THE EFFECT OF BUDGETING PRACTICES ON FINANCIAL PERFORMANCE WITH INTERNAL CONTROL AS THE MEDIATING FACTOR: A LITERATURE REVIEW
Abstract
Financial performance remains a fundamental concern for organizations across all sectors, as it underpins operational sustainability and long-term institutional survival. In this literature review study we examined the effects of budgeting practices on financial performance, with internal control as a mediating factor. Specifically, the study investigated the influence of participative budgeting, budget goal clarity, and budget evaluation on financial performance and explored how internal control mechanisms mediate these relationships. A systematic literature review design was adopted, drawing on peer-reviewed journals, dissertations, and academic publications sourced from databases. Thematic analysis was employed to synthesize findings across sources. The study found out that participative budgeting, budget goal clarity, and budget evaluation each positively and significantly influence financial performance. Internal control emerges as a critical mediating mechanism, amplifying the positive effects of sound budgeting practices on financial outcomes. Organizations with comprehensive budgeting frameworks and robust internal control systems are better positioned to achieve strong financial performance. Findings from the literature review reveal important implications for financial managers, policymakers, and institutional leaders seeking to strengthen governance, accountability, and resource efficiency, especially in church organizations.
Keywords: budgeting practices, financial performance, internal control, participative budgeting, budget goal clarity, budget evaluation
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