Abstract
An
organization plan entails the objectives to be, and the policies to enhance
their attainment. These policies are transacted into action plans called
budgets. The budget is a quantitative expression of managerial plans prepared
and approved prior usually a year, while budgetary control compares actual
results with budgeted performance and make for corrective action. Budget is as
important to a country as to a state and to business organization. As a nation
plan ahead in terms of revenue and expenditure within a specific period, so
also business organization or state conceptualizes anticipated revenues and
disbursement within a specific time. Every establishment, be it business
organization, private or public, makes it a point of necessity to prepare a budget
and institute budgetary control for the purpose of translating policies
coordinating activities as well as financial control in order to achieve the
best possible results. This project sought to examine budgeting and budgetary control
and effective financial management in government parastals in Nigeria and
highlight the process, type, classification, also, an overview of budgetary and
budgeting implementation in Guinness (Nig) Plc.
TABLE
OF CONTENTS
Title
Page
Certification
Dedication
Acknowledgements
Abstract
Table
of content
Chapter One:
Introduction
1.1
Background to the Study
1.2
Statement of Problems
1.3
Research Questions
1.4
Objectives of the Study
1.5
Statement of Hypotheses)
1.6
Significance of the Study
1.7
Scope of the Study
1.8
Limitation of the Study
1.9
Definition of Terms
Chapter
Two: Review of Related
Literature
2.1
Introduction
2.2
Budgeting Process
2.3
Classification of Budget
2.4
Types of Budget
2.5
Budgeting Techniques
2.6
Budgetary Control Process
2.7
Steps in Budgetary Control Process
2.8
Theoretical Framework
2.9
Weakness of the Framework for Budgeting
in Guinness Nigeria Plc, Benin City
Chapter
Three: Research Method and Design
3.1
Introduction
3.2
Research Design
3.3
Description of Population of the Study
3.4
Sample Size
3.5
Sampling Techniques
3.6
Sources of Data Collection
3.7
Method of Data Presentation
3.8
Method of Data Analysis
Chapter
Four: Data Presentation, Analysis and Interpretation
4.1 Introduction
4.2 Data Presentation
4.3 Data Analysis
4.4 Hypothesis Testing
Chapter
Five: Summary of Findings, Conclusion and Recommendations
5.1
Introduction
5.2 Summary of Findings
5.3
Conclusion
5.4
Recommendations
References
Appendices
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
In the year 1962 at Ikeja, Lagos State, Nigeria,
a brewery company was incorporated named Guinness (Nigeria) Plc. The Benin branch which is the case study was
established in mid 1972 as at the time of incorporation, it was called Guinness
(Nigeria)
Ltd.
It was changed to Guinness Nigeria Plc
in the year 1991 due to government directive to distinguish public limited
companies from other limited companies. Guinness (Nigeria)
Plc, Benin branch is located
along the Benin Agbor road, at Oregbeni Housing Estate, Ikpoba Hill in
Ikpobookha Local Government Area, Edo
State.
The objectives of the company (Guinness
Nigeria Plc) include amongst others:
1.
To contribute to the economic
development of the nation.
2.
To contribute to the general welfare of
the community, where it is situated.
3.
To provide or create employment
opportunities to members of the entire community.
As a result of the recent structural
re-organization of the company, the total number of full time staff of the
company is 2250. Moreover, about 250 casual workers are employed on daily pay
basis. However only 106 people are in the management cadre. It is noteworthy to
understand that expatriated workers do come from time to time to the company to
offer technical and other managerial advice particularly when a new product is
to be introduced into the market. The board of directors is made up of sixteen
(16) members.
1.2 Statement of Problems
The following are the problems faced in
the preparation of budgeting.
1.
The preparation of budgeting is very
expensive and time consuming.
2.
It tends to be frustrating when a
manager is unable to meet the level of performance expected.
3.
The budget holder tends to be rigid with
supervision of subordinates so as to be able to meet with the budget
expectations.
4.
Budget Preparation: This normally begins
with the forecast of sales and production. The resources required for
production such as labour, materials and expenses would be forecast so that the
cost of manufacture or production cost might be established. We could then
budget for administration, selling and distribution overhead where applicable.
Often it is necessary to establish the per unit cost of the production and the
entire budget can thus be prepared.
Moreover, in per unit cost, distribution
must be made between fixed and variable cost. It must be known that fixed and
variable costs are expressed in total but not in per unit cost for the purpose
of budgeting.
1.3 Research Questions
1.
Who are the users of budgeting?
2.
What is the difference between budgeting
and budgetary control?
3.
What do government or public sector need
budgeting for?
4.
What distinguishes plan from budgeting?
5.
What is a principal budget factor and
why is it important in planning?
6.
What do you understand by bias in
budgeting?
7.
How may we deal with budget slack?
8.
What are the limitation of budget?
9.
What is the difference between standard
costing and budgetary control?
1.4 Objectives of the Study
The purpose of this research work is to
examine how budgeting and budgetary has been used as an effective tool for
organizational planning and control in Guinness Nigeria Plc.
Moreover, it will highlight among others
the budgeting and budgetary control process and also to make research into
budget implementation in Guinness Nigeria Plc.
Objectives
of Budget
i.
An aid to control revenue.
ii.
To prevent waste.
iii.
To review the economy generally.
iv.
To give estimate both revenues and
expenditures arranged in recurrent and capital groupings.
v.
To conform with good business practice
by planning for the future.
vi.
To coordinate the various divisions of
the economy such as production, marketing, financial and administrative
divisions.
Objectives of Budgetary
Control
i.
To smooth out sensational variations.
ii.
To centralize management control.
iii.
To indicate where action is needed.
iv.
To provide a method of measurement.
v.
To obtain a more economical use of
funds.
1.5 Statement of Hypotheses
Research Hypothesis: In
order to provide researchers towards effective conduct of investigation, the
following tentative statement are made as the cause of the problem faced by
budgeting department.
Hypothesis One
The budget department of the Brewery
will be ineffective where management restricts budgeting activities.
Hypothesis
Two
The inadequacy of business experience
and general educational background under the achievement of the service
objective affects budgeting.
Hypothesis
Three
The apathy or influence of management in
budget department, findings and recommendation affects the performance of
budget department.
1.6 Significance of the Study
The study will be useful to the company
by a detached critical and practical view of the area, in which the company
needed useful information concerning making of its product, this would be of
benefit to the management of the company by providing the theoretical and
practical framework from which useful and quality decision for future plans on
matters affecting the company’s business operations can be taken.
1.7 Scope of the Study
This research work will be limited in
scope to Guinness Nigeria Plc, Benin
City. However, it will extend to all the departments
division and units within the organization to the extent of their involvement
in the budgeting and budgetary control of the organization.
1.8 Limitations of the Study
Generally, the increase in cost of
transportation restricted the number of trips that could have been made to the
case study.
Moreover, much money is also spent in
purchasing stationary and materials for the production of this project. Apart
from that, there are other issues like:
1.
Time:
There
is also time constraint, this project is handled along side with numerous class
exercises. That notwithstanding, the period of time expected to complete and
submit the project is too short.
2.
Distance:
The problem of distance is another factor of limitation. The case study is
situated at Benin City,
kilometers away from Auchi, where the school is situated, the information
(data) and other documents to be used in making the project work among others.
In spite of these constraints, the
research have to remark that the study has a good degree of validity.
1.9 Definition of Terms
i.
Budget:
A
budget is a plan quantified in monetary terms prepared and approved, prior to a
defined period of time usually one year showing planned expenditure; to be
incurred during that period and the capital to be employed to attain a given
objective (ICMA).
ii. Call Circular:
This is a notice issued by the budget department to every department, unit,
containing detained information and guide line to be followed by the units,
departments in the preparation and submission of their budgets.
iii. Budget Centre:
This is a section of an organization for which separate budget can be prepared
and control exercised. It is a functional location such as a section or
department which exists for the attainment of the organizations objectives and
in respect of which a budget is prepared.
iv. Budget Officer:
The budget officer is the management accountant because of the requirement of
accounting skills of the budget, he plays a very important role in budget
administration. He provides technical and unbiased help to budgeters and take
overall responsibilities for the budget programme. He is also in charge of
establishing preparatory procedures, designs relevant forms, educates others,
collects and coordinate data, verifies information received and compiles the
budget.
v. Budget Holder:
This is the head of such section, division or department; (Budget Centre).
vi. Budget Committee:
This is a body that administers the budgeting process, it is usually comprise
of members drawn from the top management of all divisions in the organization. The
committee develops and scrutinized long terms plans, offers advice on the
budget, reconciles divergent views, coordinates the budgeting activities and
sets the budget time table.
vii. Budget Time Table:
This is a plan of the timing process of the budget from the moment of objective
setting-up to the adoption and communication of the budget. It ensures that the
budgeting process does not lag behind time as it states when each activity will
begin and when it should end.
viii. Budget Manual:
This present instruction and pertinent information about the budget and its
preparation. It serves as a rule and reference book for the preparation and
implementation of budget programme.
ix. Budget Period:
This is the time for which a budget is prepared and used (ICMA).
x. Budget Administration:
This involved the management of the budgeting process from the time of
preparation to implementation.
xi. Budgeting:
This is a process of drawing up a budget that aid managers in coordinating
their effort so that objective of the organizations as a whole harmonized with
the objective of the parts.
xii. Budgetary Control:
This is an exact and rigorous analysis of the past and the probable and desired
future experience with a view to substituting considered intention for
opportunism in management. (Akinyoade, S. O.) broadly speaking, it can be said
that budget is concerned with policy making while budgetary control result from
implementation of the policy.
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