Identifying the planning and control system in an institution
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Two of the basic functions of managers are those planning and control.
Planning is the most essential thing that determine the goals and objectives of an organization, and best way in which these goals can be accomplished.
Control, on the other hand includes all these activities that ensure actions of the organization are towards the stated goals.
In order to ensure that the company achievers its aims and objectives with in the minimum cost, the company will make a projection of its cost and revenue through a budget which controlling the cost and ensure that corrective actions are taken when ever cost are incurred by means of budget control.
Lucey 1997 defines budget as “a plan quantified in monetary terms prepared and approved prior to time usually showing planned income to be generated and planned expenditure to be incurred during the period and the capital to employ to achieve the given objectives.
Budget control is defined by the institute of cost and management account in 1966 edition as “the establishment of budget relating to responsibilities of executive to the requirement of a policy and the continuous comparison between actual and budgeted result whether to ensure by individual action of the objective of that policy to provide a basis for its revision.
Simeon Ibitayo defined budgetary control as “the process of comparing the actual result with the planned performance and highlighting variance therefore which can be analyzed by cause and responsibility.
Batty 2006 defines budgetary control as “a system which uses budget as a means of planning and controlling all aspects of production and selling commodities or service”, budgetary control, therefore relates to the use of budget as control device where by predetermined plans or standard output, income and expenditure are compared with actual attainment so that, if necessary, corrective action may be taken before it is too late.
The aim of any business organization is to maximize profit and this is usually achieved by effectively planning for the accumulation and control of its cost.
A company can project what profit or loss it would make at the end of a particular accounting period by preparing a master budget. The master budget would normally undergo series of amendments, but ones it is finally approved, it becomes the target for the company during the budget period.
It also shows the effect of estimated profit and loss account for the budget period and estimated balanced sheet as at the end thereof.
In any organization where budgeting is used as a means of attaining effective management performance, that is used in decision making, many alternative plans have to be considered and the most profitable one will adopted.
For instance where the chosen plan result in great expectation, then the available resource has been made use of effectively and this show a positive link with organization plan. Cost of performance is employed through the operation of budgetary control system which also head to departmental operational statement for comparing budgeted and actual results.
The overall plan is represented in the budget that is what profit and return on investment are expected to be obtained are example of matter to a covered. The dully activities are scheduled and make up the weekly, quarterly and yearly budget.
At this junction, the executive are appointed to cost center to carry out the required policy so comparison can be made between actual budget and budget results.
The internal statement will be prepared to show actually budget and budgeted result, which may require explanation for any deviation that may occur, though this technique efficiency will be increased with minimum use of capital to maximum profit.
The decision to be made about a budget is to choose between goals and average expected performance. The way in which these goals can be used in the part of budget is to separate the control information and planning information into two, one for controlling the operation and the other to plan the available resources of the firm on the whole.
Budgetary control is a system of controlling cost which includes the preparation of budgets, coordinating department or establishing responsibilities.
In this way, responsibilities of fulfilling the budget plan can be delegated to the manager in charge of each budget center so that budget center will be the same as the subsidiary budget. (Sales, production. purchasing) and responsibilities for fulfilling budget will rest with the manager involved e.g. sale manager, purchasing manager etc. top manager still has overall responsibilities in particular for the efficient use of available capital based on actual performance with that budgeted and acting upon result to achieve maximum profit.
- AIMS AND OBJECTIVES OF THE STUDY
Many organizations are in ruin today, also many countries are economically stagnant, because they don’t know the importance of budgeting. Hence, this project work is written to open the eyes of such organizations and countries to employee the study to curb the problem.
Therefore, the aims and objective of this research work is to take a brief look at the following:
- To identify the planning and control system
- To know the kind of problems encountered in carryout these goals.
- To look into where are variance and the reason for such variance
- To recommend possible improvement