1.1 Background to the Study
The resources of an organization should be managed effectively and efficiently to achieve its purpose. This implies that the organization should be able to achieve its objectives by minimizing cost. Thus managing implies co-ordination and control of the efforts of the organization for achieving organizational objectives. The process of managing is facilitated when management charts its future course of certain objectives in advance, and takes decision in a professional manner, utilizing the individual and group efforts in a coordinated rational manner. One systematic approach for attaining effective management performance is budgeting. Budgets are monetized expressions of target to be accomplished in a given year by an individual, organization or nation. It is a deliberate attempt to achieve superior targets over time with available and expected resources. Such targets are influenced by the experiences of the past and expectation of the future.
Basically, a budget system enables management more effectively to plan, coordinate, control and evaluates its activities. It is a device intended to provide greater effectiveness in achieving organizational efficiency. To be effective, however, the functional aspects must outweigh the dysfunctional aspects. Because a budget plan exists, decisions are not merely spontaneous reactions to stimuli in an environment of unclassified goals.
It is pertinent to note that management activities are the driving force behind every organization and of course necessarily unavoidable. These activities – planning, organizing, directing and controlling of economic resources, are schematized to reflect the nature and objectives of the organization and must be tailored towards the attainment of the overall organization’s predetermined objectives. Consequently, it is important to systematically and objectively assess the relevant, efficiency, effectiveness, impact and sustainability of the activities in the light of the budget. In this context, therefore, the concern is to use the budgetary procedures to evaluate management activities.
1.2 Statement of the Problem
As we now launch into the 21st century, organizations worldwide, both private and public, have realized the need to restructure and overhaul their activities for a better quality service delivery pattern. One of the most radically affected aspects of these organizations is the budget and budgetary control. Recognizing the role of budget and budgetary control lending organizations leverage so much on it, in the private sector, several departments, whose main business is the implementation and monitoring of budgets, have been established. In the public sector, budget monitoring and project implementation committees have become an integral part of the administrations. In fact, the soundness or otherwise of the budget is adjudged by all as a to sine quo non for effective management.
In the present area of cyber space management, where information and communication technology is the main resource, budget and budgetary control are also incorporated into the information technology banks of organizations. This has given rise to professionals and specialists whose main duty is to monitor and report deviations from the budget. Several automated control software have also been designed to assist in this arduous task. And so the trend continues. Organizations worldwide are leveraging so much on budget and budgetary control. But how does budget and budgetary control assist management in effectively discharging its obligations? How is it of importance to the various stakeholders (government, employers, debtors, creditors, owners, etc?). Can it be regarded as a mirror that unerringly reflects the performance of management? These are some of the issues the researcher intends to explore.
1.3 Objectives of the Study
The research is aimed at reviewing the already existing budgetary control procedures with a view to:
i. Determine whether the use of budget and budgetary control result to the overall effective performance of management.
ii. Determine whether the budget reflects the performance of management.
iii. Determine the support programmes designed to aid the administration of the budgeting system in an organization.
1.4. Research Questions
At the end of this research work, it is expected that ample answers be provided for certain questions. These questions that may arise in the course of this study are as follows:
i. Is the use of budget and budgetary control in an organization necessary for the effective performance of management?
ii. Does a budget reflect the performance of management?
iii. What are the support programmes, designed to aid the administration of the budgeting system in
1.5 Research Hypothesis
The hypothesis for this study is set in consideration of the problems and questions earlier mentioned. The following hypothesis will be tested:
HO1: The use of budget and budgetary control in an organization is not necessary for the effective performance of management.
Ha1: The use of budget and budgetary control in an organization is necessary for effective performance of management.
HO2: There are no way(s) in which a budget reflects management performance.
Ha2: There are way(s) in which a budget reflects management performance.
HO3: There is no support programmes designed to aid the administration of the budgeting system.
Ha3: There is support programmes designed to aid the administration of the budgeting system.
1.6 Significance of the Study
The budget, which is an integral part of planning and control, constitute an important tool of performance evaluation. Thus a research work in it is a valuable one.
The study, having examined the principle of budgeting; preparation, implementation and control, the reader is better positioned in dealing with budgets and budgetary control matters.
Also, having explored the constraining factors of budgeting, the reader is in a better place in using budgets as performance evaluation tool. In addition, an examination of the various prerequisites of the budgeting system will enable the reader to better appreciate the use of budget in evaluating performance in relation to predetermined set goals of the organization. Furthermore, an exploration of the dangers and problems associated with budget will also enhance the reader’s knowledge in the use of budget as a performance standard. The work, which also confirms literature on budget and budgetary control, shall in addition serves as a good source for further research.
1.7 Limitation and Scope of the Study
In the literally sense, scope can be said to mean reach extent of an observation or action. In this context, therefore, it will mean reach or extent of this study; the research shall be limited to mainly budget and budgetary control as a planning, controlling and performance evaluation tool.