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THE IMPACT OF BUDGET AND BUDGETARY
CONTROL IN TERTIARY INSTITUTIONS
(A CASE STUDY OF IMO STATE UNIVERSITY)
TABLE OF CONTENTS
Title page
Certificate page
Dedication
Acknowledgment
Abstract
Table of content
CHAPTER ONE
1.0 Introduction
1.1 Statement of the problems
1.2 Purpose of the study
1.3
Objective of the study
1.4 Research question
1.5 Scope of the study
1.6 Assumptions of the study
1.7 Delimitations of the study
1.8 Definition of terms
CHAPTER TWO
2.0 Literature review
2.1 Historical background
2.2 The concept of budget
2.3 Development in budget control
2.4 Definition of budget & budgeting control
2.5 Objectives and purpose of budgeting
2.6 Types of budgets
2.7 How budgets are prepared / administration of
budgeting control
2.8 Human / behavioral aspect of budgetary control as a
control measure
2.9 Problems in budgeting / management by exceptions
2.10 Budgeting system in non profit seeking organization
2.11 Budget and budgetary control as a control mechanism
2.12 Budget and budgetary control in tertiary institution in Imo
state
2.13
Budgetary as a basis for comparison and enhancement
of performance
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2.14 Summary of the chapter
CHAPTER THREE
3.0
Research methodology
3.1 The population of the study
3.2 Methods of sample selection
3.3 The methods of data collection
3.4 The method of data analysis
CHAPTER FOUR
4.0 Presentation and Analysis of data
4.1 Introduction
4.2 Data presentation, classification & calculation
4.3 Analysis of data according to research hypothesis
4.4
Analysis of data according to research
CHAPTER FIVE
5.0 Summary, Conclusion, Recommendation
5.1 Summary
5.2 Conclusion
5.3 Area of further researcher
5.4 Recommendation
Bibliography
Appendix
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CHAPTER ONE
1.0 INTRODUCTION
Budgeting is essentially concerned with planning. According to
Hausen .O. (1990). Dr. Jones discovered, failure of plan, either
formally or informally, can lead to financial disaster. Careful
planning is vital to the health of any organization. If that is the
case, what role does budgeting play in planning and control.
Simply put, plans identify objectives and action needed to
achieve them.
Budgets are the actions needed to achieve them. Budgets are
the quantitative expression of these plans. States in either
physical or financial terms or both. Thus a budget is a method
for translating terms. As a plan of action budgets can be used
to control by comparing actual outcome as they happen with
the planned outcomes.
Furthermore, according to Professor Anya O. Anya April 28th
2006, guarding newspaper, the universities and the challenge
of a knowledge is base on the economy (2) the said “we have
seen that economic and human development indices presently
confirm that Nigeria is a very poor country where otherwise
immense resources and potentials have not been realized as a
result squander and poor management.
We have dedicated from the above points that planning
budgeting and control is very essential in all sphere of
endeavor be it public or private sectors. In other words, the
necessary uncertainty and complexity in the socio-political
economic and public sectors of Nigeria society have been made
it very difficult for co-operate entities irrespective of the nature
of their business (profit oriented or service oriented) coupled
with the changes in social, economic, technological and political
system to achieve optimal result without setting proper
planned targets. With the trend of failure recently witnessed in
the financial sector, arising from factors both internal external
organizations and their management should ensure that they
had decision about their future.
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The concept of economic scarcity of resources implies that
economic units including tertiary institutions, parastatals etc
must stick to action satisfaction. There may be no reason for
government to establishment which the management are no
strived
to
achieve
viability
for
optimal
result
such
establishments should be deliberately abandoned in order to
pave way for release for the pursuit of other more economically
viable investments.
We should realized that abandonment is a key to innovation
but because, it frees the necessary measures and also it
stimulates the search for the new ones that will replace the old
ones.
However, it is for the sake of avoiding such abandonment that
the researcher wanted to find out the impact of budget and
budgetary control as technique to managing the business
dynamics to evolve long term survival strategies of tertiary
institutions.
Budget and budgetary control are two accounting techniques
which the bursar in any tertiary institution can adopt in order
to achieve it task of planning, co-coordinating, directing and
control. Nevertheless, management is about decision-making
co-ordination control. The strategies for realizing the set out
goals are many but, the collectively have tools in the decision
making process of management, that is the accomplishment of
goals by utilizing the available resource. It can be said that
poor to achieve optimal result is the need for predetermined
course of action taken to accomplish set goals.
At macro level, the state represented by those possession of
authority
often
determine
the
public goals and
allocate
available resources for their accomplishment where they are
elected as in the case of a democratic setting, the process of
selling target is participatory. But where the military is in
control, the political interest of the ruling class determines the
thrust of government policies.
In essence, a plan which is one of the features of budget a
comprehensive
document
containing
desirable
set
goals,
chosen course of action methods of accomplishing them as all
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as their financial implications. Planning is mainly concerned
with the feature and is defined as the establishment of
objectives, the formulation, evaluation and election of the
policies strategies, tactics and action enquired to achieve these
objectives, it can be described as he conscious government
effort to influence, direct and income cases even control
changes in the principal economic variables like educational
investment of a country or reign over cause of time. Control on
the hand, follows closely after action has been taken. It is a
process whereby actual performance is compared with targeted
/ budgeted performance. Budgeting control is the technique
used for his purpose and when it is a combined with budget is
becomes part of responsibility accounting.
The aim of budgetary control is to provide a formal a basis for
maintaining the progress of the organization as a whole and of
its component parts towards the achievement of the objective
specified in the panned budget.
Budget enjoy a wider application and virtually human activities
require some elements or setting targets through budget even
through that alone does not guarantees success. They can be
used in our private homes where a civil servant who earns a
monthly
income
will
map
out
his
objectives
and
plan
effectively, with that; he has to achieve those of his objectives.
Both profit oriented and non-profit oriented organizations,
institution of higher learning inductive apply budget in their
activities.
The problem of hollow effects in the implementation, which
lead to sentimental attachment which may lead to over
commitment of funds to projects, may affect performance.
Academic institutions function as a system in which all its units
should
be
intimately
unturned
ass
stimulated
in
the
government financial institutions and financial regulation to
avoid in dysfunctional situation that will produce untended
consequences.
It is the view of the researchers to highlight the impact which
budget and budgetary control as a management technique
could have in the budgetary performance of our academic
tertiary institutions.
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1.1 STATEMENT OF THE PROBLEM
According to Cohn Drury .A. (1987). He stated that the actions
that follow managerial decisions normally involve several
aspects of the business. When the fail to do this, have is a
danger that managers may make decision that they believe are
in the best interest of the organization when in fact best
interest of the organization when in fact taken together, they
are not.
Tertiary institution is a nonprofit making organization in most
cases pay little or no attention towards the achievement of any
set goal. Give to the fact that they not for profit making
purposes, for proper, planning, budgeting and effective control
system become an illusion. This has resulted into financial crisis
which
culminated
into
inadequate
provision
of
learning
infrastructural facilities, delayed / non-payment of salaries,
strike actions and lack of commitment to work among staff
members.
These
institutions
also
cannot
make—up
even
with
the
subventions given to them by the government. This has been
attributed to various factors prominent among which is the
ineffectiveness of budget and budgetary control system in
these institutions.
This research work is therefore designed to ascertain the
impact of the budget and budgetary control in tertiary
institutions through a case study of Imo state university.
1.2
PURPOSE OF THE STUDY
Budget and budgetary control is a tool for management
control. As with any other aspect of management, the budget
process and budgetary control may or may prove successful in
assisting government or individuals to achieve its goals. The
use of budget is not a cure all for all organizational problems. It
is the purpose of this research work to address the following:
1)
To avail the application of budget and budgetary control
as a management technique in tertiary institution
2)
To determine the extent to which ill-defined goal would
be a conduit pipe for siphoning government resources
3)
To find out whether budget and budgetary control serve
as a control mechanism
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4)
To find out what it takes for budgetary to be effective in
management in tertiary institution
5)
1.3
To determine the extent to which budgetary provides.
OBJECTIVES OF THE STUDY
Budget and budgetary control, is intended to serve the
management as a constant reminder of the plan they have
adopted. As such, it provides a blue print they can consult from
time to time as they work to implement the sense, it serves as
a set of general instructions of the department / management
and divisional management reflecting them the actions they
have agreed to take and to results they have agreed to strive
for. In summary of the following, budget and budgetary control
has the below mentioned objective:
1)
To force management to anal life of the tertiary institution
activities critically and creatively
2)
To direct some of management attention from the present
to the future
3)
To
enable
management
to
anticipate
problems
opportunities in time to deal with them effectively
or
4)
To reinforce the management motivation to work to
achieve the tertiary institution goals and objectives
5)
To give the management a continuing reminder of the
actions have decided on
6)
1.4
To provide a reference point for control reporting
RESEARCH QUESTION
He following research question have been formulated to act as
a framework for this study, so as to enable the researchers find
out the impact of budget and budgeting control in the
performance of tertiary institutions.
1)
Can ill-defined goal be use as conduct pipe for siphoning
government resources?
2)
Does budget and budgeting control serve as a control
mechanism?
3)
Does
budgeting
require
active
participation
and
management commitment?
4)
Does
budgeting
provide
basis
enhancement of performance
for
comparison
and
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1.5 SCOPE OF THE STUDY
This work will be carried out through the study of impact of
budget and budgeting control in tertiary institution, Imo state
university. Furthermore, the research will make use of the
school library and also visit mar by institution.
The scope of budget and budgetary control is very diverse and
broad. Any of budgets which enable an organization to be
conducted
more
efficiently
is
regarded
as
budget
and
budgetary control. Budget is also psychological device to obtain
the result or the fix the responsibility and constantly keep
conscious check on the level of performance which co-ordinates
all the achievement of the tertiary institution.
a)
The master budgets: This is the budget which projects
the activities of the organization during the budget period.
The
master
budget
outlines
the
tertiary
institution
objective and steps for achieving tertiary institution
objective and steps for achieving them. It consists of at
last three types of budgets (the subsidiary budget to the
master budget).
Operating budgets: It usually consists of two parts: A
programme
budget
and
a
responsibility
budget.
The
programme that the tertiary institution plans to undertake
during the year.
b)
The cash budget: This is simply a financial budget
detailing the planned cash receipt and payments. It is one
of the most important and one of the last to be prepared.
1.6
ASSUMPTIONS OF THE STUDY
Budgeting is about making plans for the future, implement
more plan and monitoring activities to see the whether they
conform
to
the
plans
budgetary
control
in
its
totality,
organizations budget for a variety of reasons, some of which
can be continued as follows:
1)
The research will provide the needs of institutions of
higher learning in Imo state university in particular, and
Nigeria in general with the knowledge of how to apply
budget and budgeting control as a management technique
in tertiary institutions
2)
The research will also enable government, the chief
financer of education to realize that ill-defined goal by
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tertiary institution could be a conduct pipe for siphoning
government resources
3)
The research work will educate management (principle
officers and their sub-ordinate ) on how budget and
budgetary control serve as a tool of control
4)
A budget and budgetary control assists delegated of
authority and is a powerful delegation of authority in
tertiary institution
5)
Furthermore, the research work as well will enable
management to realize that there is need for active
participation
in
budgetary
in
budgeting
in
tertiary
institution
1.7 DELIMITATION OF THE STUDY
Due to time and
financial
constraint that the research
encountered in the process or carrying on this project and also
it is very difficult for must staff to release official information to
researchers.
The study was also limited as a result o inaccessibility of
research materials.
However, the control system in non-profit seeking organization
are
never
organizations
as
highly
because
developed
of
under
as
in
profit
organizational
oriented
goals,
dominance by professionals and more difficult measurement
standards. Budget will be in effective if it is unnecessarily
detailed and complicated.
1.8 DEFINITION OF TERMS
The following terms have been considered necessary to be
defined in order to explain their meaning with the content of
this work.
Goal congruence: This means that, the aims and objectives of
all the workers in an organization should be focus towards
achieving the aims and objectives of the organization.
Tertiary institution: The tertiary institution includes all
federal and state government owned universities, polytechnic
and colleges of education.
Managerial effort: This is the physical and mental exertion
made by mangers towards set goals, managerial function like
planning, organizing, supervision, co-coordinating etc. these
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tools and techniques are applied by managers of organization
both private and public on managerial effort to solve their
business decision problems.
Responsibility accounting: This is based on the recognition
of individual areas of responsibility as specified in a firms
structure. This implied that cost and revenue are controlled as
applicable by using responsibility accounting.
Management: This is also a series of activities that a firm
engages it managers to guide, plans and equally handle
responsibilities and changes that will be ahead.
Budget: A budget can be defined as a quantitative expression
of the operational plans for an organization for a future
according period.
BUDGETARY CONTROL: It has been severally defined. J.
Batty says “budgetary control in its complete form involves a
predetermined plan in financial terms, to cover all phase of
business activities and the operation of that plan in such a way
that anticipated profit is, as near as possible, achieved.
TEST OF HYPOTHESIS
Ho: The University does not consider budgeting and
budgetary control useful as a management tools.
Hi: The University considers budgeting and budgetary control
as useful management tools.
Ho: The University does not prepare its project for a
specific period of time.
Hi: The University prepares its budgets for a specific
period
of time.
Ho:
The Imo state university budget does not calls for
appropriate authorization and approval.
Hi:
The Imo state university budget calls for appropriate
authorization and approval.