Abstract:

This study was conducted using Infectious Diseases Institute (IDI) as the Case study. A sound and effective budgeting system is based upon certain prerequisites/or conditions. Failure to observe and appreciate these essentials will render the budgeting exercise ineffective (Arora, 1995). It was against this background that the study was aimed at examining the effectiveness of IDI budget systems and its impact on the liquidity levels of the Institution.

The respondents were selected using purposive and simple random sampling techniques. Descriptive and Associational research designs were adopted with Data gathered through Questionnaires and interview guides. The SPSS technique was used to establish the relationship between Budgeting systems and liquidity levels.

The major findings from the research study indicated that the budgeting systems used were inapt. It was also revealed that, there exists a positive relationship between Budgeting systems and control and liquidity level. In this respect, it was concluded that though many other factors were pointed out as possible causes of the declining levels of liquidity in the Institution between 2010 and 2014, poor budget systems and budget control strategies were largely held responsible.

Considering the persistent declining liquidity trend, a new approach of budgeting which encourages improvement by eliminating inefficiencies and wasteful expenditure should be adopted.

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