The efficiency and effectiveness of
the operations of a business depends on the control available to managements in
almost every business organization, there are a number of activities going on
at the same time such as producing purchasing, distributing, selling and
financing a product. These are
interrelated in such a way that they affected the attainment of the
The Institute of Cost and Management
Accountant (ICMA) defined budget as a financial or quantitative statement
prepared and approved prior to defined period of time of the policy to be
pursued during the period for the purpose of attaining a given objectives. It
may include income, expenditure and the employment of capital.
Therefore, in order to achieve these
objectives or goals, the organization must economize resources and discover the
means of achieving these goals. These
goals can only be realized when the properly planned use of available resources
are controlled and co-ordinated effectively.
Thus a system of managing a business by making forecasts of the different
activities and applying a financial value to each forecast becomes
imperative. These forecasts are guided
by the formulation and adoption of planned systems such as techniques in
budgeting, variance analysis, etc.
Tubbi, J. A. 1982 defined budgetary control
as the establishment of departmental budgets relating the responsibilities of
the executives to the requirement of a policy, and the continuous comparison of
actual with budgeted results either to secure by individual action the
objective of that policy or to provide a firm basis for its revision.
It is therefore, germane to say that
the level of importance that is attached to this plan and effort made in
controlling the variance differ in organizations. Once the goals are set, which must be based on
the detailed analysis of feasibility within the content of the political and
social value then the tactical plans will enable it to strive towards its
Often than not when these plans are
put into operation, conditions prevail which tends to cause deviation from the
plan and corrective measures are always taken to steer the business back on the
right track. The process already
mentioned as it is applied entails budget and its control. And to lend credence to goal congruence
suitable techniques should be applied to specific areas that need special
attention hence the measurement of budgeted with actual to arrive at the
variance cannot be over-emphasized. A
business is said to be on the right tract if the outcome of the budgeted
estimate is favourable as against the actual.
The little that is said concerning this project has not encompassed all
avenues in which the subject can aid management decision, rather it should be
seen as a guide for people in business.
OBJECTIVE OF THE STUDY:
The primary purpose of this study is
four fold. These are:
find out the importance of budgeting and budgetary controls in government
parastatals, which has the maximization of profit as its principle business
determine if there is a connection between the type of budget implemented and
their actual performance.
determine whether or not budgetary controls as a management tool contributes to
the improvement of management efficiency and high productivity.
find out the use of budgetary control as an appraisal parameter for assessing
managers’ budget or cost centers.
SIGNIFICANCE OF THE STUDY:
This report is significant in that it
(a) Determine whether budgeting and budgetary
controls play any significant role towards ensuring profitability and efficient
rendering of service.
(b) Evaluate the role played by top management
in the budgetary process and whether they ensure the act to budget.
(c) Determine the roles of budget as a tool
for effective and efficient management of resources.
This study will be a guide to
scholars; researchers or writers who may wish to carry further study on budget
and its control apparatus.
STATEMENT OF THE PROBLEM:
The growth of any business hinges, or
better put, rests squarely units budgetary control system or techniques – hence
they are considered as a vital tools in any business situation. This study then is aimed at assessing and
evaluating the extent to which budgetary control has been a tool for the growth
and goal realization of any organization.
Lack of budgets in planning and
control has resulted in the indiscriminate use of fund meant for more viable
activities. Again, the inability of many
companies to plan and accomplished budget goals is traceable to their inability
to apply controls in their budget system.
Budgetary goals are not realized also
due to low level of understanding of the budget system by middle and low level
management staff. Other problems are
shortage of stocks and shutdown. These
and many more are some of the problem of lack of budgetary control.
control is an essential tool in management decision-making.
HO: Budgetary control is not an essential tool in
H1: Budgetary is used as bases for cost control.
HO: Budgetary is not used as bases for cost
H1: Budgets are effective means of planning
HO: Budgets are not effective means of planning
SCOPE OF LIMITATION OF STUDY:
This study is aimed at finding out
the impact of budget and budgetary control in
Enugu State Housing Development Authority. The limiting factors is that of availability
of data which might be difficult to obtain following the trend of the attitude
of Nigerians with regards to giving out information. Time constraint is also a limiting factor in
undertaking this study. The available
time and the short period of study made it difficult for the researcher to
carry out a wider and more thorough work on the issue, and at the same time
carry out academic activities.
Also literature on the topic as it
relates to government parastatals is very few.
DEFINITION OF TERMS:
BUDGET: Simply put budget means estimate of income
and expenditure, which are planned by an organization for a specified future
period. In Britain, it means the annual
statement made to the House of commons by the chancellor of the Exchequer,
giving details of the governments financial plans for the coming year.
BUDGET: In a short term, financial plan which guide
managers in achieving the objectives of a firm.
A budget may be defined as a comprehensive and coordinated plan,
expressed in financial terms, for the operations and resources of an enterprise
for some specific period in future.
Alternatively, a budget is a formal expression of managerial plans in
quantitative and financial terms encompassing different phases of business
operations, and aimed at assisting management in attaining the organizational
BUDGETARY CONTROL: This means a system of managing a business by
making forecasts of the different activities and applying of financial value to
each forecast. Actual performance is
subsequently with the estimates.
VARIANCES: This is the difference between the estimates
and actual result.