The IMPACT OF FINANCIAL MANAGEMENT

SYSTEM ON HUMAN RESOURCE UTILIZATION

(A CASE IN CHIRO CITY)

A RESEARCH PAPER SUBMITTED TO THE DEPARTMENT OF

MANAGEMENT IN PARTIAL FULFILLMENT FOR THE
REQUIREMENT OF BA DEGREE IN MANAGEMENT

Oda bultum university

College of Business and Economics
Department of Management

JUNE, 2025
Chiro, Ethiopia
 Acknowledgement

First I would like to express my deep appreciation for my advisor

MBA Mulunh Hideto. Who help me in preparing this research paper
through his valuable suggestion and guidance and I also extended
my heart full thanks for my friends who help me by giving
suggestion on may project. I also for W/t Fitsum Asrat for her
precisely wrote this research paper.

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 Abstract
This study was focused on the impact of financial management
system on human resource utilization in chiro city. The main
objective of this study is to investigate the impact of financial
management system on human resource utilization in chiro city

In order to answer the above mentioned objectives the study used

both primary and secondary source of data. These primary data
were collected by structured questionnaire and interviews, where as
secondary data from Bookes Company’s journal and different
documents collected through document analysis (document review)
techniques.

The method of sampling I used was simple random sampling

because it gives equal chance for all employees and free from
biases. In order to analyze and present the data collected from
different parts, the researcher used descriptive type of data analyze
through percentage and tabulations.

Finally this study is believed to provide valuable information, to

minimize some problems that related to financial management
system in human resource utilization.

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 Table of Content
Acknowledgement..........................................................................................................I
Abstract.........................................................................................................................II
Table of Content..........................................................................................................III
Chapter one...............................................................................................................1
1. Introduction..........................................................................................................1
1.1. Background of the organization..........................................................................1
1.2. Background of the study.....................................................................................1
1.3. Statement of the problem....................................................................................4
1.4. Objectives of the study................................................................................6
1.4.1. General objective.........................................................................................6
1.4.2. Specific objectives.......................................................................................6
1.5. Significance of the study....................................................................................6
1.6. Scope of the study...............................................................................................7
1.7. Limitation of the study........................................................................................7
Chapter Two..............................................................................................................8
2. Review of the Related Literature...............................................................................8
2.1.1. An over view of financial management.......................................................8
2.1.2. Basic principles of financial management.................................................10
2.1.3. Evaluation of financial management.........................................................11
2.1.4. Functions of financial management...........................................................12
2.1.5. Objectives of financial management.........................................................13
2.2.1. Human resource utilization........................................................................13
2.2.2. Responsibility of human resource department..........................................15
2.2.3. Function of human resource......................................................................16
2.2.4. Objectives of human resource...................................................................18
Chapter three.........................................................................................................19
3. Research methodology..................................................................................19
3.1. Research design................................................................................................19
3.2. Source of data and data collection method.......................................................19
3.3. Sample size determination................................................................................19
3.4. Sampling method..............................................................................................20
3.5. Methods data analysis.......................................................................................21
3.6. Data interpretation and presentation.................................................................21
Chapter Four...........................................................................................................22
4. Data Presentation, Analysis and Interpretation...................................22
CHAPTER FIVE.........................................................................................................39
5. Summary, Conclusions and Recommendations......................................................39
5.1. Summary of the finding....................................................................................39
5.2. Conclusion........................................................................................................41
5.3. Recommendation..............................................................................................42
Bibliography................................................................................................................43
Appendix A..................................................................................................................44
Appendix B..................................................................................................................49

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IV
V
 Chapter one

1. Introduction

1.1. Background of the organization

This study was focused on chiro town which is 352 km away from
Addis Ababa. This area is located in the south western part of
Ethiopia. Jimma town was founded at the eve of the 21 th century
when the five Gibe oromo states such as chiro town become the
center of trade in the 21th century, during or the well known leader
of chiro in the second half of the 21 th century. From the economic
aspect, this particular place is the origin of . Now aday chiro town is
administered under oromia original state and service as the center
of trade, especially coffee trading. chiro town is service as the
center of trade, especially coffee trading. chiro town is service as
the capital city of the chiro town. In addition to the above, the area
is known by moderate climate condition.

1.2. Background of the study

Financial management is about planning incomes and expenditure
and making decision what will able you to survive financially. It
concerned with the acquisition of financially and management of
assets with some over all goals. It concerned with rising of funds,
creating value to the asset of the organiziaon by efficient allocation
of funds. (Singh, 2019)

Financial managements are most concerned with managing the flow

of fund into and out of the organization and help to deter mine how

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company’s fund can be most effectively used. Individual manager
in this functional area are responsible for granting and using their
company’s credit, investigating company’s fund, safeguarding
company’s asset, keeping track of the company’s fanatical health
and preparing budget. (Plunkett, 2018)

Human resource utilization is the human power or employees to use

properly and wisely in the organization and also it is the policies,
Practice and systems that influence employ’s behavior, attitudes
and performance and it implies that employees are resource of the
employer. It is critical to the success of organization because human
capital has certain quality that it makes value. (Noe, 2018)

Human resource utilization is to recruit, develop and utilize the

organizational personnel on the way which most appropriate to the
achievement of the firm’s aim and objectives.

In terms of business strategy an organization can success if it has

suitable competitive advantage and it is the organization
employees, described in terms of their training, experience,
judgement intelligence, relationship and insights. (Etal)

This research contains five chapters these are chapter one

introduction, chapter two literature reviews, chapter three research
methodologies, chapter four data analysis and presentation, and
chapter five summaries, conclusion and recommendation.

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This study would help the municipality to improve its financial
management system and it would provide information for all level
managers.

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1.3. Statement of the problem
Financial management is the part of the total management function
which is concerned with the effective and efficient rising and
utilization of funds. It must be operated with the framework of
clearly understood objectives and with the basis of logical concept.
Financial management is recognized or avery important branch of
management, it is dynamic subject, and responsible for operating
company’s resource efficiently.It has also to work among
conflicting goals of equity and profitability in accompany and also
financial management covers different functional areas in a firm
including supply function, production function, distribution function,
and personnel function.(Singh,2019).
Human resource is the most strategic and critical determinant for
growth of any organiziaon and human effort is required to mobilize
and use those resources effectively and efficiently to achieve
organizational objectives. (Jon. R, 2019).

Human resource utilization is critical to organization because it can

serve as to improve the overall productivities and minimize any
cost. (Et al)

The assessment of financial management system and its impact on

human resource utilization in Jimma municipality has not been
sufficiently assessed or studied by identifying the impact of financial
management system on human resource utilization.Sothis research
is vital in filling this gap, beside this in my preliminary study in
Jimma municipality I have got there is problem related with proper

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use of financial management system .So this research was
conducted so as to fill this gap.
In this research, the researcher would try to investigate the impact
of financial management system on human resource utilization in
Jimma municipality. To this effect, the researcher would try to
answer the following basic questions:
1. How the financial management system works in chiro city ?
2. Will be are the relationship between financial management
system and human resource utilization in chiro city ?
3. Will be are the impacts of financial management system on
human resource in chiro city?

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1.4. Objectives of the study

1.4.1. General objective

The main purpose of the study is to analyze the impact of financial
management system on human resource utilization in chiro city y.

1.4.2. Specific objectives

1. To assess the financial management system chiro city
2. To identify the relationship between financial management
system and human resource utilization in chiro city
3. To show the impact of the financial management system on
chiro city

1.5. Significance of the study

Primarily this research was conducted as requirement in partial
fulfillment to acquire a bachelor degree in management. Beside this
the result of this study, however, were expected to have the
following significance:- it might serve as a stepping stone for further
research conducted by interested researchers.

Additionally the study will be help the municipality to improve

financial management system and it will be provide information for
all level of managers and it may help the concerned body/
stakeholder/ to be aware regarding the existing constraints.

Finally the government can modify and make different policies,

strategies and to aware of any service delivery organiziaons feel a
sense social responsibility, and to be ethical on their activities.

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1.6. Scope of the study
The study was delimited to the investigation of financial
management system on human resource utilization in chiro city
because of time and financial constraint. It also believed that the
study area was available for getting reliable information from
managers and employees of the organization.

1.7. Limitation of the study

The possible limitations that encountered in this study are lists of as
follows:-
 Time was one of the basic limitations that put its restriction on
the investigation area.
 Budgetary limitation was also among the expected limitation that
is result in lack of stationary typing and editing problems
absence of transportation cost and the lire.
 Lack of adequate data from the organization on was also another
problem.
 During data analysis some respondents gave less attention to
the question and it resulted data lose.
 Lack of experience from research.

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 Chapter Two

2. Review of the Related Literature

2.1.1. An over view of financial management

plunkett, (2018) defined as “finance is the function of a business
that acquires funds from the firm and manages those funds within
the firm and management is the process of planning, organizing and
controlling to achieve the limited resources of the organizational
goals and also financial management is the job of managing a firms
resource so it can meet its goals and objectives.”

Financials manager examine the financial data prepared by

accountants and make recommendation to job executives regarding
strategies for improving the health (financial strength) of the firm.
(MCKUgh. 2018).

Financial management is the part of total management function

which is concerned with the effective and efficient raising and uses
of funds. It must be operated with the frame work of clearly
understood objectives and on the basis of logical concepts. (Jon. R,
2018)

Financials management is broadly concerned with acquisition of and

use of funds by organization. Thus it depends on the system of an
organization. (Singh, 2018).

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“Financial management in municipality is differentt from that of
business and other profit makers and organization because it is
much concerned with social returns of the service they provided.
And it used to provide information and analyzed to manager within
the organization to assist in decision making and if concerned with
measuring and reporting cost of production, marketing and other
function preparing budget (planning) and checking wither or not
units are staying with in their budget (controlling) and designing
strategies to minimize taxes.” (Hodder and Stoughton, 2019).

Financial management is recognized or a very important branch of

management. And it is a dynamic subject and responsible for
operating accompany efficiently. Traditional financials management
subject was treated with a very narrow function but now the
modern concept of financial management has wide coverage. It has
turned in to subject in to brining about analysis, planning and
controlling of funds. Financial management has to work amongst
conflicting goals of equity and profitability in accompany. And if
covers different functional areas in affirm. If has to be part of supply
function, production function, distribution function and personal
function.

Financial management involved traditionally with the approach of

rising funds for an enterprises. The modern approach of financial
management consists of dealing with managerial problems both of
long terms and day to day nature of accompany. And it is some of
its functions include deter mining financial requirements of firms.

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Determining source of funds, financial analysis, establishing
optimum capital structure, profit planning and control project
planning and evaluation and corporate taxation. (Singh, 2019).

2.1.2. Basic principles of financial management

1. Risk and return: - every financial decision has two aspects as
“risk and return”. Every decision involves a risk. This risk may
be broad spectrum or market risk, which is uncontrollable. It
can be unsystematical risk, which is specific to the firm and can
be controlled. The degree of risk with becomes different in each
case depending on weather it is controllable or uncontrollable
risk. Financial management decisions are taken to optimize
return through the calculation of risk and return.
2. Time value of money:- it is evaluate cash flows expected to be
generated at different times. If is the timing of cash flows
because money received to day is work more than the amount
received at a future date.
3. Cash flow concept:- financial management is based on the
inflows and out flows of cash. It does not deal with none cash
items like depreciation, amortization of preliminary expense. It
uses cash revenue and each expense to find out the returnee
its investment.
4. Incremental cash flow analysis: - cash flow is measured of the
proposals which are an addition to the already existing projects.
This concept helps in judging whether the new project is good
for the firm. The feasibility interims of cost and benefits can be
considered.
5. Wealth maximization: - maximization of share holder’s wealth
considers a cash flow pertaining to future decision. It is the

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 concept based on cash flow to measure the economic values of
afirm profit maximization may be considered as apart of wealth
maximization. (Signh, 2019)

2.1.3. Evaluation of financial management

The evaluation of financial management can be discussed under
two distinct approaches those are the traditional approach and the
modern approach. The evaluation of the subject started in the 21 th
c. it can be devised in to two periods. The traditional phase was
from 2020– 2025 and the modern approach also called insider
approach. (Et al).

The traditional approach

I. Procurement of fund: - this approach was concerned with the
procurement of funds through analysis of financial instrument,
institutions and source of funds.
II. Outsider looking approach: - it had a limited scope because it
emphasis was on the supplier of funds.
III. Financial instruments: - the traditional approach its function for
procuring funds was trough the issue of financial instruments
like equity share, preference share and debt securities.
IV. Status of the subject: - financial management was not part of
the managerial function. It was operational in nature, limited to
preparing accounts, reports, and procuring funds.

In modern approach
The modern approach to financial management gave the subject
increased responsibility and brought about an integrated and
analytical scope of finance.
In modern approach the following aspects are considered

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 I. Integrated finance function
II. Management function
III. Status position
IV. Techniques

2.1.4. Functions of financial management

I. Liquidity of funds: - financial manager has to match inflows and
out flows and those create liquidity continuously by managing
the flow of the funds in the firm continuously.
II. Profitability: - a financial manager has to measure the cost of
capital raised with by him as a source for the funds of company
because cost of capital is linked with profitability of the company.
III. Management; - the financial manager has to coordinate different
activities of the company. it will be to deal with long term and
short term activities of the company.
IV. Balance conflicting goal: - financial management will be the
scope of financial decision making for along group of people. This
group consists of share holders, debt investors, employees,
customers, suppliers, public, government and management.
V. Economic value adding/ EVA/:- is financial tool, which provides to
the organiziaon knowledge of how much value the company is
adding above the total cost of capital.
The financial manager may as a measure of performance also
functions to find out the return on equity, market, capitalization and
earnings per share by adding the concept of market value added
capital.

Financial decision making

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Financial management is the study of financial decision making.
And it is an art and skill of developing techniques to create
effectiveness in this process. There are three basic finantical
decisions making. These are:-
1. Investment decision: - it is deals with long them and short
finance of a firm. This can be termed as fixed assets and current
asset.
The long term process cover the area of capital budgeting. Fixed
asset are cost intensive and the profitability of the firm depends
on the composition of fixed assets.
Short term financing is to the day to day coverage and usage of
techniques for each flows, inventory management and bull
receivable and payment on a day to day basis.
2. Financing decision: - financial management also deals is
financing issues, such as making the business profitability, by
analyzing breakeven point, fixed costs and variable costs.
3. Dividend decision: - financial management is also applied to the
requirement of the share holders. If is concerned with the
amount of profit that can and should be with drawn to declare
dividends to the owners of the capitals of the share holders.

2.1.5. Objectives of financial management

Financial management is concerned with the following aspects
 It aims of optimum use of assets to maximize the profitability
of the company
 It’s the objectives to maximize the wealth of the share
holders.

2.2.1. Human resource utilization

Will be is human resource utilization?

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Human resource is perhaps them most strategic and critical
determinants or growth of any organization and human effort is
required to mobilize, organize and use those resources effectively
and efficiently for the production of the required goods and services
(Ahmed, 2019).

Human resource utilization is critical to organization because it

conserve as to improve the overall productivity and minimize
penalties to the organization by observing the humanities laws
relevant to the utilization of human resource (Etal).

According to (Ahmed, 2019) books Nalder says that human resource

utilization which component including recruitment, selection,
placement, appraisal and compensation. According to (Ahmed,
2019) books parcel and roe says that human resource utilization
has four major areas this are 1. planning administration 2. human
resource development 3. Job and salary 4. worker affairs.

Human resource utilization is to requite, develop and utilize the

organization personal on the way which is most appropriate to the
achievement of the firm aims and objectives (Hhodder and
Stoughton, 2019).

Qualities of human resource

 Human resource is valuable: - high quality employee provides an
ceded service as they perform many critical functions.
 Human resource is rate: - in the sense a person high level of the
needed skill and knowledge is not common.

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 Human resource can not be imitated: - to mite human resource
at a high performing competitor, you would have to figure out
which employees are providing the advantage and how.
 Human resource have no good substitute:- when people are well
trained and highly motivated, they learn, develop their abilities
and care about customers.

2.2.2. Responsibility of human resource department

1. job analysis and design:-
 Job analysis: - the process so fretting detailed information
about job.
 Job design:- the process of defining the way work will be
performed and the tasks that a given job requires.
2. recruitment and selection of employees
 Recruitment: - is the process of through which the
organization seeks applicant for potential employment.
 Selection: - is the process of which the organiziaon attempts
to identify applicant with the necessary knowledge, skill,
ability and their characteristics that will help the
organization achieve its goals.
3. training and development of employees
 Training: - is a planned effort to enable employees to learn
job related knowledge, skill and behavior.
 Development: - is the acquisition of knowledge, skill and
behavior that improve an employee abilitie to meet change
in job requirements and in customer demand.
4. Managing performance:- is the process of ensuring that
employees activities and out put match the organization goals.

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 5. Planning and administering pay and benefits:- the pay and
benefits that employees earn play an important role in
motivating them. This is especially true when such as bonuses
are linked to the individuals or group achievements.
6. Human resource planning;- is the process of identifying the
members and types of employees the organization will require
in order to meet its objectives.

2.2.3. Function of human resource

Human resource consists of several interleafed activities.
These are two functions those are
1. managerial function
2. operative function
1. Managerial function are performed by managers through the
people in order to achieve desired goals a human resource
manger perform the following managerial functions.
I. Panning II. Organizing III. Directing IV. Controlling
I. Planning:- is the first function of management which consisted
of broad range of ideas and programs relative to various
activities of people in the organization. And it is the conscious
determination of future course of actions.
II. Organizing:- is the group of people working together to achieve
common goals. People are organized in an effective manner.
Organizing is the process of allocating tasks among the
members of the group, establishing authority responsibility
relationship among them and integrating their activities towards
the comment objectives.
III. Directing:- is the process of motivating, leading and supervising
of people and it is the heart of the management process
because it is concerned with initiating action.

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IV. Controlling:- is the process of controlling. Every thing is
simplified and conformed based on the broad objective of an
organization. And it implies checking, verifying and regulation to
ensure that everything occurs in conformity with the plans
adapted and the instruction issue.
2. Operating function:- also know as “service functional
management” these function are performed to ensure that the
right man for right job, at right time and right place. These
function is divided in to four type these are:-
I. Employment II. Compensation
III. Human resource development IV. Human relation
I. Employment:- is the first function of operative function. If
involves recruitment, selection, and placement etc of the
personnel.
II. Compensation:- this function concern with wage and salary of
employees. It deals with determination of adequate for their
contraption to the organizing goals. The personnel can be
compensated both in terms of monetary as well as non
monetary rewards.
III. Human resource development:- is the process of developing
the skill and knowledge, ability and talents and value and
attitudes of the employees.
IV. Human resource relation:- is the process of association among
the people. It is the area of management in integrating people
in to work situation in way that motivates them employees to
work together productivity and job satisfaction in organization
to fulfill both psychological and social needs.

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2.2.4. Objectives of human resource
1. To help the organization to attain its goals by providing well
trained and well motivated employees.
2. To utilize the human resource effectively in the achievement of
organizational goals.
3. To manage changes to the mutual advantage of individuals,
groups, the organization and society.
4. To maintain high employees moral and sound human relations
by sustaining and improving the various conditions and facilities.
5. To enhance job ratification and self- actualization of employees
by encouraging and assisting every employees to resize his/her
full potential.
6. To establish and maintain productive, self-respecting and
internally satisfying working relationship among all the member
is of the organization.
7. To recognize and satisfy individual needs and group goals by
offering appropriate monetary and non monetary benefits.
8. To develop and maintain a quality’s of work life which makes
employment in the organization a desirable personal and social
situations. (Chandramihan, 2020).

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 Chapter three
3. Research methodology

3.1. Research design

The research design I used was descriptive survey method, because
it is the appropriate research design to identify the impact of
financial management system on human resource utilization
through various information regarding chiro city

3.2. Source of data and data collection method

To collect the research data two data source were used these were
primary and secondary sources. The primary data provides first
hand information, more information in depth and misinterpretation
of the answer for the question is easily avoided .And these primary
data were collected through structured questionnaire and interview.
Additional secondary data was collected by using document
analysis (review) techniques. The questioner method was used so
as to get adequate information from the respondents and it was
cover a large number of populations. By using interview method
detailed and adequate information could be collected. Thus I used it
so as to get more and adequate information from managers and
subordinates.

3.3. Sample size determination

The total sample size determination from among different methods,
and the one which was developed by Chavilo (2019), and Zelalem

(2020) was used. The method is presented in table below.

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Table 1.1. Sample size determination table
Population size Low Medium High
51-90 5 13 20
91-150 8 20 32
151-280 13 32 50
281-500 20 50 80
501-1200 32 80 125
1201-10,000 50 125 200
10,001-35,000 80 200 315
35,001-150,000 125 315 500

Based on the above table my research total population was get

from the range between 51-90 that was 72 take the highest 20
employees in number.

3.4. Sampling method

The researcher used two sampling methods simple random
sampling and purposive sampling. I used simple random sampling
to select the employees because of it give equal chance to all
employees save time and cost and free form bias. Other method the
researcher used was purposive sampling method so as to select a
sample from managers and subordinates because it involves
particular units of the universe and in addition misleading and
inappropriate information was eliminated.

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3.5. Methods data analysis
After the data collection activity accomplished the data analysis
comes. The data collected through structured questioner and
interviews were analyzed by using tabulation, and percentages.
A. Tabulation: - the already processed data has been arranged
orderly in table and other summary forms.
B. Percentage: - the data has been expressed relative variables
among categories.
And financial statements were analyzed by using financial
evaluation techniques.

3.6. Data interpretation and presentation

The researcher integrates the study findings in such a manner that
the final user of the research will be a clear idea of the quantitative
and qualitative meaning of the data. Further more the researcher
will believe that tables, percentages and graphs simplify the
research findings hence tables and graphs are used to facilitate the
summarization and communication of the meaning of the data.

21
 Chapter Four
4. Data Presentation, Analysis and
Interpretation
This analysis is based on both primary and secondary data. The
primary data is collected through questionnaire from employees
and interview from managers and subordinates. The secondary data
includes internally generated documents by Jimma municipality.
The documents are organization’s profile, annual reports as well as
other related documents. The sample size is 20 and all were filled
and returned.

The information about the respondents are shown below.

I Analysis for demographic characteristics of respondents

Table 4.1. Sex Ratio of Respondents
Respondents
Sex No %
Male 8 40 %
Female 12 60 %
Total 20 100 %
Questionnaire survey,2013

As indicated in the above table, from the total number of

respondents 8 (40%) are male and the rest 12(60%) are females.
This indicates that the respondents’ sex ratio females are highest in
number.

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Table 4.2. Age group of the respondents
Respondents
Item No %
19-25 7 35 %
26-30 6 30 %
31-36 4 20 %
>37 3 15 %
Total 20 100 %
Source questionnaire survey 2013

As shown from the above table, from the total number of

respondents 7(35%) are found in between 19-25 age, 6(30%) are
26-30 age interval, 4(20%) are 31-36 age interval, and the
remaining one is 3(15%) above 37 age.

This table indicates that majority age ratio of respondents are lies
between 19 -25 interval.

Table 4.3. Marital status of Respondents

Respondents
items No %
Married 6 30%
Divorce 3 15%
Single 11 55%
Total 20 100%

Source questionnaire survey 2013

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As clearly shown from the above table 4.3 from the total number of
respondents 6(30%) are married, 3(15%)are divorced the remaining
11(55%) are single. So from this we can understand that single
employees are highest in number.

Table 4.4. Year experience of Respondents

Respondents
items No %
1–5 6 30 %
6 – 10 5 25 %
11 – 15 3 15 %
16 – 20 3 15 %
21- 25 2 10%
> 26 1 5%
Total 20 100 %
Source questionnaire survey 2013

Pertaining to the level of education, 6(30%) of respondents do have

1-5 years experience, 5(25%) do have 6-10 years experience, 3
(15%) do have 11-15 yeas experience, 3(15%) also do have 16-20
years experience, 2 (10%) do have 21-25 years experience and the
remaining 1(5%) do have above 26 years of experience. So this
indicates that respondents who do have 1-5 years experience are
highest in number.

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Table 4.5. Level of education of Respondents
Respondents
items No %
Certificate 2 10 %
Diploma 14 70 %
Degree 3 15 %
Other 1 5%
Total 20 100 %
Source questionnaire survey 2013

As shown from the above table 4.5 out of the total number of
respondents 2(19%) are certificate holders, 14(70%) are diploma
holders, 3(15%) degree holders and the remaining 1(5%) reflects as
he/she has other level of education that is second degree. Thus
from the above table one can understand that the majority of
respondents are diploma holders.

Table 4.6. Working section/ unit of responsibility

Respondents
items No %
Finance department 2 10 %
Human resource department 5 25 %
Purchasing department 5 25 %
Other 8 40 %
Total 20 100 %
Source questionnaire survey 2013

As presented from the above table 4.6 from the total number of
respondents, 2(10%) are finance department workers, 5(25%) are

25
human resource workers, 5(25%) are purchasing department
workers and the remaining 8 (40%) reflects that as they are working
in other section than listed above. Those respondents reflect that
they are working as investment workers, marketing department
worker, inventory management worker etc.

Thus, it indicates that most respondents are working in other

department (i.e. investment workers, marketing department worker,
inventory management worker) than listed the above.

II. Budgeting practices

Table 4.7. The source of municipality budget
Respondents
items No %
Regional state 9 45 %
Federal gov’t 2 10 %
Society 5 25 %
NGO’S 3 15 %
Other 1 5%
Total 20 100 %
Source questionnaire survey 2013

According to documents that shows budgeting practice from

Finance department and presented in the above table, among the
total number of respondents 9(45%)of them depicts that sourer of
municipality budget is regional state, whereas five respondents
(25%) states that source of municipality budget is from the society,
while 2(10%) pointed that the source of municipality budget is from
federal government, the other three (15%)respondents cited that

26
source of municipality budget is from NGO’s and the remaining
1(5%) depicts that the sources of municipality budget is fro other
source, that is city administration. Thus majority of the source of
municipality budge is regional state.
Table 4.8. The source of municipality budget
Respondents
Items No %
Yes 19 95 %
No - -
I don’t know 1 5%
Total 20 100 %
Source questionnaire survey 2013

As indicated in the above table, among the total number of

respondents 19(95%) reflects that as there is yearly budget plan
and the remaining is 1(5%) of answered that is I don’t know, this
implies that the municipality have yearly budget.
Table 4.9. Period of budget preparation during the year
Respondents
items No %
At the beginning of the year 12 60 %
At the middle of the year 3 15 %
At the end of the year 3 15 %
I don’t know 2 10 %
Total 20 100 %
Source questionnaire survey 2013
As presented from the above table 4.9 from the total number of
respondents 12(60%) reflects that the budget is prepared at the
beginning of the year, 3(15%) states that the budget is prepared at

27
the middle of the year, 3(15%) answered that the budget is
prepared at the end of the year, but the remaining 2(10%) don’t
know when the budget is prepared. So it indicates that period of
preparation of budget plan is mostly at the beginning of the year.

Table 4.10. Participants in departmental budget preparation

respondents
Respondents
items No %
budget worker only 3 15 %
head of department 1 5%
kebele office 1 5%
all 15 75 %
Total 20 100 %
Source questionnaire survey 2013

As clearly shown from the above table, from the total number of
respondents were asked about participants in departmental budget
reparation, accordingly, 3(15%) reflect that participate in budget
preparation is budge worker only, 1(5%) depict that participate in
budget preparation is head of department, 1(5%) says that
participate in budget preparation is kebele office and the remaining
one is 15(75%) says that all departments are participate in budget
preparation. This indicates that all departments participate in
budget preparation.

Table 4.11. Human resource capacity for budget preparation in your

department is
Respondents

28
 Items
No %
High 5 25 %
Medium 6 30 %
Low 9 45 %
Total 20 100%
Source own survey 2013
Pertaining to the capacity of human resource, out of the total
number of respondents were asked, accordingly, 5 (25%) reflect
that high, 6(30%) says that human resource capacity for budget
preparation is medium and the remaining is 9(45%) depicts that
how. It implies that there have not clear awareness on
municipality’s financial guideline and also they have no enough
modern financial management skills.

III. Budget approval

Table 4.12. When does the municipality budget approve
Respondents
Items No %
As soon as prepared 5 25 %
At the mildest the year 4 20 %
At the end of the year 11 55 %
Total 20 100%
Source questionnaire survey 2013

As shown from the above table 4.12 from the total number of
respondents were asked about the time of budget approved,
5(25%) reflect that budget approval is as soon as prepared, 4(20%)
says that budge approval is at the middle of a year and the

29
remaining one is 11(55%) depict that budget approval is at the end
of the year. therefore this indicates that the expected goal of the
municipality plan of the department faces great problem to be
achieved.

Table 4.13. Municipality budget is approved by

Respondents
Items No %
By management only 3 15 %
By city council 14 70 %
By federal government 2 10 %
By regional parliament 1 5%
Total 20 100%
Source questionnaire survey 2013

Besides the reality as clearly shown from the above table, out of
the total number of respondents were asked about municipality
budget is approved by, accordingly, 3(15%) reflect that budget is
approved management only, 14(70%) says that budget is approved
by city council, 2(10%) depict that budget approved by federal
government approved by regional parliament. Thus, it implies that
municipality budget is approved by more focused on city council.

Table 4.14 do you use the budget code in municipality

30
 Respondents
Items No %
Yes 18 90 %
No - -
I don’t know 2 10 %
Total 20 100%
Source questionnaire survey 2013

As presented from the above table 4.14 from the total number of
respondents 18(90%) reflect that municipality use the budget code,
but the remaining 2(10%) says that use the budget code you don’t
know. Thus, it implies the municipality used budget code.

Table 4.15 do they use the budget cycle properly

Respondents
Items No %
Yes 13 65%
No 2 10 %
I don’t know 5 25 %
Total 20 100%
Source questionnaire survey 2013

As presented from the above table 4.15 from total number of

respondents 13(65%) says that the municipality use the budget
cycle properly, 2(10%) reflected that not use the budget cycle
properly, and the remaining, 5(25%) depict that use the budget
cycle properly you don’t know so it indicates the municipality use
budge cycle properly
IV. Financial administration

31
Table 4.16 how many times finance department practice of receipt
and expenses balance.
Respondents
Items No %
Regularly 15 75 %
Sometimes 4 20 %
Not practice 1 5%
Total 20 100%
Source own survey 2013

As depicted from the above table 4.16 from the total number of
respondents 15(75%) reflect that the activity of balancing takes
place regularly, 4(20%) says that activity of balancing practiced
sometimes, and the remaining 1(5%) says that the activity of
balancing is not practice.

Therefore, this implies that always finance department checks the

expense and receipt balances.

Table 4.17 finance management system in municipality is

Respondents
Items No %
Backward 51 55 %
Modern 6 30 %
I don’t know 3 15 %
Total 20 100%
Source questionnaire survey 2013
According to the above table 4.17 from the total number of
respondents 11(55%) reflect that financial management system is

32
backward, 6(305) says that financial management system is
modern and the remaining 3(15%) depict that you don’t know. This
implies that the municipality management system is back ward
system.

Table 4.18 if your answer for the above question is backward, what
is the reason?
Respondents
Items No %
Lack of skilled man power 10 50 %
Administration problem 9 45 %
I don’t know 1 5%
Total 20 100%
Source own survey 2013

As depicted from the above table 4.18 from the total number of
respondents were asked about reason of back ward management
system, accordingly, 10(50%) reflect that lack of skilled man power,
9(45%) depicts that administration problem and the remaining one
is 1(5%) says that you don’t know. This indicates that the reason of
backward financial management system in municipality is lack of
skilled manpower.

33
Table 4.19 municipality attentions to improve finance accounting
administration system is
Respondents
Items No %
High 7 35 %
Medium 10 50 %
Low 3 15 %
Total 20 100 %
Source questionnaire survey 2013

Based on the analysis of the above table, from the total number of
respondents were asked about municipality attention to improve
finance accounting administration is, accordingly, 7(35%) reflect
that are high to improve, 10(50%) depict that medium to improve
and the remaining one is 3(15%) says that low to improve.
This implies that the municipality has medium attention to improve
financial system of the municipality.

Table 4.20 do you have financial report on time

Respondents
Items No %
Yes 15 75 %
No - -
I don’t know 2 25 %
Total 20 100%
Source questionnaire survey 2013

Regarding to financial report, from the total number of respondents

were asked, accordingly, 15(75%) says that do financial report on

34
time and there mining 5(25%) reflect that reflect that you don’t
know. Thus it indicates that the municipality financial report is
exercised on time.

V. Human resource utilization

Table 4.21 does the manager lead properly for financial budget
Respondents
Items No %
Yes 7 35 %
No 10 50 %
I don’t know 3 15 %
Total 20 100%
Source questionnaire survey 2013

As depicted from the above table 4.21 among the total number of
respondents 7(35%) says that manager leads the budget properly,
10(50%) reflects that not lead the budget properly, and the
remaining 3(15%) depicted that you don’t know. Therefore, this
indicates that the municipality manager does not have sufficient
skilled to lead the budget properly.

35
Table 4.22 is there proper plan to recruitment, selection, job
training design and development?
Respondents
Items No %
Yes 8 40 %
No 10 50 %
I don’t know 2 10 %
Total 20 100%
Source questionnaire survey 2013
As clearly presented on the above, from the total number of
respondent were asked about proper plan to recruitment, selection,
job design, training and development, accordingly 8(40%) reflect
that proper plan of human resource utilization in municipality,
answered as they have proper personnel planning system, 10(50%)
depict that no proper human (personnel) planning system and the
remaining 2(10%) says that you don’t know. This indicates that in
the municipality there is no proper plan for recruitment, selection,
job design, ant training and development.
Table 4.23 if your answer for above question number 2 no, what is
the reason you expect?
Respondents
Items No %
improper financial management system 10 50%
lack of transparency and accountability 5 25 %
being corrupted 3 15 %
all 2 10%
Total 20 100%
Source questionnaire survey 2013

36
Based on the analysis of the above table, from the total number of
respondents were asked about a reason that why not lead properly
recruitment, selection, job design, training and development,
accordingly, 10(50%) reflect that the reason for not lead properly is
improper financial management system, 5(25%) says that the
reason for not lead properly is lack of transparency and
accountability, 3(15%) depict that the reason for not lead properly
is being corrupted and the remaining one is 2(10%) says that all the
above listed problems are the reason. Thus, it indicates that the
reason for not proper planning system is the municipality’s
manager uses improper financial management system on human
resource utilization.

Table 4.24 do you think if there is proper financial management

system in your organization, human resource utilization plan will run
properly.
Items Respondents
No %
Yes 15 75 %
No 4 20 %
I don’t think 1 5%
Total 20 100 %
Source questionnaire survey 2013

As depicted from the above table 4.24 from total number of

respondents were as bed about do you think. If there is proper
financial management system in your organization, human resource
utilization plan will run properly, accordingly, 15(75%) reflects that
proper financial management system have positive impact on

37
human resource utilization, 4(20%) said that proper financial
management system doesn’t have positive relation with human
resource utilization and the remaining one is 1(5%) depict that
proper financial management system and human resource
utilization doesn’t have any relation. Thus, it indicates that proper
financial management system have positive impact on human
resource utilization in Jimma municipality.

38
 CHAPTER FIVE
5. Summary, Conclusions and Recommendations

This chapter deals with summary, conclusion and recommendation

of the study. The objective of this study was to investigate the
impact of financial management system on human resource
utilization in Jimma municipality.

5.1. Summary of the finding

In consistent to the statement of the problem and basic questions
and based on the data analysis the followings are summarized.
1. Regarding to the response of the majority of the respondents
the major financial source for municipality budget is from
regional state.
2. The study pointed out that the usage of financial management
system is back ward.
3. The study investigated that the improper financial management
system make unplanned recruitment, selection, training,
development and transfer in municipality due to this they don’t
know some of their employees and they don’t control them
properly.
4. Based on the response, the department workers and the
management bodies have not common understanding in
financial management system.
5. The study pointed out that in the department balancing the
daily receipts and expenses were exercised regularly.

39
6. The study pointed out as there was no strong financial rules
and regulations.
7. According to the respondents, the organization has strongly
budget plan.
8. The study pointed out proper financial management system has
positive impact on human resource utilization.

40
5.2. Conclusion
In consistent to the statement of the problem and basic questions
and based on the data analysis regarding to the major finding of the
study the following conclusions forwarded:-
1. A major financial source of the municipality is from regional
state. This indicates that the municipality was mostly
dependence for its budget on this source of finance. This kind of
dependence could create serious problem on municipality
program because the source of the municipality’s budget is
mostly in one way.
2. The usage of financial management system in municipality is
back ward. This system indicates that they have less controlling
system and the financial rules and regulations are not applied
properly.
3. The improper financial management system makes unplanned
recruitment, selection, training, development and financial
resource utilization of the organization is poor. Where as if there
is proper financial management system, it has positive impaction
human resource utilizations.
4. The department workers and the management bodies have not
common understanding on financial management system
because they have not clear and strong management system in
municipality.
5. Regarding some of the main problems related to financial
management inefficiency of man power, lack of trained man
power and inadequate training for staff members who work in
finance department were some of the suggestions put forward
the respondents.

41
Due to lack of transparency, accountability and lack of attention to
give rules and regulations usually ends up with weak performance.

5.3. Recommendation
The following recommendation are forwarded in to the hope that
they would help to develop effective or proper management system
of the municipality found and to look in the major problems that
exist in the financial management systems.
1. Since most aspects of the budgeting process involves the effects
of all staff members, each individuals of the department staff
should be seen as a person who can contribute to the
preparation of budget. Therefore, the management of the
department should request all staff members concerned in
budgeting process so as to reduce the possibility of latter
misunderstanding and to gain individual workers commitment.
2. The proper utilization of the allocated budget source service as
one of the most important measures that help to achieve the
attainment of the municipal program. To effect this department
has to make great effort to settle those payment which were
accumulate unsettled for the previous year besides this advance
to payments should not be made against the finance rule and
regulations.
3. Jimma municipality financial management system should strictly
control the utilization of human resource, budget and accounting
system of the municipality through timely reports. It should
better take measure quickly to restore many misrepresentations
through investigation and should be alert to investigate and
audit the municipality at least twice a year.

42
 Bibliography
1. Raymond A, Noe,(2004) fundamentals of human resource
management,(1st edition)Boston Burr Ridge, McGrew Hill/Irwin
2. Plunkett, W. Richard,(1999)Management,(6st edition)South
western Hall, England
3. Preeti Singh,(2008) fundamental of financial management, new
delhi, ane books India
4. Shokel Ahmed, (1999) human resource development in
university, A.P.H Publishing corporations. S Anseri Road, dama
GANJ, New Delhi.
5. James M. McHugh, (2005) understanding business, (7st edition)
McGraw Hill Companies, in New York.
6. Hodder and Stoughton, (2001).Business study, for As Nancy wall
campanies, inLondon.
7. A. Chordramohan, (2008) Human resource management S, B
Nigeria, New Delhi.

43
 Appendix A
Jimma University
College of business and economics
Department of management

Questionnaire for employees

The aim of this questionnaire is to collect data of the research title
“the impact of improper financial management system on human
resource utilization in Jimma municipality”. The response you give
for the question have a great value for the success of the study. So
we kindly request you to give us the pertinent response.
Notice:-
1. No need of writing your name
2. Mark  for questions that has an alternative
3. Write brief answer for those questions that have no choices.
Part One
Question for Personal Data
1. sex Male  Female 
2. age 19 – 25  31 – 36  26 – 30  above 36 
3. marital status Single  married 
4. service year 1-5  6 – 10  11-15  16-20  above 25 
5. education status: certificate  diploma  degree  Other 
If other specify
6. working condition
Finance department worker 
Human resource worker 
Purchasing department worker 

44
 Part Two
About Source and Preparation of Budget

1. The source of municipal budget

Regional state  Federal  society  NGO other
If other specify
2. Is there yearly budget plan?
Yes  No  I don’t know 
3. Period of budget preparation during the year
At the beginning of the year 
At the middle of the your 
At the end of the your 
I don’t know 
4. Participants in departmental budget preparation
Budget worker only 
Head of the department  Kebele efface  All 
5. Human resource capacity for budget preparation in your
department is? High  Low  Medium 

45
 Part Three
Budge Approval
1. When does the municipality budget approved?
As soon as prepared 
At the middle of the year 
At the end of the year 

2. Municipality budget is approved by?

Management only 
By cit council 
By federal government 
By regional government 
3. Do you use the budget code in municipality?
Yes  No  I don’t know 
4. Do they use the budget cyele properly?
Yes  No  I don’t know 

46
 Part Four
About Finance Administration
1. How many times finance department fraction of receipts and
expenses balance?
Regularly  Sometimes  Not practiced 
2. financial management system in municipality is
Back ward  Modern  I don’t know 
3. If your answer for the above questions back ward, what is the
reason?
Lack of skilled manpower 
Administration problem 
I don’t know 
4. Municipality attention to improve financial accounting
administration system is?
High  Medium  Low 
5. Do you have financial report an time?
Yes  No  I don’t know 

47
 Part Five
Human Resource Utilization
1. Does the manager lead properly for financial budge?
Yes  No  I don’t know 
2. Is there proper plan to recruitment, selection, job design,
training, development and transfer?
Yes  No  I don’t know 
3. If your answer for question number 3 is no, what is the reason
you expect?
Improper financial management system 
Lack of transparency and accountability 
Being corrupted 
All 
4. if your organization have other problem, write under this

5. for the problem listed above if you have any idea in relation to
their solution, please point it down here

48
 Appendix B
Guide line for interview questions for managers and subordinates
1. When Jimma municipality established?
2. How do you see the financial management system of Jimma
municipality?
3. What are the problems related to human resource utilization in
your organizations?
4. What are the problem /challenges which are created by the
financial management system and have an impact on human
resource utilization in your organizations?

49
 ጅማ ዩኒቨርሲቲ
ቢዝነስና ኢኮኖሚክስ ኮሌጅ
ማኔጅመንት ትምህርት ክፍል

ለሰራተኞች የተዘጋጅ መጠይቅ

የዚህ መጠይቅ ዋና አላማው የጅማ መዘጋጃ ቤት የገንዘብ አጠቃቀም በሰው ሃይል ላይ የሚያደርሰውን
ተጽኖ ለማወቅ፣ ለመገምገም እና አስፈላጊውን መፍትሔ ለመስጠት የተዘጋጀ መጠይቅ ነው፡፡

ማሳሰቢያ፡-
1. ስም መጻፍ ኤስፈልግም
1. ከተሰጡት አማራጮች የዚህን ምልከት ያድርጉ 
2. አማራጭ ለሌላቸው ጥያቄዎች ትክክለኛውን መልስ ይፃፉልን፡፡

ክፍል 1፡ ማንነትን በተመለከተ

1. ጾታ ወንድ  ሴት 
2. ዕድሜ ከ 19-25  ከ 26 – 30  ከ 31-36  ከ 36 በላይ 
3. የጋብቻ ሁኔታ፡- ያገባ (ች) ላገባ(ች) 
4. የአገልግሎት ዘመን ከ 1-5  ከ 6-10 ከ 11 – 15 
ከ 16-20  ከ 21 - 25 ከ 26 - በላይ 
5. የትምህርት ደረጃ ስርቲፊኬት  ዲግሪ 
ዲፕሎማ  ሌላ 
6. የስራ ሁኔታ
ገንዘብ ክፍል ሠራተኛ 
የሰው ሃይል ሠራተኛ 
ግዢ ክፍል ሰራተኛ 

ክፍል 2 የበጀት ምንጭና የበጀት አዘገጃጀት

1. የመዘጋጃ ቤቱ የገቢ ምንጭ ከየት ነው;

50
 ከክልሉ መንግስት  ከፌደራል መንግስት 
ከህብረተሰብ  መንግስታዊ ካልሆኑ ድርጅቶች 
ሌላ ካለ 
መልስዎ ሌላ ከሆነ ይግለፁ
2. አመታዊ የበጀት ዕቅድ አለ;
አወ  የለም  አላውቅም 
3. የአመቱ የበጀት እቅድ መቼ ይካሔዳል ;
በስራ አመቱ መጀመሪያ ላይ 
በስራ አመቱ አጋማሸ ላይ 
በስራ አመቱ መጨረሻ ላይ 
አላውቅም 
4. በበጀት አዘገጃጀት ላይ የሚሳተፉ ሰራተኞች እነማን ናቸው;
የበጀት ሰራተኛ ብቻ 
በክፍል ሀላፊው 
የቀበሌ ጽ/ቤት 
ሁሉም 
5. በክፍላችሁ ውስት ለበጀት ዝግጅት የሰው ሃይል አቅም ምን ይመስላል;
ከፍተኛ  መካከለኛ  ዝቅተኛ 

ክፍል 3 በጀትን ማዕደቅ በተመለከተ

1. መዘጋጀ ቤቱ በጀቱን የምፀድቀው መቼ ነው;
በጀቱ ተዘጋጅቶ እንደተጠናቀቀ 
በአመቱ አጋማሽ ላይ 

51
 በአመቱ መጨረሻ ላይ 
2. መዘጋጀ ቤቱ በጀቱን የሚያጸድቀው በማን ነው;
በማኔጅመንቱ ብቻ  በፌደራል መንግስት 
በከተማው ም/ቤት  በክልሉ ፓርላማ 
3. መዘጋጃ ቤቱ የሚጠቀምበት የበጀት ኮድ አለ;
አዎ አለ  የለም  አላውቅም 

ክፍል 4 ገንዘብ አያያዘን በተመለከተ

1. ወጪና ገቢ አሰራር በድርጅታችሁ ውስጥ መቼ ይካሄዳል;

አልፎ አልፎ  መደበኛ  የለም 
2. ማኔጅመንቱን በገንዘብ አያያዝ ሰርዓቱ ምን ይመስላል;
ኋላ ቀር  ዘመናዊ  አላውቅም 
3. ከላይ በተጠቀሰው ጥያቄ መልሶዎ ኋላቀር ከሆነ ምክንያቱ ምን ሊሆን ይችላል;
ያልወለጠነ የሰው ሃይል 
የአስተዳደር ችግር 
አላውቅም 
4. ለገንዘብ አያያዝና አመራር ስርኦት መጎልበት መዘጋጃ ቤቱ የሚደርገው ጥረት ;
ከፍተኛ  መካከለኛ  ዝቅተኛ 
5. በጊዜው የሂሳብ ውርርድ ሪፖርት ያደርጋሉ
አዎ  ኤደርጉም  አላውቅም 

ክፍል 5 የሰው ሃይል አቅርቦት በተመለከተ

1. ማኔጅመንቱ በጀቱን በአግባብ ይመራል;
አዎ  አይመሩም  አላውቅም 
2. በድርጅታችሁ ውስጥ የተቀናጀና በእቅድ የሚመራ የሰው ሃይል ምልመላ፣
መረጣ፣ የሰራ ቅርድ፣ ሰልጠናና እቅድ ይጃሄዳል;

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 አዎ  አይካሄድም  አላውቅም 
3. ከላይ በጥያቄ ቁጥር 2 በተጠቀሰው መልሶዎ አይካዴድም ከሆነ ምክንያቱ ምን
ሊሆን ይችላል;
አላ አግባብ የገንዘብ እጠቃቀም 
ግልፅነትና ተጠያቂነት እጥረት ስላለ 
በሙስና የተዘፈቀ አሰራራ መኖሩ 
ሁሉም 
4. በእናንተ ድርጅት ውስጥ ከላይ ያልተገለፀ ችግር ካላ በዚህ ይፃፍልን;

5. መፍትሔ ይሆናል የምትሉትን ይፃፍልን

#ለትብብርዎ እናመስግናለን$

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