ABSTRACT
The purpose of the study is to determine the
effect of budgeting on the economic development of the state to determine the
factors which account for the difference between the capital expenditure and
the recurrent expenditure and to take an overview of the analysis of the
relationship between estimated and actual expenditure in the last five
financial years. The study is aimed at improving budgeting as an effective tool
for financial planning and control in the state public sector. Some of the
problem associated with this study include , ascertaining whether the budget is
usually prepared aimed at realizing the states objectives or if the budgets and
make them look ambitious why are budget
bigger or smaller over the year? What account for deficits or surplus budgets?
Five years consolidated financial statement of estimates of Enugu state
of Nigeria , approved revenue estimated , actual revenue and revised revenue
estimates. The instrument of data collection was a structured questionnaire and
it was self-administered. The data so collected was put in a form that allowed
for easy comparison.
The findings reveal the “call circulars” are
issued in July and that the “estimates committee” is the only body charged with
reviewing proposals from every ministry and government bodies. The state has
not adopted the planning programming and budgeting system [ PPBS]. The states
major source of revenue are the federation account and states internal revenue
though the states share of the federation account is received monthly , it is
received short of the expected revenue. It was also found that while the
civilian budget was mostly done at a deficit, that of military government is
either a balanced one or a surplus one.
The implication of this findings for budget preparations ,revenue
control and budgeting techniques , measurement and assessment are discussed.
Some recommendations are made regarding how budgeting can be improved to help
check the up- surge of recurrent expenditure and improving the internally generated
revenue.
TABLE OF CONTENT
Title page
Approval
Dedication
Acknowledgement
Abstract
CHAPTER
ONE
1.0
INTRODUCTION
1.1 Objective of the study
1.2 Purpose of the study
1.3 Significant of the study
1.4 Statement of the hypothesis
1.5 Limitation of the study
1.6 Scope of the study
1.7 Definition of terms
CHAPTER TWO
2.0 REVIEW
OF RELATED LITERATURE
2.1 The
historical literature framework
2.2 Revenue
allocation formula in Nigeria
2.3 Enugu
state budgeting
CHAPTER THREE
3.0
RESEARCH DESIGN AND METHODOLOGY
3.1 Source
of data
3.2 Primary source of information
3.3Secondary
source of information
CHAPTER
FOUR
4.0 DATA
PRESENTATION AND ANALYSIS
4.1 Data
analysis
4.2
Test of hypothesis
CHAPTER FIVE
5.0 SUMMARY
OF FINDING , CONCLUSION, AND RECOMMENDATION.
5.1 Findings
5.2 Conclusion
5.3 Recommendation
Bibliography
Appendix: questionnaire.
CHAPTER ONE
INTRODUCTION
In his budget of December
23, 2011 presented the year 2012 budget, there the governor of Enugu state
governor Sullivan chime said that the thrust of the 2012 budget is poverty
reduction of the people. The state government appreciated the dangers of
delaying of delaying the narrowing of gay
between the tow socio-economic order ,the rich and the poor so as to
provide equal footing for both .
For proper integration of social and
economic environment in the state ,it has become imperative to reduce
unemployment and poverty in the state to the barest minimum . For us in Enugu
state it meant drastic reduction in
personnel cost ,recovery of government funds and properly filtered away during the
civilian administration ,increase in
internal revenue generation ,judicious spending and accountability . Though ,a
budget can be prepare simply on the basis of what was done on the pervious year
,adjusted for any change in condition or scope of the activity that may be
anticipate for the coming year, a soundly conceived budgetary plan should be
such that will simulate the executive to
take a more critical view of his own operation .
The fundamental difference between the
public sector and private sector is that the later is organics and operated to
make a profit for its owner while the former exists to provide services to its citizens substantially on a
non-profit basis . The Enugu state
Annual Budget like any other state in
the federation consists of two segments:
the recurrent expenditure and the capital expenditure .However the
drastic collapse in oil revenue over the year is one factor that has seriously
affected state budgets .Also the recent
federal government ban on the state from securing loan from external or internal
sources and the heavy dependence on
imports for essential raw
material spare parts and capital goods has continued to affect the state
budgeting . Others include unacceptable high rate of inflation and unemployment
,low productively ,and an adverse debt repayment position .it is this state of
affairs that made Enugu state government to adopt the following strategies to
achieve the derived goals .
A} Maximization of internal revenue by
improving the revenue collection machinery and policies .
B} judicious management of expenditure so as to conserve scare fund .
C} concentration of attention on the execution
and completion of some selected project in the various sector ; thereby
avoiding the used mistakes of preaching scarce resources thing over tow many
project and achieving little or nothing .
1.1 OBJECTIVE OF THE
STUDY
The study aims at collecting
quantities information on budgeting
control measures. Data
generation from such information are
essential for :
(A)
providing a base and framework for improving the quantity and quality of
current budgetary control statistics
(B) planning
problem ,formulating and appraising the budgeting techniques of the
public sector .
(C) The measurement and assessment of the
contribution of the role of
budget in the economy of the state .
(D)
Budget implementation committee .
1.2 PURPOSE OF STUDY
THE PURPOSE OF THE STUDY IS TO:
(A) To take an overview of the a analysis of the
relationship between approved estimates
and actual expenditure in the
last five financial year ,and whether there is a wide or narrow gab between
financial provision in the budget and what was achieved and to draw conclusion from such analysis .
(B)To
determine the factors which account for
the difference between the capital expenditure and the recurrent .
(C) To determine the effect of budgeting on the
economic development of the state .,
1.3
SIGNIFICANCE OF THE STUDY
The study will contribute toward improving the
budgetary planning control techniques
in Enugu state .
Thy study will also help the state government a
technique for effective financial contor and control over revenue collection
.The study will enable the government and the ministries broaden their
understanding of the role of budgeting as
a planning and control device in
the public sector .This could be done by allowing the respective ministries
,Parastatals corporation etc .have second look at their budgeting techniques .
1.4 STATEMENT OF HYPTHESIS
For the purpose of this reseach work the
following assumption were made in order to employ a scientific approach to the recitations of
the following hypothesis were analyzed.
1 HO: There is no effective budgeting in public
sector economic .
HI :There is effective budgeting in public
sector economy ,
2 HO
internal revenue generation is not effective in the public sector economy .
HI ! internal revenue generation is effective
sector economy .
1.4
LIMITATION OF THE STUDY
The finding of the study and
generalization are limited to Enugu state of Nigerian . Due to time and
financial contract it will be wrong to claim that the findings are exhaustive
and conclusive as far as this subject is concerned .
Another
limitation is that the researcher relied entirely on data from Enugu
state official gazette ,previous budget proposal and speeches of pass head of
government of Enugu state ,journals and past student publication and this is
therefore the only means of acerbating validity
and reliability .
However ,these sources can only provide quantization
information about budgeting but could
not be a good guideline to behavioral implication of budgeting .
Also during the data collection
provides the respondents were not variable in their offices and several visit
had to be made before the interview and questionnaires could be administered
.The interview had the tendency not to talk about their areas of difficulties
and showed little interest in the other ,thus to there night have been some
falsification of information .
1.6 SCOPE OF THE STUDY
The scope of the study is that in
public sector economy in Nigerian consist :-
(A) The
government Parastatals
partly or completely financed
by the government Parastatals
operate in some private sector fashion , government presence coming only in the from of control
,directive and subvention .E.G mass
transit services of state an local government rural electrification bounds ,
state housing corporation .
(B) The federal government visit its ministries ,department and
agencies like, INEC, NDE ,NBTE ,NUE, ETE .
(C) The
state government represented by its ministries and departments.
(C) The local
government .
1.7 DEFINITION OF TERMS
In
this study certain term are to be used and whenever it found are to be
given the following meaning: -
(A)
THE FEDERATION ACCOUNT
It is the distributable pool account into which all
revenue collected by the federal government departments or an authority by the
states on behalf of federal government.
(c)
EXCLUSIVE REVENUE OF THE FEDERAL GOVERNMENT
Federally collectable revenue is made up of
two disproportionate parts. The first and often the smaller parts is the
revenue which accrues exclusively to the federal government from its own
independent sources such as from income tax of the personnel for the armed
force of federation of the Nigeria police force the ministry of external
Affairs and residents of the federal capital territory , Abuja. The second and
is whatever that is not included in the first part above.
CONCLUSION
REVENUE
It is a
special fund into which all revenue and
money receivable by the federal government is paid. Except in some few
cases where some revenue are received into some other funds like capitals
receipt into the capital development fund.
CONTINGENT REVENUE
Contingent
revenue or contingencies fund could
be defined according to sector 15 {1}
of the constitutional
Amendment order 1958 provided
that a sum of one million pounds be transferred
from the consolidated Revenue fund for its creation in 1958 .This amount
is set aside to take care of unforeseen expenditure
And is
operated by the issue of a warrant . if the contingences for which the fund is
provided do not arise within the financial
year under review ,the fund relents to the consolidated revenue fund at
the beginning of the financial year .The
and any other unspent revenue form what is generally termed consolidated revenue fund “surplus ‘.
REVENUE ALLOCATION FORMULA
It is a
model indicating the proportion into which the distributable pool account is to be divided between federal and
state governments .
GOVERNMENT OPERATION
These
operation do not resemble commercial
activities .Thy include providing primary services financed from tax revenue
.Example are Education ,public safety , judiciary ,social services and Administration .
PROPRIETORY OPERATION
Proprietary operation resemble
commercial activities .Usually financed wholly or partially from used changed
,these operation may be considered secondary services . Example are utilities ,public transportation ,parking
facilities .proprietary usually have the objective of earning a profit or
recovering operational cost .
CAPITAL
BUDGETS
These are long range budget often prepared for particular project . E.G Road
construction companies etc .
CAPITAL PROJECT FUNDS
These
are fund designed to be used for the acquisition of construction of
major capital facilities {other than those financed by proprietary fund
,special assessment fund and trust funds }.
BUDGET COMMITTEE
The
budget committee is a group of representatives of various function in
the public sector who have been brought together for the purpose of :-
_ Receiving
and reviewing budget estimate
form the respective department or division .
_ Recommending decision on budget matter where there may be conflicts between
department or divisions .
_ Recommending change an approval of revised
budgets .
_
Receiving studying and analysis periodic report and comparing
the budget with the actual performance .
_Considering
and making recommendation for revision
of the budget when warrant .
PLANNING
PROGRAMME AND BUDGETING SYSTEM.
This is a system
of budgeting introduced by the united state department of defiance that was
intended to improve the existing system by concentrating on the output of the department ,improving the pre-allocation budgeting together with
quicker estimates of requirement and looking further ahead than just one or two
year ,the planning ,programme and budgeting system {PPBS}requires that the
objective of the organization be clearly defined ,and that all feasible
alternative means of achieving this objective be considered and a cost beefiest
analysis done to choose the most effective alternative .
RECURRENT
EXPENDITURE.
These may
be defined as the working capital of the government . it is the
expenditure set aside for satisfying on
–going activities of the state during the budget period ,[example ,the payment of salaries
],while capital expenditure is said to be the contraction of roads , bridges
the provision and redemption of capital “etc-and for the completion of existing
capital projects .
ADVERSE VAMANCES
Adverse
variance occurs when the actual budget is greater than the planned or approved
estimates .
FAVOURABLE
VARIANCE
Favorable
variances occur when the actual budget is less than the planned or approved
estimates.
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