The effect of budgeting and budgetary control practices on the liquidity levels of the Seventh-day Adventist Missions in Angola

Abstract

The budget defines the financial plan of the organization quantitatively during a specific period. Effective Budgeting practices are the processes of creating and implementing a budget according to the policy, within the appropriate process, and with the participation of top- and lower-level managers within an organization. Effective budgetary control practices are the processes of evaluating an organization´s budget by preventing errors from occurring and detecting them after the errors have occurred, always respecting the rules. Budgeting and budgetary control practices are instrumental in improving financial performance in an organizational setting. Non-profit organizations have a particular interest in improving income, and reducing expenses so that the liquidity can carry on their short-term operations. The purpose of this study was to determine the effect of budgeting and budgetary control practices on the liquidity levels of Seventh-day Adventist missions in Angola. The study was conducted in four Seventh - day Adventist missions in two Seventh-day Adventist unions in Angola. These missions experienced the problem of decreasing liquidity. This study used a causal research design. The study population comprised all committee members and accountants, who usually deal directly with budgeting and budgetary control. The instrument used for its data collection was a questionnaire that was tested for validity and reliability. Data were analyzed using descriptive statistics, correlation analysis, and regression analysis. The findings indicate that budgeting and budgetary controls are effectively practiced in Angle’s Seventh-day Adventist missions. However, there are areas that require improvement to enhance liquidity levels. The liquidity levels are very low in such a way that they are a source of concern. The regression analysis shows that a p-value less than 0.05 for budgeting practices and budgetary control practices impacts on liquidity levels; however, only 12% of budgeting practices and 6% of budgetary control practices explain the level of liquidity. The study shows coefficient B= 1.198 and unstandardized coefficient B= 0.458, for the effect of budgeting practices on liquidity levels, and B= 1.427 and unstandardized coefficient B= 0.351 for the effect of budgetary control practices on liquidity levels. It was recommended that improvement of the utility of budgeting and budgetary control in the organization was needed: the participation of departmental directors in the budgeting making process be enhanced; and to board members be trained on issues related to budget and financial statements.