The Effect of Budget Control on the Public Sector Effectiveness Moderated by Information and Communication

Abstract

Budget control is a crucial management accounting technique designed to plan, monitor, and adjust a company's budget to achieve its financial objectives. This study investigates the  effect of budget control on public sector effectiveness, with a particular focus on the moderating role of information and communication within the Addis Ababa City Administration. The research involved thirty public sectors, comprising eleven sub-cities and nineteen additional sectors. Data were gathered using a structured Likert-scale questionnaire, which reached 368 respondents, of whom 346 completed the survey, alongside structured interviews with key informants. Utilizing a pragmatic research paradigm and a mixed-methods approach, the study integrated both qualitative and quantitative data. The research defined budgetary control as the systematic management of costs through goal-setting, performance comparison, and corrective actions. It analyzed components such as budget implementation, accounting and reporting, auditing, and monitoring as independent variables, while information and communication were treated as a mediating variable. Data analysis was performed using SPSS 26 and AMOS 23, with Structural Equation Modeling (SEM) confirming the reliability and validity of the constructs. The findings revealed significant relationships: effective budget implementation, accurate accounting, and regular audits each positively influence organizational effectiveness. The findings also indicate a negative moderating effect of information and communication, suggesting that ineffective communication can undermine the relationship between budget implementation and effectiveness. Conversely, effective communication strengthens the positive impacts of accounting and auditing. These results highlight that while budget control practices are crucial for public sector effectiveness, strategic improvement of communication systems is essential for maximizing their benefits. Recommendations include revising budgeting policies and enhancing communication frameworks. Future research should explore these dynamics across broader institutional contexts and consider longitudinal studies to evaluate long-term impacts.