Assessment of financial management practices in selected Ngos‟ working in jimma town

Abstract

Sound Financial Management Practices determine the effectiveness and efficiency of any organization. This study assesses and describes of financial management practices for selected NGOs utilize to identify their area of strength and weakness as well as challenges around the key financial management components and reporting requirements; namely Financial Planning, Budgeting, Accounting Records, Internal controls and Financial Monitoring. To achieve this purpose interviews with finance heads and a tested questionnaire framework comprising of general information data for background assessment and a Likert scale of 5 levels listing financial management assessment questions was distributed to sample seven International Non Government Organizations. The questionnaire response was analyzed using statistical tools of means and standard deviation as well as frequency tables. The average mean scores for the various financial management practices are as follows: Financial Planning Practices (Mean = 3.87), Budget Process (Mean = 3.55), Accounting Record Practices (Mean = 3.68), Internal Control Review (Mean = 4.14), and Financial Monitoring Practices (Mean = 3.87). The assessment of the organization's financial management practices indicates a generally strong framework, particularly in internal controls and financial monitoring. While financial planning and accounting record practices are sound, there is room for improvement in documentation and risk assessment. The budget process shows the greatest variability, suggesting a need for enhanced consistency and integration. Overall, the organization demonstrates effective financial management with key areas identified for further enhancement. To enhance the organization's financial management practices, it is recommended to ensure thorough documentation and regular updates of policies and procedures, strengthen risk assessment processes, actively engage program managers in financial planning and monitoring, provide continuous professional development for financial management staff, and establish a system for regular evaluation and improvement of financial practices.