Application of Budget and Budgetary Control Measures in Non-Profit Organization (Case Study of Apostolic Church Delta)

Application of Budget and Budgetary Control Measures in Non-Profit Organization (Case Study of Apostolic Church Delta)

Chapter One

OBJECTIVE OF THE STUDY

To ascertain the effect of budget and budgetary control in nonprofit organization
To examine whether lack of experience contributed to the committee inefficiency in terms of budgetary control
To ascertain the important of budget and budgetary control measure in non profit organization

CHAPTER TWO

REVIEW OF RELATED LITERATURE

CONCEPTUAL FRAMEWORK

A budget is defined by the Institute of Cost and management Accountants as planned outcome to be generated and for the expenditure to ensure during that period and the capital to be employed to attain a given objective.
Ezeugwu (1999), defined a budget as a quantitative plan of action of how to carry out an operation/process by a business/establishment.
Osisioma (1989), defined a budget as a different phases of business operation aimed at helping management towards the attainment of organizational objectives.

Horngren and Foster (1987), see a budget as a quantitative expression of a plan of action and an aid to coÂordination and implementation. Matz and Ivory described a budget simply as a plan expressed in a financial and other quantitative terms and stressed that the terms “Budgeting, Profit and Planning” are synonymous. Pogues opined that a budget is a plan or target I the form of a quantitative statement for a specified time-span. He stated that a budget for the future time-span attempts to look over the hill into the future t where the business hopes to be in a future period of time and how it intends to get there. The budget, therefore, attempt to look at tomorrowâ€™s business world (in a short time frame) and management is forced to think a tomorrow’s opportunities. Budget was also described as comprehensive and co-ordinated plan, expressed in financial terms, for the operations and resources of an enterprise for some specifies period in future. A budget involves every level of activity integrating revenue plans, expense plans, asset requirements and financing needs. To Pandey (1985) a budget is a plan of the organization’s manipulation of relevant variables (controllable and uncontrollable) and reduces the impact of uncertainty. It activates the management into influencing the environment in the interest of the organization.

According to Osisioma (1989) a budget has a number of characteristics, namely.

It is a plan of action
The plan is stated in quantitative or financial terms or both.
It is prepared prior to a defined period of time for the control of performance within the period.
It states performance expectations over a defined period of time, in different phases of business operation – sales, production, marketing and so on.
It integrates the resources and costs of an organization, to plan for anticipated level of performance.
It is aimed at the attainment of organizational objectives

From the foregoing, it could be seen that a budget is a quantitative state of plans in a future period. The process of preparing budget is known as budgeting.
Planning, according to Osisioma (1989) is the management function concerned with the identification of objectives and target and, the selection of policies and methods necessary to achieve those objectives. Planning is a process of deciding what action should be taken in the future Furthermore, it was defined by Homgren and Foster as the delineating of goals, predictions of potentials, results under various ways of attain described results. The purpose of business planning is to minimize uncertainty about the future and through co-ordination of plans to increase the chances of making a satisfactory profit. Planning is, therefore, required at all levels of an organisation, departmental/sectional plan must synchronize in order to achieve the broad objectives of the organisation.
Controlling as a management function which according to Matz and Usry is the measurement and correction of performance of activities of subordinates in order to make sure that enterprise objectives and the plans devise to attain them are being accomplished. Meigs concurred with this view or the managerial controls includes, planning, action, reporting and evaluation. They explain that planning is the setting of organizational objective standards of performance and choosing among alternative course of action while action is to see that the plans are put into effect and that policies are followed reporting in the ensuring of the results of actions taken and evaluation represents the accessing of the quality of performance and taking necessary steps to correct deviation from plans.
Chartered Institute of Cost and Management Accountants (1975) defined budgetary control as the establishment of departmental budgets relating the responsibilities of the executives to the requirements of policy and continuously comparing actual with budgeted results either to secure by individual action the objective of that policy or to provide a basis for it revision.

CHAPTER THREE

RESEARCH METHODOLOGY

Research design

The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to application of budget and budgetary control measure in nonprofit organizations (case study of apostolic Church Delta)

Sources of data collection

Data were collected from two main sources namely:

(i)Primary source and

(ii)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 byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.

Population of the study

Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information application of budget and budgetary control measure in nonprofit organizations (case study of apostolic Church Delta). 200 members of selected Apostolic church, Delta state was selected randomly by the researcher as the population of the study.

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.

SUMMARY, CONCLUSION AND RECOMMENDATION

Introduction

It is important to ascertain that the objective of this study was on Application of budget and budgetary control measure in nonprofit organizations (case study of apostolic Church Delta). 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 the challenges of Application of budget and budgetary control measure in nonprofit organizations

Summary

This study was on Application of budget and budgetary control measure in nonprofit organizations (case study of apostolic Church Delta). Three objectives were raised which included: To ascertain the effect of budget and budgetary control in nonprofit organization, to examine whether lack of experience contributed to the committee inefficiency in terms of budgetary control, to ascertain the important of budget and budgetary control measure in nonprofit organization. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 members of selected apostolic Church, Delta. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made pastors, elders, men and women were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

Conclusion

Planning contributed the highest towards the positive performance of the nonprofit organization followed by Monitoring and Control and finally budget participation. Finally, this research determined the effects of budgetary controls on performance of nonprofit organization established the relationship and have also concluded that there is a low positive relationship between budgetary controls and Performance. This means that budgetary controls might not be the only reason for high Performance; many other factors may affect the performance of a nonprofit organization

Recommendation

Budgetary controls are important in influencing performance therefore more efforts should be made by management of organizations both profit and non-profit to sensitize the employees on its importance so as to enhance performance. It also recommends that organizations should develop more formal practice in the development of budgetary controls, that is, Planning, Monitoring and Control and budget participation. Most organizations have minimal formal budget controls in their organizations hence the need to develop a clear policy on budget control processes.

REFERENCES

Arora, M.N. (1995). Cost Accounting, Principles and Practice, 4th ed.
Vikas Publishing Badu, D. (2011). An investigation of budgeting and budgetary Control at Ernest Chemist Laurea, Published BBA Degree, University of Applied Sciences
Callahan, C. M., & Waymire, T. R. (2007). An Examination of the Effects of Budgetary Control on Performance: Evidence from the Cities. AAA 2008 MAS Meeting Paper, Available at SSRN: http://ssrn.com/abstract=1003930.
Carolyne, M., Callahan, Waymire, T.R., & Renea, T. (2007). An Examination of the Effects of Budgetary Control on Performance: http://ssrn.com/abstract=1003930.
Chemweno, C. (2009). Survey of operational budgetary process and challenges in the Mortgage Financing Institutions in Kenya, Unpublished MBA, University of Nairobi
Cherington, D.J., & Cherington, J.O. (2003). Appropriate reinforcement contingencies in the budgeting Process. Journal of Accounting Research, 17(2), 225-253.
Churchill, G.A. (2001). Marketing Research: Methodological Foundations. Fort Worth: The Dryden Press.
Coates, J.B. (2005). Management Accounting in Practice (2nd ed). CIMA Publishing.
Controllers report (2001). Best practice budgeting insights: how controllers promote faster and better decisions, 16, 16-18.
DeVellis, R. B. (2003). Principles and practice of Structural Equation Modeling, 2nd ed. New York, NY: Guilford Press. 47
Donald, R. C. (2008).Business Research Methods (6th ed).Boston Irwin. McGrawHill.
Douglas, B.R. (2004). The budget process in a multinational firm. The Multinational Business Review.2, 58-63.
Drury, C. (2006). Cost and Management Accounting (6th ed). Boston Irwin. McGrawHill, 422-471.
Dunk, A. S., Hopwood, A. G., & Shields, M. D. (2001). Role of Budgeting and Budget process Journal of Management Accounting, 1(2):1-8
Dunk, A.S. (2007). Budget Emphasis, Budgetary Participation and Managerial Performance in Non profit making firms. International Journal of Accounting, 3(1):1-4
Dunk, A.S. (2009). Budget Emphasis, Budgetary Participation and Managerial Performance: A Note. Accounting, Organization and Society, 14(4):, 321- 324.

Other Topics