Research Key

ASSESSING THE EFFECT OF BUDGETARY CONTROL ON THE REALIZATION OF COUNCIL PROJECTS

Project Details

Department
ACCOUNTING
Project ID
ACC352
Price
5000XAF
International: $20
No of pages
70
Instruments/method
QUANTITATIVE
Reference
YES
Analytical tool
DESCRIPTIVE
Format
 MS Word & PDF
Chapters
1-5

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ABSTRACT

Budgeting involves the establishment of predetermined goals, the reporting of actual performance results and evaluation of performance in terms of the predetermined goals. Budgetary control systems are universal and have been considered an essential tool for financial planning. The purpose of budgetary control is to provide a forecast of revenues and expenditures this is achieved through constructing a model of how our business might perform financially speaking if certain strategies, events and plans are carried out. Most firms use budget control as the primary means of corporate internal controls, it provides a comprehensive management platform for efficient and effective allocation of resources. Budgetary controls enable the management team to make plans for the future through implementing those plans and monitoring activities to see whether they conform to the plan, effective implementation of budgetary

control is an important guarantee for the effective implementation of budget in the organization. This study examined the budgetary control in council organizations and its effects on their realization. The research target population consisted of the staffs of the Buea municipal council. Thirty staffs of in the organization were selected using convenience judgmental sampling technique. A descriptive survey (questionnaires) was used in the data collection. The statistical package for social sciences version 25 was used to analyze the data using descriptive statistics,
including means and standard deviation. The relationship between budgetary controls
and realization of council projects was analyzed using correlation and regression analysis.
The research findings established that there is a weak positive effect of budgetary
control on realization of council projects measured by R square at 14.3%. The research recommends that employees need to be sensitized on budgetary controls and the effect on performance of the organization. It also recommends that other factors that influence performance (realization) apart from budgetary controls should be investigated by organizations. It also suggests that further research should be done on the same area but a larger sample should be used.

KEYWORDS: Budgetary control, planning, monitoring and control, evaluation and realization

 

CHAPTER ONE
INTRODUCTION

  • Background of the Study

In the business world today, organizations have developed a variety of processes and
techniques designed to contribute to the planning and control functions. One of the most important and widely used of these processes is budgeting. Budgeting involves the establishment of predetermined goals, the reporting of actual performance results and evaluation of performance in terms of the predetermined goals. Budgetary control systems are universal and have been considered an essential tool for financial planning. The purpose of budgetary control is to provide a forecast of revenues and expenditures this is achieved through constructing a model of how our business might perform financially speaking if certain strategies, events and plans are carried out (Churchill, 2001).

Most firms use budget control as the primary means of corporate internal controls, it provides a comprehensive management platform for efficient and effective allocation of resources. Budgetary controls enable the management team to make plans for the future through implementing those plans and monitoring activities to see whether they conform to the plan, effective implementation of budgetary control is an important guarantee for the effective implementation of budget in the organization (Carr and Joseph, 2000).

Most organizations have adopted broad budgetary control that ensures that the entire budget system is a control system, which it is the formation of a prior, during and after the whole process of control system through the budget preparation, budget evaluation, reward and punishment by monitoring of budget execution. With a narrow budgetary control, an organization can prepare a good budget as a basis for performance management and standards on a regular basis in order to compare actual performance with the budget to analyze differences in the results and take corrective measures, which mainly involves the process of budget implementation, evaluation and control (Hokal and Shaw, 2002).

Companies are created into environment that is riddled with many restrictions, scarcity of funds economic, political and social instabilities and the general scarcity of resources.
The internal control method that will take care of achieving set objectives in the midst of these environmental variables was the brain child of budgetary control.

The budgetary control system (as an internal control method) originated in industries to act as a check on the resources employed in the production of goods and services.

These resources have become increasingly unpredictable over the years and have posed a great deal of challenges to corporate managers. Budgeting control therefore came up as a measure of performance of the budget in achieving the goals of management. Put in another form, budgetary control is a planning process which compares actual budget with expected budget.
According to Scott (1970), the term budgetary control is applied to the system of management control and accounting in which all operations are forecast and so far as possible planned ahead and the actual results compared with the forecast and planned ones. The plan of operations is the best that can be devised in the particular circumstances, and reasons and remedies in the actual results. For this to form an effective control in the hands of the management the different figures should as far as possible be forecast by the persons responsible for the achievement. All executives should have planned conditions to aim at and improved upon and the degree to which this is being attained should be regularly brought to their notice.

Taylor and Sharing (1983), wrote that budgetary control working side by side with the accounting system is primarily forward looking, and aims to provide all ranks of management with all instrument for recording plans measuring performance in relation to those plans. It represents therefore, an extension of the managerial function and has been described as the long arm of management.

Budgetary control is the process of developing a spending plan and periodically comparing actual expenditures against that plan to determine if it or the spending patterns need adjustment to stay on track. This process is necessary to control spending and meet various financial goals. Organizations rely heavily on budgetary control to manage their spending activities, and this technique is also used by the public and the private sector as well as private individuals, such as heads of household who want to make sure they live within their means (Dunk, 2009).
Budgetary control is a system of management control in which the actual income and spending are compared with planned income and spending, so that the firm can make decisions if plans are being followed and if those plans need to be changed in order to make a profit. Budgetary control is the one of best technique of controlling, management and finance in which every department’s budget is made with estimated data. Then, the management conducts a comparative study of the estimated data with original data and fix the responsibility of employee if variance will not be favorable. Organizations can use budgetary control in forecasting techniques in order to make
plan and budget for the future (Epstein and McFarlan, 2011).

The management of the organizations implements budgetary control to prevent losses resulting from theft, fraud and technological malfunction. These instructions also help management to ensure that expenses remain within budgetary limits. The importance of budgetary control is that it can be implemented by three departments in an organization to enhance effective realization. These departments are accounting department, statistical department and management department. Accounting department provides old data. Statistical department provides the tools and techniques of forecasting like probability, time series other sampling methods. Management department uses both department services to estimate the expenditures and revenue of business under the normal conditions of business (Suberu, 2010).

It’s therefore worthy of note that budgeting and budgetary control is essentially concerned with planning. This involves taking into account the various limiting factors that could possibly inhibit the accomplishment of goals. In the course of executing the plans, these factors are continually being watched for any possible abnormality and where any is encountered; there might be deviations from plans if prevailing circumstances require it. At the end, comparisons will be made between conditions encountered with those expected. The experience gained will be used in further planning.

However, to facilitate effective implementation of budgetary control, the management should
define proper budgetary control processes, this is achieved through planning, monitoring and control and evaluation (Carr and Joseph, 2000). Hence, the reason for this research work is to evaluate the effect of budgetary control on the realization of council projects.

  • Problem Statement

Accounting Project Topics and Materials

 

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