THE ROLE OF BUDGETING AND BUDGETARY CONTROL IN A BUSINESS ORGANIZATION

THE ROLE OF BUDGETING AND BUDGETARY CONTROL IN A BUSINESS ORGANIZATION

ABSTRACT

This research work conducted with special reference to the budgetary system of Emenite Nigeria Limited with the view to ascertain the major role budgets play in the achievement of profitability for an organization. Budget as a profit planning device sets standards of performance of manager, while budgetary control is a tool implored by management to keep track of actual performance to ensure budgeted standards are achieved. In the course of this research work 40 managers were taken as sample population. Data is obtained through personal interview and the administration of questionnaires secondary data source is also implored. Data collected in subject to chi-square test in order to prove or disprove hypothesis therein. The analysis of the finding indicates that Emenite Nigeria Limited has a formal system of budgeting and does attach incentives for the attainment of budgetary goals.

CHAPTER ONE
INTRODUCTION

1.1 BACK GROUND OF THE STUDY

          A budget is a financial and a quantitative statement prepared prior to a defined period of time of the policy to be pursued for the purpose of attaining a given objective.
Also according to A.U. Nweze (2004) in his profit planning.
Budget is a plan quantified in monetary terms, prepared and approved prior to a defined period of time, usually showing planned income to be generated and or expenditure to be incurred during that period and the capital to be employed to attain a given objective.
Furthermore a budget is an attempt made at the beginning of each financial year to plan the profit and loss account for the year and to aim for a definite balance sheet. This profit planning must be a well thought- out operational plan with its financial implication expressed as both long and short range profit plans.
In any organization where budget is used as a means of profit planning many alternative plans have to be considered and the most profitable one will be adopted, because where the plan chosen in great expectations, then the best use has been made of the available resources.
On the other hand budgetary control is the establishment of policies and the periodic review or comparison of the actual result with the budgeted performances either to secure approval for individual action or to serve as a remedial course of action. Budgetary control whereby actual state of affairs can be compared with that planned for by the management, so that appropriate action may be taken to correct adverse situation that may occur before it is too late. It is also used to fix responsibility.

THE ROLE OF BUDGETING AND BUDGETARY CONTROL IN A BUSINESS ORGANIZATION