ETHICS AND FINANCIAL MANAGEMENT

ACASE OF   UGANDA NATIONAL ROADS AUTHORITY

ABSTRACT

The topic of study was ethics and financial management and the objectives of the study were; to examine the level of ethics at UNRA, to evaluate the level of financial management at UNRA and to discuss the relationship between ethics and financial management UNRA.

The study adopted a descriptive research design because of the nature of the variables that at hand. The study was carried out at UNRA at plot 95 Kampala road. The study targeted UNRA top management (administration), the accounting staffs of UNRA, accounting officers of the organization, and suppliers of UNRA.

The sample comprised of 30 respondents that were selected in a way that 3 respondents were from the accounting department, 10 from administration, 10 from Accounting and 7 respondents who are top management. While carrying out research, purposive sampling was be applied to the above different categories of respondents. Source of data was from both primary and secondary sources.

The results of the study states that employees of UNRA are not well trained to submit their financial states in time this therefore creates inconsistencies and the organization is not in position eliminate financial mistakes that may take place.

The results also further states that UNRA should has weak rules that employees always break this has thus made employees to mismanage the organization’s finances without fear of any legal implications.

Some of the new employees of UNRA are not aware of the rules and regulations that govern the organization and that is the reason for the poor following of the rules and regulation by the organization.

The study recommends that employees of UNRA should be trained to submit their financial statement in time to eliminate any inconsistencies and enable the organization to be in position eliminate financial mistakes that may take place.

The result also recommends that UNRA should enforce strong rules regarding employees who intend to break the law. This will help in ensuring that employees follow the laid down laws so that they are able to manage the organization resources without mismanagement.

The study also recommends that UNRA should ensure that all the employees of the organization are taught the rules and regulations of the organization. This will help in eliminating the key challenges that the organization faces.

The study recommends the following areas for further research; the influence of technology in financial management, the roles of automated record keeping on organizational performance and the different technique of financial management.

CHAPTER ONE

INTRODUCTION

1.0 Introduction

This chapter presents the Background, statement of the problem, purpose of the study, objectives of the study, research questions, scope of the study, Significance of the study, and operational definitions of key concepts.

1.1 Background to the study

Financial management is fast becoming one of the main drivers of change, posing new organizational opportunities and impacting on its strategic challenges (Somuyiwa, 2010). The business environment today has been undergoing unprecedented change and many companies are seeking new ways to stand out from the competition by sustaining their competitive advantage. In today’s highly competitive global marketplace, the pressure on organization’s to find new ways of creating and delivering value to customers is growing stronger, therefore advancement in financial management operations in organizations is imperative to achieve a big market share and reduce costs in organizational operations, (Oyesiku et al, 2010).

The subject of ethics in business has gained a striving importance in today’s business research (Chan, Fung & Yao, 2009). In the last decade, we have witnessed the sub-prime crisis in the United States, several financial and economic scandals on a global scale, both at public and private level (Cragg & Matten, 2011; Brassett, Rethel & Watson, 2010). The Euro crisis has spread. It is no longer a peripheral matter of countries like Greece, Portugal, Ireland and Spain, affecting even the most solid and prosperous economies (Longstaff, 2010; Overbeek, 2012). The economic uncertainty that has spread throughout Europe, has resurrected old hatreds and cultural conflicts. Suddenly, countries are culturally designated as lazy deadbeats, long-time corrupted and unable to survive, on the long term, without external aid. Ethics can be defined as a set of principles; rules and codes of conduct that rule an individual or a group (Treviño & Nelson, 2009). Business ethics is a set of rules, standards and codes, or principles which provide guidelines for morally right behavior and truthfulness in specific situations (Lewis, 2015).

In most of African economies adoption of ethical standards in financial management has been instrumental in enabling organization win a large market share, increase competitiveness, and faster organizational decision making, Ogbonna (2010). Due to gglobalization of most of the Businesses in Nigeria there has been an urgent need by business in the country to ensure proper code of conduct so that they are able to meet the requirements of the share holders by ensuring proper financial management that meet the goals and objectives of the organization, (Almaory, 2008).

Uganda as a country before the period of 2000, the level of unethical financial management was not pronounced like it is happening now where there are many cases of unethical practices running on the media such as news papers, radios, televisions and magazines. According to report on the news paper (daily monitor Monday 23 may 2011), Uganda revenue authority (URA) noted that the government is losing revenue as a result of unethical financial management practices.

Financial management in Uganda National Roads Authority has been poor as indicated by Auditor general report, (2015) which indicates that most of the organizational resources has been misused leading to failure to accomplish the tasks that the organization is supposed to finish.

1.2 Statement of the problem

Uganda National Roads Authority since 2014 has been facing a serious  financial management challenges as indicated in  Auditor General (2016) expenditure totaling to UGX.150, 486,219,673 was inappropriately charged on budget lines to fund activities that were not planned for without authority. Mischarges undermine the budgetary process and the intensions of the appropriating authority as funds are not utilized for the intended purpose. UNRA had outstanding commitments amounting to UGX.283, 820,541,567 contrary to set procedure. Outstanding payables adversely hamper budget performance in the subsequent year and accumulation of debts results into possible interest payments and litigation expenses to the entity.

Apart from that UNRA budgeted UGX.10 billion for the full operation of its 9 Ferries across the country. In contrast, UNRA remitted a total of UGX.14,030,718,000 to KIS for operations of the 2 ferries between Luuka and Bukakata in Kalangala islands.

The practice also leads to financial misreporting. Auditor general, report (2016) further indicates that some of the residents who were affected by the fort portal to Kamwenge road were not paid despite the availability of funds to the organization by the government, since they were cases of 110 people who had been affected by the road; this factor raised concern on the transparency of accounting at UNRA. These results further also shows challenges in financial management as shown in the 2017 financial records of UNRA, were (auditor general report, 2017) show a lot of discrepancies in the organization’s expenditure. Therefore due to poor financial management at UNRA, this has prompted the researcher investigate into influence of ethics on financial management.

1.3 Purpose of the study

The study aimed at establishing the influence of ethics on financial management.

1.4 Specific objectives of the study

The overall objectives of this research were

1. To examine the level of ethics at UNRA.
2. To evaluate the level of financial management at UNRA.

• To discuss the relationship between ethics and financial management UNRA.

1.5 Research questions

The following research questions shall guided the study;

1. What is the level of ethics at UNRA?
2. What is the level of financial management at UNRA?

• What are the relationship between ethics and financial management?

1.6 Scope of the study

The scope of this study was divided into subject, geographical and time scope.

1.6.1 Subject scope

The study was specifically look at, the level of ethics at UNRA, level of financial management, the relationship between ethics and financial management UNRA.

1.6.2 Geographical scope

The study was conducted at UNRA located at plot95 Kampala road

1.6.3 Time scope

The period of data to be considered from the company records was from 2012 to 2017 while the period of data carrying out research was from March 2018 to November 2018and the period of body of knowledge to review literature was from 2000 up to date (2018).

1.7 Significance of the study

The study will help the government in analysing the benefits of ethics in accounting.

The study will help the management in establishing the Relationship between ethics and accounting efficiency.

The study will also help the management in identifying factors that affect accounting efficiency in an organization.

Local government: The study will benefit local government in understanding the importance of ethics in accounting.

Future Researchers, the study will help future researchers with basic facts of importance of ethics in accounting.

1.9 Operation Definition of Key Terms

Ethics:

According to the oxford dictionary (1999), ethics are moral beliefs and rules about right and wrong.

Ethics a set of principles of right and wrong behavior guiding, or representative of a specific culture, society, group or individual.

Ethics can also be defined as set rules that a people in a given profession are supposed to be abide by, (American department of education, 2010).

Accounting

The state of analyzing an organization’s revenue and expenses so that to ensure profitability (Lyson, 2006).

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter presents an overview of the existing literature based on other writers’ opinions, findings, and viewpoints on the influence of ethics on the financial management.

2.1 Over view of key concepts in the study

2.1.1 Level of ethics

According to Johnson, et al., (2008) it is imperative for an organization to invest is building core competencies of employees son as to enhance a specific ethical standard in an organization this will enable employees to develop their skills and be in position to achieve better economic success, they define core competencies as the skills and capabilities by which resources are deployed through an organization’s activities and processes in order to achieve Competitive advantage in ways that others cannot imitate or obtain.

Most of the organizations were the core competencies of the employees is low there is an inability to acquire the skills and knowledge needed to develop the organization, a company’s strategy will be successful in creating competitive advantage when it deploys its resources and capabilities to match the key success factors within the industry environment (Sadler, 2010), that argues that no skill or cognitive trait, no matter how refined, should be described as a ‘competence’ if it does not lead a firm; directly or indirectly, to a persistent competitive advantage by satisfying a customer need better than competitors in a marketplace.

According to Ogbonna (2010) the competence of employees is essential in achieving the ethical code of conduct; this is because competence enables employee to perform according to the expectations of the management and follow the organizational rules and objectives, this helps in reduction of costs and maintaining a strong organizational influence.

According to Prahalad & Hamel (2015) view competence as the ‘root’ of competitiveness, we see it as the root of competitive advantage, i.e. the basis of persistent above-average returns, not just the ability to compete well. When the organizational employees are competent towards the performance of a given organizational task there is likely hood of growth and development in the path of organizational development. The competence of employees is essential in reduction of organizational unnecessary expenses, when the employees are not competent enough this leads to poor performance in the production process of the organization and the reduction of key organizational challenges that are experienced in the process.

According to Sanchez, (2004) the level of employee competence is essential in ensuring that organizations are able to achieve maximum returns on investments. In a study carried out in South Africa, the study showed that most of the large organization invested more in improving their employee competence to enable them reduce costs and maintain organizational profitability. Each form of flexibility is in turn distinguished by the kinds of strategic options it creates for an organization. Key interrelationships among the five competence modes are identified, and important aspects of managing each of the competence modes and their interrelationships are discussed.

Perera et al, (2016) states that a formal code of ethics ensures that professional members will be more aware of the moral aspects of their work; an accessible reference tool for managers to keep ethical concerns in mind; abstract ideas will be translated into concrete terms applicable to every situation; members as a whole will act in a more standardized fashion throughout the profession.

According to Jenfa (2010),professional ethics provides accountants with these advantages: it helps the accountant to determine the prosperity of his conduct in his professional relationship; it indicates the kind of professional posture the accountant must maintain if he is to succeed; it gives clients and potential clients a basis for feeling confident that the professional sincerely desires to serve them well and places service above financial reward; it gives clients assurance that standards of competence, independence and integrity shall remain the goal of the accountant; it enables member bodies and regulatory authorities to fulfill their responsibility of ensuring that the professional accountants have the capabilities and competence expected of them by employees, clients and the public and public interest is protected and the credibility of the profession is enhanced.

Ethics are the moral principles that an individual uses in governing his or her behaviour. It is the personal criteria by which an individual distinguishes “right or wrong” (Appah, 2011). According to Ogbonna (2010), when wetalk about ethics and ethical values, we mean our concern about things, which we think, say and/or practice that may not necessarily violate the rules of the organization or infringe the law of the land or amount to outright crime or felony, but which borders on our sense of morality, our sense of right and wrong. They concern issues like conflict of interest, insider’s dealings, compromising integrity, objectivity, independence, confidentiality, disclosure of official secret and destruction of official documents for financial benefits and other similar acts that are against moral principles and ethical standards.

Ethical codes in accounting is a practice which includes the offering, giving, receiving, or soliciting of anything of value to influence the action of a public official in the (Lysons, 2010).Nwagboso (2008) argues that ethics or morality as matters of good and evil, right and wrong and subscribes to the fact that “we are living today in an ethical wilderness”. Nwagboso believes that ethics is in ferment and chaos among all people.

2.2 Financial management

According to (Baldassare 2000), financial management in an organization requires employees trust and this is shown when an employee accomplishes organizational goals, job satisfaction, and motivation. Because financial management is sometimes viewed to have a close relationship with national growth or economic prosperity, it is considered social capital which enables members of society to confide in each other and form new groups and gatherings (Fukuyama, 1995).

In addition, more and more researchers have proven that financial management in government improves the level of public policy acceptance and reduces administrative costs, while encouraging compliance with laws and regulations (Ayres and Braithwaite, 1992; Levi, 1998; Tyler, 1998). Thus, increasing trust in government is becoming an important goal in order for central and local governments to implement their policy measures effectively and so to realize good governance. Possible causes of decreased confidence in government include government waste and inefficiency, economic change (Bok, 1997), perceptions of performance of government programs (Orren, 1997), decreasing social capital (Mansbridge, 1997), party polarization (King, 1997), lack of reflecting citizen‘s desire toward democratic values into political institution and by political leaders (McAllister 1999), and corruption like the Watergate scandal (Thomas 1998).

According to Tyler (1998) most governments in Africa are pursuing a Participatory government and have set  principle and financial management as a top priority in its governing philosophy, and have initiated an intensive reform of the powerful organizations to sever collusive ties among politicians and businesses and transformed the organizations into service-oriented ones. Along with those measures, the administration has enforced several innovation initiatives for more participatory and transparent government in which participation is encouraged from both citizen and public workers, and high integrity of government is retained and all public information freely accessed.

The values of integrity, transparency and accountability in public administrations have enjoyed resurgence within the past three decades or so these key factors leads to efficient financial management in an organization. Sound public administration involves public trust, citizens expect public servants to serve the public interest with fairness and to manage public resources properly on a daily basis. Fair and reliable public services and predictable decision-making inspire public trust and create a level playing field for businesses, thus contributing to well-functioning markets and economic growth (Elia, 2005).

According to Elia (2005) accountability is achieved in an organization when there is efficient financial management in an organization, accountability refers to the obligation on the part of public officials to report on the usage of public resources and answerability for failing to meet stated performance objectives. In leadership roles, accountability is the acknowledgment and assumption of responsibility for actions, products, decisions, and policies including the administration, governance, and implementation within the scope of the role or employment position and encompassing the obligation to report, explain and be answerable for resulting consequences.

According to (Derek, 2000) in a study carried out in west Germany companies financial management is essential in enabling employees be in position to develop long term relationship with their suppliers and hence there is ability of an organization in achieving success in its endeavours. Integrity, this is the quality of being honest and having strong moral principles. It implies not merely honest but fair dealing and truthfulness. This principle of integrity imposes an obligation on all accountants to be straight forward and honest in professional and business relationships.

According to Thacker, (2006), to enhance ethical competencies of employees need to be trust worthy, in a study carried out in Japanese automobile companies. Financial management in the organization eliminates conflict of interest, a conflict of interest occurs when an individual or organization has an interest that might compromise their actions. The presence of a conflict of interest is independent from the execution of impropriety. More generally, conflict of interests can be defined as any situation in which an individual or corporation (either private or governmental) is in a position to exploit a professional or official capacity in some way for their personal or corporate benefit. Depending upon the law or rules related to a particular organization, the existence of a conflict of interest may not, in and of itself, be evidence of wrongdoing. In fact, for many professionals, it is virtually impossible to avoid having conflicts of interest from time to time. A conflict of interests can, however, become a legal matter for example when an individual tries (and/or succeeds in) influencing the outcome of a decision, for personal benefit (McDonald, 2006).

Winkler (2002) emphasizes that through effective financial management in the organization it is able to achieve transparency among the organizational employees leading to better financial management, He argues that more information divulged by a Ministry does not necessarily imply a greater understanding on the part of the public, part of his definition of transparency. Further, he argues, the simplistic modeling of transparency as simply the reduction or elimination of the uncertainty around a parameter in a model is not helpful for a ministry trying to communicate with the public. An important lesson, however, is that transparency is about effective communication, not simply announcements.

Financial management encourages objectivity in the organization; the principle of objectivity imposes the obligation on all professional accountants to be fair, intellectually honest and free from conflicts. This principle requires four basic needs of credibility, professionalism, quality of service and confidence, (Reena et al, 2009).

Professional competence is one of the key measurements of ethical code of conduct in an organization. professional services implies that he is competent to perform the services. Accountants should refrain from agreeing to perform professional services which they are not competent to carry out unless competent advice and assistance are obtained, Posti (2005).

Financial management enhances an organization to eliminate conflict of interest, a conflict of interest occurs when an individual or organization has an interest that might compromise their actions. The presence of a conflict of interest is independent from the execution of impropriety (Thacker, 2006). More generally, conflict of interests can be defined as any situation in which an individual or corporation (either private or governmental) is in a position to exploit a professional or official capacity in some way for their personal or corporate benefit.

Depending upon the law or rules related to a particular organization, the existence of a conflict of interest may not, in and of itself, be evidence of wrongdoing. In fact, for many professionals, it is virtually impossible to avoid having conflicts of interest from time to time. A conflict of interests can, however, become a legal matter for example when an individual tries (and/or succeeds in) influencing the outcome of a decision, for personal benefit (McDonald, 2006).

Interpretations of Rules of Conduct consist of interpretations which have been adopted, after exposure to state societies, state boards, practice units and other interested parties, by the professional ethics division’s executive committee to provide guidelines as to the scope and application of the Rules but are not intended to limit such scope or application. A member who departs from such guidelines shall have the burden of justifying such departure in any disciplinary hearing. Interpretations which existed before the adoption of the Code of Professional Conduct on January 12, 1988, will remain in effect until further action is deemed necessary by the appropriate senior technical committee.

Ethics Rulings consist of formal rulings made by the professional ethics division’s executive committee after exposure to state societies, state boards, practice units and other interested parties. These rulings summarize the application of Rules of Conduct and Interpretations to a particular set of factual circumstances. Members who depart from such rulings in similar circumstances will be requested to justify such departures. Ethics Rulings which existed before the adoption of the Code of Professional Conduct on January 12, 1988, will remain in effect until further action is deemed necessary by the appropriate senior technical committee.

As a quality of financial report is referred to as the capability of making a difference in the decisions made by users in their capacity as capital providers(IASB, 2008). Drawing on prior research, relevance is operationalized using four items referring to predictive and confirmatory value. Many researchers have operationalized predictive value as the ability of past earnings to predict future earnings (Francis et al., 2004). Confirmatory value to the relevance of financial reporting information if it confirms or changes past (or present) expectations based on previous evaluations (IASB, 2008).

Faithful representation is the second fundamental qualitative characteristic in the standard. To faithfully represent economic phenomenon that information must be complete, neutral, and free from material error. Faithful representation is measured using five items of neutrality, completeness, freedom from material error, and verifiability (Willekens, 2008).

The first enhancing characteristic, understand ability, will increase when information is classified, characterized and presented clearly and concisely. According to IASB (2008), understand ability is when the quality of information enables users to comprehend their meaning. Courtis (2005) argues that understand ability is measured using five items that.

Proper Record keeping, when the there is proper record keeping in an organization This is to blame for most of procurement fraud in the developing countries, maintaining a proper records of providers is vital and when organizations do not maintain a record of their providers they are prone to fraud (Farrington et al, 2006).

Giving employees training facilities so as to increase their performance and skills; many organizations spend billions of dollars on training their employees so that they are able to produce quality products which match the company’s goals and also to stand out in the competitive automobile industry, (Handfield et al, 2006).

Provisions of secretaries with enough facilities which is needed for them to execute their duties such facilities may include computers, printers, type writers, telephones, books, pens and other technological; equipment’s needed to facilitate the work of a secretary in an organization this will enable them perform efficiently and effectively so as to be productive and add value to the organization (Greenberg et al, 2000).

Better remuneration of employees is key towards better performance of employees , according to Ernst and young, (2004), employees who are better remunerated love their jobs since they are able to provide for their families this therefore  motivates them and increases their productivity  while organizations with poor remuneration for the employees were found to be characterized by employees who arrive late at the company, and are also absentees in their duties most of all they are found of lacking respect for their superiors and in turn do not perform their duties efficiently.

Providing proper working environment promotes good performance amongst employees when an organization has good working environment for the employees their productivity will increase while an organization with poor working environment will definitely have poor performing employees. (Burri et al, 2001).

Creation of good working relationship between workers and subordinates is essential towards creating better performance amongst employees and if the relationship between employees and management is not at its best organizational employees will feel demotivated with work and in turn their productivity will also lower, (Chandrasekar 2011).

Communication of organizational goals to the employees has the potential of improving the performance of employees when the employees like secretaries are aware of the organizational goals and what is expected of them and above all when the organization introduces a standard performance in which is required of employees this will improve performance of employees as it will make them work towards a standardize procedures, (Stup, 2003).

Generally, codes of ethics forbid conflicts of interests. Often, however, the specifics can be controversial. Codes of ethics help to minimize problems with conflicts of interests because they can spell out the extent to which such conflicts should be avoided, and what the parties should do where such conflicts are permitted by a code of ethics. Thus, professionals cannot claim that they were unaware that their improper behavior was unethical. As importantly, the threat of disciplinary action helps to minimize unacceptable conflicts or improper acts when a conflict is unavoidable. As codes of ethics cannot cover all situations, some governments have established an office of the ethics commissioner (Porter and Thomas, 2002).

2.4 Relationship between ethics and financial management

Drury (2011) indicated that financial management in  an organization has a direct influence on the overall performance of the organization. From the above one can define performance measurement as the comparison of outcomes of activities or processes with the strategic goals of an organization. The comparing of actual results with strategic outcomes represents performance measurement. Performance measurement therefore strengthens the principles of corporate governance as it promotes accountability and openness to stakeholders. Performance measurement is the link between what is set out to do and what is actually achieved.

Performance measures are the indicators or predetermined targets that are used to measure performance. These measures indicate to management the areas where it is going to plan and where to make changes or adoptions in order to meet the strategic goals of an organisation. The three Es of financial management should in line with the performance measures. Lapsley (2016) referred to the three Es and appropriateness as what performance measures usually take into account Economy which refers to the acquisition of the appropriate quality and quantity of financial, human and physical resources at the appropriate time and place and at the lowest possible cost, efficiency which refers to the use of resources so that output is maximized for any given set of resource inputs, or input is minimized for any given quantity and quality of output provided, effectiveness which refers to the extent of the achievement of set or predetermined outcomes, objectives or other intended effects of programmes, operations, activities or processes, and Appropriateness which deals with whether the objectives or outcomes of programmes, operations, activities or processes address the real needs of customers Efficiency in financial management is important to enable the organization achieve its goals and objectives. Efficiency‘means doing the same as before, but with fewer resources in terms of money, staff, space, etc. Efficiency is a measure of productivity, i.e. how much you get out in relation to how much you put in. The efficiency of services such as rent collection may be measured by the cost of the service compared to the rent roll. Efficiency is primarily associated with the process and the best use of resources (also involves the delivery of procurement). It includes whether you get it right first time or whether you have duplication (Anderson, et al, 2011)

Proper financial management eliminates conflict of interest in the organization according to Thembileet al, (2005) he further asserts that during accounting process, an employee might not disclose a conflict of interest concerning a certain service provider. For example, the employee might award a contract to a relative’s company. This hidden interest is not in the interests of the organization. An employee might receive kickbacks from suppliers in exchange for approval to either order from or make a payment to them, when goods have not been fully supplied or are charged at a higher price. They added that Staff from the donor organization can be bribed by an entity manager, so that during the monitoring process some instances of non compliance are ignored.

According to Dervaes (2006) for an organization to have an efficient financial management it has to ensure that employees are fully motivated and willing to work towards organizational cause.In some countries working for an organization is an admirable and attractive occupation, but in others it is no longer as gratifying as it used to be. There are a number of reasons for this, ranging from restrictive legislation targeted at organization, single party autocratic government, donor fatigue and the presence of civil strife. Most employees working in such environments are tempted to engage in fraudulent activities, as they cannot make personal plans beyond the next twoyears at most. Most organizations operating in difficult environments have strategic plans ranging from six months to a year, and so the staff contracts may vary with the organization’s planning strategies. Organizations generally employ younger people who may be starting families, or who have young families, and need financial security.

Proper record keeping enhances organizational financial performance, this is to blame for most of accounting fraud in the developing countries, maintaining a proper records of providers is vital and when organizations do not maintain a record of their providers they are prone to fraud (Farrington et al, 2006).

Accounting officers should be encouraged to maintain proper record keeping and management to provide bases for tracking fraudulent accounting and accounting entities should provide conducive environment that should be supported by trained skilled and professional experts the reports add that non compliant officials should be prosecuted in courts of law (PAC Reports, 2009-10).

Staff remuneration is a key component of better financial performance in an organization Hansen et al, (2015), he further states that an organizational has to ensure that when there are low levels of financial management in an organization. Financial management of the organizational reduces key challenges like fraud thereby enhancing better organizational performance; Staff and external suppliers can be involved in this fraud when obtaining refunds for cancelled workshops, membership and subscriptions, or overpayment for services. Employees can design schemes whereby they duplicate payments to vendors and only deliver one cheque, converting the other to cash.

Chikanza et al, (2005) asserts that poor payment of employees leads to employee revenge against the organization due to being overlooked for advancement, overworked, in order for them to gain from other sources making them to act in fraudulent manner, leading to fraud, poor payment in the organization has poor effect in the

According to Luway, (2009), civil society organizations, believe that they are activists who are not concerned about monetary gain. Employees of organization are engaged with changing the social status of human kind and empowering them with human rights education so that they make informed decisions and choices. With the current change in the economies and political dispensation of many countries, the cost of living is soaring and the risk associated with human rights activism is now too great so that staff feel the need for market related remuneration. Unfortunately most organizations in developing countries are unable to pay attractive salaries, particularly to local staff. Weakens the financial position of organization, as programs are abandoned midway and in some instances staff can go without salaries.

Political influence in accounting, in accounting is to blame for accounting fraud in most organization, According to the Global integrity report 2008, it has been noted that although there are penalties, Accounting process especially big accounting contracts tend to involve high profile politicians, who influence the process & therefore usually protect the individuals who may be implicated. The regulations are in place but not effective due to the influence assumed by accounting personnel and how they manipulate the system to attain their own ends (IGG reports, 2010). According to report on the Newspaper (daily monitor Monday 23 may 2011), Uganda revenue authority (URA) noted that the government is losing revenue as a result of organized crime between staff of the institution and officials of clearing and forwarding firms.

Level of Corruption, is one of the main proposed causes of accounting fraud, The government of Uganda in its National Strategy to fight corruption and rebuild ethics and integrity in Public Office (2004–2007) launched in July 2004, recognizes that corruption in public accounting and service delivery poses a serious obstacle to economic and social development in Uganda.

Accounting skills of employees, amongst the accounting staffs, has led to fraud in most parts of the world , accounting profession is a relatively new profession unlike accountancy , medicine , law and so most parts of the world still lack qualified accounting profession , this limited skill has caused fraud in most institutions around the world, (Lysons, 2006).

Ntayi (2005) has noted that accounting operations require experts to carry out public accounting at the private and public sector levels. The PPDA as the regulatory public accounting body should provide enough personnel to carry out the function.  Besides, there should be training to provide knowledge and skills of the scope and dynamics of public accounting as required by the (PPDA Act, 2003).

Motives of employees, According to Thembile et al, (2005), an employee may come under extreme financial stress, if she or he has health problems or family members are chronically ill. An employee may desire to solve a need or seek to attain a certain lifestyle. Possibly there may be gambling or alcohol-related problems. Unfortunately the manager cannot do much about such motives, but it is important that they are identified. Internal motives emanate from the workplace if an employee feels they are being underpaid, are unfairly treated in an appraisal interview, are given high volumes of work, leading to stress, and an employee perceiving that promotions are based on work politics and not performance. This may lead to fraudulent act

According to Dervaes (2006), internal motives emanate from the workplace if an employee feels they are being underpaid, are unfairly treated in an appraisal interview, are given high volumes of work, leading to stress, and an employee perceiving that promotions are based on work politics and not performance. This may lead to fraudulent act

Motivation and revenge, Motivation is another critical element. It includes financial need, challenge, and revenge. When the trusted employee has a financial need in their life, the motivation factor kicks in to permit the individual to perform an illegal act (Joseph R. Dervaes 2006).

Dervaes (2006) asserts that, the financial need can be either real or perceived  (i.e.; greed). They become desperate and see no other alternative to solve their financial crisis. Sometimes this is the most visible element of change in a person’s life actually observed by fellow employees in the office. But, sometimes the individual commits fraud by exploiting the organization’s computers, accounting systems, and internal controls as a challenge. Breaking the organization’s codes and passwords is perceived as a game. The most dangerous person is one who seeks revenge against the organization. This wayward employee seeks to financially destroy the organization in retaliation for the poor treatment they’ve received in the past. Employees who have lost their jobs, been passed-over for promotions, or who did not receive a raise fall into this category.

According to Chikanzaet al, (2005) Opportunity, and Motives are translated into action when there is an opportunity to commit fraud. If that opportunity is not there, temptation is removed. Opportunity can present itself if a cheque book is kept in an unlocked office drawer, or a manager travels often and signs blank cheques for activities or purchases whose actual amounts are not yet available. This presents a great opportunity for the staff to tamper with the cheque book or the signed cheques. A manager can establish “opportunity” through studying the organization and searching for weaknesses. An employee can omit a procedure once, and on realizing that no one has noticed, can skip the procedure in future, which can be used by colleagues to commit fraud. Other examples of “opportunity” include someone working for an organization with weak controls, such as only requiring one signature on a check, those who use an organization’s credit card but also approve all credit card purchase. All these prevail opportunities for fraudulent act.

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter presents the methodology which consists of the research design, area of study, study population, sample population and selection, sampling technique, data collection method, data quality control, data collection procedures and limitations of the study.

3.1 Research design

The study adopted a descriptive research design because of the nature of the variables that at hand; to produce data required for quantitative and qualitative analysis and to allow simultaneous description of views, perceptions and opinions at any single point in time (White, 2000).

Descriptive research enabled the researcher to obtain in-depth information on interests and opinions of the respondents concerning the study variables. This design yielded rich data that led to important recommendations.

3.2 Area of the study

The study was carried out at UNRA at plot 95 Kampala road.

3.2 Study Population and Sample Size

The study targeted, Administration, accounting staffs, procurement and disposal staffs, and Top management and the total population is 30 (UNRA employee records, 2015).

3.3 Sampling Techniques

According to (Amin, 2005) sampling involves selecting a sample of the population in such a way that samples of the same size have equal chances of being selected.

The sample comprised of 30 respondents that were selected in a way that 3 respondents were from the accounting department, 10 from administration, 10 from Accounting and 7 respondents who are top management. While carrying out research, purposive sampling was be applied to the above different categories of respondents.

Table 1 below shows the summary of the sample size of the respondents and the sampling techniques that was used in the study.

Table: Sample size of the respondents

3.4 Data Collection Methods

Source of data was from both primary and secondary sources.

• Primary data

Primary data was obtained from the questionnaires administered on the target respondents to gain opinions and practices on influence of ethics on the financial management at UNRA.

3.5 Data Collection Instruments

The major instruments for data collection were both questionnaires. Surveys were just one part of a complete data collection and evaluation strategy. The major method of data collection for the study were the survey, which was done using selected instruments like questionnaires. The questionnaire provided respondents with ample time to comprehend the questions raised and hence, they were able to answer factually.

3.5.1 Questionnaires

The questionnaire was used to collect quantitative data. The researcher administered the questionnaires to respondents in different departments including, administration, accounting, accounting and disposal, suppliers which were designed basing on study objectives and questions. Respondents read and wrote the questionnaires themselves. The questionnaires were close ended and were considered convenient because they were administered to the literate and its anonymous nature fetched unhindered responses.

3.6 Data Collection Procedures

Upon receiving the University permission to carry out research, the area of study was visited for purposes of familiarization.  The researcher sought permission from staff and once allowed to proceed with research, questionnaires were issued and interviews were carried out with the selected staff.

3.7 Quality Control of Data Instruments

The instrument took taken to the supervisor to check its correctness there after pilot study was carried out to find out if it measures what it is meant to for.

3.8 Data Processing and Analysis

The raw data was coded, edited, and arranged ready for analyzing only completed raw data was analyzed using statistical tables and graphs.

CHAPTER FOUR

PRESENTATION, ANALYSIS, INTERPRETATION OF FINDINGS

4.0 Introduction

This chapter presents the results in reference to objectives in chapter one. Capacity in which one is serving UNRA, Gender of respondents, Age of respondents, Education level of respondents,

4.1 Findings on general information

4.1.2 Findings on the Gender of respondents

Depending on the sample of respondents that was taken, below is the table showing the gender distribution.

Table 1: Shows the findings on the gender of the respondents

Source: primary data

Table 4.1.2 above shows that 60 percent of respondents were male and 40 percent were female. This means that the biggest percentage of respondents and employees in the organization that were sampled were male and apart from that it also shows that male gender dominate the work force of UNRA which eased the work due to flexibility of men other than women.

4.1.3 Findings on the age of respondents.

The age groups of the respondents were represented as shown below;

Table 2: Shows findings on age of the respondents

Source: primary data

The study results indicates that majority 30 percent of the respondents have worked for more than 8 years, while 26 percent have worked for 5-7 years, 27 percent have worked for 3-4 years. This findings indicates that majority of the respondents have worked for more years and therefore they are conversant with the operations of UNRA. this also shows that the researcher was able to get information from respondents who are well informed about the study topic.

4.1.4 Findings on the education level of respondents.

The education levels of the respondents were as shown in the table below;

Table 3: Shows findings on education level of respondents

From the findings above the table this implies that majority of the respondents were degree holders. This result indicates that the researcher was able to get information from a reliable source and therefore the information could be relied upon.

4.2 Level of ethics at UNRA.

The Level of ethics at UNRA are summarized in the table below;

Table 4: Shows the Level of ethics at UNRA.

Source : primary data

The legend;

From table 4.2.1 above, findings revealed that, majority of respondents strongly disagreed that Employees at UNRA are honest ,This findings shows that most of the employees at UNRA are not honest , this is presented by a low mean value of 1.60 and the standard deviation of 1.133 this results also further indicates that employees of UNRA are not honest.

According to the table majority of the respondents strongly disagreed that Employees respect the organizational rules, this was also presented by a mean value of 1.50, this findings shows that most of the employees of UNRA do not respect the rules and regulations.

According to the table above most of the respondents strongly disagreed that Employees enforce the employment code of conduct at UNRA. This was presented by a low mean value of 1.17, this findings also indicates that the employee codes of conduct at UNRA is poor this findings could be the cause of poor financial management at UNRA.

From the table most of respondents agreed that Employees have the ability to interpret the rules and regulations of the organization at UNRA, This findings shows that UNRA employees well educated employees who can interpret the rules and regulation.

The table above indicates that majority of respondents strongly disagreed that Employees are recruited basing on their competence, this finding also shows that most of the respondents state that there is no fairness in recruitment at UNRA. This was presented by the low mean value of 1.13.

The above table also shows that majority of the respondents strongly agreed that employee code of conducts applies to everyone. This was presented by the mean value of 4.50. This result also shows that employee code of conduct applies to all the employees at UNRA without any segregation.

The table also shows that majority of the respondents strongly agreed that the rules in the organization are clear to everyone at UNRA this therefore shows the rules at UNRA are very clear to everyone at UNRA. This result was also presented by a mean value of 4.20.

4.3 Level of financial management.

Table 5: Level of financial management at UNRA.

Source: primary data                                                                                                                

The legend;

From table above, indicates that majority of the respondents strongly disagreed that Employees submit their financial accountability on time. This findings was also presented by a mean value of 1.10, this results also further shows that employees do not submit their financial accountability on time.

According to table above it indicates majority of the respondents strongly agreed that UNRA hires auditors to audit the company’s records at UNRA. These findings shows that UNRA is able to hire experienced auditors to manage the records of the organization, this was presented by a mean value 4.07.

Findings revealed in table above, shows that majority of the respondents strongly agreed organization has strict rules regarding financial management in the organization at UNRA; this was presented by the mean value of 2.43.

According to the table majority of the respondents strongly disagreed that UNRA employees competent financial management. This results shows that UNRA does not employee competent financial management.

From table above, majority of the respondents strongly agreed that the organization keep financial records. This was presented by the mean value of 4.00, this findings also shows that UNRA, keeps financial records.

From table above majority of the respondents strongly agreed that the employees in the financial section are qualified, this was presented by the mean value of 4.00, this finding also indicates that UNRA employees competent financial managers.

According to table above it indicates that majority of the respondents strongly disagreed that all the employees are aware of the company’s policies regarding financial management at UNRA. This finding also indicates that some of the employees at UNRA are not aware of the policies regarding financial management at UNRA.

CHAPTER FIVE

DISCUSSION, CONCLUSION AND RECOMMENDATIONS OF FINDINGS

5.0 introductions

This chapter presents the discussion, conclusion and recommendations of findings

5.1 Discussions of findings

5.1.1 Level of ethics at UNRA

The results from the study indicates that majority of respondents disagreed that employees are honest at UNRA. This findings shows that employees of UNRA are not honest and therefore they are capable of causing financial mismanagement in the organization this view contradicts  Johnson, et al., (2008) who states that it is imperative for an organization to invest is building core competencies of employees so as to enhance a specific ethical standard in an organization this will enable employees to develop their skills and be in position to achieve better economic success, they define core competencies as the skills and capabilities by which resources are deployed through an organization’s activities and processes in order to achieve Competitive advantage in ways that others cannot imitate or obtain. Therefore UNRA should invest in developing the core competencies of employees so that they become honest and manage the company resources well without mismanagement.

The results also shows that UNRA employees donot respect the organizational rules   this view was also not in line with Sadler, (2010), who indicates that most of the organizations were the core competencies of the employees is low there is an inability to acquire the skills and knowledge needed to develop the organization, a company’s strategy will be successful in creating competitive advantage when it deploys its resources and capabilities to match the key success factors within the industry environment. Therefore when the organization invests in its employees they are able to understand what is expected of them therefore they will be able to respect the organizational rules.

According to the findings at UNRA employees have the ability to interpret the rules and regulations of the organization this shows that UNRA has trained employees to be more knowledgeable about the rules that govern the organization, this view was also shared by Perera et al, (2016) who states that a formal code of ethics ensures that professional members will be more aware of the moral aspects of their work; an accessible reference tool for managers to keep ethical concerns in mind; abstract ideas will be translated into concrete terms applicable to every situation; members as a whole will act in a more standardized fashion throughout the profession.

The results from the study indicates that employees are not recruited basing on their competence   , this indicates that UNRA doesn’t recruit employees basing on their core competencies. This finding therefore shows that UNRA does not recruit qualified employees basing on their competencies.

The above table also shows that majority of the respondents strongly agreed that employee code of conducts applies to everyone. This finding also indicates that all the employees of UNRA have to follow the employee code of conduct set by UNRA to enforce discipline and better management of the financial records of the organization.

The results also indicates that the rules in the organization are clear to everyone at UNRA this therefore shows the rules at UNRA are very clear to everyone. This also further shows that UNRA has set rules but perhaps may be sometimes it is not properly enforced or the employees are not empowered to follow it.

5.2 Level of financial management.

The findings in the study indicates that employees at UNRA do not submit their financial accountability on time this indicates that UNRA , this shows that employees do not meet deadlines and this can cause an effect on data quality this view was also in line with Baldassare (2000) who indicates that financial management in an organization requires employees trust and this is shown when an employee accomplishes organizational goals, job satisfaction, and motivation all in financial statement must prepared early enough to all for better analyzing of the financial records by the top management of the organization

Findings revealed the organization has strict rules regarding financial management in the organization this view was also shared by Elia, (2005) who indicates that the values of integrity, transparency and accountability in public administrations have enjoyed resurgence within the past three decades or so these key factors leads to efficient financial management in an organization. Sound public administration involves public trust, citizens expect public servants to serve the public interest with fairness and to manage public resources properly on a daily basis.

The findings revealed that UNRA does not employ competent financial managers this was not in line with Derek, (2000) who indicates that  in a study carried out in west Germany companies financial management is essential in enabling employees be in position to develop long term relationship with their suppliers and hence there is ability of an organization in achieving success in its endeavours.

Results indicates that the UNRA keep financial records, this view was also in line with Thacker, (2006) who indicates that to enhance ethical competencies of employees need to be trust worthy, in a study carried out in Japanese automobile companies. Financial management in the organization eliminates conflict of interest, a conflict of interest occurs when an individual or organization has an interest that might compromise their actions.

The results from the study shows that all the employees at UNRA are aware of the company’s policies regarding financial management.

5.2 Conclusions

The study made the following conclusion;

The study states that employees of UNRA are not well trained to submit their financial states in time this therefore creates inconsistencies and the organization is not in position eliminate financial mistakes that may take place.

The results also further states that UNRA should has weak rules that employees always break this has thus made employees to mismanage the organization’s finances without fear of any legal implications.

Most of the employees of UNRA are not aware of the rules and regulations that govern the organization and that is the reason for the poor following of the rules and regulation by the organization.

5.3 Recommendations

The study recommends that employees of UNRA should be trained to submit their financial states in time to eliminate any inconsistencies and enable the organization to be in position eliminate financial mistakes that may take place.

The results also recommends that UNRA should enforce strong rules regarding employees who intend to break the law. This will help in ensuring that employees follow the laid down laws so that they are able to manage the organization resources without mismanagement.

The study also recommends that UNRA should ensure that all the employees of the organization are taught the rules and regulations of the organization. This will help in eliminating the key challenges that the organization faces.

5.4 Areas of further research

The study recommends the following areas for further research;

• The influence of technology in financial management
• The roles of automated record keeping on organizational performance
• Different technique of financial management

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APPENDIX I: QUESTIONNAIRE

INFLUENCE OF ETHICS ON FINANCIAL MANAGEMENT

Dear respondent

I am NAMALWA JUDITH CAROLINE   REG NO: 15/U/1614/AFD/PD a student of Kyambogo University; Iam carrying out a study on the “Influence of ethics on financial management”. You are one of the respondents randomly selected to participate in the study. The information given shall be treated with at most confidentiality and shall only be used strictly for academic purpose.

SECTION A: BACK GROUND INFORMATION OF THE RESPONDENTS

• Gender : Male             female

• professional duration

1. a) 0-2 yrs b) 3-4 yrs

1. c) 5-7 years                           d) 8 years
2. Academic qualification

Certificate                               Diploma

Degree                                     masters

Any other

Specify…………………………………………………………………………………………………………..

SECTION B: LEVEL OF ETHICS

Tick in the box where appropriate.

SECTION C: level of financial management

This section presents level of financial management.

Tick in the box where appropriate.

APPENDIX II: TIME FRAME

APPENDIX III: BUDGET ESTIMATES

BUDGET ESTIMATES