EFFECT OF INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM (IFMIS) ON FINANCIAL PERFORMANCE OF COUNTY GOVERNMENT IN KENYA

Abstract

Integrated Financial management information systems (IFMIS) is the computerization of 
public expenditure management processes including budget formulation, budget execution, 
and accounting with the help of a fully integrated system for financial management of central 
government ministries, county governments and other spending agencies. The general 
objective of this study was to establish the effect of IFMIS on financial performance of 
County governments in Kenya. The specific objectives were to determine how integrated 
budgeting system, procurement information system, reporting information system and 
revenue collection information system affects financial performance of County Governments. 
The target population of the study included 208 employees of Coastal County Government 
and a sample of 137 employees taken to be a representative of all employees in Coastal 
Kenya who use IFMIS. Descriptive survey was used to collect both primary and secondary 
data. Structured questionnaires were distributed targeting 137 Coastal Kenya County 
Government employees. The data collected was analyzed with the help of Statistical Package 
for Social Scientists (SPSS) version 21. Descriptive analysis was done using frequency 
distributions, percentages, mean and standard deviation to summarize results on individual 
variables. Inferential analysis was done using correlation and multiple regression models in 
order to establish the linear relationships between one or more variables and to test the 
significance of the relationships between the dependent and independent variables. The 
results were presented in tables and inferences drawn at 95% level of confidence. Results 
showed that there was a strong positive correlation between use of integrated budgeting 
system and financial performance of County Governments. Results showed that there was a 
strong positive correlation between use of procurement information system and financial 
performance of County Governments. Results showed that there was a strong positive 
correlation between use of reporting information system and financial performance of County 
Governments. Results showed that there was a strong positive correlation between use of 
revenue collection information system and financial performance of County Governments. It 
was concluded that integrated budgeting system improves credibility and confidence of the 
budget by ensuring that it is detailed and transparent with all the financial reports adequately 
prepared. Procurement information system enhanced procurement process that ultimately led 
to efficiencies in resource utilization. Reporting information system improved expenditure 
management and control. Finally, it was concluded that revenue collection information 
system ensured transparency and accountability of collected county revenue. It was 
recommended that the county management should always embrace IFMIS in budgeting 
process. In order to improve the procurement process within county level there is need to  continually embrace procurement information system. In order to enhance financial reporting 
process within county, there is need to encourage compliance on policies governing the 
system. The county governments should ensure that the revenue collection information 
system is well integrated and efficient so as to increase the revenue collection as this was 
found to work better than old revenue collection methods.