An analysis of the relatedness between budget and performance of a microfinance entity: A case study of “BRAC International”

Abstract

This report is a result of a 5-months long internship that I completed in the finance and accounts department of BRAC International, an NGO who has operations in 9 different countries across Africa and Asia. BRAC International has been formed as a separate part from BRAC Bangladesh and it is in its 12th year of operation. This report consists of three important chapters:  The Company overview – This chapter covers BRAC’s basic profiles, timelines, products and services, the two parts of BRAC International that is Stichting BRAC International and BI Holdings B.V., about its Microfinance programme and my overall internship experience at BI.  Budgeting processes of Microfinance programme – The process of initiating a budget till its successful implementation and review is very carefully developed at BI, especially for its Microfinance programme, which is what we tried to explain in this section. The budgeting process consists of 5 stages: development and approval, implementation, monitoring, revision and annual review.  Research to find a link between budget variance and performance of the entity – This is the most fundamental part of the report as it mostly addresses the main report topic. The research performed consists of a questionnaire answered by the staff of BI and an econometric model to prove the link between budgets and performance. Finally, a conclusion and some recommendations were given. From the findings of the research it can be said that through an employee perspective at BI, data collected through the questionnaire supported the fact that budget surely contributes to improvement of performance of the company. However, if the statistical data is considered, the fact that there is a link between budget and performance could not be proven from the tests that were performed. From these findings we can suggest that though not statistically proven, we can ignore the fact that budgets are a very important step in financial operations especially in such big entities as BRAC. From my internship, I could also observe that there are responsibilities of handling budgets were collective and everybody worked together to achieve the best results.