BUDGET AND BUDGETARY CONTROL SYSTEM AS A TOOL FOR EFFECTIVE DECISION AND PLANNING A CASE STUDY OF ETERNIT LTD, SAPELE
Budget and budgetary control system as a tool for effective
decision and planning in Nigeria recently starting receiving immense attention
in most national dallies, since it was considered as one variable tool in
improvement of a national economy. There has been some contribution and
assertions in some parlance that for a firm or an organisation to increase in
their capital income, it is imperative that individual or the organisation
should maintain a budget and budgetary plans system. It was against this
background that the Federal Government of Nigeria through the apex bank (CBN)
constitutes the bankers committees to give the anticipated financial assistance
to individual and organisation with sound business proposal, the formation of
budget and budgetary control. This formation of budget and budgetary control
was a modus operandi by Federal Government to improve the national economy
through the encouragement of indigenous technology. The Federal Government was
saddled with the responsibility of financing the budget and budgetary control
system with low risk burden and favourable profit and returns
TABLE OF CONTENTS
Table of Contents vii
CHAPTER ONE – Introduction
Background to the Study 1
Statement of the Problem 2
Objective of the Study 3
Significance of the Study 4
Research Question 4
Scope of the Study 5
Limitation of the Study 5
Definition of Terms 6
CHAPTER TWO – Literature Review
Budget Defined 8
Administration of the Headquarter 10
Budgetary Control 12
Organisation for Budgetary Control 16
The Essential and Requirement of Budgetary Control 17
Type of Budget 18
CHAPTER THREE – Research Methodology
Research Design 22
Population of the study 22
Sample Size 22
Sampling Technique 23
Research Instrument 23
Validity of Instrument 23
Reliability of the Instrument 23
Method of Data Collection 24
Method of Data Analysis 25
CHAPTER FOUR – Data Presentation and Analysis and
4.1 Introduction 26
4.2. Presentation of Senior Staff Questionnaire 26
CHAPTER FIVE – Summary, Conclusion and Recommendation
Suggestions for Further Studies 38
Appendix I 40
It was due to the participation of the federal government
that led to the establishment of various housing operation in Nigeria.
Government participation in various housing corporation was due to take of
adequate, guidelines and unnecessary high expectation of both public and the
government. However, this housing corporation despite the clamor for housing
for all vision 2010” (Below year 2010) by government has not been able to meet
the high demand of housing in the federation.
The function of the company includes, to acquire, develop,
hold, manage, sell lease or led to persons or companies, land, landed
properties, residential, houses, officer and industrial buildings within and
outside the state.
However, the following are the activities carried out by the
Acquisition and development of land or states.
Acquisition, construction and maintenance of repairs of any
structure, plant or machinery necessary or desirable for the provision of
electricity or connection with any building owned, constructed or managed by
the company. Establishment and over securing of any subside ring that may carry
out any special programmed building project or needing specialized services in
Mortgaging and changing any of the real estate properties
acquired and to issued out per or at perineum or discount mortgage debenture
redeemable or payment or collectable to further secure any securities of the
company by trust and deed or other assurance of road, scheme. Provision and
maintenance of road, footway, bridges, drain, water courses, open space public
amenities for or in connection with the housing estate owned.
Statement of the Problem
Shelter amongst the three basic need of human beings, world
over, remain a crucial need for the security and protection of life from
external of internal attacks of all sort.
More so, the need to own and the provision of b=human houses
to its citizens is a great challenges both to the individuals and government of
However, the building industry or sector is basically that
of services whether state or federal housing authority which consequently
requires relevant current and effective budgetary. Control strategies that
would sustain the surenial of the industry as well as making it profitable.
However, the DDPA as a state government owned aim is focused to make sure the
problem associated with housing by the people of delta state totally reduce,
managed and it possible eradicated.
The firm is faced with problem of improper management and
lack of proper financial which has left its official to retort to corruption
with nonstandard illegal structure taking away that of its capital “Asaba” and
other major towns in the State.
Objectives of the Study
The aims and objective of the researcher on the study is to
carry out an investigation and to examine the problem of budgetary deviation in
Eternit ltd Sapele with the view to see how the adoption of budgetary control,
contribute to its growth thus, the aims and objective of study are;
To examine the problem of budgetary deviation in the
organization with the view to see how the adoption of budgetary control
contribute to its growth.
To study budgeting and budgetary control and the adoption in
government organization and parastals with particular reference to DDPA with
the aim of pointing out the factors militating against the growth and
development of the company.
To show how budget and budgeting control techniques are use
as tools for management efficiency.
To show how budget and budgetary control techniques are used
as tools for management efficiency.
Significance of the Study
Budget and budgetary control techniques are important aspect
of any business as it guarantees that in the event of financial losses in
expenditure over estimated revenue, the need for budgetary control devices play
a significant role to enable the firm meet up with it services operations by
the proper identification of the bottlenecks that can march the survival of
However, the identification of budget and budgetary control
problems that have stood against the progress of the “DDPA” with reference to
the building sector” in Nigeria will serve as a to all interested parties. The
outcome of this work shall be beneficial to the public as it shall be used as a
reference point and source of information for others who will have need for
further studies in other area that may not be covered by this study.
What advice would you wish to give the organization for the
preparation, monitory and execution of budge and budgetary control?
Does your organization operate a budget any control system?
What is your assessment of the operation of the various
types of budgets.
Is your organization involve in budget preparation?
Scope/Delimitation of the Study
This has to do with Eternit Ltd Sapele and how budgets and
budgetary control system has make the firm in spite of its short coming to
maintain a standard and keep it growing against the imbalance and bottleneck
which has crumbled most housing corporation today in Nigeria.
However, its noted, that, many firm has failed in their
operation due to the fact that, motive are always centered on the profit
maximization of its products without comparing cost sales of the previous year
Limitation of the Study
The research work is limited to Sapele. The company was
selected for this work because it is the leading indigenous company in the
stated ranked amongst the top five (5).
Time, finance and lack of adequate information were also
limiting factors that did not make study more in-depth and wide it’s also a
notable fact that the industry (building) in Nigeria is not given the proper
relevance it deserves due to the prevailing harsh economy conditions.
Definition of Terms
Client: Is the building owner and be undertakes to finance
Real Estate: All land together with improvement on land in
form of residential properties, roads and different types of civil Engineering
constructions like bridges, dam etc attached to land such as plants machinery
Management: Achieving slated objectives usually to produce
good s and services by directing human and other resources toward ends
System: An organized unitary whole, composed of two or more
interdependent part, components or subsystem and delineated by identifiable
boundaries from its environment supra system.
Maintenance: Work undertaken in order to keep restore or
improve every facilities.
Committee: A group of people formally appointed and consider
matters laid down by slated term of references.
P.E.R: Performance evaluation report
HOD’s: Heads of Departments
Housing Scheme: A programme set up to provide accommodation
for people at no cost or lower cost with a view of not making profit.
Housing estate: An area in which a number of houses for living
in, are planned and built at the same –time.
I.C.M.A.: Institute of cost and management accounting.
S.A.S.S: Site and services scheme
Renovate: Restore old building to good condition
D.D.P.A.: Delta State Development and property Authority.
D.D. P.A.: Delta State Development and Property Authority.
S.B.U.: Strategic business units.
REVIEW OF RELATED LITERATURE
In this chapter, the researcher to look into, or review the
related literature of relevance to the subject matter, however, to allow the
researcher to have a comprehensive study, the chapter has been into different
related to the subject matter.
A budget is simply a plan to future activity necessary to
achieve specific goals or objective, usually the plan is qualified in monetary
term but not always, it provides a standard for comparison with the results
According to Okwelum, Onyema Chukudi (2012) Fundamental of
business law defined budget as the qualification of plan of action purposed
towards some future objective.
According to Agbawe and Eloho (2011) defines budget as
qualities of expectation regarding future revenue, cash flow, expenditure and
financial outlay supported by the various plan of actions which service as the
planning and control of resource and operations of government establishments
Also, according to Okpamen P.E. (2002) business finance;
defines budget as the coordination and implementation of such action which
measures appropriately the financial feasibility or commercial viability of a
plan and hence whether the plan has any economic scene, Davidson in his book
“Modern accounting techniques, sees budget “as a coordinated program or plan of
operation shred into responsibility areas, indicating amounts expected to be
required for specific purpose, or received from responsible management.
Analysis of the above definitions reveals the following
essentials of a budgeted. A budget is a monetary and/or quantization statement.
A budget is prepared prior to a defined period of time. It
is prepared for the definite future period. It specifies that policy to be
followed to attain a given objective, which must be laid before the budget is
Budget, therefore is a plan which has been carefully
prepared for all phases of operation for a business in a definite future period
at time. In fact, one can say that without a budget a business may wonder
aimlessly. It may never go anywhere, but with a budget, a business may reached
its planned destination, but the exercise of budgetary control will not be
deviation from the original plan and thus provide the opportunity for necessary
From this chart it is quite obvious that the heads of
division are responsible to general manager who is the brief executive of the
authority. These Divisions are the administration general and legal division,
works services division, finance and supplies division and estate services
division, there are also unit and the internal audit unit.
Administration of the Headquarter
The headquarters is originated and administrated under the
Administration, General and Legal Division
This is headed by the secretary to the authority, who is
responsible to the chief executive for execution and implementation of polices
and boards division on matters in respect to function like recruitment,
selection promotion and administration of wages and salaries economic in good
time, that is when the authority is in good time, that is when the authority is
in good financial position, vacancies will be filled and in bad time the
strictest economy will be applied.
Legal: By legal factor, the secretary with the advice from
the legal officer sees that the authority does not do anything against sues. He
makes sure that no employee is unduly sacked. The implementation of law is also
part of his schedule duties.
Social factor: He sees that welfare of the authority. He
makes sure that every staffs get his/her due benefit.
Work / services and supplies division: This division
represents the authority in all aspect of architectural works.
Accounts and finance division; This division is currently
headed by deputy chief accountant (A professional accountant i.e. ACA and FCA).
The division is responsible for the payment of wages /and salaries. Settlement
of cleans and receipt of monies, it duties also included dealing with other
financial institution for the authority, both for paying and receiving monies,
seeing that the financial affairs of the authority is property managed and of
course in a systematic manner to avoid and detect fraud.
Estate services division: This division is headed by the
deputy principle estate manager who also acts of the chief executive of the
authority. This division is responsible for the maintenance of all estate and
in charged with the service of mortgage section of the authority including the
Authority registries: This is the first and last place of
call of call official’s letters (non-confidential) in and outside the
authority. These letters are first are first filled and munity to the schedule
officer by office in charge of the register, which rank fall within the bracket
of level 06 to 08 his or her assistance confidential registries: this
registries handles all the confidential and classified documents, annual
reports progress report promotions advancement and also demotion in rank.
Mortgage registry: This registry is under the Estates
services division and had some dealings with the ministry of land and housing.
It also has connection within the state deeds registry for registration of such
document and finally with the ministry of finance who collect source amount of
money before the deed document is finally executed.
Land registry: This division is responsible for all lands
matters in the authority.