CHAPTER ONE
INTRODUCTORY STATEMENT
The going concern concept has it that once an organisation commences business it wishes to continue operations in perpetuity. That is, to continue operations for a foreseeable future. Thus, whatever the nature, size and mode of operation of the business; the going concern concept still has it’s place. Many reasons abound for the conception of a business as a going concern. This ranges from the benefits derived, meeting of specific needs of individuals, and that of the society at large. Ironically, a business, like any other human entity cannot exist in perpetuity, but could be in existence for a much longer period of time.
Thus, the long existence of a business, hinges on some factors, such as effective planning, good management, profitability, conducive operating environment favourable government policies etc. However, planning constitutes a key factor in the management process of a business, it is also the bedrock to other success factors.Planning is a comprehensive management function that includes setting of goals, selecting missions and objectives and developing active plans to achieve them. It bridges the gap between ‘where we are’ and ‘where are going’. According to Cole (2002:122), “planning is basically a decision making process by which an organisation decides what it wants to achieve, how it intends to achieve it, and in what manner”. It is concerned with ends, means and conduct. Planning is the design of a desired future and effective ways of bringing of about (Ackoff, 1981).
A distinction is normally made between short term planning and long-rang planning (Strategic or Corporate Planning). Sizer (1989) defines long-range planning as a systematic and formalized process for purposely directing and controlling future operations towards desired objectives for periods extending beyond one year. Short-term planning, on the other hand must accept the environment, and the physical, human and other financial resources at present available to the firm. Planning is an essential tool for business survival, it reduces uncertainty and provides direction of efforts by determining the course of action in advance. Planning remains inevitable for managers that wishes to succeed. It involves the determination of what should be done, how the goals may be reached and what individuals or units to assume responsibility and be held accountable. Planning coordinates the various activities of an organisation to ensure the congruency of goals in order to attain the firm’s objectives.
However, an aspect of planning which entails the preparation of plan of action for future period for the success of the firm is known as budgets.Budgets are financial plans of the resources needed to carry out task and financial goals. They are plans expressed for the future to be accomplished within a specified time period. Charles T. Horngren (1997:176) defines a budget as “a quantitative expression for a set time period of a proposed future plan of action by management of an organisation”. Budgets provides an orderly way to proceed to attain goals and also provides a time schedule for future actions to produce measurable result. According to Adeniyi: Adeniji (2004:298) a budget is “a plan quantified in monetary terms, prepared and approved prior to a defined period of time, usually showing planned income to be generated and expenditure to be incurred during that period and the capital to be employed to attain a given objective”. Budgets coordinates the activities of employees and the various units of a firm to achieve congruency of goals. It serves as a guide to activities of an organisation. It ensures that all efforts by individuals and units are geared towards the attainment of the overall corporate objective. This meshing of objectives brings about a boost to the overall corporate performance of the organisation.The corporate performance of a firm determines it’s success and by extension it’s longetivity (survival).