Critical Analysis Of Budgetary Control It’s Effectiveness And Efficiency In A Non Profit Making Organization

Project and Seminar Material for Statistics

Critical Analysis Of Budgetary Control It’s Effectiveness And Efficiency In A Non Profit Making Organization


Abstract


This research work will be A very crucial study for non- – profit making organization in Nigeria. The role of non – profit making organization in any economy is indispensable. To give this effort proper direction, it is identifiable that the key ingredient in translating this dream into reality is to bring about a clearer understanding of the need for an effective and efficient budgetary control in a non – profit making organization. The research will be carried out through series of oral interviews and distribution of questionnaire in collection of data and relevant information to the employees of national cereals research institute Badegi. The data collection will be analyzed as well as interpreted by there researcher from the testing and proofing of hypothesis. The researcher will be faced with the following constraints:

  • Insufficient time
  • Poor response from the employees
  • Insufficient money

In order for the company to achieve their objectives the researcher will recommend that there should be budgetary control so that works will be aware of the objective of the organization and sud- ordinates opinion considered in the preparation of the company’s budget estimate.


Chapter One


Introduction

The essence of budgeting is to provide an essential element of control in an organization in order to facilitate the achievement of set objectives .The control process is the fundamental organization link between the manager and the other people in an organization in a non profit making organization output various with the objective with which they were established. The objective of public organization could be social and or development in nature.

However this does not means that public organization can not make profit if government policy changes to privatizing or commercializing them. The main structural problem of these type of organization is the sacrifice of the organization profitability for social efficacy which must be achieved in research institute Badeggi falls into this category.

With the use of budget as a control tool, there is Ned for planning a the performance of an organization. Planning as defined by C.I.M.A is an the establishment of objective and the formulation evaluation and selection of the formulation of the policies strategies tactics and action required to achieve these objective, by planning activities in advance more economical use is made of the organization resource and facilities and a fairly accurate estimates of it’s future resources requirement can be determined.

One of the outstanding features of budgetary control is that policy plans resource s and activities of the organization are coordinated integrated and controlled to achieve the desired objectives.

Budgetary control is a means of providing some centralizing control where activities and also responsibilities are decentralized.

It is also the use of budget for assigning responsibilities planning and controlling performance and guiding managerial and other activities of the firm towards the achievement of organizational objectives. It involves, setting out clearly defined forgets of output , income and expenditure for each section of the organization .Embodying these forgets of performance in sectional divisional and departmental budgets co0mpariing these budget standards with actual performance .identifying deviations or variances from the budget and taking corrective action or bringing performance in line with budget targets .this is because all the heads of departments in the organization are involved in the preparation and implementation of budgets, while management5 control the whole activities of the organization.

Budgets are prepared as a result of committee work .Each cmmittee constituting of representatives of various departments and functions to be controlled .the heads of departments are responsible for the respective department budget

Each executive or manager can then fully appreciate his responsibilities ,as they are reflected in his department budget .Any deviation of the actual result from the estimate and forecast are traced back to the department head or manager.


1.1 Purpose of the Study

Most of the non_ profit making organization in Nigeria are governmental in nature, this is because they are mainly set up for social and developmental purposes, this usually leads to a poor planning and control measures. The purpose of this study is to critically analyze the budgetary control system as a planning tool in non_ profit making organization using National cereals Research institute as a case study. This research work intend to bring about clearer understanding of the need for an effective and efficient budgetary control in a nonprofit making organization which will also be of benefit to other similar Organization leading to an improvement in government owned organization budgetary control system.


1.2 Statement of Problems

public sector and other nonprofit making organization are often noted for inefficiencies and poor management, which is as a result of poor planning through repetitive budgeting. Recent studies in the area of budget and resources allocation have shown lack of proper analysis. There is a general lack of the concept of why we have a budget at all. This issue calls for immediate investigation of budgeting as a tool for resources planning and performance control and to recommend how it can function properly.


1.3. Objective of the Study

The main objective to be achieved from this research work is that, it will; serve as a means of measuring the output or the work performed and to compare it with the cost of input. This comparison provides a basis for indicating efficiency and effectiveness.

The process of comparing actual results with planned and evaluating variance if any set a control frame works which help expenditure to be kept within an agreed limit. If this deviations are noted, so that action can be taken to correct this in the future.


1.4 Scope of the Study

The study intend to cover budgetary control as it affect National cereals Research institutes {N.C.R I} . it will examine its budgeting control as a measure of performance.


1.5 Research Questions

The followings are the research questions of the study.

1. Historical Background
  1. Was there any Decree /Act by Government that established the institute? (If any, quote with date.)
  2. What are the objectives of the Federal Government in establishing the institute?
  3. How does the institute relates with the ministry?
  4. What is the organization structure of the institute like?
  5. Looking at the organization structure, what are the function of this department?
2. Funding / Expenditure
  • How do you budget for the institute / or what are the Department that participate in the preparation of budget and disbursement of the fund to Department etc?
  • Do you have a budget committee for the preparation of budget. What does it comprise of?
  • It is understood that Federal Government plays a major role in funding, what are the other sources of fund, with regard to sponsorship, loans, etc. Take a look at three consecutive financial fear.
3. Budgetary Control
  • How does the management control the activities of the institute with regards to administration of budget, in respect of resources, personnel etc?
  • Is there any external monitory agent from the parent ministry that supervise the management? How is this carried out?

There is a table of analysis here which is available in the complete material which you will get before the end of this page


1.6 Research Hypothesis

The underlisted hypothesis from the framework for carrying out the study

  1. HO: Budgetary control effective and it s efficiency is not facilitated by the financing inducing role of government.
    HI: Budgetary control effectiveness and its efficiency is facilitated by the financial inducing role of government
  2. HO: Effectiveness and efficiency of budgetary control does not depend excessively on the provision of basic infrastructures .
    H1: Effectiveness and efficiency of budgetary control expends excessively on the provision of basic infrastructures.
  3. HO: Budgetary control are not the hallmark for development of the economy
    H1: Budgetary control are the hallmark for development of the economy.
1.6.1 Research Question
Section A

1. How effective is the financial inducing role of government towards non profit making organization by the use of access to borrowing loans etc?

  • Very adequate Adequate
  • Very poor Poor

2 Does inadequate infrastructure facilities like access good road telecommunication, electricity etc. effect budgetary control in on profit making organization?

  • Very much Much Very low Low

3 Has establishment promotion and development of non profit making organization been identified as a strategy to tacking poverty and sustenance of economic development.

  • Totally agree Agreed Totally disagreed Disagreed

4 Has the funding of non-profit making organization contributed satisfactorily to budgetary control effective in the development of the economy.

  • Highly satisfied Satisfied Highly Dissatisfied Dissatisfied

5. Does non profit making organization has the hall mark for development of economy

  • Yes No Don’t know
Sample Questionnaire (Structured)

Project Topic: The critical Analysis of budgetary control, its effectiveness and efficiency in a non profit making organization. A case study of National cereal research institute, badeggi,

Instruction: Kindly tick ( ) in the boxes provided or supply simple answers where applicable.


1.7 Limitation of the Study

The constraints include:

Time Factor

The period within which the research work is expected to be completed is rather two short for any meaningful work to be done.

Financial difficulty

Considering the bad economy situation in the country, effort to have sufficient research material to be able to write extensively on the Subject matter proves abortive.

Lack Of Adequate Research Material

Many libraries visited offered little help as regard text books for the project.

Poor Response From The Employees

The employees are unable to disclose some information about the company which made some difficulty in writing the research work.


1.8 Definition of Terms

Actual Performance

Is the real facts on how well or badly the targeted objective was achieved.

Budget

Is a statement showing how money will be spent over a period of time.

Critical

Expressing disapproval on the expected performance.

Efficacy

The ability to produce

Effectiveness

Ability to produce the intended or actual result being efficacious and efficient.

Evaluation

Finding out or stating the value of something.

Forecast

To budget in advance what is likely to happen

HO

Null hypothesis

H1

Alternative hypothesis Alternative hypothesis is what the researcher thinks most of the respondent will agree with in relation to the research problem or the true description of the phenomena. Null hypothesis is not and the opposite.

Hallmark

Mark to indicate standard.

Inducing

Persuade, bring in labour

Planning

Is the act or process of intending to achieve an objective in advance.

Variance

Is the amount which brings difference between the actual and the budgeted.


Chapter Five


Summary, Conclusion and Recommendation

Having delved into budgetary control in a non profit making organization with special emphasis on National cereal research institute, Badeggi, Niger state. This chapter conveys the summary of the researchers finding, conclusion and recommendation


5.1 Discussion of Results and Findings

The most critical problem facing the National cereal Research institute, Badeggi is that of delay or in some cases. Out right default in getting fundds due from various sources. Many a time, before funds are disbursed, the year has already run by, unless stated income is gotten when due budget can not be relies upon as a measure of performance, because of the problem of non receipt of mories when due budget can not be relied upon as a measure of performance because of the problem of non receipt of mores when due. Through most a time when funds to the actual years is deleted the institute make use is delayed the institute make use of the available surplus pending the time the fund are available and it will be replaced for due accountability.

5.1.2 Accounting Records

accounts are properly classified into expenditure and revenue coders. The accounting records reveals certain inadequacies which include improper coding of transactions posing of entries and significant time lag between transition and recording of transitions. Further investigation for the purpose of study reveals inaccuracy in the keeping of records. Example are the revenue source which shows consistencies. Deadline on the processing of routine transition are some times not met and there is lateness in preparing and reconciling bank statement. There is need for the improvement in the standard and quality of work produced and also for the accounting department to be strengthened. Records of aids in form of grants assistance etc., should be properly recorded with document to verify the amount of involved.

Proper records of these items will allow for adequate monitoring of receipts and disbursement of research funds record keeping is a basis tool that assists management in the monitoring of performance, especially records on finance. Records are not properly kept in the NCRI Badeggi. Records for the actual expenditure for the year could not be neatly and effectively extracted for comparison with the budget which were given in detail’s even into the detail of the research costs, which is the primary aim for which the institute was established.

5.1.3 Financial / Performance Reports

In the area of budgetary control, accounting and budget report comprises large portion of the reports needed by the various levels of management. these reports stimulate action. In the Institute, accounting information is not communication for budgetary control process. Communication here implies that reports are not written for the various level of management to appraise their performance . the Accounts Department is structured to provide information for external reporting only and therefore time is wasted in trying to adopt data for management information purposes to the neglect of internal control.

5.1.4 Budget Participation

This is an important aspect of the budgetary control process. It has been shown that participation by lower people in the preparation of budget performance and facilitate control. In a hierarchical system like the NCRI Badeggi, there always exist in the organization bottom up approach to budgeting ; the lower level as (eg the operating supervisors) are not involved in the preparation and results in low morale of works.

Finally, for budget intention to be achieved, the resources and personnel to implement them must be available and the enthusiasm must also be available. This is apparent lack of interest in the budget on the part of heads of department, monitoring of activities is left with the accounts department, while the heads of department interest is on the spending.


5.2 Conclusion

Budget has been defined as financial and / or quantitative statement prepared prior to a given period of time of the policy to pursue during that period for the purpose of attaining given objectives. Performance control has been defined as the direction of current and future activities of the organization to conform to plan. The control process involves five aspects;

1. Planning:

Planning is the basis for control the words control carries no meaning without a plan.

2. Communication:

Informing those involved in the budget of the proposed plan.

3. Motivation:

Motivation of people to achieve the plans.

4. Comparison (Perfomance Reporting)

The comparison of actual with planned results in order to plan, corrective action may be taken if necessary.

5. Action:

If events do not conform to plan, corrective action has to be taken, without action there is no control.

The use of budget as a tool for performance control is a core all” for organization problems. In fact, budgets which are poorly administered may actually create more problems. The essential conditions should exist if an organization is to benefit from the budget process; organization fir management commitment and budget education.

1. Organization Fit

A full budgetary control process may not be appropriate in some situation especially rapidly changing situation. Budget should be designed around the peculiar need of the organization and management ought not to spend valuable time on it , because it is an annual ritual standards are to be revised when necessary

2. Management Commitment

All levels of management, particularly top level managers must be committed to the use of the budget, achievable targets must be set and action taken over areas not performing according to budget. If management’s regard the budget process as merely a form filling exercise with no real meaning or effectiveness, than the system will lack credibility and become dysfunctional.

3. Budget Education

If the budget system is to be correctly used as a positie managerial technique, it is essential that all workers involved should be aware of the implications. The accounts department has the important task of educating other non functional heads of department about the budget. Too often the budget is seen merely as avenue other department to pool ideas and jointly solve problems. Participation is a key aspect of the budget process.
Accountants should participate by helping others to understand the financial implication of their plans, non functional heads of departments should participate in the setting of budget target and in the investigation of budget variances.

In general, the benefits of budgeting are usually agreed to be planning, decision making, co-ordination, control and motivation. In situation where budget is prepared by non finance personnel using more historical data, couple with non ad hereance to the budget during the period, it can not be side that dudegeting exist as one would have expected.

For budgeting to be a control instrument, it must not be seen as a routine exercise to be ignored after the preparation, but must be used as a yardstick for measuring performance, this has been found to be absent in the for measuring performance. This has been found to be absent in the case of National cereal research institute, badeggi. Therefore, the conclusion arrived is only an annual ritual which is not monitored immediately after its preparation.
Consequently, the National cereal research institute Badeggi, can not be said to have used budgeting to achieve any of the stated aims which the research is meant to examine.


5.3 Reccommendations

Current government polices are directed at achieving grater financial self sufficiency and discipline for public sector. The corollary to this policy is the adequate method must be found to fund and control the institute funds. Therefore, for the institute to achieve an effective budgetary control system that could ensure cost effectiveness and efficiency as a tool performance control, the following recommendation are to be afforded , the National cereal research institute badeggi because of the nature and scope of research work carried out for the nation and the fact that it is subbasement of fund, frequent changes in government research policies, inflation etc all these put together could make the use of budget as a tool of performance measures quite problematic. For the same reasons, the following budget which is flexible and allow frequent revising will be recommended for the instute. There should be link between short term and long term budgeting at the national cereal research institute, badeggi which will in turn make budgeting detail from one period into the other and also co ordinate the activities of the budget committee. This will to a large extent, ensure financial prudence and efficient performance of the national cereal research institute, badeggi, Niger state.


5.4 Suggestion for Further Research

I am suggesting that further research should be made on the financial requirement of establishing a non profit making organization of the many types to enable unemployment and fresh graduate who are willing and have the desire to embark in such business to know the financial predicaments involved./ also research should be conducted on the entire population of Badeggi in particular and Niger state as a whole.


Get Complete Project Material

5,000 5000

The Complete Material Will Be Sent to You in Just 2 Steps

Quick & Simple…


Step One Purchase

Make Payment (Through Transfer) of ₦5,000 to Any of the Account Below

Access Bank PlcAcc No: 0811003731
Samphina Academy
Current Account
Zenith BankAcc No: 1225513212
Samphina Academy
Current Account

Or CLICK HERE To Pay With Debit Card


FOR STUDENTS OUTSIDE NIGERIA
CLICK HERE To Purchase Material ($15)
FOR GHANIAN STUDENTS
Make Payment of 120 GHS to 0553978005 | Douglas Cloud Osabutey | MTN MoMo

Step Two Purchase

Send the Following Details on WhatsApp ( 08143831497) After Payment

  1. Payment Details

  2. TOPIC: Critical Analysis Of Budgetary Control It’s Effectiveness And Efficiency In A Non Profit Making Organization

The Complete Material Will Be Sent To You On WhatsApp After Receiving Your Details
T & C Apply


  Contact Our Help Desk


Need a Different Topic? Perform a Quick Search



List of Related Works

Click on Any Topic to Preview the Content

samphina.academy

Samphina Academy

Samphina Academy is an Online Educational Resource Center that is aimed at providing students with quality information and materials to aid them in succeeding in their academic pursuit.