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ASSESSMENT OF BUDGETING IN THE PRESENT NIGERIA ECONOMIC SYSTEM IN CROSS RIVER STATE UNIVERSITY OF TECHNOLOGY
ABSTRACT
This study was carried out to assess budgeting in the present Nigeria economic system in Cross River State University of Technology. Specifically, the study determined the role played by budgeting towards the controls of government fiscal policies, established the relationship between budgetary control and performance in Cross River State University of Technology and, ascertained the extent to which budgeting processes has aided planning for long term survival of Cross River State University of Technology. The study employed the survey descriptive research design. A total of 30 responses were validated from the survey. The study adopted the theory of Budgeting and the Punctuated Equilibrium Theory of Budgeting. From the responses obtained and analysed, the findings revealed the extent budgeting processes aids planning for long term survival of Cross River State University of Technology is very high. Furthermore, the findings revealed that the roles played by budgeting towards the controls of government fiscal policies include influencing the economy, shows how government will prioritise and achieve its annual and multi-annual objectives, helps in financing new and existing programs and is the primary instrument for implementing fiscal policy. The study recommends Cross River State University of Technology should be budget and budgetary control conscious knowing fully well that a budget is a plan and a mirror that guides the organization towards achieving their goals in the labour market.
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CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Budget and Budgeting are concepts traceable to the Bible days, precisely the days of Joseph in Egypt. It was reported that nothing was given out of the treasure without a written order. History has it that Joseph budgeted and stored grains which lasted the Egyptians throughout the seven years of famine.
Budgets were first introduced in the 1920s as a tool to manage costs and cash flows in large industrial organizations.
Jean, (2010), states that it was during the 1960s that companies began to use budgets to dictate what people needed to do. In the 1970s performance improvement was based on meeting financial targets rather than effectiveness companies then faced problems in the 1980s and 1990s when they were not willing to spend money on innovations in order to stay with the rigid budgets, they were no longer concerned about how customers were being treated, only meeting sales targets became essential.
It is a requirement as per Serena Group of Hotels Finance policy that each unit has got to prepare budgets from where financial statements prepared on a monthly basis can be compared with. However effective budgetary control has been a problem. What is forecasted monthly is not actually met. In business organizations, budgeting are formally associated with the advent of industrial capitalization for the revolution of the eighteenth century, which presented a challenge for industrial management (Jean, 2010).
However, budgeting at the early state of its development was concerned with preparing and to permit correct performance evaluation and consequently rewards.
Information that management accounting control system helps managers, by monitoring company‟s changing environmental circumstances, to compare opportunities and threats in the market so that they can obtain added value against competitors because it is important in facilitating the preparation of budgets, since budgeting and accounting are closely related (Bruner, 2002).
Budgets are known to have an important role to transmit the expectation of top management to lower levels. According to Brigham, (1979) budgets are used to communicate top management‟s expectations to managers and employees.
According to Lucey. (1993), it is a quantitative expression of plan of action prepared in advance of the period to which it relates, expressed in money terms approved prior to the period.
Lucey (2002) further urges that performance is influenced by many factors which includes planning and coordination, clarification of authority and responsibility, effective communication both internal and external, control of resources available, both human and non human and motivation of both the lower and middle management.
If the actual numbers delivered through the financial year turn to be close to the budget, this actually demonstrates that the organization‟s management understand its business and has been successfully driving it in the direction they had planned. On the other hand, if the actual results diverge wide from the budget, this sends out an „out of control‟ signal. For this reason, budget based control means manager‟s evaluation according to budgetary goals (Lucey 2002).
In this context, budgeting benefits and its possible negative effects on attitudes and behaviors of managers on performance are still among the subjects of strategic management control systems that are being researched presently nearly all large businesses reforecast their forecast their activities, as months pass, the actual income achieved and expenses incurred can be compared to the budget and forecast.
STATEMENT OF THE PROBLEM
Based on the purpose of the study, the problems under study can be seen in this context. Due to the dependence of Nigeria on revenue, a crisis in the world market will result to the following: A reduction of oil revenue which will cripple the economy and shatter National Development. Abandoning of capital projects or programs due to insufficient fund in the economy. In-efficient allocation of limited resources to provide the right caliber of manpower and necessary infrastructure as basis for our national growth. The inability of the management to prepare a concise budget that will enable Cross River State University of Technology to achieve its set goal and objective (Nwude, 2001).
OBJECTIVES OF THE STUDY
The broad objective of this study is to assess budgeting in the present Nigeria economic system in Cross River State University of Technology. Other objectives of the study are;
To determine the role played by budgeting towards the controls of government fiscal policies.
To establish the relationship between budgetary control and performance in Cross River State University of Technology.
To ascertain the extent to which budgeting processes has aided planning for long term survival of Cross River State University of Technology.
RESEARCH QUESTIONS
What are the roles played by budgeting towards the controls of government fiscal policies?
Is there a relationship between budgetary control and performance in Cross River State University of Technology?
To what extent does budgeting processes aided planning for long term survival of Cross River State University of Technology?
SIGNIFICANCE OF THE STUDY
The significance of this research work cannot be over emphasized because it is inequitable in every organization. It will be appreciated by administrators of public utilities as its sets standard of performance which act as day to day guide time for the successful realization of the budget plan and the attainment of government objectives. It serves as a document of reference; the study is also relevant to all public and private sectors as financial resource these days are scare and limited, this budgeting control is inequitable because the limited funds available has to be judiciously utilized allocated and this can only be made possible through budgeting control.
SCOPE OF THE STUDY
For simplicity and easy analysis of data, the scope of this study is restricted to the budget office of Cross River State University of Technology. It would have been an interesting academic exercise to cover other branches of the budget office within the country, but for easy analysis and data presentation, the researcher decided to restrict her study to Cross River State University of Technology.
LIMITATIONS OF THE STUDY
The following are the basic limitations of the study:
Secrecy: some of the workers contacted were not only just unco-operative but were also non-approachable. Some of the vital information needed to give this project a better look was not easy to come across.
Financial Constraint: another factor that limits the wider coverage of this study is financial constraint as situation of things were not very pleasant at the time of this project work.
High Cost of Transportation: as at the time of this research work, there was an increase in the cost of transportation, so the researcher finds it difficult transporting from one place to another in search of research materials.
DEFINITION OF TERMS
Budget: budget is a plan for financing an enterprise or government during a definite period, which is prepared and submitted by a responsible executive to a representative body (or other dully constituent agent) whose approval and authorization are necessary before the plan may be executed.
Budgetary Control: It has been severally defined. J. Batty says “budgetary control in its complete form involves a predetermined plan in financial terms, to cover all phase of business activities and the operation of that plan in such a way that anticipated profit is, as near as possible, achieved.
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