be responsive to the local needs of schools. Similarly, research was conducted by
Davies,(2004);and Sharp and Walker,2005) who stressed the importance of the
involvement of stakeholders in the budgeting process.
As indicated in table 9 item 2, item was raised to the respondent to know the criteria
considered for allocated budget for schools in the town. Accordingly, 5(71.4%) of viceprincipals, all accountants and 2(66.7%) of treasures responded that no criteria was
considered in allocating budget for schools in the town, but it depends on the amount of
budget released for towns. Similarly,18(60%) of department heads,6(85.7%) of education
office supervision groups and 11(57.9%) of PTAs also give response that no criteria
considered for allocating budget for schools in the town.
Similarly, the researcher conducted interview with BTEO, BTFEDO and town finance
plan and budget experts, they describe that "the budget allocation not done based on the
schools guideline". According to the schools guideline of MoE (2002) schools should
receive 20 birr per years for every student that enrolled in grade 9-10 and 50 birr for grade
11-12.The purpose of this grant is to cover schools operating costs and augment non salary
expenditures. But, the town allocated budget for schools depends on the amount of budget

53

released for town as whole. In case of school internal budget not allocating based on
specification criteria. This indicates that no criteria considered for allocate budget for
schools in the town.
As indicated in table 9 item 3, item was raised to the respondents in what form does
schools receive the allocated annual budget from the BTFEDO. Based on respondents'
response, all vice-principals, all accountants, all treasures, 25(83.3%) of department heads,
all education office supervision groups and all PTAs replied that the schools receive the
allocated annual government budget from BTFEDO in kinds. But, receiving the allocated
budget in the forms of kinds affects the tasks of teaching learning process. Because
providing materials for schools take long process and do not reach schools on time. The
education tasks run with in the academic calendar. From this perspective giving allocated
budget in the forms of kinds is not suitable for the education work, So, it is better to give
the allocated budget in terms of cash and receive reports about its implementations from
schools.

3
4
1.57
.535
1
5
1
2.00
.577
4
3
2.57
.535

VP
N

57.1
42.9
-

14.3
71.4
14.3

42.9
57.1

1 33.3
2 66.7
1.33
.577
1 33.3
2 66.7
2.33
.577
2 66.7
1 33.3
2.67
.577

A
N

3
1.00
.000
3
2.00
.000
2
1
2.67
.577
66.7
33.3
-

100
-

100

Respondents
T
N
%

9
21
1.30
.466
5
21
4
2.03
.556
9
15
6
2.10
.712

DH
N

30
50
20

16.7
70
13.3

30
70

3 42.9
4 57.1
1.43
.535
2 28.6
5 71.4
2.29
.488
3 42.9
4 57.1
2.43
.535

EOSG
N %

12
7
1.63
.496
8
11
2.42
.507
5
12
2
2.16
.602

26.3
63.2
10.5

42.1
57.9
-

63.2
36.8

PTAs
N
%

Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG= Education Office Supervision Groups and
PTAs=Parent-Teachers-Associations.

How do you explain the

participation of
stakeholders in your
school budget planning

Response

Very high
High
Medium
Low
Very low
Mean
SD
How do you rate the
Very high
community participation High
in budget related
Medium
decision making in your Low
school?
Very low
Mean
SD
How could you explain
Very high
the transparency and
High
accountability of
Medium
financial resources
Low
management practices in Very low
your school?
Mean
SD

Items

No

Table 10: The Practices of Budgeting Process in the Schools

54

55

As indicated table 10 in item 1, the researcher requested the respondents the budget
planning participatory. The respondents means of all vice-principals, accountants treasures,
departments heads, education office supervision groups and PTAs indicated towards very
low with means values of 1.57, 1.33, 1.00, 1.30, 1.43 and 1.63 respectively. Among the
listed respondents accountants and treasures had high variation from their mean value
(SD = 0.577). According to the interview conducted with principals, BTEO and school
supervisor and they describe that in the schools the budget plan preparation not invited the
participation of concerned bodies like PTA members, department heads and others
stakeholders. The budget plan was prepared by principals alone and this make difficulty
during implementation of budget.
This implies that in the schools the budget plan preparation process was not participatory
enough to gather opinion of different concerned bodies like PTAs, department heads and
others in the schools. The participatory budget planning increase transparency,
coordination and collaboration in managing finance and to increase the raising of finance
which helps to solve schools problems.
The research done by Roman and Livingstone in Crowther (2004),has shown that the
involvement of concerned body in the budgeting process, through participatory in the
development budget, leads to higher motivation to achieve the budget targets set. Effective
financial management calls for careful preparation of budget for each financial year. It is
healthy practices to invite proposals from various sections, examine them and consolidate
all proposals in the budget. A competent teacher should be remaining in charge of
preparation of budget(Dash and Nena,2008).
As indicated in table 10 item 2, the groups means of all vice-principals, accountants,
treasures, department heads, education office supervision groups and PTAs revealed that
community participation in budget related decision making in school was low participatory
decision making with mean values of 2.00, 2.33, 2.00, 2.03, 2.29 and 2.42 respectively.
Among the listed respondents accountants and treasurer had high variation from their mean
value ( SD = 0.577). This implies that there is a low community participation in budget
related decision making.
According to the researcher conducted an interview with school principals, BTEO,
BTFEDO, School supervisor and finance plan and budget experts and they describe that

56

"participatory in the budget plan was poor and this affect the finance management in the
school. This shows that in the school poor participatory highly affect the financial
management. The lack of participatory affect the relation between school administrative
and school staffs and it also affect the budget plan quality because of absence of getting
different comment or suggestions." According to Chadwick (2002) the effective principles
of budgeting includes the following points. It should be a team effort. All these involved
should work together in harmony and adopt a common sense approach throughout the
budgeting process. The people involved may even bring to the attention of management
information that is vital to the success of the budgeting process, and stop them from going
ahead with a development that could have disastrous consequences.
As indicated in table 10 item 3, the responses to item shows that, both vice-principals,
accountants and treasures responded that in the school transparency and accountability of
financial resources management practices of finance was medium with the means of 2.57,
2.67 and 2.67 respectively, but department heads, education office supervision groups and
PTAs. revealed that in the schools transparency and accountability of financial resources
management practices was low with the respondents means of 2.10 2.43 and 2.16
respectively. Among the listed respondents accountants and treasures had high variation
from their mean value ( SD = 0.577). According to the interview conducted with BTEO,
school supervisor, principals, BTFEDO and finance plan and budget experts and they
describe that "because of low participatory in the budget planning, lack of presenting
finance reports for stakeholders of schools and the transparency and accountability of
financial resources management practices of finance in the school was low". According to
UNSECO (2006) ensuring transparency and accountability in the conduct of both public
and private affairs is a necessary in any society. This is mainly so far purposes of utilizing
scarce resources equitably, effectively. We should be mindful of the fact that, because
resources are not elastic, competition for these will always be high.

No

Items

Response

Respondents
VP
A
T
DH
EOSG
PTAs
N
%
N %
N
%
N
%
N
%
N
%
1
The extent of spending Very high
school finance by rules High
and regulation
Medium
2
28.6
1 33.3
1
33.3
5
16.7
2
28.6 13 68.4
Low
5
71.4
2 66.7
2
66.7
22
73.3
5
71.4 6
31.6
Very low
3
10
Mean
2.43
2.33
2.33
2.07
2.29
2.68
SD
.535
.577
.577
.521
.488
.478
2
The status of
Very high
accounting process
High
2
10.5
Medium
3
42.9
3 100
3
100
13
43.3
3
42.9 5
26.3
Low
4
57.1
17
56.7
4
57.1 12 63.2
Very low
Mean
2.43
3.00
3.00
2.43
2.43
2.47
SD
.535
.000
.000
.504
.535
.697
3
The extent of school
Very high
use the allocated
High
1
14.3
1 33.3
3
100
8
26.7
2
28.6 4
21
budget for its intended Medium
4
57.1
2 66.7 16
53.3
5
71.4 12 63.2
educational purpose
Low
2
28.6
6
20
3
15.8
Very low
Mean
2.86
3.33
3.00
3.06
3.29
3.05
SD
.690
.577
.000
.680
.488
.621
Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG= Education Office Supervision Groups and PTAs=
Parent-Teachers-Associations.

Table 11: Practices of Budget Utilization in the Schools.

57

58

As indicated in table 11 item 1, the researcher requested the respondents the extent of
spending schools finance by rule and regulation. The responses to item shows that viceprincipals, accountants, treasures, department heads and educational office supervision
groups revealed that the extent of running the school finance following finance rule and
regulation was low with the mean value of 2.43, 2.33, 2.33 2.07 and 2.29 respectively, but
PTAs responded medium. Similarly, the researcher conducted interview with BTEO,
BTFEDO, finance plan and budget experts and school supervisor and they described that
"in the schools when they run finance for different purpose, the extent to follow finance
rule and regulation was poor. This problem more serious on the internal budget sources,
than the block grant. The reason behind this problem were carelessness of those run the
finance, and the lack of follow up from others." This shows that in the schools the running
of finance following rule and regulations was low. The absence of following finance rule
and regulation caused the school finance for wastage of finance resources, corruption and
lack of transparency. It also makes the controlling of school finance difficulty for
stakeholders. According to MoE (2002) the schools have responsibility to run the school
finance by follow proper finance rule and regulation, misutilization of finance, the
implementation problems and unreasonable lagging and absence of accomplishing the
planned task.
As indicated in table 11 item 2, the researcher requested the respondents the status of
accounting process in the schools. According to respondents, vice-principals, department
heads, education office supervision groups and PTAs revealed that in the schools status of
accounting process was low with the mean value of.2.43, 2.43, 2.43 and 2.47 respectively.
But, accountants and treasures revealed that in the schools status of accounting process was
medium with the mean value of 3.00 and 3.00 respectively. Among the listed respondents
PTAs had high variation from their mean value ( SD = .697). In line with this an interview
conducted with BTEO, BTFEDO, finance plan and budget experts, school principals and
school supervisor and they described that "in the schools, their accounting (finance record
keeping) condition was low." As researcher analysis document, it was not properly handled
the document, not fulfill the necessary documents and not pass through necessary process.
The financial report relies on accurate and completes financial record keeping.
The accounting system should be comprehensive (Bisschoff and Mestry, 2003). From these
perspective , the weak accounting (finance record keeping) systems affect the controlling

59

auditing process and preparation of budget plan as well as monitoring and evaluation of
finance by making difficulty to get accurate and full information finance.
As indicated in table 11 item 3, the researcher requested the respondents the extent of
school use the allocated budget for its intended educational purpose. Accordingly, the
responses to item shows that vice- principals, accountants, treasures, department heads,
educational office supervision groups and PTAs revealed that the schools use medium the
allocated budget or funds for its intended educational purpose with the mean value of 2.86,
3.33, 3.00, 3.06, 3.29 and 3.05 respectively. Among the listed respondents accountants had
high variation from their mean value ( SD = 3.29). This shows that so, the respondents
have agreed that in most schools the allocated budget used moderately for its intended
educational purpose.
Table 12: The Practices of Depositing Money in the School
No

Items

How
often is
the
money
collected
by school
deposited
in the
bank?

Response

Respondents
DH

VP

N %

N %

N %

28.6

33.3

33.3

Immediatel 1
y
after
collection
At half of year
Not at all
4

14.3

57.1

Total

100

Every
month
Quarterly

EOSG

PTAs

N %

10

33.3

20

28.6

26.3

66.7

66.7

14

46.7

71.4

14 73.7

100

100

30

100

100

19 100

Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG=

Education Office Supervision Groups and PTAs= Parent-Teachers-Association.

As indicated in table 12 item 4, a questions was raised to respondents to know when money
collected by the schools deposited in the bank. Accordingly, 4(57.1%) of vice-principals,
2(66.7%) of accountants and 2(66.7%) of treasures replied that the schools deposited
money in the bank not at all. Similarly, 14(46.7%) of department heads, 5(71.4%) of
education office supervision groups, and 14(73.7%) of PTAs replied that the schools
deposited money in the bank not at all. This show that the school deposited money in the
bank not at all.

4
3
-

Very high
High
Moderate
Poor
Very poor
Once a week
Once a month
Once a quarterly
Once a year
Twice a year
Once a quarterly

The existence of
internal auditing
services

If there is internal
auditing how
frequency is
financial inventory
undertaken by
internal auditors?

If there is external
auditing, how
frequently is the
schools seen by
auditors of Ministry
of finance or
external auditors

57.1
42.9
-

%
57.1
42.9
14.3
3
-

A
N
2
1
100
-

%
66.7
33.3
3
-

T
N
3
100
-

%
100
30
-

DH
N
3
17
10
100
-

%
10
56.7
33.3
-

Respondents

6
1
-

85.7
14.3
-

EOSG
N %
4 57.1
3 42.9
12
3
-

PTAs
N
11
8
4

63.2
15.8
-

%
57.9
42.1
21

Once in a year
Twice in a year
Occasionally as 7 100
3
100 3
100 19 63.3 7 100
11
57.9
needed
I didn't observe
11 36.7 8
42.1
Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG= Education Office Supervision Groups and
PTAs=Parent-Teachers-Association.

VP
N
4
3
1

Response

No Items

Table 13: Auditing and Controlling Financial Operation

60

61

As indicated in table 13 item 1, 4(57.1%) of vice-principals, 2(66.7%) of accountants and

all of treasures respondents responded that internal auditing it was poor. Similarly,
17(56.7%) of department heads, 4(57.1%) of education office supervision groups and
11(57.9%) of PTAs respondents responded that it was poor. Even,3(42.9%) of vice principals, 1(33.3%) of accountants, 10(33.3%) of department heads,3(42.9%) of education
office heads and 8(42.1%) of PTAs respondents responded that it was very poor.
Moreover, from the interview of education office head and all of others interviewees
revealed that," most internal auditing is usually only to check the balance between income
and expenditure, but not targeted to check the wise utilization of the budget." In addition to
this, when the researcher conducted document analysis did not get evidence like audit
report which show the success of internal auditing. Therefore, from the response of the
majority of respondents, it implies that in the schools internal auditing system was very
poor.
As indicated in table 13 item 2, 4(57.1%) of vice-principals, all accountants and all
treasures respondents responded that it was carried out once a year. Similarly, all
department heads, 6(85.7%) of education office supervision groups and 12(63.2%) of
PTAs respondents responded that it was carried out once a year. On the other hand, 3(
42.9%) of vice-principals,1(14.3%) of education office supervision groups and 3(15.8%) of
PTAs respondents responded as it is conducted once a year. This implies that financial
controlling system of schools were very weak.
The absence or long delay of auditing activities may bring up undesired results such as
mismanagement and improper utilization on the scares resources. But, the accomplishment
of internal auditing in the school helps for proper use of financial resources. It helps to take
corrective measures. It makes finance controlling easy. It is also economically cheaper.
According to Bischoff and Mestry (2003) the school should established sound internal
financial control to ensure the reliability and accuracy of its financial transactions.
As indicated in table 13 item 3, all vice-principals, all accountants and all treasures replied
that the external auditing accomplished occasionally as needed. Similarly, 19(63.3%) of
department heads, all education office supervision groups and 11(57.9%) of PTAs replied
that the external auditing accomplished occasionally as needed. On the other hand,
11(36.7%) of department heads and 8(42.1%) of PTAs respondents responded that as they

62

didn't observe the trend of external auditing. According to the interview conducted with
TEO, Principals and all of others interviewees revealed that "the external auditor did not
audit the school finance at the end of budget year. The school finance wait for more than
three year without auditing by external auditor. It may be only audit when the employee
leave the position ,the external auditor did audit the school finance." On the other hand,
when the researcher conduct document analysis; did not get evidence that shows the
achievement of school finance at the end of budget years. This implies that in the schools
the external auditing accomplished occasionally as needed. Town/woreda finance
economic and development office should audit the school finance twice a year at half and
end of budget year and present it results for concerned bodies(MoE,2002).
Auditing is the school finance very important and help to use finance resource
appropriately. The achievement of auditing school finance by external auditor helps to
minimize misutilization of school finance; it create a sense of trust between schools and
schools stakeholders, strength further coordination and support to achieve educational
objectives and which more manipulate by financial resources. In addition to this, the
function of auditing is to examine the fiscal efficiency. It also protects the system and the
school personnel from illegalities and losses financial control is the principal's task that
ensures that there is coordination and effective functioning of all the school's financial
activities, so that the formulated school objective are implemented and pursued according
to the school financial plan(Van Deventer andKruger,2005 and Nieman and Bennett,2004).

The lack of experience on the

financial management

Poor and improper financial

planning

Lack of proper monitoring and

evaluation ( auditing)

Improper
purchasing

4.

Items

No
Very high
High
Moderate
Poor
Very poor
Mean
SD
Very high
High
Moderate
Poor
Very poor
Mean
SD
Very high
High
Moderate
Poor
Very poor
Mean
SD
Very high
High
Moderate
Poor
Very poor
Mean
SD

Response

4
3
-

2
5

1
6
-

VP
N
2
5
-

57.1
42.9
2.57
.535

4.29
.488

28.6
71.4
3.29
.488
14.3
85.7
3.14
.378
28.6
71.4

A
N

2
1
-

1
2

2
1
-

1
2
-

2.67
.577

4.33
.577

2.67
.577

3.33
.577

66.7
33.3
-

33.3
66.7

66.7
33.3
-

33.3
66.7
-

Table 14: Degree of Problems of Financial Management Implementation in Schools

Respondents
T
DH
N %
N
11
3
100
19
3.00
.000
7
3
100
15
8
3.00
.000
6
3
100
19
5
3.00
.000
8
2
66.7
17
1
33.3
5
2.67
.577
36.7
63.3
3.37
.490
23.3
50
26.7
2.97
.718
20
63.3
16.7
4.03
.615
26.7
56.6
16.7
3.10
.662

3.71
.75

EOSG
N %
2 28.6
5 71.4
3.29
.488
5
71.4
2
28.6
2.71
.488
2
28.6
4
57.1
1
14.3
4.14
..690
1
14.2
3
42.9
3
42.9

PTAs
N %
6
31.6
13 68.4
3.32
.478
14 73.7
5
26.3
2.74
.452
3
15.8
12 63.2
4
21
3.95
.621
8
42.1
10 52.6
1
3.3
3.32
.749

63

64

Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG= Education
Office Supervision Groups and PTAs= Parent-Teachers-Associations.

As indicated in table 14 item 1, vice-principals, accountants, treasures, department heads,

education office supervision groups and PTAs respondents rated medium, regarding to lack of
experience on current position with the mean value of 3.29, 3.33, 3.00, 3.37, 3.29 and 3.26
respectively. Among the listed respondents accountants had high variation from their mean
value ( SD=.577). Accordingly, the majority of the interviewers responded that,
there are different problems of financial management in school, for example: most of the
school personnel are degree graduates, even though they are qualified in different subject,
but not related with current position, they are not well experienced on their current position
and the PTA members are no experienced and untrained for educational finance
management. So that, the experience of would not enable them to manage, plan, organize,
coordinate and control the budget. In addition to above discussion, financial management
at the schools was generally weak. When a teacher is promoted to be a school principal or
vice-principal; in most cases such a teacher does not undergo any additional training to
prepare him for the management role. He thus learns on the job( more like trial and error).
The same case applies to members of the Parent-Teachers- Association. Therefore all
concerned body should be taken training regularly, to safeguarded money and school
property. The condition that budget is not released on time, it influence on teachinglearning process.
As indicated in table 14 item 2, the researcher requested the respondents the extent to which
poor and improper financial planning affect financial management in the schools.
Accordingly, all the respondents responded that medium, vice-principals mean=3.14
accountants mean=2.67, treasures mean=3.00, department heads mean=2.97, education
supervision groups=2.71 and PTAs mean=2.74. Among the listed respondents department
heads had high variation from their mean value ( SD= 0.718).

According to the researcher

conduct an interview with TEO, principals, supervisor and others, they describe that" in the
school improper budget preparation of budget plan affect the utilization and managing of
school finance in order to achieve the intended educational objectives." This implies that in
the schools poor and improper financial planning affect financial management practices in the
schools.

65

As indicated in table 14 item 3, all groups of respondents revealed that lack of proper
monitoring and evaluation( auditing) was high with the mean of vice-principals=4.29,
accountants mean=4.33,treasures mean=3.00,department heads mean=4.03, education
supervision groups mean= 4.14 and PTAs mean= 3.95. Among the listed respondents
education office supervision groups had high variation from their mean value ( SD = 0.690).
From the respondents responses, this implies that lack of proper monitoring and evaluation
was highly affect financial management in the schools.
As indicated in table 14 item 4, the researcher requested the respondents the extent that
improper purchasing materials to schools affect financial management in the school.
Accordingly, all groups of respondents responded that the improper purchasing materials to
the schools highly affect financial management in the schools with mean value of viceprincipals(2.57), accountants(2.67), treasures(2.67), department heads(3.10), education office
supervision groups(3.71) and PTAs(3.32). Among the listed groups of respondents
department heads had high variation from their mean value ( SD = 0.662). According to the
researcher conduct an interview with TEO heads, principals, supervisor, TFEDO and finance
plan and budget experts and they describe that" the improper of purchasing materials to the
school affect financial management. Because, it make the budget not used for the intended
purpose on time." This implies that the improper purchasing materials to the schools
moderately affect financial management in the school.

Work over loaded of the

concerned individual

Misuse of the school funds

The school administrative

personnel are incompetent in
carrying out

Shortage of adequate financial

documents

Items

No
Very high
High
Moderate
Poor
Very poor
Mean
SD
Very high
High
Moderate
Poor
Very poor
Mean
SD
Very high
High
Moderate
Poor
Very poor
Mean
SD
Very high
High
Moderate
Poor
Very poor
Mean
SD

Response

5
2
-

2
3
2
-

4
3
-

VP
N
5
2
71.4
28.6
2.71
.488
57.1
42.9
4.57
.535
28.6
42.8
28.6
3.00
.816
71.4
28.6
2.71
.488
1
2
-

1
2
-

2
1
-

2
1
-

A
N
66.7
33.3
2.67
.577
66.7
33.3
4.67
.577
33.3
66.7
3.33
.577
33.3
66.7
2.33
.577

Table 15 : Challenges of Financial Management Implementation in Schools

2
1
-

3
-

1
2
-

3
-

T
N

Respondents
DH
%
N
%
100
14
46.7
9
30
7
23.3
3.00
2.30
.000
.794
33.3
10
33.3
66.7
13
43.4
7
23.3
4.33
4.10
.577
.759
8
26.7
100
16
53.3
6
20
3.00
3.07
.000
.691
66.7
19
63.3
33.3
11
36.7
2.67
2.63
.577
.490
EOSG
N
%
3
42.9
3
42.9
1
14.2
2.29
.756
2
28.6
5
71.4
4.29
.488
2
28.6
4
57.1
1
14.3
3.14
.690
4
57.1
3
42.9
2.57
.535

PTAs
N
%
9
47.4
10
52.6
2.47
.513
4
21
13
68.5
2
10.5
4.11
.567
5
26.3
12
63.2
2
10.5
3.16
.602
10
52.6
9
47.4
2.53
.513

66

67

Note; VP= Vice-principals, A=Accountants, T=Treasures, DH= Department heads, EOSG= Education
Office Supervision Groups and PTAs= Parent-Teachers-Associations.

As indicated in table 15 item 5, vice-principals, accountant and treasures indicated towards

moderate with the mean values of 2.71, 2.67, and 3.00 respectively, but department heads,
education office supervision groups and PTAs responded low with the groups mean of 2.30,
2.29 and 2.47 toward shortage of adequate financial documents, respectively. Among the
listed groups of the respondents department heads had high variation from their mean value (
SD = 0.794). This implies that schools have shortage of adequate financial documents.
As indicated in table 15 item 6, financial management activities of secondary school were
influenced by overload work of principals. From the responses, groups of respondents that
were treasures, department heads, education office supervision groups and PTA members
rated high regarding to work overloaded of concerned individuals with mean of 4.33, 4.10,
4.29 and 4.11 respectively, but vice-principals and accountants responded very high with the
mean of 4.57 and 4.67 respectively. Among the listed groups of the respondents department
heads had high variation from their mean value ( SD = 0.759). Accordingly, it indicates that
the school financial management activities were delayed because of principals and PTAs
overload work in schools.
As indicated in table 15 item 7 , the researcher requested the extent to which misuse of the
school funds. Accordingly, all groups of respondents revealed that misuse of school find was
moderate with the mean values of vice-principals(3.00), accountants(3.33), treasures(3.00),
department heads(3.07), education office supervision groups(3.14) and PTA members(3.16).
Among the listed groups of the respondents vice-principals had high variation from their mean
value ( SD = 0.816). In case of schools budget allocation, the majority of interviewers
revealed that
no cash was allocated for school but some materials bought and allocated in kind. In
addition Annual budget is not released on time and the delay of budget has a impact on
purchasing educational supporting materials and also the allocated non salary budget is not
based on students enrollment, the school finance is never seen by external auditor. Even
they did not have internal auditors. The reason is our office has not own auditors on its
structure. In some schools they cannot report the income and expense or utilization of
school budget on timely, recording school property, financial statement efficiently and

68

improper purchasing, absence of external auditing. Finally, to reduce these problems,

giving continuous training related with financial management for concerned body, discuss
with community and stakeholders to solve shortage of budget and also strengthen follow
up of supervision, increasing generating internal income.
As indicated in table 15 item 8, the researcher requested the respondents the extent to which
incompetent school financial administrative affect financial management in the schools.
Accordingly, almost all groups of respondents responded that the incompetent school
financial administrative moderately affect financial management in the schools with group
mean of vice-principals(2.71), accountants mean(2.33), treasures mean(2.67), department
heads mean(2.63), education office supervision groups mean(2.57) and PTA members
mean(2.53). Among the listed groups of the respondents accountants and treasures had high
variation from their mean value ( SD = 0.577).

This implies that in the schools the

incompetent school financial administrative moderately affect the financial management in

the schools.

69

5. SUMMARY, CONCLUTION AND RECOMENDATIONS

This chapter of the thesis consists of summery, conclusions and recommendations of the
research results. The study was intended to investigate the practice and problems of financial
management in Government Secondary Schools in Bishoftu Town. Therefore, to reach at the
overall purpose of study, three types of data gathering instrument (questionnaire, interview
and document analysis) were used. The data which was gathered through the above mentioned
data gathering tools was tabulated, analyzed, and discussed in the chapter four. Based on the
analysis and discussion, the following summary, conclusions and recommendations were
made.

5.1. Summary
The purpose of this study was to assess the practices and problems of financial management in
government secondary schools of Bishoftu Town, Oromia Regional state. To address this
study, the following four basic questions were administered.
1. What is the current status of financial management practices in the Government Secondary
Schools of Bishoftu Administrative Town?
2. To what extent do the educational financial resources are audited and monitored in Bishoftu
Administrative Town Secondary Schools?
3. What are the sources and the ways of allocation of Education Finance in Bishoftu
Administrative Town government Secondary Schools?
4. What are the problems that secondary Schools encounter in managing their financial
resources in Bishoftu Administrative Town?
The study was conducted in three Government Secondary Schools in

Bishoftu

Administrative Town and descriptive survey design was used in the study. To answer the
basic questions data were gathered through questionnaire, interviews and document analysis.
Questionnaires were designed and distributed to the school vice-principals, accountants,
treasurer, department heads, education office supervision groups and Parent-TeacherAssociation members. 74 questionnaires were distributed. 69 were returned and properly
filled. Interview was conducted with the town education office heads, Town finance office
heads, Town finance office expert and school supervisor. The data collected and organized

70

were analyzed by using: Descriptive statistics, to describe the data in terms of frequency,
percentages, mean score and standard deviation. The qualitative data were analyzed using
descriptive and narrative form supporting the quantitative data. The major finding of the study
are summarized as follows.
Regarding sex, out of the total 69 respondents, which is one 79.7% of male and 20.3% of
female. From this, one can confirm that gender inequality shows to represent women in
financial management position is low, compared to their male counterparts.
The majority of the respondents were degree graduates, except some members of PTAs and
accountants. In addition to this service years in the current position of the respondents from
the school showed that the majority of them had a work exercises of below 5 years. From
this implies that the majority of the respondents, their work experience on current position
were less. Similarly, the majority of the school personnel's respondents reported that they
were working in a position not relevant to their area of field of study.
The majority of respondents (57.97%) responded that the school financial personnel's
competence were moderately satisfactory on their duties. This reveals that financial formats
may not be used properly, financial regulations of budget process may not obeyed, and
control and reports of budget implementation may not complete.
Most of respondents (91.3%) responded that the school personnel's were not trained regarding
practices of financial management. This implies that most school personnel had no adequate
knowledge and experience in the financial management.
The majority of the respondents (66.66%) responded that budget approved covered were 5070% of budget requested and also budget was released from the government in the 2nd
quarter. This shows that shortage of budget was a serious problem, which caused failure to
accomplish the work plan.
Majority of the groups(71%) of respondents replied that the schools have low rule and
regulation on financial issue. In addition, 71% of respondents responded that schools status of
accounting process were low. This implies that the schools may not properly run financial

71

resources for its intended educational purpose and absence of having sufficient rules and
regulations issue affects the tasks of managing finance in the schools.
Majority of the respondents responded that Bishoftu Administrative Town was not considered
criteria of budget allocation for schools and School internal budget was not allocated based
on specification criteria. This implies that criteria was not considered for allocating budget for
Schools in the Bishoftu Administrative Town.
Majority of the respondents responded that internal and external auditing system was very
low. This implies that there was may be mismanagement and improper utilization on the
scarce resources and controlling system of schools were very weak.
Most of the respondents (81.15%) responded that the school can directly utilize their internal
income without permission from Bishoftu town finance economic and development offices.
All groups of the respondents (76.81%) responded that schools budget were not participatory
in its preparation. This implies that there was a low stakeholders involvement in school
functions and may greatly affect the implementation of educational plan.
The majority of the respondents responded that the main sources of school finances were
69.6% government and 30.4% parents respectively. This implies that schools were weak in
generating additional income for the organization rather than waiting the contributions of
governments and parents.
As it was revealed in the finding, the major problems that influence the practices of financial
management in the schools were lack of skilled and experienced, very low financial workers
participation in budget planning and decision-making, lack of structure guide-line and
procedure, improper monitoring and evaluation, lack of budget allocation and utilization,
scarcity of budget and improper purchasing and expenditures not supported by proper
decision. This implies that there were very serious problems that affect the practice of
education financial management in schools.

72

5.2. Conclusions
Based on the discussions and summary of the findings made above, the researcher draws the
following conclusions.
The study indicated that the majority of the groups of the respondents revealed that personnel
who are working on financial administration position are not in accordance with the field of
study and they did not obtain enough training on the job they are doing. This implies that,
although the workers have sufficient qualification in other fields, but they do not have enough
experience about financial management. This can affect the effectiveness and efficiency of
financial management. Therefore, it is possible to conclude that lack of training leads to weak
management of educational finance resources.
The study revealed that the experiences of the schools were not show of any effort to
overcome the shortage of budget and unable to generate other income activities to cover the
budget of their plan; except waiting for government budget and parent contribution
financially. In addition to this, the block grant budget was not released in time. Therefore,
there was a serious problem of budget, which causes failure to accomplish the work planned
and difficulty of fulfilling the necessary inputs. Hence, from this, one can conclude that the
main sources of schools finances were only parents and government. Whereas, the schools
were weak in generating educational income for expansion and quality education provision,
for this reason the budget was not used for the intended purpose timely.
The finding of the study showed that there were low involvement of stakeholders in the
budgetary process and decision making. And also other factors that adversely affect the
practices of educational finance management at schools are improper monitoring and
evaluation and lack of purchasing process. Besides, the existence of internal auditing is not as
it was expected and the external auditing employed occasionally as needed. This implies that
the financial resources were not allocated and utilized efficiently in accordance with objective
of educational policy and this leads to misuse of resources. In addition, from the interview
response, it is possible to conclude that mostly auditing is employed only to check the balance
between income and expenses, but not targeted to check the wise utilization of the budget.

73

The study confirmed that there was not enough rule and regulation guide-lines on financial
issue in the schools. Absence of having adequate rule and regulation guide-lines on finance
issue affects the tasks of managing finance, caused wastage of schools finance and aggravate
misunderstanding. Moreover, there were improper handling of schools finance from the side
of school administrators or there were low attention of financial handling activities. In other
hand, there were low participation of concerned bodies in the budget planning, decision
making and lack of presenting finance reports for stakeholders of the schools. This implies
that there was lack of knowledge and skills related to financial management; there was
misunderstanding in managing financial resources and the schools have low transparency and
accountability of financial resource management practices.
Generally, as the finding of the study shows that low participation of stakeholders to increase
school income, lack of skilled and experienced, lack of training, lack of budget allocation
criteria, not enough structured guide-line and procedures, lack of budget, low controlling
systems, low participation of concerned bodies or school personnel's involve in the budget
planning and decision making process, improper utilization of financial resources and lack of
auditing school finance can affect highly the effectiveness and efficiency of financial
management of the schools. Therefore, from this, one can conclude that these problems may
have affected not only the effectiveness and efficiency of financial management of the schools
but also the whole process of educational activities.

5.3. Recommendations
Based on the analysis of this study from the conclusions which were derived from the
summary, the researcher would like to recommend the following:1.The Town Education Office in team work with the Town Finance Office should provide
short and long term training for the school principals, vice-principals, accountants, treasures
and PTAs to improve their performance and also assign well trained and experienced financial
personnel's to the work at the school level so as to improve financial management activities.
2.The study suggest that the Oromia Regional Education Bureau and Bishoftu town education
office should allocate the disbursement of funds timely, without unnecessary delays. More
qualified and competent audit personnel should be deployed in secondary schools.

74

3. School principals, PTA members, Bishoftu town education office and other concerned
bodies should work in collaboration and participate to increase internal incomes of the schools
with communicating all stakeholders of schools such as school community, private investors,
NGO and different aid organizations.
4. The School financial personnel's such as Principals, vice-principals, accountants, treasurers,
PTAs, department heads and others should be participated in the school budgeting, in
generating income to overcome the shortage of budget with communicating stakeholders and
in financial decision making process. In addition, the school should report the financial
reports for stake holders at least quarterly in order to increase the school transparency and
accountability of financial resources management practices.
5. The study recommend that school should have enough rule and regulation guide-lines on
finance issue in order to increase their practices of financial management. It helps for a new
school accountants, treasurers, principals, vice-principals and PTAs to proper monitoring and
evaluation of the financial management in schools. Hence, Oromia Regional

Education

Bureau, Bishoftu Town Education Office and School financial workers can be encouraged to
investigate the problems related to lack of guidelines and take corrective measures.
6. Town Education Office, Town Finance Office and Schools work in collaboration to adjust
the implementation of internal auditing quarterly and external auditing once in a year, by
having plan of auditing school budgets and providing training for school principals, viceprincipals, accountants, treasurers, internal and external auditors in order to improve their
performance of monitoring, evaluation of the budget and to increase their practices of
financial managements at the school level and also to reduce problems that are related to
practices of financial management in the schools.
Generally, the study recommended that Oromia Regional Education offices, Bishoftu Town
Education Office and School financial personnel's should work in collaboration and avails
training and awareness creation on the practices of financial management so as to improve
school financial personnel's skills, reduce lack of financial management, increase coordination
and integration of budget preparation activities, reduce shortage of budget, decrease missing
of necessary auditing, reduce absence of reporting financial activities and increase proper
utilization of financial resources.

75

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80

7. APPENDICES
7.1. Appendix-I: Questionnaire
HARAMAYA UNIVERSITY

POST GRADUATE PROGRAM DIRECTORATE

SCHOOL OF EDUCATION AND BEHAVIORAL SCIENCES
DEPARTMENT OF EDUCATIONAL PLANING AND MANAGEMENT
(To be filled by School Vice-principals, Department heads, Accountants, Treasurers,
Education

office

supervision

group,

Parent-Teacher-Association(PTA)

members

of

Government Secondary schools).

Dear respondent: I am a Masters of Educational Leadership student in Haramaya University
college of Education & Behavioral Sciences carrying out an academic research focusing on "
Practices and Problems of Financial Management in Government Secondary Schools in
Bishoftu Administrative Town, Oromia Regional State ".
The purpose of this questionnaire is to obtain information about Practices of Financial
Management in your school. The study aims to generate suitable and practical based
statements about the current status of financial management, monitoring and evaluation,
problems that affecting financial management, solution of the problems and utilization of
finance in Bishoftu Administrative Town Government Secondary Schools. The success of this
study is largely dependent on your real(frank), genuine and timely responses to each item
which have an essential role for its accuracy and reliability. Therefore, you are kindly
requested to go through all questions and respond appropriately. Since the information you
give is only meant for the purpose of the study. I would like to assure you that your identity
will remain highly confidential. The responses will be read only by researcher and used only
for research purpose.
General instruction

In any part of the questionnaire you are not required to write your name.

For close-ended questions, put ( ) mark against the most appropriate answer.

For open-ended questions give briefs answer on the space provided.
Thank you in advance for taking your time in making your contribution for the study.

81

Part I. Personal data

Instruction I. Answer the following questions by putting a ( ) mark or by writing where
necessary.
1. Name of the school:_______________________________
2. Gender:

Male

Female

3. Age: a) Below 25 years

d) 46-55 years

b)25-35 years

e) 56 and above years

c) 36-45 years
4. Your level of education/Academic status.
a) College Diploma
b) 1st degree
c) 2nd degree
d) PhD
5. Service in current position.
a) 1-5 years

d) 16-20

b) 6-10

e) 21 and above

c) 11-15
6. Total service of years/ Work experience.
a) 1-5 years

d) 16-20

b) 6-10

e) 21 and above

c) 11-15
7. Your (Job Title) Position in the School or office.
a) vice-principal

c) Department head

e) Accountant

82

b) PTAs

d) Education office expert

f) Treasurer

g) Education office supervision group

Part II. Budget Sources and Approved Annual Budget.

Instruction II. The following are some awareness questions of financial management.
Please put a ( ) mark in the box provided.
I/ Sources of budget and Budget approved
1.What percentage of budget was approved in 2006 E. c. as compared to that of budget
requested?
1. 91-99

2. 71-90 %

3. 50-70%

4. Below50%
2.The amount of budget approved for your school to implement your annual plan of the
school is ?
1. Excess

2. Adequate

3.Inadequate

4.I don't know

3. In what period of the year your school budget is released from town education office?
st

1. 1 quarter

nd

2. 2 quarter

rd

3. 3 quarter

th

4. 4 quarter
4. What are the main sources of finance in your school?
1. Government

2. Private and different aids

3. Parents

4. Internal incomes of the school itself

Part III. Competence, Training and Position of Financial Personnel

Instruction III. Answer the following questions by putting a ( ) mark or by writing
where necessary.
1. The relationship between the current position and field of specialization is?
1. Related

2. Not related

2. The mode of training attended

1. workshop

2. Seminar

3. On job training

4. Specify if any-----------------------------------------------------------------------------3. Duration of training related to financial management.

83

1. From 1 week and below

2. From 1-2 week

3. From 2-4 week

4. One month

5. Two month and above

4. How often do school accountants receive training related to their current position?
1. Once in three months

2. Once in six months

3. Once in a year

4. Not at all

If you say "not at all" to the above item, What is the mode of training attended?
___________________________________________________________________________
5.The competence of existing financial officers in your school.
1.Very High

2. High

3. Satisfactory

4. Low

5. Very low
6.According to your personal view what do you suggest to minimize and or avoid problem
related to financial property, administration and utilization of budget in your school?
(Please, explain it: ________________________________________________________

Part IV: Finance rule and regulation in the schools

Instruction IV: Each of the following item in this section refers to finance rules and
regulations in the schools. For each statement, there are 5 alternative responses showing
whether you Very high (5), High (4), Medium (3), Low(2) , Very low (1) with the statement.
Mark "x'' the appropriate number after each statement to indicate the degree of financial
management
No

Indicator

The adequacy of rules and regulations

in financing education

The schools capacity directly utilizing

their internal income without
permission from the TOFED
Necessary staff for finance work
assigned in the schools

The extent of finance workers handle

the financial activities of the school
properly

84

Part V. Practice of Finance Accounting in the Schools and Research

related Information.
Instruction V. For each statement, below, there are 2 alternative responses showing
whether you Yes , No with the statement. Answer the following questions by putting a ( )
mark.
No

Items

Yes

Is your school annual budget known?

Do you think that the school prepared appropriate budget

No

plan?
3

Does the school have a bank account?

Does the school use the petty cash?

Does the school use the payment voucher?

Do concerned bodies involve in monitoring and evolution

of school finance

Part VI: Practices of Budget plan and Accounting in the Schools

Instruction VI. Answer the following questions by putting a ( ) mark or by writing
where necessary.
1. Does your school have budgeting system? 1. Yes

2. . No Budgeting

If you say Yes, how budgeting is prepared? Please, Explain

___________________________________________________________________________
___________________________________________________________________________
2. Who are participants in your school budget planning?
1.Teachers/Department heads

3. Students

2.An organized committee

4. Principals and PTAs

3. How do you explain the participation of stakeholders in your school budget planning
1.Very High

2.High

4. Low

5.Very low

3. Medium

4. How do you rate the community participation in budget related decision making in your
school 1.Very High
4.Low

2. High
5.Very low

3. Medium

85

5. How could you explain the transparency and accountability of financial resources
management practices in your school?
1.Very High

2.High

4. Low

5.Very low

3.Medium

6. The extent of spending school finance by rule and regulation is

1.Very High

2.High

4. Low

5.Very low

3. Medium

7. The status or/ condition of accounting process ( finance record keeping) is

1.Very High
4. Low

2. High

3. Medium

5.Very low

8. The extent of school use the allocated budget for its intended educational purpose
1.Very High

2.High

4.Low

5.Very low

3. Medium

9. What problems / challenges did your school encounter concerning financial management
practices? Please list it:
a)_____________________________________________________________
b)_____________________________________________________________
c)_____________________________________________________________
d)_____________________________________________________________
10. Please suggest your possible solutions to the current status of financial management
practices?___________________________________________________________________
___________________________________________________________________________

VII/ Financial Allocation, Utilization and Administration

Instruction VII. Answer the following questions by putting a ( ) mark or by writing
where necessary
1.What is the criteria are considered for allocating budget for schools?
1. Number of students in the schools
2.Standard cost set by REB

86

3. Previous year's expenditure of the schools

4.Schools internal income
5.No use criteria
2.What form does schools receive the allocated annual budget from town finance economic
and development office?

1. In cash

2. In kind

3. No budget allocation
3.How often is the money collected by school deposited in the bank?
1.Every month

2. Quarterly

3.Immediately after collection

4. At half of year

5. Not at all
4.How are your school income and/ or revenues being collected?
1 By receipt prepared by the school

3.Any white paper

2.By receipt sent to your school from education office

.

4. Specify if

any___________________________________________________________
5. How often does the school present a report of income and outcome of the school for the
stakeholders ?
.

1.Every month

3. Every six month

2. Every three month

4. Every year

5. Not at all

6.Do you think that allocated financial resource is utilized efficiently in the school?
.

1. Yes

2. No

If you answer No, What problems do you observed ? Please, list it

___________________________________________________________________________
___________________________________________________________________________

87

Part VIII. The Practices of Auditing the School Finance

Instruction VIII. Answer the following questions by putting a ( ) mark or by writing where
necessary.
1. The existence of internal auditing services and its effectiveness is
1. Very high

2. High

3. Moderate

4. Poor

5.Very poor
2.If there is internal auditing how frequency is financial inventory undertaken by internal
auditors? 1. Once a month
3. In semester

2. Once a quarterly
4.Once a year

5.Not at all

3.If there is external auditing, how frequently is the schools seen by auditors of Ministry of
Finance or external auditors.
1. Once a quarterly

2. Twice in a year

3. Once in a year

4. Occasionally as needed

5. I didn't observe since I came to this position

4.What do you suggest to build a well organized auditing system in your school? Explain
shortly._____________________________________________________________________
___________________________________________________________________________

Part IX: Factors that Affecting Schools Financial Management

Instruction IX: For each statement, below, there are 5 alternative responses showing
whether you Very high (5), High (4), Medium (3), Low(2) , Very low (1) with the statement.
Mark "x'' the appropriate number after each statement to indicate the degree of the problem.
No
1
2
3
4
5

Indicator
Lack of experiences on financial
management
Poor and improper financial planning
Lack of proper monitoring and evaluation
(auditing)
Improper Purchasing

Shortage of adequate financial

management documents
Work overloaded of the concerned
individuals
Misuse of school funds.

The school administrative personnel are

incompetent level in carrying out

88

7.2. Appendix-II: Interview

HARAMAYA UNIVERSITY

POST GRADUATE PROGRAM DIRECTORATE

SCHOOL OF EDUCATION AND BEHAVIORAL SCIENCES
DEPARTMENT OF EDUCATIONAL PLANING AND MANAGEMENT
Questions for Interviewing, School Principals, Education Office head, Finance Office head,
Town Education experts , Finance office plan and budget experts and school supervisors.
The aim of this study is to obtain information about Practice and Problems Financial
Management of Bishoftu Administrative Town Government Secondary Schools. The study
aims to generate suitable and practical based statements about the current status of financial
management, monitoring and evaluation, problems that affecting financial management,
solution of the problems and utilization of finance in Bishoftu Administrative Town
Secondary Schools. Be sure that the information gathered will be used only for the research
purpose. Hence, you are kindly requested to provide the necessary information which is very
helpful to the quality of the research.
Thank You in advance for your cooperation
The name of the school:____________________________________
Position in school:_________________________________________
Position in your office:_____________________________________
Education qualification:_____________________________________
Other ___________________________________________________
1. How often does your school or office facilitates capacity building / training/ for schools in
related to financial management?
2. What mode of training attended regarding financial management?
3. How much do you believe the untrained school personnel have the necessary capacity to
manage the schools' finances effectively?

89

4. Is it the amount of budget approved for school to implement school annual plan is
adequate?
5. How does your school or office facilitate auditing system in schools?
6. How much do the schools uses the clear guidelines or procedures for financial management
practices in the school?
7. How could you explain the transparency and accountability of financial management
practices in the schools?
8. To what extent does your office obtain a financial report from schools?
9. How often does the school present a report of income and outcome of the school for the
stakeholders ? ( for principals and school supervisor).
10. To what extent do a system of controlling and monitoring exist weather the allocated
budget is being utilized for the targeted purpose in schools?
11. What problems / challenges do you observe regarding financial management practices in
the schools?
12. In your opinion what measures should be taken by stake holders/ or parents, government
and school to enhancing the effectiveness of the implementation of financial management?

90

7.3. Appendix-III: Documents

HARAMAYA UNIVERSITY
POST GRADUATE PROGRAM DIRECTORATE.
Document Assessment Check List.
The purpose of this document analysis sheet is to assess the availability and effectiveness of
financial related documents in secondary schools in Bishoftu town.
Which of the following document are available in the secondary schools under the study?
No

Types of Documents

1
2

School budget planning

School budget report (financial
statement)

3
4

Transaction registers
Receipt

5
6
7

Minutes
Purchasing procedures
Town education office budget
report
Adequate rule and regulation
guide-line in the schools on
financial issue
Financial decision making
process
Model 19,20 and 22
Auditing reports
Balance and Income sheet

9
10
11
12

Bishoftu
preparatory
school
Yes
No

Bishoftu
school
Yes

high Adea model

secondary
school
No
Yes
No