Effect Of Accounting Concept Application On Government Education Parastatals
The aim of this project is to address the role of budgeting in government parastatals accountability in Enugu State Housing Development Authority. It stresses the usefulness of budgeting and budgeting controls in government accountability. The major problems is the inability of organizations to plan and accomplish goals which can be traced to their inability to apply controls and accountability in the budgeting system. The researcher uses both primary and secondary data but reliance was placed more on primary data because of its relative factual nature. They include personal observation, interviews, questionnaire, about 60 personnel of the organization were interviewed and their responses analysed by simple percentage. The major findings reveals that there is a great degree of relationship between budgetary implementation and their actual performance. This lack or no implementation of the budget hinders the achievement of the organizational goal. Budgetary control also as a management tool contributes to efficiency and effectiveness of management productivity. The researcher based on these findings proposes many recommendations. Which include educating the other levels of management on the importance of adhering strictly on the provisions of the budgets and implement it as such. The organization should adopt technique that is easy to implement which include flexible and zero based budgeting techniques. The researcher concluded that when budget are effectively implemented at all levels, it will become an essential standard in ensuring actual performance.
1.1 Background of the Study
This project addresses the role of budgeting as a tool for accountability in government parastatals in Enugu State Housing Development Authority. This is not intended to be a complete work on all budgeting system; rather it stresses on the usefulness of budgets in promoting accountability in government parastatals.
In his budget of December 23, 2011 presented the year 2012 budget, there the governor of Enugu state governor Sullivan chime said that the thrust of the 2012 budget is poverty reduction of the people.
For proper integration of social and economic environment in the state, it has become imperative to reduce unemployment and poverty in the state to the barest minimum. For us in Enugu state it meant drastic reduction in personnel cost ,recovery of government funds and properly filtered away during the civilian administration, increase in internal revenue generation ,judicious spending and accountability. Though ,a budget can be prepare simply on the basis of what was done on the previous year ,adjusted for any change in condition or scope of the activity that may be anticipate for the coming year, a soundly conceived budgetary plan should be such that will simulate the executive to take a more critical view of his own operation .
The fundamental difference between the public sector and private sector is that the later is organics and operated to make a profit for its owner while the former exists to provide services to its citizens substantially on a non-profit basis . The Enugu state Annual Budget like any other state in the federation consists of two segments: the recurrent expenditure and the capital expenditure .However the drastic collapse in oil revenue over the year is one factor that has seriously affected state budgets.
Like every other parastatals, Enugu State Housing Development Authority is fast growing, hence the need for accountability becomes necessary with the use of budgeting. Budgeting system is the process involved in using the scarce resources to achieve the desired goals and objectives of the corporation (Ikpe and Oba, 2004:66).
Budget is also seen as a financial or quantity statement prepared and approved prior to a defined period for the process of attaining a given goal or objectives. It may include income, expenditure and employment of capital (ICMA; 2008).
Therefore in order to achieve these objectives, the organization must deploy the economic resources and discover the means of achieving these goals. These goals can only be realized when the properly planned use of available resources are controlled and coordinated effectively.
Thus the system of managing a business by making a forecast of different activities imperative.
These forecast are guided by the formulation and adoption of planned systems such as techniques in budgeting variance analysis etc. Budgets may be prepared for the firm as a whole or smaller units like departments, operations like production and sales, financial and resource items like personnel, purchase, cash and capital expenditure etc.
Budgetary control at same time is a system of controlling cost through the preparation of budget coordinating departments, establishing responsibilities, relating the responsibilities of the executives to the requirements of a policy. It entails comparism of actual performance with the budgeted and ensuring that the remedial actions are taken promptly to achieve organizational objectives.
It is therefore germane to say that the level of importance that is attached to these plan and effort made in controlling the variance differ in organizations once goals are set which must be based on the detailed analysis of feasibility within the content of political and social values and the financial plans will be enable to strive towards its attainment.
Often than not when these plans are put into operation, condition prevails which tends to cause deviation to the plan and corrective controls and measures are always taken to steer the business back on the right track.
The process already mentioned as it is applied entails budgets and its control. And to lend credence to goal congruence, suitable techniques should be applied to specific areas needs. Special attention, hence the measurement of budgeted with actual to arrive at variance cannot be over emphasis. A business is said to be on the right track; if the outcome of budgeted estimates is favourable as against the actual.
Enugu State Housing Development Authority; a Historical Background
The history of Enugu State Housing Development
Authority started in the days of East Central State Housing Development Corporation that was established in 1971; by Ajei Ukpabi Asika’s administration.
It was charged with the responsibility of building houses and estates to be used for both industrial and residential purposes.
However, following the creation of states by the then Murtala Mohammed government in 1976, the corporation was renamed Anambra State Housing Development Corporation owing to the splitting of East Central State to Anambra and Imo States.
In 1991, the government of Ibrahim Babangida once again created Enugu State from the Old Anambra State thus changing the name once again to the present Enugu State Housing Development Corporation.
The corporation began its operation by utilizing the premises and facilities of the old East Central State and Anambra State Housing Development corporation, while the present staff were made up of employees of former corporation of Enugu State origin and new employees.
In addition, the recent federal government ban on the state from securing loan from external or internal sources and the heavy dependence on imports for essential raw material spare parts and capital goods has continued to affect the state budgeting. Others include unacceptable high rate of inflation and unemployment, low productively, and an adverse debt repayment position.it is this state of affairs that made Enugu state government to adopt the following strategies to achieve the derived goals.
- Maximization of internal revenue by improving the revenue collection machinery and policies .
- Judicious management of expenditure so as to conserve scare fund .
- Concentration of attention on the execution and completion of some selected project in the various sector ; thereby avoiding the used mistakes of preaching scarce resources thing over tow many project and achieving little or nothing .
1.2 Statement of Problem
The success of any business organization rest upon its ability to adopt a well organized budgeting and budgetary control system.
Lack of budgeting system in planning and controlling has resulted in indiscriminate spending of scarce funds meant for use in viable projects and activities. The results in many problems for many organizations which include;
- Inability of the company to plan and accomplish goals which can be traced to their inability to apply controls and accountability in the budgeting system.
- Budgeting goals are not fully realized due to low level of understanding of middle and low level managements.
- Improper accountability of past jobs performed has resulted in management not being able to use past information to make proper and accurate budget for the future which leads to ineffectiveness and inefficiency.
- Improper coordination of various cost centres and information on job progress are delayed and this results in delay of prompt management decisions.
1.3 Objectives of the Study
The primary purpose of this study are:
- To find out the role of budgeting and budgetary control in government parastatals.
- To find out whether there is a relationship between budgetary implementation and their actual performance.
- To determine whether budgetary control as a management tool contribute to efficiency and effectiveness of management productivity.
- To find out whether budgetary control can be used in assessing management budgeting accountability.
1.4 Research Questions
The following questions will be addressed in this study:
- What role do budgeting and budgetary control play in your organization?
- To what extent do budget implementation and their actual performance relates?
- To what extent does budgetary control enhances management productivity?
- What are the significant relationship between budgeting control and management accountability?
- Ho: Budgeting does not play any role in government corporation.
Hi: Budgeting plays a vital role in government organization/corporations.
- Ho: There is no relationship between budget implementation and their actual performance.
Hi: There is a relationship between budget implementation and their actual performance.
- Ho: Budgetary control does not enhance management productivity.
Hi: Budgetary control does enhance management productivity.
- Ho: There is no significant relationship between budgetary control and management accountability.
Hi: There is a significant relationship between budgetary control and management accountability.
1.6 Limitations of the Study
The limitation of this study are:
- Financial constraints on the part of researcher.
- Time constraints on the part of researcher and school timetable on the MBA programme.
- Government secrecy: the corporation personnel are not willing to release information in the course of this research and thus hinders the details.
1.7 Significance of the Study
The study will contribute toward improving the budgetary planning control techniques in Enugu state. Thy study will also help the state government a technique for effective financial contor and control over revenue collection .The study will enable the government and the ministries broaden their understanding of the role of budgeting as a planning and control device in the public sector .This could be done by allowing the respective ministries, Parastatals corporation etc .have second look at their budgeting techniques .
The research is so useful in several ways:
Firstly, the government will benefit immensely from the findings and recommendations. This study will highlight the problems associated with inadequate budgetary control in government business. It will also help government on how they will effect controls in their businesses.
Secondly, corporate organizations will utilize the recommendations to effect proper budgetary control is all their affairs to ensure accountability in all its businesses.
Thirdly, the society at large will benefit because accountability will eradicate corruption. This will ensure that all projects and activities budgeted for are completed and on the specified periods of time to their benefit.
Finally, this project study will be useful for academic purposes. It will act as a data bank to those who will carry out further study on the field in the future.
1.8 Scope of the Study
The study focuses on using budgeting as a tool for accountability in government and its parastatals.
However, its scope covers; the role of budgeting, the relationship between budgeting and budgetary controls budget implementation and its performance and budgeting controls and accountability in management.
1.9 Definition of Terms
In this study certain term are to be used and whenever it found are to be given the following meaning: –
(A) The Federation Account
It is the distributable pool account into which all revenue collected by the federal government departments or an authority by the states on behalf of federal government.
(c) Exclusive Revenue of the Federal Government
Federally collectable revenue is made up of two disproportionate parts. The first and often the smaller parts is the revenue which accrues exclusively to the federal government from its own independent sources such as from income tax of the personnel for the armed force of federation of the Nigeria police force the ministry of external Affairs and residents of the federal capital territory , Abuja. The second and is whatever that is not included in the first part above.
Summary of Findings, Conclusions and Recommendations
This chapter presents the summary of research findings conclusions and recommendations based on the findings of the research work. It is in this chapter that the objectives of the study will be fulfilled through the discussions of the major and minor findings from which the conclusions will be drawn and the necessary recommendations made.
5.1 Summary of Findings
In the course of this study which is based on the role of budgeting in government parastatals accountability with reference to Enugu State Housing Development Authority.
The following findings were made:
- Budgeting and budgetary control play a vital role in the overall success of the government parastatals which will lead to the achievement of the set goals and objectives of setting up the parastatals.
- The study also reveals that there is a great degree of relationship between budgetary implementation and their actual performance. This shows that if a budget set out at any financial period is not implemented to at least 70% the goal of the period will not be made or attained.
- The research also reveals that budgetary control as a management tool contributes to efficiency and effectiveness of management productivity.
- It also reveals that budgetary control can be used to assessed management budgeting accountability.
Having examined in details the uses and importance of budgeting and budgetary controls in the organization and the role the play towards determining the corporate objectives (profit making) one could rightly conclude that it is indespensible to any business organization.
If budget are carefully planned and implemented by management, it could lead to decrease in cost and an increase in revenue. Though budgeting and budgetary controls enhance the efficiency of the organization performance, it should be noted that it is not the magic stick that could replace effectively planned and efficiency implemented at all levels, it will become an essential standard in measuring actual performance.
This in above all makes budget an essential tool for management accountability.
5.3 Research Recommendations
On the whole the findings of this study supports the conclusion that the propose of budgeting and budgetary controls contributes in no small way tot he overall performance of the organizational accountability.
In the light of the findings made earlier, the following recommendations were made:-
- For budgeting to play a vital role in government parastatals accountability. Top level managers should educate other level managers on the importance of adhering strictly to the budget provisions and implementations. When every staff understands the provisions of the budget its implementation will lead to proper accountability.
- For actual performance the organization should adopt the techniques that is easy to understand by their managers and staff such as flexible and zero based budgeting techniques. This will make it easy for implementation and reduces cost for actual performance.
- Since budgetary controls leads to efficiency and effectiveness of management productivity, the top level management should allow inputs from all levels of management in its budgeting decisions to ensure its decisive implementation.
- Since budgetary control is used to assess management accountability, constant and periodic review should be introduced in the budgeting process to ensure that corrective action are taken an deviations which occur as they occur.
5.4 Direction for Further Research
Future research should need focus on larger populations size. For validation purposes. This will lead to an upshot to other areas that has not been covered by this research because of time constraints and other variable.
- Environmental influence in budgeting control as a tool for transparency in government parastatals.
- Problems and prospects of budgets and budgetary controls in government parastatals.
- The role of corporate budgetary system in government parastatals.
- The benefits and contribution of budgetary control in government decision making.
Finally, researchers should took for other ways of using budgeting as a tool for accountability in government parastatals. Overall the research has been an interesting experience to the researcher and has given evidence to the aim and objectives and well as justified the researchers rational and viewpoint.
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