Examining the Effect of Budgetary Controls on the Financial Performance of Oman Telecommunication Company

terms of CC-BY-SA. Abstract Purpose: The objectives of the study were to analyze the different budgetary control techniques that affect and how it affects the financial performances; to determine the ways of effective budgetary control affecting the financial performances and to identify and to evaluate the roles of top management in budgetary control techniques of the Oman Telecommunications Company. Design/methodology/approach: A questionnaire was prepared for collecting the survey. The respondents were the employees of the financial department and also officials and supervisors from other departments of the Oman Telecommunications Company. The questionnaires were distributed to 60 members and the data collected was analyzed using Microsoft Excel to obtain the frequencies, percentages, and descriptive analysis. Findings: The results indicated that there is a positive relationship between budgetary control and the financial performance of the company. The results also indicated that the company preferred the Responsibility accounting technique, Revenue budgeting technique, and Variance analysis technique. It is also reported that the management is informed of the deviations regularly, and the managers take timely corrective measures. It was found that the top management is aware of the importance of budgetary control techniques and supports them. Research limitations/implications: From the results, it was recommended that the company should give prior attention to developing budgetary control through proper planning, ensure continuous evaluation of comparative analysis of actuals vs. budget. It was also suggested that the company introduce enterprise resource planning (ERP) as the monitoring will become easy for the financial management in ensuring the productivity of the employees in the budgetary control process. Social Implications : The study will allow financial managers in various companies to understand the serious nature of budgetary control techniques, their importance, and the extent of the impact which in turn will help them to improve efficiency in achieving financial performances. Originality / Value: No study was carried out before to study the impact of budgetary control on the organizational performance of Oman Telecommunication Company. This is a maiden attempt.


Introduction
A budget is a planning tool used for allocating resources of an organization to several different functions (Abdallah, 2018). A budget is a method for controlling the financial performances and ensuring the achievement of the administrative and financial goals of the company (Etale and Idumesaro, 2019). One of the most important techniques used for planning and controlling jobs within an organization is budgeting and budgetary control.
Budgetary control is the system through which an organization controls its costs by setting budgets, to compare the actual performance against the budget to ensure that there are no deviations (Asumani, 2019). Budgetary control is not only a catalyst for achieving the company's aims but also being one of the most important and administrative and financial control tools (Hertati, 2015). Budgetary control is linked to the responsibility of the decision-makers in the company and comparing the goals set by the company. One of the most important steps in budgetary control is monitoring it, which is a systematic process that is continuously worked on, and its advantages are that it determines the levels of activities.
The process of preparing the organization's budget is carried out by the financial officers who specialize in preparing budgets, by determining the financial needs of the organization and its financial position and is considered as a plan for the financial growth of the organization because it is devoted to measuring the financial performance of companies. Budgetary control procedures begin with budget preparation planning. Budget planning starts with defining the objectives that the organization plans to achieve by determining the financial position. The plans set for the budget must be properly coordinated, in order to eliminate differences and difficulties that the financial management may face.
The organization is dependent on the efficiency, experience, and skill of its employees in activating and monitoring the implementation of budgetary control techniques in the organization. In the budget control system, the top-level management delegates the responsibilities to the middle-level managers to focus on the deviations that occur in the planned budget (Kimani, 2014). The management of the organization should pay great attention to the differences created by the budget in order to facilitate the process of controlling the budget and the administrative and financial reform of the organization and raise the efficiency of the budget in order to expedite the corrective measures taken promptly.

Budgeting Techniques
The success of the administration in the budgetary control process depends on the budgetary control techniques used in controlling the budget. Budget control techniques aim to assist in budget planning, and they use the resources in the organization to ensure the achievement of goals.

Income and Expense Budgeting Technique
For the organization to manage, monitor and control cash flows, the organization always develops plans for its monthly and annual revenues. Through this technique, the company will work to determine the periods in which the revenues double and determine the period in which the revenues are low, and in this way the company manages its cash flow, making it ready for the periods in which the cash flow is low. The company will link its revenues with its expenses and expenses.

Variance Analysis Technique
The commitment to analyzing the variance in the company leads to the achievement of specific financial goals related to the costs of the company. The company achieves its goals at low costs by controlling these costs. The variance analysis technique works through reviewing the differences.

Accounting Responsibility Technique
Accounting responsibility technique aims at the best investments for the company, the highest profit, and the adjustment of the financial performance (Epstein and McFarlane, 2011). One of the most important elements of administrative and financial control in organizations is accounting responsibility, which is the allocated to various responsibility centres of the organization.

Statement of Research Problem
Budgetary control is used to manage resources and businesses' activities. Companies set their priorities towards preparing the budgets, but do not pay attention to controlling part of it and they find that discrepancy between the prepared budget and the actual results. The discrepancy and the difference arises due to the lack of prior planning of the budget and budgetary control the budget and not implementing the right budgetary control technique. If the budget preparation is not paid due attention and not controlled properly, it ends up with weak financial performance of the company. On the other hand, some financial managers use traditional practices in the process of budgetary control, and they ignore the impact on the effectiveness of budgetary control, hesitate to change to modern budgetary control techniques and due to which it might create lack in the effectiveness of budgetary control and the use of such budgetary control techniques.

Significance of the Study
Through this study, the companies could determine the best ways to control the budget and the related plans to achieve the goals set. They evaluated the importance of the company's use of budgetary control techniques and their effect on budgetary control. Companies can benefit from their knowledge of the role of top management in various budget control techniques; and the effectiveness in improving the financial performance of the company, and the importance of encouraging managers and employees to use them to achieve budget goals and control them.

Review of Literature Budgeting
Budgeting is a preparatory plan for the costs, resources, and revenues of the organization and its goal to develop and improve the financial performance of the organization (Mazikana, 2019) while budgetary control is the responsibility to compare the budget plans with the actual results of the budget (Nafisatu, 2018). Most companies use the budget as a tool for internal controls, through which allocation of resources is done with high efficiency (Kimani, 2014). Budget Planning is to control the budget, reduce its costs, and improve the quality of service, which helps to achieve the goals and improve the financial performances linked to the goals of the organization (Koech, 2015;Kimani, 2014). Budgets and the ability to control the budgets can be used as a financial indicator for the performance of an organization (Hassan & Siraj, 2015).

Budgetary Control
Budgetary control can be used by the organization to forecast and plan for the future (Epstein and McFarlan, 2011). A good control system depends on accurate information and helps the organization in achieving the purpose it is meant for, promptly (Joseph, 2012). Budgetary control is a must as it determines the expected financial position of a company after a specific period (Isaac et al., 2015). Budgetary control is the system that controls the costs incurred by the organization and works to correct the differences in achieving the goals (Etale and Idumesaro, 2019).
Mazikana (2019) confirmed the necessity for budgetary controls because it is used in knowing the differences arising between an organization's expected results and the actuals. The most important objectives of budgetary control are planning, coordination, and control over the actual and planned budget (Kipkemboi, 2013). The company achieves its goals through its activities, as budget control is one of those financial and administrative activities in monitoring the differences between what is planned and the actual performance (Gunawan et al., 2020 Companies using Income and expense budgeting techniques depend on income to cover their operating expenses to achieve profit (Nyongesa et al., 2016). But in variance analysis technique the company constantly review the differences in the budget and keep aware of financial developments and the differences (Dandago & Adah, 2013). In the Responsibility accounting technique cost center managers responsible for managing the profit and investment and work within the plans and goals set to achieve good financial performance (Mohamed et al., 2015). Top management sets guidelines for controlling the cost center and standards to adhere to (Koech, 2015).

Financial Performance of the organization
Financial performance is considered as a measure to assess the usage of its assets towards its revenues (Adongo and Jagongo, 2013). Financial performance is a true measure to complete its operations and shows the efficiency of the organization -the costs, operating capital, and cash flow to the company are monitored if it is within the revenues (Chaudhary, 2018). The financial performance of a company is measured using the financial reports issued by the company (Imo and Chika, 2018). If the financial management has a comprehensive knowledge of the techniques of budgetary control, this will lead to solving the financial problems of the company (Nyongesa et al., 2016).

Involvement of Top-level Management in the Budgetary Control
The top-level management has the responsibility to decide to establish units that will operate under its management following the objectives of the organization (Kimani, 2014). Senior management strives towards controlling its resources and employing the systems and its employees to achieve its budget goals and plans, which will lead to outstanding financial performance for the organization (Nafisatu, 2018).
Reporting the details of the policy and budget objectives to the directors and heads of departments will increase the possibility of achieving the goals (Koech 2015). The management sets a policy to keep expenditures and costs within a specific framework to keep them within the planned, limits to keep them in a stable state (Kipkemboi, 2013).

Theoretical Framework
Based on the literature review, the theoretical framework was developed according to the studies conducted by Mazikana (2019) and Hassan & Siraj (2015) also through the exploratory study that was conducted by the researcher with several managers in the financial departments at the beginning of the research and verification of the subject of the study. inferential which was not biased and got generalized results (Creswell and Creswell, 2017). So, the data collected was analyzed using Microsoft Excel to obtain the frequencies, percentages, and descriptive analysis.

Conceptual Framework
For budgetary controls to be effective, the factors such as effective budgetary control procedures and techniques need to be attended to. Also, the support and role of top management in budgetary control techniques play a key role in the success of the budgetary controlling process and thus raising the financial performance. If the budgetary controls are weak, this will hinder the financial performance of the organization. Therefore, the following conceptual framework for the study was considered:   to-female employment in the Sultanate in general, and this has been reflected in the low rate of female employment in many departments.  Table 3 shows the percentage of male and female employees who responded to the questionnaire according to their position at work in the Oman Telecommunications Company. The majority of the respondents were from the entry-level -55%. The mid-level of respondents was 32%. The top-level in financial management were 13% only. Perhaps the higher number of respondents from the entry-level is due to the higher number of employees of this level in the company than the other levels as they had more chances to fill out the questionnaire than the rest of the levels as they had more responsibility. It is good to know the extent of the experience of the respondents in their job in the company to determine the accuracy of the answers and their reliability. Accordingly from Table 4, the results showed that the majority of the respondents (55%) were having an experience of fewer than 4 years. 5% of the respondents who worked were having experience of more than 10 years whereas 40 % of the percentage of respondents were having experience of 4 to 10 years. More than one year of experience is sufficient enough to get a manager a good understanding of his field of work, so managers' answers can be taken seriously, and hence the responses could be considered as reliable information.  Table 5, on the overall average, 47% of the respondents agreed and 41% strongly agreed that the budgetary control techniques were effective on the financial performances of the company. Our finding is similar to that the budgetary control could be effectively implemented through budget control techniques as it is the guarantee of effectiveness (Harelimana, 2017). Therefore, it was understood that the company uses techniques to control the budget to a large extent.
Mean rank was calculated based on the weighted means calculated for each statement. Accordingly 'Responsibility Accounting is an effective technique' ranked first with 0.304 points, followed by 'Variance analysis is an effective technique' and 'Revenue budgeting is an effective technique' both ranking second with 0.299 points and 'Cash budgeting is an effective technique' ranking third with 0.286. Ranking first item confirms that the importance of managing the responsibility centers in the company. This is similar to the finding by Mohamed et al. (2015) that the responsibility accounting technique is used to ensure good financial performance. The finding also showed the importance of the company's revenue budget technique as the company's revenues from sales are among the priorities of the financial and administrative management. Similarly, the variance analysis technique was also given importance as the managers were aware of the fact that the success of budgetary controls and financial performance could be obtained through the variance analysis technique. This is similar to the result of Dandago & Adah (2013) that the variance analysis technique helps to review the differences and compare the achievement versus the plans.
So it was confirmed that the null hypothesis got rejected, and the emphasis was on the positive impact of budget control techniques on the financial performance of the company.  Table 6, it was indicated that 90% of the respondents agreed that the budgetary controls allow planning, monitoring, and controlling of income and expenditures. The most important characteristic of budget planning is continuous monitoring of the performances, to determine the areas in which there arise differences between budgeted figures and the actuals (Gunawan et al., 2020). So, the budgetary control procedures are a sequential process; the company monitors to ensure that there are minimum deviations against the budgeted figures.  Table 4.7 shows that all of the respondents confirmed the positive impact of budgetary control on the financial performance of the company. It is similar to a study by Kinyua (2015) in which he emphasized the necessity of using and following the principles of budgetary control to achieve the goals of the company. A similar study by Silva and Jayamaha (2012) also showed a high positive relationship between the budgetary controls and the financial performance of the company.  Table 8 shows that the respondents' assertion on the support of the top management for budgetary control techniques. 98% of the respondents agreed on the necessity and the importance of top management supporting budgetary control techniques.
We conclude from the above results of respondents' assertion of the role of top management and its impact on the success of the effectiveness of budgetary control techniques and asserting that the top management is the main driver through the decisions it makes. This result is similar to the findings by Kimani (2014) that the support from the top management to work with budgeting techniques made the company highly successful.

Defining Budgetary Control Techniques
The study identified that there were seven techniques of budgetary control were used by the company. Although all techniques have an impact on the financial performance of the company in one way or the other, there is a difference in their impact. However, the respondents of the company preferred the Responsibility accounting technique, Revenue budgeting technique, and variance analysis techniques.

Budgetary Control Procedures
Further, it was also found that the company plans were following the company's financial goals and that the plans cover all departments in the company based on the resources available. It is also reported that the management is informed of the deviations regularly, and the managers take corrective measures promptly as and when required. The respective managers are also reported to be taking necessary measures to study the reasons for such differences.

The Nature and Impact of Budgetary Control Techniques
It is concluded that the company has to work with budget control techniques as it impacts the financial performance. Using the financial indicators and the variance analysis, the differences are arrived at and measures are taken to avoid them. The study also concluded with the importance of the responsibility accounting technique as the work includes all the departments of the company making them responsible. The study also concluded that there is no significant importance for the expenditure budgeting technique.

Roles of Top Management
It can be concluded that the top management of the Oman Telecommunications Company is aware of the importance of budgetary control techniques and supports them to play an effective role by monitoring the performance of these techniques, which positively affects and increases the financial performance of the company.

Recommendations
Budgetary control is considered one of the most important factors which influence the financial performance of the companies, so effort must be made for the same. Organizations must work with budgetary control techniques that contribute significantly to improving the financial performance of companies because of their effectiveness. Therefore, to improve the budgetary control measures, it is recommended that  The company should give wide attention to developing budgetary control through proper planning.  Ensure continuous evaluation of comparative analysis of actuals vs. budget.  The company should introduce enterprise resource planning (ERP) as the monitoring will become easy for the financial management in ensuring the productivity of the employees in the budgetary control process.  The company should pay utmost importance in implementing budgetary control techniques.  Top-level managers should ensure the activation of budgetary control.  Responsibility must be entrusted to competent and experienced employees involving in budgetary control functions.  Motivate the managers through creating awareness of budgetary control to achieve the desired goal of the company.  Collective work through information exchange and control over the budget will lead to improved organizational performance.