AN APPRAISAL OF BUDGETING AND BUDGETARY CONTROL AS A TOOL FOR FINANCIAL PLANNING AND CONTROL
|BANKING AND FINANCE|
No of pages
|MS Word & PDF|
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1.1 BACKGROUND TO THE STUDY
Budgeting has become one of the indispensable tools in modern day management (for both profit and non-profit making organizations).
This is because budget and budgetary control, both at management and operational level looks at the future and lays down what has to be achieved.
Budgetary control checks whether or not plans are realized and puts corrective measures into effect where deviations or shortfall is occurring.
In view of above blucher and Chan (1999), believed that a good management implements planned operations to attain the target results.
Planning is a process of charting the future course to attain goals, recognize opportunities and minimize the adverse effects of uncertain and unavoidable events.
Budget however, is one of the tools of planning used by many organization, profit or non- profit, large or small, service or manufacturing.
However, budgeting at the early stage of its development was concerned with preparing and presenting credible information to legitimize accountability and to permi correct performance evaluation and consequently rewards.
Over the year, the functions and focus of budgeting has shifted considerably and business organizations become more complex and their environment becomes dynamic coupled with the emergence trend, the term budget has been differently defined and examined by various scholars in several ways.
Budgetary control is part of the overall system of responsibility accounting within an organization.
It is the system that provides a basis for maintaining the progress of the organization as a whole and of its components parts, toward the achievement of the objectives specified in the budgets.
This study aim at examining the impact of budgeting and budgetary control on the effective financial planning and control and the overall performance of a tertiary educational institution.
1.2 STATEMENT OF THE PROBLEM
Following the uncertainties prevailing in the business environment today, managers must prepare to compete favourably under these rapidly shifting conditions.
In order to survive the environmental complexities, managers of organizations (profit and non-profit) need sharp tools, proven management techniques to forecast the major changes which are likely to affect the socio- economic environment while they choose future direction and dimension of resources needed to attain selected goals.
Budgetary control as proven management tool helps organization management, and enhances improved performance of any economic in different ways.
Its primary functions is to serve as guide in financial planning operation; its also helps administrative officials to make careful analysis of all existing operation.
Budgetary and budgeting control entails a distinct pattern of decision in an organization which is capable of determining its objective, purpose or goals and how these goals are achieved by establishing principal policies and plans.
However, the inability to recognize the problem concerned and fixing a boundary off investigation creates an obstacles for the successful implementation of budgetary and control (steward,1993).
Some organization only look for narrow ranges of alternatives which the arrive at from their past expenses and present situations, other management levels even avoid long term planning and budgeting in favour of today’s problems thereby making the problem of tomorrow more severe.
The above reflects the need for organization to set up a formal mechanism for scanning its environment for opportunities and give early system of future problem, this course of action will improve the system of budgeting and budgetary control, resulting in an expectation of improved performance, in business and also in non-profit making organization like an educational institution as seen in this study.
1.3 OBJECTIVE OF THE STUDY
This research emphasized on how effective budgeting and budgetary control can assist in achieving the objectives of educational institutions at the tertiary level. Other secondary objectives are:
i. Examine the role of budgetary system as a tool for effective financial planning and control in a tertiary educational institution.
ii. Identify various ways that budget is being applied as a means of financial control in tertiary institution
iii. Examine the motivational effect of a good budgetary system on the employees of a tertiary educational institution
1.4 HYPOTHESIS OF THE STUDY
H1: Budgetary system does not have not a role to play in the effective financial planning and control of an educational institution.
H2: Budgeting and budgetary control do not serves as a tool for financial planning and control.
H3: The application of budgeting and budgetary control in educational institution does not have motivational effect on the employees