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.