Variance analysis: a solution to financial performance in a non governmental setting, a case of World Vision

Abstract

This research was carried out with the aim of establishing the relationship that exists between variance analysis budget control technique and organisational performance. World Vision has experienced wide adverse budget variances due to ineffective variance analysis by the organisation resulting in the organisation repetitively over spending and under spending, losing donor confidence and trust and hence motivation to this study. A descriptive research design was used in gathering the research data. 24 questionnaires were administered and 3 one-on-one interviews were carried out. The major findings were that measures adopted by WVZ such as budget committees and Zero based budgeting have not been effective and this has had a negative impact on organisational performance. Besides variance analysis, factors such as responsibility accounting also improve organisational performance. There is a significant negative relationship between variance analysis and organisational performance. Recommendations are that, World Vision Zimbabwe should educate all the employees about the budgeting system to keep them well informed and reduce chances of deviations from the set budgets. The organisation should employ other measures into its variance analysis system such as responsibility accounting and top management should be more involved in reviewing the variance analysis system to stop the continuous wide budget variances that the organisation has been continuously experiencing over the years.