A Study on the Impact of Budgetary Controls on the Performance of an Organization (a Case Study of Fidelity Bank Plc)
CHAPTER ONE
Objectives of the study
The main objective of the study is to harness on the impact of budgetary controls on performance of an organization. However for the successful completion of the study, the following sub objectives were put forward by the researcher:
- To ascertain the impact of budgetary control on organizations performance
- To ascertain the role of budgetary control in attaining profitability.
- To ascertain the effect of budgetary control in the productivity of the organization
- To ascertain the relationship between budgetary control and profitability.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
Budgeting has come to be accepted as an efficient method of short-term planning and control. It is employed, no doubt in large business houses but even the small businesses are using it at least in some informal manner. Through the budgets, a business wants to know clearly as to what it proposes to do during an accounting period or a part thereof. The technique of budgeting is an important application of management accounting. Probably the greatest aid to good management that has ever been devised is the use of budgets and budgetary control. It is a versatile tool and has helped managers cope with many problems including inflation.
Definition of budget
The Chartered Institute of Management Accountants defines a ‘budget’ as under: ” A financial and/or quantitative statement, prepared and approved prior to define period of time of the policy to be persued during that period for the purpose of attaining a given objective.” According to Brown and Howard of Management Accountant “a budget is a predetermined statement of managerial policy during the given period which provides a standard for comparison with the results actually achieved.”
Types of Budgets
As budgets serve different purposes, different types of budgets have been developed. The following are the different classification of budgets developed on the basis of time, functions and flexibility or capacity.
(A) Classification on the basis of time:
- Long-term budgets
- Short-term budgets
- Current budgets
(B) Classification according to functions:
- Functional or subsidiary budgets
- Master budgets
(C) Classification on the basis of capacity :
- Fixed budgets
- Flexible budgets
(a) Classification on the basis of time
(i) Long-term budgets: Long-term budgets are prepared for a longer period varies between five to ten years. It is usually developed by the top level management. These budgets summarize the general plan of operations and it’s expected consequences. Long-term budgets are prepared for important activities like composition of it’s capital expenditure, new product development and research, long-term finance etc.
CHAPTER THREE
RESEARCH METHODOLOGY
- Introduction
This chapter deals with the method used in collecting data required in carrying out this research work it explains the procedures that were followed and the instrument used in collecting data.
- Sources of data collection
Data were collected from two main sources namely:
- Primary source and
- Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment, the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as by products of the same other purposes. Example administration, various other unpublished works and write ups were also used.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the impact of budgetary controls on the performance of an organization.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing challenges of budgetary control in fidelity banks.
Summary
This research examined the budgetary controls on the performance of organization generally have budgetary controls at different levels of organizations; it established that most of them have planning, monitoring and controls, and budget participation. Planning contributed the highest towards the positive performance of the banks followed by Monitoring and Control and finally budget participation. It also established that there is above average performance in all the branches of fidelity banks based on the findings, that is, both financial and non-financial performance indicators which include revenue growth, community participation, dollars spending, investments, acquisition and efficiency are above average. Finally this research determined the effects of budgetary controls on performance of organization using the simple percentage and chi-square method to established the relationship and have also concluded that there is a positive relationship between budgetary controls and Performance.
Conclusion
In the course of the study, we have attempted to determine if a business organization can implore its profitability by using the technique of budgetary control. Some problems were identified, especially in the present unstable nature of the Nigerian economy which called for a critical research to ascertain the implications of budgetary control for business organizations. As a result, some hypothesis were formulated which were subjected to some methods proof. To enable a logical proof to be avoided at, some existing relevant literatures were renewed, thus giving a springboard for a comfortable selection and collection of data. The collected data was statistically analyzed to form a basis upon which some findings were made about the case studied business organizations. And the following conclusion was arrived at: It is possible for an organization especially business organizations to control its actual performance through the use of budgetary control. When budgetary control is continuously practiced by business organizations, it is always easy to anticipated operational changes and reacts quickly for them by making some adjustments. Arising from the observed direct relationship between the practice of budgetary control and the profitability of the selected business organizations, it can be logically asserted that the technique is useful in profit-planning.
Recommendation
It is now very obvious that budgetary control is of tremendous importance to business organizations such establishments can easily survive if the budgetary control technique is properly implemented in its routine operations. However, budgetary control is not a substitute for the individual performance of the entire staff. Obviously, it has some shortcomings, although those may be minimal. Therefore, the process of implementing budgetary control in business organizations should: Ensure that subordinate is carried along when formulating the budget. Ensure that the budget is tailored to the organization for easy monitoring and control. Attempt to revise budget standards when circumstances change to such dimension as to warrant adjustments in operating procedures; Ensure that the budget is not too mechanical to allow positive creativity.
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