The effects of government disbursements procedures on the management of accounts payable in Public Universities in Kenya; a case study of Egerton University

Abstract

In Kenya, public universities rely to a large extent (over eighty per cent) on the Government grants in their recurrent budget. The government requires that universities submit their budget requests four months before the start of every financial year. These budgets are subjected to the government procedures, the funding level controls and disbursements methods. These procedures determine the level of funding to the universities and how the funds are disbursed. The university budgets are sometimes reduced arbitrarily and disbursement delayed, thus affecting the financial management of the university. This study was aimed at determining the effects of government disbursements procedures on the management of accounts payable in public universities in Kenya with special reference to Egerton University. The objective of the study was to identify the effects of government disbursements procedures on the management of cash receipts, accounts payable and credit rating of the university. Secondary data was obtained from the University accounting records and the primary data through a questionnaire. The data was analysed using frequency tables, graphs; performance tables and the T-test showing the various aspects of disbursements of government grants and level of accounts payable. The findings indicate that government disbursements procedures and timings have a significant effect on the cash receipts and thus affects the management of accounts payable. It was noted that the disbursements directly affected the level of accounts payable at the end of every month. The credit rate assessment indicated poor rating by the suppliers. The rise in the level of fiinding (4% p.a.) was far below the rise in accounts payable (155%), Therefore the low level of funding was found to have contributed to an increase in the level of accounts payable.