DETERMINANTS OF ADOPTION OF INTERGRATED FINANCIAL

MANAGEMENT SYSTEMS IN COUNTY GOVERNMENT IN

NORTH RIFT KENYA

By

RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS FOR THE AWARD OF MASTERS DEGREE IN BUSINESS

MANAGEMENT, SCHOOL OF BUSINESS AND ECONOMICS

MARCH, 2014

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 DECLARATION

Declaration by the Candidate

This research proposal is my original and has not been presented for a degree in any other
institution. No part of this proposal may be reproduced without prior permission from the author
and/or the institution.
…
Date………………… Signature ………………………….

Declaration by the Supervisor

This project has been submitted to the university, Moi, for examinations, with our approval as
the university supervisors

Signature………………………………Date …………………………….

DR. ,,,

Dean School of Business and Economics (Rongo campus)

Moi University

Signature……………………………….. Date……………………………..

PROF. …

Professor ,Moi University

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 DEDICATION

This research proposal is dedicated first to God for the strength He gave me to carry on and my

mother and brother for their assistance and encouragement throughout the period of undertaking

the proposal and all my friends who participated and supported me.

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ABSTRACT

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 CHAPTER ONE

INTRODUCTION

1.0 Overview

This chapter deals with the background of the study, the statement of the problem, the objective

of the study, hypotheses, significance of the study, and the scope of the study.

1.1 Background to the Study

Governments in developing countries are increasingly exploring methods and systems to

modernize and improve public financial management. For example, over the years, there has been

an introduction of the Integrated Financial Management Information System (IFMIS) as one of

the most common financial management reform practices, aimed at the promotion of efficiency,

effectiveness, accountability, transparency, security of data management and comprehensive

financial reporting. The scope and functionality of an IFMIS varies across countries, but normally

it represents an enormous, complex, strategic reform process (Chêne 2009:3). The establishment

of an IFMIS has become an important benchmark for the country’s budget reform agenda often

regarded as a precondition for achieving effective management of budgetary resources (Diamond

et al, 2005).

According to Rozner (2008), an IFMIS is an information system that tracks financial events and

summarizes financial information. It supports adequate management reporting, policy decisions,

fiduciary responsibilities and the preparation of auditable financial statements. In its basic form,

an IFMIS is little more than an accounting system configured to operate according to the needs

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and specifications of the environment in which it is installed (Rodin-Brown 2008:2). In general

terms, it refers to the automating of financial operations.

In the sphere of government operations, IFMIS refers to the computerization of public financial

management processes, from budget preparation and execution to accounting and reporting, with

the help of an integrated system for the purpose of financial management (Lianzuala & Khawlhring

2008).

IFMIS can enable prompt and efficient access to reliable financial data and help strengthen

government financial controls, improving the provision of government services, raising the budget

process to higher levels of transparency and accountability, and expediting government operations

(GOK, 2011; Peterson et al, 2008).

The sheer size and complexity of an IFMIS poses significant challenges and a number of risks to

the implementation process that goes far beyond the mere technological risk of failure and deficient

functionality. The introduction of an IFMIS can be regarded as an organizational reform which

deeply affects work processes and institutional arrangements governing the management of public

finance. Challenges and obstacles can have a devastating effect on the success of the

implementation and management of the process and should not be underestimated (Rodin-Brown

2008: Hove & Wynne 2010).

The effective implementation, operation and maintenance of an IFMIS require staff with the

necessary knowledge and skills. Lack of capacity is regarded as one of the main causes for the

delay in the implementation process experienced by Ghana, whilst the emphasis that was put on

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capacity building through training in Tanzania was one of the main contributors to their success.

(Diamond & Khemani 2006).

The lack of staff with IT knowledge and experience cannot be easily remedied by training and

hiring. The salary structure and terms of employment in the public sector are usually not attractive

enough to compete with the private sector and to incentivize candidates with the required IT-skills

levels (Chene 2009). Trained personnel also leave the government service, often for better job

opportunities. The implementation of an IFMIS is a complex, risky, resource-intensive process

that requires major procedural changes and often involves high-level officials who lack incentives

for reform (Chene 2009). It demands a commitment to change: change in technology; in processes

and procedures; as well as changes in skills, responsibilities and behaviours (Rodin-Brown 2008).

1.1.1 IFMIS in Kenya Context

The development of the Integrated Financial Management and Information System (IFMIS) started

in 1998 whilst deployment of the system to line ministries commenced in 2003 (GOK< 2013).

The Government of Kenya’s IFMIS is an Oracle based Enterprise Resource Planning (ERP)

Software. Enterprise Resources Planning (ERP) applications or ERPs, as they are commonly

known, are large-scale computer software and hardware systems that attempt to integrate all data

and processes of an organization into a unified system, housed in a centralized database which is

accessed through a secure network (Diamond &Khemani, 2008).

ERP functionalities are managed through a system of modules, which allows for flexibility in

implementing various functions. Most organizations will not require or want all the functionalities

that the software can offer (Diamond &Khemani, 2008). The IFMIS implementation requirement

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in Kenya originated from The Ministry of Finance and Economic Planning’s ICT Master Plan

2001-2005, that highlighted gaps and weaknesses within the SIBET system that was being used at

the time (GOK, 2013). This master plan proposed development of different modules comprising

of Accounting, Revenue management, and Asset management among others. It also proposed the

establishment of interfaces with the National Bank payment information system, Kenya Revenue

Authority and the Ministry of Labor for payroll and human resource management modules

(Diamond &Khemani, 2008).

In addition to the above, the system was also supplied with additional analytical tools like Oracle

Financial Analyzer and the Financial Statements Generator. A number of customizations were

undertaken to configure the system to the government’s business processes (Bartel, 2009). The

Ministry of Finance has since reviewed the IFMIS implementation process. This IFMIS Re-

engineering and this Strategic Plan seeks to enhance that process by identifying requirements,

priorities and activities for the Re-engineering of IFMIS (Diamond &Khemani, 2008).

However, effectiveness problems have been cited particularly on the users front with studies

showing problems with some of the IFMIS features like the standard data classification for

recording financial events; Internal controls over data entry, transaction processing, and reporting;

and common processes for similar transactions and a system design that eliminates unnecessary

duplication of data entry in cash management (Diamond &Khemani, 2008).

Bartel (2009) asserts that the ease of use, reliability, security, flexibility of IFMIS that is meant to

provide timely, accurate, and consistent data for cash management and budget decision-making

has also been called to question by users who note that while IFMIS has been touted as necessary

has weaknesses that need to be addressed.

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1.2 Statement of the problem

Emerging information and communication technology (ICT) can play an important role in

fighting corruption in public finance systems by promoting greater comprehensiveness and

transparency of information across government institutions. As a result, the introduction of

Integrated Financial Management Systems (IFMIS) has been promoted as a core component of

public financial reforms in many developing countries. Yet, experience shows that IFMIS

projects tend to stall in developing countries, as they face major institutional, political, technical

and operational challenges. Case studies of more successful countries indicate that factors

supporting successful implementation include clear commitment of the relevant authorities to

financial reform objectives, ICT readiness, sound project design, a phased approach to

implementation, project management capability, as well as adequate resources and human

resource capacity allocated to the project. he government of Kenya introduced the IFMIS

system in the year 2008. This program was to be rolled out in all the government ministries

within a period of five years (Ministry of Finance strategic Plan 2008-2012).However, in spite

of all these government efforts to modernize and develop financial frameworks in the public

financial management through the ministry of finance, the implementation of IFMIS which was

to increase efficiency and effectiveness in service delivery remains a pipe dream

1.3 General Objective

The main aim of the study will be determinants of adoption of integrated financial management

systems in county government in north rift Kenya

1.4 Objectives of the study

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1. To determine effect of employee capacity on adoption of integrated financial management

systems

2. To determine effect of management support on adoption of integrated financial management

systems

3. To determine effect of ICT capability on adoption of integrated financial management

systems

4. To determine effect of implementation cost on adoption of integrated financial management

systems

1.5 Hypotheses of the study

Ho1: Employee capacity on adoption of integrated financial management systems

Ho2: Management support on adoption of integrated financial management systems

Ho3: ICT capability on adoption of integrated financial management systems

Ho3: implementation cost on adoption of integrated financial management systems

1.6 Significance of the Study

This study is significant to staff working in the accounting department at county government who

use IFMIS in their financial management as they will know the user issues involved in IFMIS.

They will understand the reliability, flexibility and training issues involved in IFMIS and how to

improve their user interaction with the system.

The study will be beneficial to the Ministry of finance in county government as they will know

what policy to initiate or review to conform it to the improved needs of IFMIS operations. The

policy is in the form of improvements both on the program side and most importantly on the users’

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front to further help in improving financial management in the public service. Moreover, the study

will benefit the private sector with information on how to improve the system or any other better

system to help in financial management. The private sector being a partner of county government

in the development of IFMIS will know the inherent problems of IFMIS and how to then make the

system simpler, secure and reliable for use.

Finally, the study will be as important to future researchers and academicians who will add the

findings of this research to their body of work. This will be to develop studies on public finance

management geared towards strengthening the field of finance management

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

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This chapter is intended to acquaint the reader with existing studies carried out to assess the

determinants of adoption of integrated financial management systems. The chapter will also

entail the conceptual framework and theories of the study

2.1 Concept of integrated financial management systems

According to Dorotinsky (2003) an IFMS is an information system that tracks financial events and

summarizes financial information. It supports adequate management reporting, policy decisions,

fiduciary responsibilities and the preparation of auditable financial statements. In its basic form,

an IFMS is little more than an accounting system configured to operate according to the needs and

specifications of the environment in which it is installed Rodin-Brown (2008). In general terms, it

refers to the automating of financial operations. The introduction of Integrated Financial

Management Systems has become a core component of financial reforms to promote efficiency,

security of data management and comprehensive financial reporting. IFMS provides an integrated

computerized financial package to enhance the effectiveness and transparency of public resource

management by computerizing the budget management and accounting system for a government.

It consists of several core sub-systems which plan, process and report on the use of public resources

(Rodin and Edwin, 2008). The scope and functionality of IFMS can vary across countries, but sub-

systems normally include accounting, budgeting, cash management, debt management and related

core treasury systems. In addition to these core subsystems, some countries have chosen to expand

their IFMS with non-core sub-systems such as tax administration, procurement management, asset

management, human resource and pay roll systems, pension and social security systems and other

possible areas seen as supporting the core modules (Brown, 2008).

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The scale of IFMS may also vary and be limited to specific country-level institutions such as the

Ministry of Finance. However, IFMS is generally meant to be used as a common system across

government institutions, including in the more ambitious schemes for federal, state and local

governments. The integration of IFMS across the board ensures that all users adhere to common

standards, rules and procedures, with the view to reducing risks of mismanagement of public

resources (IFMS, 2000).

Dorotinsky (2003) argues that there are a number of ways in which implementation of IFMS can

improve public finance management, but generally IFMS seek to enhance confidence and

credibility of the budget through greater comprehensiveness and transparency of information.

They seek to improve budget planning and execution by providing timely and accurate data for

budget management and decision making. IFMS allow a more standardized and realistic budget

formulation across government, while promoting better control over budget execution through the

full integration of budget execution data. They also allow for the decentralization of financial

functions and processes under the overall control of the Ministry of Finance, enhance financial

discipline and control operating costs by reducing administrative tasks and civil servants’

workload.

In addition, implementation of IFMS also seeks to strengthen the efficiency of financial controls

by making comprehensive, reliable and timely financial information available to the Auditor

General, parliament, investigative and prosecutorial agencies, etc., as they improve accounting,

recording and reporting practices through the provision of timely and accurate financial data, a

standardized integrated financial management reporting system and an upgraded computerized

accounting system. When they work well, they make bank reconciliation automatic and allow a

closer monitoring of outstanding bills and cash in bank accounts (Junghun Cho 2003).

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William (2003) argues that an implementation of IFMS enables a firm to track financial events

and summarizes financial information. In the private sector, such systems provide critical support

for management and budget decisions, fiduciary responsibilities, and the preparation of financial

reports and statements. In the government realm, IFMS systems must be designed to support

distinctly public sector functions. They must be able to handle and communicate all the financial

movements for the complex structure of budget organizations. The scale of the IFMS will also

vary depending on whether its operation is limited to selected central-level institutions, such as the

finance ministry and treasury, or is implemented more broadly, to include line ministries, their

spending agencies, and even regional and local governments and municipalities. These variations

will have implications far beyond the cost of hardware and software installation (Casals et al.,

2004).

Diamond and Khemani (2008) further mention that all manner of reports can be generated; balance

sheets, sources and uses of funds, cost reports, returns on investment, aging of receivables and

payables, cash flow projections, budget variances, and performance reports of all types. Some

systems have libraries consisting of hundreds of standard reports. Managers can use this

information for a variety of purposes; to plan and formulate budgets; examine results against

budgets and plans; manage cash balances; track the status of debts and receivables; monitor the

use of fixed assets; monitor the performance of specific departments or units; and make revisions

and adjustments as necessary, to name a few. Reports can also be tailored to meet the reporting

requirements set by external agencies and international institutions like the International Monetary

Fund (IMF).

According to Jack and Pokar, (2005) the objective of implementing FMIS is to increase the

effectiveness and efficiency of state financial management and facilitate the adoption of modern

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public expenditure practices in keeping with international standards and

benchmarks.Implementation helps an IFMS store, organize and make access to financial

information easy. It not only stores all the financial information relating to current and past years’

spending, but also stores the approved budgets for these years, details on inflows and outflows of

funds, as well as completes inventories of financial assets e.g., equipment, land and buildings and

liabilities (debt). The scale and scope of an IFMS can vary, from simple General Ledger System

to a comprehensive system addressing Budget, Revenue, Expenditure Control, Debt, Resource

Management, Human Resources, Payroll, Accounting, Financial Reporting, and Auditing

processes across central government or even including local government and other public sector

and quasi-governmental agencies and operations.

The implementation of Integrated Financial Management Systems (IFMS) has been promoted as

a core component and in many cases a driver- of public financial reforms in many developing

countries. Yet, experience shows that in spite of the considerable amount of resources allocated to

such schemes, IFMIS projects tend to stall in developing countries, as they face major challenges

of institutional, political, technical (Mark, 2007).

The implementation of Integrated Financial Management Systems (IFMS) has become a core

component of financial reforms to promote efficiency, security of data management and

comprehensive financial reporting. IFMS provide an integrated computerised financial package to

enhance the effectiveness and transparency of public resource management by computerising the

budget management and accounting system for a government. It consists of several core sub-

systems which plan, process and report on the use of public resources. The scope and functionality

of IFMS can vary across countries, but sub-systems normally include accounting, budgeting, cash

management, debt management and related core treasury systems. In addition to these core

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subsystems, some countries have chosen to expand their IFMS with non core sub-systems such as

tax administration, procurement management, asset management, human resource and pay roll

systems, pension and social security systems and other possible areas seen as supporting the core

modules (Omirin, 2007).

The scale of IFMS may also vary and be limited to specific country-level institutions such as the

Ministry of Finance. However, IFMS is generally meant to be used as a common system across

government institutions, including in the more ambitious schemes for federal, state and local

governments. The integration of IFMS across the board ensures that all users adhere to common

standards, rules and procedures, with the view to reducing risks of mismanagement of public

resources (Barteli, 2009).

2.2 Theoretical Framework

2.2.1 Meta Theory Model

According to Ruchala and Mauldin (1999), research on accounting information systems has been

sourced from various disciplines, basically computer science, cognitive psychology and

organizational theory. In this regard, it has been asserted that previous applications of

information technology in accounting systems were mainly processes of transactions that would

reciprocate the manual processes. This has led to the need of incorporating various accounting

sub disciplines into more research on accounting information systems. With increased focus on

the design of these systems, practicing professionals will add more value to the field and thus

redefine the scope of accounting information system. The changing nature of the information

systems has brought about the need for an organized way of doing things. Meta theory is the

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integration and the synthesis of technical orientations, cognitive as well as the overarching model

into the research on AIS. The Meta theory has helped in addressing the

IT limitations that are imminent and addressed in previous researches such as the failure to

recognize the task to which IT is being applied, the failure to recognize the adaptive nature of the

artificial phenomena, the failure to account for the design science in the actual field research and

the failure to direct the act of making or choosing the necessary decisions and treating all the

transactions in an equal manner (Gorry and Scott-Morton, 1971). According to Reneau and

Grabski (1987) information systems in accounting are used by accountants and other key

decision makers that employ the accounting information or make use of the accounting data. The

Meta theory model is built on past frameworks on the management information systems.

Technology is very pervasive and an essential component in accounting tasks and changes work

processes very efficiently. This is well recognized in the accounting theory.

There are many research methods that are being employed to look into the problems inherent in

Accounting information systems and accounting problems. This is evident in managerial

accounting where field work, experimental work and analytical works address the relationships

that exist between management information systems and accounting. The Meta theory model

starts with a task focus and also suggests a process that matches between task and the alternatives

for system design and various levels of analysis. It also suggests contingency factors,

organizational factors and technological factors have an influence on the aspect of task

performance (Ruchala, 1999).

2.2.2 Contingency Theory

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There are various alternative theories that have been put forward for the purposes of accounting

on information systems. According to Macintosh (1981), there is a new IT theory that embraces

the concept of macro organizations, technology and the human information processing systems.

Earlier on, the contingency theory and possible relationship of the context control of the

organization and structures of accounting. Widener (2004) and Gerdin and Greve (2004) looked

into the various forms of contingency.

Traditionally, accounting has served as the major supplier of information for decision-making.

Bedford (1961), Simon (1954) and Sathe (1978), in their study of centralization versus

decentralization discussed the need for an accounting system to consider the decision making

process. Caplan (1966) and several other authors have discussed the need to consider the

relationship between the decision making process and accounting system. Caplan (1966) defined

the management accounting process as an information system whose major purposes are to provide

the various levels of management with data which will facilitate the decision-making function of

planning and control and to serve as communication medium within the organization.

The contingency theory has been used for identification, analysis and the evaluation of the factors

that affect the design of accounting information systems and financial information systems. The

conceptual framework has been coined to explore how management accounting relates with the

features of the organization. Since the early days of modern information technology, many people

have suggested that IT will have a profound effect on the accounting profession. Elliot (1992), in

his article, Accounting Horizons, claimed that Information Technology is changing everything.

Elliot (1992) uses the third wave imagery to predict the impending and significant changes in

accounting practice, education and research.

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2.2.3 Technology Acceptance Model
The Technology Acceptance Model (TAM) is an information systems theory that models how

users come to accept and use a technology. The model suggests that when users are presented with

a new technology, a number of factors influence their decision about how and when they will use

it, notably. Perceived usefulness (PU) - This was defined by Fred Davis as "the degree to which a

person believes that using a particular system would enhance his or her job

performance".Perceived ease-of-use (PEOU) - Davis defined this as "the degree to which a person

believes that using a particular system would be free from effort" (Davis 1989).

The TAM has been continuously studied and expanded-the two major upgrades being the TAM 2

(Venkatesh& Davis 2000&Venkatesh 2000) and the Unified Theory of Acceptance and Use of

Technology (or UTAUT, Venkatesh et al. 2003). A TAM 3 has also been proposed

(Venkatesh&Bala 2008).

TAM is one of the most influential extensions of Ajzen and Fishbein’stheory of reasoned action

(TRA) in the literature. It was developed by Fred Davis and Richard Bagozzi (Davis 1989,

Bagozzi, Davis &Warshaw 1992). TAM replaces many of TRA’s attitude measures with the two

technology acceptance measures— ease of use, and usefulness. TRA and TAM, both of which

have strong behavioral elements, assume that when someone forms an intention to act, that they

was free to act without limitation. In the real world there was many constraints, such as limited

freedom to act (Bagozzi, Davis &Warshaw 1992).

Earlier research on the diffusion of innovations also suggested a prominent role for perceived ease

of use. Tornatzky and Klein (Tornatzky& Klein 1982) analyzed the adoption, finding that

compatibility, relative advantage, and complexity had the most significant relationships with

adoption across a broad range of innovation types. Eason studied perceived usefulness in terms of

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a fit between systems, tasks and job profiles, using the terms "task fit" to describe the metric

(quoted in Stewart 1986).

The problem statement of this study argues a challenge in user friendliness and know-how of

IFMIS. The TAM theory therefore becomes relevant in looking at the effectiveness of IFMIS in

relation to its reliability, security, flexibility and the user training and skills

2.3 Employee Capacity on Adoption of Integrated Financial Management Systems

According to a study conducted by Chen, (2009) employee capacity building is a major factor

affecting the success of IFMIS implementation, especially in developing countries. An IFMIS

comprises more than only implementing a project; it also means planning for capacity building. A

comprehensive training programme is therefore vital for the success of the project and should be

compiled as early as possible. Training is essential to unlocking client readiness and is the best

way to ensure sustainability of a system (Vickland&Nieuwenhuijs 2005).

According to a study done by Maake (2007) in South Africa, the challenges that the country faces

include access to appropriate IT skills as well as appropriate functional skills by user departments.

South Africa faces significant human capital development challenges in building the capacity

required by an IFMS hence low level of adoption of IFMS. The shortage of skilled ICT people in

the country is exacerbated by the emigration of highly skilled ICT personnel and other

professionals to developed countries, and from the public to the private sector (Farelo& Morris

2006).

According to Frankle, (2009) in order to build the necessary capacity for the successful

implementation of IFMS, it is important to create a learning environment early in the project and

to treat the whole process as a learning opportunity with training being part of an ongoing process.

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Training should be provided to senior managers, technical staff and end users, and should teach

users how to use the new system and how it affects business processes.

Diamond and Khemani (2006), however, argue that the training to improve capacity building will

not only include training in the use of the IFMS for the respective operations and functions, but

will also entail training in the new legal and regulatory framework, the new codes and

classifications, and the new business procedures put in place hence successful adoption of IFMIS.

According to Rodin, (2008) a well-defined training programme will also assist in building capacity

and help build confidence amongst users who, through the process, are reassured that there will be

some constants amidst the change thus more adoption of IFMIS processes. Given the nature of

institutions and organizations, capacity building is a never-ending process. It needs to be ongoing

and permanent.

IFMIS implementation involves considerable human resources requirements and capacity building

needs throughout the entire government. The low level of computer literacy in developing

countries must first be adequately addressed before such projects can be truly viable. The lack of

staff with required IT-knowledge cannot be easily remedied by training and hiring. The current

salary structure and terms of employment in the public sector are usually not attractive enough to

compete with private sector employment conditions and to incentivise candidates with required

IT-skills. There is also a risk that trained staff leaves for better job opportunities (Sahin, 2009).

According to Cooper, (2000) capacity building is a major factor affecting the success of IFMIS

implementation, especially in developing countries where IT-capacity is limited and the public

sector’s salary structure and terms of employment usually can not attract and retain well trained

staff. Capacity building and training need to be scoped during the early stage of the need

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assessment process. The process should allow for the identification of various user groups, assess

the level of knowledge, recruiting needs, and define the scope of the training curricula, targeting

the various key audiences. Training should begin from the beginning of the reform, starting by

those who will be most immediately affected by IFMIS reform. A broader and permanent training

programme should also be developed and implemented.

Brar (2010) argues that low capacity for system implementation at the sub-national level, such as

provincial and regional governments, is one of the major challenges in the implementation of an

IFMS in developing countries. This aspect is especially relevant in the South African context with

its nine provinces and the consequent demand that the duplication of efforts creates for skills and

knowledge, of which a shortage already exists. Farelo and Morris (2006:11) contend that the

human resource development issue within government needs prioritization, the education system

needs to be aligned with the information and communication technologies (ICT) demands of the

country and scarce ICT skills need to be attracted and retained particularly within government.

2.4 Management Support and Adoption Of Integrated Financial Management Systems

In a study conducted by Vickland&Nieuwenhuijs, (2005) it was argued that when implementing

and adopting an IFMS, strong project management support is critical for the success of the

initiative. Project support entails more than managing the technical aspects of implementation.

It also involves project planning methodologies to plan, implement and monitor the project,

with project management responsibilities clearly identified.

An adequate project implementation team should therefore be established, ideally comprising a

project manager, a public finance economist, a qualified accountant, a change management or

training specialist, an IT-system specialist and a logistics specialist (Chêne 2009). At the same

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time, the programme manager must have the necessary managerial and leadership skills to direct

and co-ordinate diverse activities executed by a wide range of specialists thus successful

implementation of the IFMS. The team should strive to adhere to the project implementation

plan, but there should be flexibility to address inevitable changes, with approval through a

programme governance structure.

In a South African study conducted by Van Deventer, (2003) it was argued that in order to

fulfilthe role of successful; adoption of IFMS, the National Treasury in South Africa has set up

a dedicated IFMS management support office composed of project management, systems

engineering, domain specialists and information technology (Van Deventer 2003). The

Programme Management Office (PMO) works with the IFMS Programme Managers to monitor

the execution of the project schedule and the budget. It is responsible for the development and

implementation of policies and processes for the project.

According to O’Sullivan (2008), when developing an FMIS it is important that it cater to

management support needs not just those of the central agencies, but also line agencies.

Moreover, as a management tool it should support the management of change. It must be viewed

as an integral part of budget system reform hence not be designed just to meet present

requirements, but also to support those needs that are likely to arise as parallel budget reforms

are implemented thus more adoption of IFMS.

Management support goes beyond managing the technical aspects of implementation. An

adequate management support team should be set up, ideally comprising a project manager, a

public finance economist, a qualified accountant, a change management/training expert, IT-

system experts and logistic experts hence foster adoption of IFMS. It is recommended to set up

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a steering committee to oversee the process at the highest level, chaired by a high-level figure,

such as the Minister of Finance, that meets regularly and produces minutes on issues and

milestones (Dotsey, 2009).

According to Richmond, (2009) the experience of advanced countries is that managing complex

FMIS projects requires considerable management support skill in order to ensure successful

adoption of an IFMS. However, this is typically in short supply in DCs. Senior managers in

DCs rarely delegate responsibility and frequently are overloaded with work. Moreover, top

managers may not be computer literate. The consequence is that often the binding constraint

when introducing FMISs is not the technical capacity to create them but the capacity to manage

them. Nor is it clear that there is always a good alignment in the incentive structure facing

managers.

In a US study conducted by Heeks, (2009), on the experience of IT reforms in state and local

governments in the United States, he concluded that the reforms were most likely to succeed if

they are easy to use by the manager; they address an external reporting requirement by the

manager; and they are confined to the manager’s area of concern. These requirements are hard

to attain in an DC, where top managers lack experience in computerized accounting and are

therefore unable to grasp its possibilities for financial management. In DCs in the absence of

computer literacy there is a tendency to leave the system development to the computer supplier,

with minimal user involvement. In such an environment there is every likelihood that systems

will not be user friendly, will not match the needs of the managers, and will not have a required

level of management ownership thus low adoption of IFMIS.

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Chêne (2009) as well as Diamond and Khemani (2006) argue that the importance of

commitment by management support is vital to ensure success of the implementation of an

IFMIS. Experience indicates that the best designed project will fail without firm commitment

from all stakeholders involved, including politicians, as well as senior and middle management.

Thus, Diamond and Khemani (2006) posit that ensuring project commitment at the highest

levels of the political system and of management and continuous participation from the direct

users of the system is necessary in all phases of the project.

2.5 ICT capability and adoption of integrated financial management systems

According to Bloyi, (2011) appropriate ICT-solutions must be identified in countries facing

specific logistical challenges such as unreliable power supplies, telecommunications and

capacity in order to enhance adoption of IFMS. A case study conducted in post-conflict

countries such as Rwanda or Sierra Leone suggests that simpler, web-based financial

management systems with easy interface may be considered. The study recommends piloting a

web-based IFMS supported by a simpler software package installed in stand-alone machines

and building up an incremental network

In a study conducted by Barata, (2001) many IFMS projects have also failed because the basic

ICT system functionality had not been clearly specified from the onset of the intervention. IFMS

must be carefully designed to meet agency’s needs and functional requirements, including the

accounting and financial management tasks the system should perform. In some cases,

interfaces with existing IT systems have to be created to fit the country’s specific circumstances.

As documents on the functional requirements – which will often serve as a blueprint for later

25
phases of the system – are difficult to rectify at a later stage, it is of crucial importance to spend

enough time on the design phase of the project.

As IFMIS core ICT systems need to be adapted to the local context and environment, a key

issue to consider is whether to use Off-The-Shelf (OTS) systems and customise them to fit the

local conditions or whether to invest in an own custom-build system, with major costs and

resource implications. This particular issueis discussed at more length in the appendix on

lessons learnt from IFMS implementation. IFMS implementation also involves major hardware

requirements. In Malawi for example, IFMS requires 50 servers, one central server and a local

IFMS sever in each line ministry. Power shortage and interruptions mean that in some countries,

generators and power supply units are needed as well (Barcan, 2010).

Establishing an FMIS ICT system should not be viewed as merely computerizing existing

procedures. Brar, (2010) makes the case that computerization promotes two kinds of reform

efficiency reforms that accelerate the operation of existing procedures and effectiveness reforms

that change existing procedures in successful IFMIS adoption.

Many IFMIS projects have failed because the basic system functionality was not clearly

specified from the onset of the intervention. Chêne (2009) posits that an IFMS must be carefully

designed to meet the needs and functional requirements, including the accounting and financial

management tasks the system should perform. Consideration must be given to the type of

systems that will be implemented, for example, off-the-shelf (OTS) or custom-built systems

that fit the requirements of the specific country. An analysis of the different systems used by

developing countries indicates that they make use of both off-the shelf systems as well as

custom-built systems. For example, Ghana and Uganda opted for a system designed and

26
developed to fit their specific requirements, whilst Tanzania, Malawi and Kenya opted for off-

the shelf systems. It is important to note that a determining factor in the success of the

implementation is not in the type of system, i.e. off-the-shelf or custom-built but rather in the

complexity of the system. One of the reasons for the success of Tanzania’s project is, for

example, their decision to purchase a less complex, mid-range commercial package (Diamond

&Khemani 2006).

2.6 Implementation Cost and Adoption of Integrated Financial Management Systems

The importance of financial resources in adoption of IFMS is a concern raised by many writers

(Hillary 1999; 2000; Winder, 2000). Brio &Junquera (2002) argue that most firms are

companies with limited budgets, thus they cannot allocate funds to initiatives that perceived to

be secondary company aspects.

According to Morris, (2006) budgeting on implementation costs enables an organization to plan

future adoption of IFMS expenditures, reducing the risk of over-spending and ensuring the

revenues are available to cover the predicted spend. Additionally, budgeting allows an

organization to compare actual costs with previously predicted costs in order to improve the

reliability of budgeting predictions.

Mouton, (2001) asserts that charging provides the ability to assign costs of an IFMS adoption

Service proportionally and fairly to the users of that service. It may be used as a first step

towards an IT organization operating as an autonomous business. It may also be used to

encourage users to move in a strategically important direction for example by subsidizing newer

systems and imposing additional charges for the use of legacy systems. Transparency of

charging will encourage users to avoid expensive activities where slightly more inconvenient

27
but far cheaper alternatives are available. For example, a user might browse a dump on screen

rather than printing it off.

In a study conducted by Vickland&Nieuwenhuijs, (2005) it was argued that when implementing

and adopting an IFMS, strong financial support systems are critical for the success of the

initiative. Financial support entails more than managing the technical aspects of

implementation. It also involves project planning methodologies to plan, implement and

monitor the project, with project management responsibilities clearly identified.

2.7 Conceptual Framework

Independent Variable Dependent Variable

ICT capability
Employee capacity

Management support

Adoption of integrated financial

management systems
ICT capability

Implementation cost

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Figure 2.1 Conceptual Frameworks On Determinates of Adoption of IFIMS

Source; (Author Conceptualization, 2015)

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

3.0 Introduction

Methodology refers to the system of methods or procedures used in sampling and collecting data

required for a particular research. It is also the application of the principles of data collection

methods and procedures in any field of knowledge. This section describes research design, study

area, target population, sampling design and sample size, data collection methods, validity and

reliability of research instruments, data collection procedures and data analysis technique.

3.1 Research Design

Explanatory research design will be used in this study. According to Creswell & Plano Clark

(2007) explanatory research focuses causal effect relationship. he term explanatory research

implies that the research in question is intended to explain, rather than simply to describe, the

29
phenomena studied. This type of research has had a contested history in qualitative inquiry, and

divergent views of the appropriateness of such goals in qualitative research are currently held. This

entry summarizes the current state of this debate and describes some of the most important

qualitative methods for such explanation. Traditionally, the research denoted by the term

explanatory research has been quantitative in nature and has typically tested prior hypotheses by

measuring relationships between variables; the data are analyzed using statistical technique

3.2 Target Population

The study will target employees drawn from IT and accounting department of the 7 counties in

north rift. The total population for the study will be 806 respondents. This population will be

included in the study because it is directly involved in the development of budgets plans and

budget implementation. Apart from that, this population directly influences the future life of the

district financial roles and therefore is an essential population for this study.

Table 3.1 Target Population

No of employees in it and accounting
Name of the county department
Elgeyo marakwet 98
Uasin gishu 101
Trans nzoia 71
Nandi 134
West pokot 110
Turkana 167
Baringo 125
Total 806
Source: Human recourse departments (2013)

3.3 Sample Size and Sampling Procedures

According to Nachmias and Nachmias (2008), a sample is a subset of the population. According

to Oso and Onen (2005), a sample is part of the target population that has been selected as a

30
representative sample. The sample in question will be derived from a total of 808 employees. First,

the 808 employees will be stratified into seven counties namely Elgeyo marakwet, Uasin gishu,

Trans nzoia, Nandi , West pokot, Turkana and Baringo Krejcie and Morgan (1970) table as quoted

by Kathuri and Pals (1993) will be used to get the sample size of employees. (See appendix V).

According to the table a target a population size of 265 will be represented by a sample size of

346. Random sampling will be used to select employees in each county to constitute the sample.

This will be done by assigning respondents numbers. Papers with numbers indicated on them will

mix well. The researcher will then pick proportionate numbers from each stratum using Neyman

allocation formula, Neyman allocation is a method used to allocate sample to strata based on the

strata variances and similar sampling costs in the strata.

A Neyman allocation scheme provides the most precision for estimating a population mean

given a fixed total sample size.

No Of Employees In IT And
Name of the county Accounting Department Sample Size
Elgeyo marakwet 98 32
Uasin gishu 101 33
Trans nzoia 71 23
Nandi 134 44
West pokot 110 36
Turkana 167 55
Baringo 125 41
Total 806 265

3.4 Data Collection Instruments

Data collection will be done using a questionnaire and document analysis guide. A questionnaire

will be preferred because it permits collection of data from a large population (Ogula, 2010). A

document analysis guide will be used to ascertain IT facilities in county to validate ICT

capability (Mugenda & Mugenda 2003).

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3.4.1 Questionnaire

A questionnaire with closed ended questions will form the major instrument of data collection in

this study. The closed- questions will be constructed based on a Likert scale response system

offering five alternative responses. This Likert scale will be used more frequently in an attempt

to capture data on respondents’ perceptions, views and opinion determinants of adoption of

IFIMs. The five-point Likert used in the current study will be represented by the following terms;

strongly Agree (5), Agree (4), Undecided (3), Disagree (2) strongly Disagree (1). The

questionnaire will be divided into sections. Each of the sections investigated a different variable

of the study.

3.4.2 Document Analysis Guide

The document materials that will be produced acted as secondary research material. The

document data will consist of number of ICT facilities.

3.5 Validity Test

According to Patton (2002), validity is the degree to which a test or an instrument measures the

phenomenon under study. In this study, validity will be taken to mean the extent to which the

instruments cover the research questions. To determine the content validity of the instruments,

expert judgmental panel from the university were consulted due to their expertise and proximity.

The research experts helped the researcher to determine the validity of the research instruments.

This will be used to make necessary changes on several items. To improve on the validity of the

instruments the researcher will use methodological triangulation where two different instruments

of data collection will be used that is document analysis guide and a questionnaire. Triangulation

is the use of multiple data collection devices, data sources, data analysis and use of different

32
theories to establish the validity of the findings (Oso & Onen, 2005). For testing face validity of

the data collection instruments, colleagues will be consulted.

3.6 Pilot Study

The questionnaire will be piloted in two schools in the neighboring Wareng sub-county, a

locality similar to the study area but not involved in the study. Thirty respondents who were not

being involved in the study were asked to complete the questionnaire. According to Mugenda

and Mugenda (2003), the pilot sample is normally between 1% and 10% the larger the sample

the smaller the percentage. Data collected from the pilot study will be not reported but will be

used to rephrase and reorganize the format of the questionnaire. Piloting will be important as it

enabled the researcher to assess the willingness of the respondents to co-operate in the study and

to assess the efficacy of the items to collect relevant data.

3.7 Reliability Test

Creswell (2003) describes reliability as the accuracy or precision of a measuring instrument. The

questionnaire will be designed carefully to ensure no ambiguity and that all respondents

understood and responded to all issues in exactly the same way as expected by the researcher.

Cronbach alpha will be used to determine a reliability index of the research instruments. The SPSS

computer software will aid in working out this coefficient correlations achieved. According to

Mugenda & Mugenda (2003) a reliability index of 0.70 is considered ideal. The study Adjustment

will be to be done if lower reliability coefficient is realized.

3.8 Data Collection Procedures

The researcher will apply for a research permit from Moi University. On receiving a permit, a

covering letter requesting the respondents’ participation will be prepared by the researcher and

attached to the questionnaires. A copy of the permit will be forwarded to the education officer to

33
be informed of the study, the County seniors Human resources of the sampled will be approached

and informed about the study. The researcher then will proceed to collect data. The questionnaire

will be issued to the respondents and instruction explained. The questionnaires will then picked

after completion.

3.9 Data Analysis and Presentations

The data collected will be coded and analyzed by use of statistical package for social sciences

(S.P.S.S) computer software program. Quantitative data results from closed ended questions will

be tabulated by use of descriptive statistics means, frequencies and percentages and data presented

in form of tables. The test will be done at 95% confidence interval. Significant relationship will be

considered at p< 0.05. The study will adopt Correlation and Regression analysis to estimate the

causal relationships. The collected data will be analyzed using multiple regressions and correlation

analysis, the significant of each independent variable will be tested at a confidence level of 95%.

The regression equation of the study will be applied as shown below

𝑌 = 𝛼 + 𝛽1 𝑋1 + 𝛽2 𝑋2 +𝛽3 𝑋3 +𝛽4 𝑋4 + 𝜀

Where, Y = adoption of IFMIS

α = Constant

β1… β3= the slope representing degree of change in independent variable by one unit

variable.

X1= Employee capacity

X2= Management support

34
 X3= ICT capability

X4= Implementation cost

ε = error term

3.11 Ethical Considerations

Permission to carry out the study will be sought from the County director’s office. The head of

departments will be consulted to allow the researcher to access the employees. The respondents

involved will be provided with information about the purpose of the study and respect of privacy

and confidentiality. This will be done through letters which will be written to them. The nature

and purpose of the research will be explained to the respondents by the researcher in order to obtain

consent. The researcher will respect the respondents’ privacy. The participants will not be

expected to write their names on the questionnaire, but each questionnaire will have a code number

for reference. The participants will then be assured that the information given would be treated

confidentially and for the purpose intended only. After the study, the instruments will be securely

kept. They will also have the freedom to withdraw from the study at any point or time. The

proposal document will be checked for degree of plagiarism using anti-plagiarism software to test

originality.

35
 INTRODUCTION

SECTION A

PART A: DEMOGRAPHIC DATA

1. Please indicate your gender

Male ( ) female ( )

2. Indicate your age

18-25 ( )

26-33 ( )

34-41 ( )

41-48 ( )

49 and above………………………………………

3. How long have you worked at the public service accounting/IT office?

Less than a year ( )

36
1-5 years ( )

5-10 years ( )

More than 10 years ( )

4. What is your level of Education?

Certificate ( )

Diploma ( )

Degree ( )

Masters ( )

PHD ( )

PART B

Adoption of IFIMS

Please indicate the extent to which you agree or disagree with the following statements. Please
indicate by ticking [√] your view. The Value of Scale is given below

SA-Strongly Agree (1), A-Agree (2), U-Undecided (3), D-Disagree (4), SD-Strongly Disagree (5)

SA A U D SD
1 2 3 4 5

We have fully adopted IFMIS in our financial management

We effectively use IFMIS to collects timely financial
information
We all like using IFMIS in our financial management
IFMIS provides adequate management reporting
IFMIS supports government-wide policy decisions
IFMIS is therefore significantly reliable.
We will continue using IFMIS

PART C EMPLOYEE CAPACITY

37
10. Please indicate the extent to which you agree or disagree with the following statements. Please
indicate by ticking [√] your view. The Value of Scale is given below.
SA-Strongly Agree (1), A-Agree (2), U-Undecided (3), D-Disagree (4), SD-Strongly Disagree (5)

SA A U D SD
1 2 3 4 5
We have been trained on use of IFMIS

We can effectively use IFMIS

We have adequate skills on use of IFMIS

We enough employees with skills in IFMIS

PART D MANAGEMENT SUPPORT

10. Please indicate the extent to which you agree or disagree with the following statements. Please
indicate by ticking [√] your view. The Value of Scale is given below
SA-Strongly Agree (1), A-Agree (2), U-Undecided (3), D-Disagree (4), SD-Strongly Disagree (5)

SA A U D SD
1 2 3 4 5
Management are very committed to us of IFMIS
Management always come to our aid on use of IFMIS
Management have allocated adequate fund on
implementation of IFMIS
Management are always there to support to implement
IFMIS

PART F: ICT CAPABILITY

The table below shows ICT CAPABILITY. Please indicate by ticking [√] your view.

SA-Strongly Agree, A-Agree, U-Undecided, D-Disagree, SD-Strongly Disagree

SA A U D SD
We have enough computers to use IFMIS
We have enough personnel with ICT skills

38
 With our adequate ICT facilities were are fully prepared
to handle IFMIS
We have reliable internet which ease connection on use
of IFMIs

PART E Implementation cost

The table below shows the effects of IFMIS proficiency and training on cash management. Please
indicate by ticking [√] your view.

SA-Strongly Agree, A-Agree, U-Undecided, D-Disagree, SD-Strongly Disagree

SA A U D SD
Personnel training in IFMIS is important for quality
cash management
There is no quality efforts to train personnel for better
cash management
We are not fully prepared to handle IFMIS for effective
cash management
Personnel training in IFMIS, or lack of it, have greatly
hampered effective cash management.

39
 Appendix VI: Table for Determining Sample Size

Table 2 Determining Sample Size from a Given Population

N S N S N S

10 10 220 140 1200 291

15 14 230 144 1300 297
20 19 240 148 1400 302
25 24 250 152 1500 306
30 28 260 155 1600 310
35 32 270 159 1700 313
40 36 280 102 1800 317
45 40 290 105 1900 320
50 44 300 109 2000 322
55 48 320 175 2200 327
60 52 340 181 2400 331
65 56 360 186 2600 335
70 59 380 191 2800 338
75 63 400 198 3000 341
80 66 420 201 3500 346
85 70 440 205 4000 351
90 73 460 210 4500 354
95 76 480 214 5000 357
100 80 500 217 6000 361
110 86 550 226 7000 364
120 92 600 234 8000 367
130 97 650 242 9000 368
140 103 700 248 10000 370
150 108 750 254 15000 375
160 113 800 260 20000 377
170 118 850 265 30000 379
180 123 900 269 40000 380
190 127 950 274 50000 381
200 132 1000 278 75000 382
210 136 1100 285 100000 384

40
Source: Krejcie and Morgan (1970)

41