Integrated financial management system adoption and the quality of financial reports in local governments in Uganda : a case of Kasese district local government

Abstract

The purpose of this study was to examine the relationship between Integrated Financial Management Systems (IFMS) adoption and the quality of financial reports in Local Governments, with Kasese District Local Government as the case study. The study focused on Budgeting, General Ledger Management, and Cash Management because they are the key IFMS modules that handle financial planning, recording, control, and reporting, which directly affect financial report quality. The study aimed to examine the relationship between of IFMS adoption in budgeting, general ledger management, and cash management and the quality of financial reports. A cross-sectional survey research design was adopted, incorporating both quantitative and qualitative approaches. Data were collected from a sample of 89 respondents using structured questionnaires and interview guides. While the linear regression findings revealed that IFMS adoption in budgeting had a positive, and statistically significant influence on the quality of financial reports (unstandardized coefficient B = 0.647; standardised Beta = 0.680; p = 0.000 < 0.01), IFMS adoption in general ledger management significantly influenced the quality of financial reports (β = 0.666; Beta = 0.704; p = 0.000 < 0.01) and IFMS adoption in cash management positively and significantly predicted the quality of financial reports (β = 0.597; Beta = 0.649; p = 0.000 < 0.01), multiple regression analysis revealed that IFMS adoption in Budgeting, General Ledger Management, and Cash Management jointly explained 54.2% of the variation in the quality of financial reports (Adjusted R² = 0.542). The model was statistically significant at the 1% level (F = 35.722, p = 0.000). However, individually, IFMS adoption in both General Ledger Management (β = 0.305, p = 0.023) and Cash Management (β = 0.243, p = 0.013) had a positive and significant influence on the quality of financial reports at 5% level of significance, while IFMS adoption in Budgeting (β = 0.224, p = 0.081>0.05) showed a positive but insignificant influence. Therefore, the first null hypothesis is accepted because IFMS adoption in Budgeting has an insignificant influence in the multiple regression while the second and third hypotheses are rejected because IFMS adoption in both general ledger management and cash management have a positive and significant influence on the quality of financial reports in the multiple regression. The study concluded that IFMS adoption significantly enhances the quality of financial reports in local governments by improving accuracy, transparency, and timeliness through real-time processing, automated approvals, and integrated reporting. It recommends enhancement of budgeting process, targeted training of finance staff, and integration of all IFMS modules, strong top management support, and alignment of district financial practices with IFMS capabilities. The study further recommends implementation of a structured framework for the regular monitoring and evaluation of IFMS performance across modules to ensure continuous improvement and system effectiveness.