CHAPTER
ONE
1.1
BACKGROUND OF THE STUDY
The fundamental question which should be asked about
any enterprises is “How well is it doing?” ad his can be rightly answered
accessing the extent to which the objectives of the enterprises are achieved.
The major objectives of the enterprises are
achieved, base on profit maximization and improved future profit tend to enhance
growth and survival. The increasing complexity of the business and ever changing condition of the business
environment, social environment technological
and political changes have made companies investors and management to
realize the need for new techniques to protect and improve performance.
To achieve the Afro- mentioned objects it becomes
imperative for management of business organization to develop ways of attaining
them.
The available instrument at Management’s disposal is
the adoption of adequate planning and control. one of the basic device
used in planning and controlling the activities of business
enterprise is by means of financial
standard and management of
budgeting and budgetary control.
To many the terms can not retraining influence on
action service the needs or opportunity which the enterprise would like to service budgeting remains the most
tactical budget is essentially on agenda setting. It is carefully designed,
packaged and aimed at achieving the goals and objective of business organization or individual with the limited resources at
their disposal.
According to fubara( 1988) in his book “ business
management principle and strategies.
He further and described budgeting is a means of utilizing
collective knowledge of an enterprise to prepare a co-ordinate
plan for future activities.
Budgeting control is a techniques that emphasizes
control of plan by companing actual result against target to identify variance
upon which corrective measure should be taken to improve the performance of the
enterprises.
The primary function of business organization is
production of goods and services and
make it available for the consumers when ever is needed. All these
functions are performed in order to achieve the organizations goals which is
profit maximization. Performances are evaluated based on the actual result. To
achieve the organizational objectives there is need for adequate planning and
control, efficient budgeting and effective budgetary control system in business
organization.
1.2
STATEMENT
OF THE PROBLEM
Budgeting and budgetary control is very important in business
organizational due to its
function in relation to planning ,
organize coordinating and controlling functions of management forwards.
Successful realization of the organizational
objective. Performance evaluation in business organization is usually base on
effective decision making and efficient
resources allocation. These have been affected due to the incorporate
of budget and budgetary control.
This improper budgetary control responsible for poor
performance of some business organization most business organization do prepare
budget. Yet there are deviation from such budgets and they fail to
investigate the causes deviation and
thus take appropriate corrective measures to prevent re-occurrence most business organization sues budgeting as
just useful for planning purpose but
refuse to take cognizance of its benefits whom to revise budgets to make it reflect prevailing situation or whom to hold
responsible for budget vacancies.
1.3
AIMS
AND OBJECTIVE OF THE STUDY
The main aim of this research work is to examine
budgeting and budgetary control in business organization in order to see the
extent to which it’s to be applied in management planning and control.
These are some of the aims of the
research work.
i.
To examine the procedure
for drawing up budget in business organization and to know how budget are being
approved implanted, improved and revised.
ii.
To know who there
budgeting and budgetary controls assist the managements of business organization
effective decision making and efficient resources allocation.
iii.
To know whether the use
of budgeting and budgetary control is indispensable to achieve organizational
goals and objective.
iv.
To evaluate performance
by comparing budgetary with actual result of the business stand
v.
To know whether
budgeting and budgetary control serves as a communication tools between the top
management and the low staff.
vi.
To provide a useful l recommendation
on the application of budgeting and
budgetary control as means of improving business performance.
1.4 SIGNIFICANCE OF THE STUDY
Several research work have been carried out on
budget and budgetary control in various business organization like
manufacturing , pharmaceutical and oil industries.
This research work can be said to be a fair work on
the topic. This research will share more light on the efficient resources and
effective decision making in business organization.
This research work can be said to be a fair work on the topic. This research will share
more light on the efficient resources and effective decision – making in business
organization.
It will also help the student to know how relevance
budgeting and budgetary control is to an individual and business organization.
1.4
SCOPE
OF THE STUDY
This research work will examine in details budgeting and budgetary control
with emphasis on how its application
aids in planning and controlling of activities of business organization to enhance or improve performance.
There are different types of banks as a business organization but commercial bank are the
prominent types of business organization because of the n umber size therefore this research
work is limited to commercial bank with Afri Bank Plc as a case study.
1.6 LIMITATION OF THE
STUDY
Firstly, this research has the limitation of financial
problems in the cause of carrying out the study.
Secondly, it was that due to time factor as the research
was carried out along with academic work.
Also, detailed budgeting statement
and the corresponding actual result are not made available by the bank
because of high confidentiality and very competition in the banking industries.
However, it is the researchers believe that the
finding of the research will represent the pictorial of budgeting and budgetary control of the
study.
1.7
RESEARCH HYPOTHESIS
The research shall focus and test the following alternative hypothesis.
The hypothesis is denoted with Ho alternative is
denoted with Hi
i.
Ho: There is no proper budgeting and effective
budgetary in business organization.
ii.
Hi: applications of
budgetary control system do performance of business organization in terms of
objectives realization.
1.8
DEFINITION
OF TERMS
AND CONCEPTS
Budget is a document containing words and figures which proposes expenditure
for certain items and purpose.
Budget is a document or a collection of document
that refers to the financial condition of an organization.
Budget is also merlya plan expressed in quantitative
terms.
TERMS OF BUDGET
1.
Budget cycle: Public budgeting
system which are devise for selecting society ends and consist of numerous participants
2.
Budget preparation and
submission: phase of the budget is carried out by the executive aim of the
government.
3.
Budget authorization:
Having compiled the various department estimates, the draft budget is new to be
sent to the legislatures for authorization
4.
Executive of the
budget: Budget execution commences the
moment the presidents signs the general warrant incur expenditure execution
invest the transaction of financial outlays approved in the budget plants of
action.
5.
Line item budgeting: Is
the tradition budgeting it is oldest
types of budget.
6.
Performance budget: was
aimed at enhancing effectiveness and improving efficiency in public budgeting.
7.
Planning programming
budgeting system: Approach to budgetary
decision making is a system
approach that attempts to influence the
choice.
SOME BUDGET CONCEPTS
i.
Recurrent revenue: This
include the year to year revenue of
government from sources like taxes fines free specific charges profit.
ii.
Capital receipt : These are in form of loan and
graint
iii.
Capital expenditure : This involves expenditure on productive
economic activities i.e on agricultural
road , Hospital and university etc.