The Impact of Financial Management Strategies in the Management of Public Enterprise in Ghana.
CHAPTER ONE
Objective of the study
The objective of this study is to comprehensively examine the impact of financial management strategies on the management of public enterprises. To achieve this overarching goal, the study aims to:
- Analyze the effectiveness and efficiency of various financial management strategies employed by public enterprises in achieving their objectives,
- Investigate the role of financial management practices in promoting good governance and accountability within public enterprises.
- Assess the contribution of financial management strategies to the resilience of public enterprises in mitigating risks.
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
Financial management practices
Financial management basically deals with money circulation and control of money for all kinds of business operations including the SMEs (Lasher, 2010). Financial management practices are the central activities for the success of small business (Vohra and Dhillon, 2014). SMEs financial profitability is the conceived result of financial management practices. Financial management transactions cover various objectives starting with cost calculation, cost control, sales and profit maximization, attaining the market share and overall endurance of a firm (Vohra and Dhillon, 2014). Small businesses have been using different set of financial management practices, core principles of financial management practices are not exercised, it run with short term financial management approach and run by the personal business goals of the owner (Lasher, 2010). Vohra and Dhillon (2014) was of the view that the lack of adoption of financial management practices by SMEs may be justified in the below described areas: absence of understanding effective interpretation of financial management information and uses of financial statement. SMEs are rare to effective use of risk management, liquidity, working capital, scientific inventory management, project valuation, thorough capital budgeting techniques, financial reporting and financial analysis which are core functioning areas of financial management practices and this issue is the most critical aspect for obtaining the best financial resources (Vohra and Dhillon, 2014).
The importance of financial management strategies in public enterprises
Resource Allocation Efficiency: Effective financial management helps public enterprises allocate their limited resources efficiently, ensuring optimal utilization for achieving organizational objectives. According to Andrew Likierman, author of “Financial Management in the Public Sector,” sound financial management practices aid in prioritizing investments and projects to maximize returns and public value (Likierman, 2013).
Budgeting and Planning: Financial management strategies facilitate the development of comprehensive budgets and long-term financial plans, which are essential for guiding decision-making processes in public enterprises. As highlighted by Allen Schick in “The Capacity to Budget,” a robust budgeting framework enables public organizations to align financial resources with strategic priorities, enhancing transparency and accountability (Schick, 2009).
Risk Management: Public enterprises face various financial risks, including economic fluctuations, regulatory changes, and operational uncertainties. Effective financial management involves identifying, assessing, and mitigating these risks to safeguard the organization’s financial health and sustainability. According to the International Federation of Accountants (IFAC), integrating risk management practices into financial management processes enhances resilience and fosters informed decision-making in public sector entities (IFAC, 2017).
Transparency and Accountability: Transparency and accountability are fundamental principles of good governance in public enterprises. By implementing robust financial management systems and reporting mechanisms, organizations can enhance transparency by providing stakeholders with timely and accurate financial information. Moreover, accountability is reinforced through effective monitoring and evaluation of financial performance against predetermined objectives. In their publication “Public Sector Financial Management,” Richard Allen and Dimitar Radev emphasize the importance of transparency and accountability in promoting public trust and confidence in governmental institutions (Allen & Radev, 2006).
Long-Term Sustainability: Sustainable financial management practices are essential for ensuring the long-term viability of public enterprises. By adopting strategies that prioritize fiscal responsibility, debt management, and revenue generation, organizations can mitigate financial vulnerabilities and build a solid foundation for future growth and development. According to the World Bank, sustainable financial management is critical for enhancing the resilience of public sector institutions and supporting socio-economic progress (World Bank, 2018).
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the impact of financial management strategies in the management of public enterprise in Ghana.. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the impact of financial management strategies in the management of public enterprise in Ghana.
Summary
This study was on the impact of financial management strategies in the management of public enterprise in Ghana. Three objectives were raised which included: Analyze the effectiveness and efficiency of various financial management strategies employed by public enterprises in achieving their objectives, Investigate the role of financial management practices in promoting good governance and accountability within public enterprises and assess the contribution of financial management strategies to the resilience of public enterprises in mitigating risks. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from enterprises in Accra, Ghana. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
In conclusion, this study has shed light on the significant impact of financial management strategies on the management of public enterprises in Ghana. Through a comprehensive analysis of various financial management practices, it has become evident that effective financial management is crucial for the sustainability and success of public enterprises in the country. The findings underscore the importance of prudent financial planning, budgeting, accounting, and control systems in optimizing resources, mitigating risks, and enhancing overall performance.
Recommendations
Based on the findings of this study, several recommendations are proposed to improve the financial management practices in Ghanaian public enterprises:
- There is a need for enhanced financial governance frameworks to ensure transparency, accountability, and integrity in financial management practices. This includes implementing robust internal control mechanisms, conducting regular audits, and enforcing compliance with financial regulations and standards.
- Investing in the continuous training and capacity building of finance professionals within public enterprises is essential. This will empower them with the necessary skills and knowledge to adopt best practices in financial management, including financial analysis, forecasting, and risk management.
- Leveraging modern financial technologies and software solutions can streamline financial processes, improve data accuracy, and facilitate timely decision-making. Public enterprises should embrace digital transformation initiatives to enhance efficiency and effectiveness in financial management.
- Collaboration and engagement with stakeholders, including government agencies, regulatory bodies, shareholders, and the public, are critical. Establishing effective communication channels and fostering transparency in financial reporting can build trust and credibility, ultimately contributing to the sustainable growth of public enterprises.
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