Problems Of Budgetary Control As Management Tool For Planning And Control

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Problems Of Budgetary Control As Management Tool For Planning And Control


The research on problem of budgetary control as a management tool for planning and control. Its source is mainly concentrated at Asaba capital city of Delta as a result of the lack o implementation of budget and management of budget in he financial industries and organizations. The objective is to identify the cause of poor performance in an organization also to examine the problem of inadequate allocation of resources to meet organizational goals, standard for prediction of past and present budget for future reference. The researcher examines this work by using primary and secondary data, personal interviews and questionnaire, the yaro yemen’s formula (n=N/ 1+n (e)2) was used.

In the chapter four, the data was analyzed by percentage and the findings were properly discussed. From the findings, he researcher observed that forecasting should be used in predicting the future budget, also lack of management of fund causes inadequate allocation of resources and equal relationship exist within the organization in conclusion. The research recommended that there should be equal relationship within an organization and forecasting should be used in prediction of future budget and finally, management auditors should be called in from time to time to make inquiry in reducing the stress and constrain involved in effective management.

Chapter One

1.0 Introduction

1.1 Background of the Study

Fundamentally, management is the coordination of human effort that is art of accomplishment of goods by utilizing the effort of other people. The management process may be varied as the total management effort operating in a particular endeavor that include decision making, the application of selected techniques and producers and the motivation of individual and groups to accomplish specified objective. One of the most important approaches that have been developed for facilitating effective performance of management process is budget and budgetary control. As consequence, the concept has found wide acceptance in recent years in the better managed companies / organizations. A budget, according to Horgen et al (2013:59), as a qualitative expression of a plan of action and, an aid to coordination and implementation.

Every organization has an implicit and explicit objective, it hopes to achieve in a given period of time such objective is translated into plan through the formulation of policies and selections of programmes in other to check derivation from it, hence most organization normally use budget as an action plan, a budget is therefore a parameter, which measures actual achievement, Budgetary control as sample used to institute control for the plan, this is because budgetary control takes target of desired performance as its standard than systematically collected information relating to actual performance and identifies variance between targets and actual performance. Budgetary control is more than an administrative technique which aims to ensure the managerial function are in fact carried out a well organized and coordinated fashion hence budgetary control apart from being a longer system which involves setting objectives concerning alternative programmes and incorporating them into the formulating authorization and implementation of budget, accounting per and reviewing of findings to check deviation from actual plan in order for corrective measures to be taken on time.

Budget which is required to achieve different aims within an organization starts with the setting out of the objective of the organization by the management for the budgeted year according to government fiscal and monetary policies, guidelines and the approval of the management centered in carrying out the plans which are contained in each budget.

In conclusion, for management to provide adequate control over the budget of an organization, it could coordinate all the collaborated responsible parties in achieving the actual result with the budget to establish the variance, hence budget is therefore a primary tools for planning while the process of budgetary control is both planning and control device.

1.2 Statement of the Problem

The main focus of the problem is based on problem of poor performance in an organization due to lack of effective and efficient budgets and budgetary control system.

Also problem of inadequate allocation of resources to meet organizational goals and maximize performance.

Further more studies on problem of reflecting data of the past and present and how to enable predictions and forecasts to be made out in the future.

The study also term to discover how banking industries in Nigeria can make use of prepared budget to achieve efficient result.

Also, looking into numerous pressures in the job may impose constrains upon managers which affect the qualities of information they collected in the organization.

1.3 Purpose of the Study

The purpose of this study is to know how budget and budgetary control serve as a managerial tool for planning and controlling specifically, the study aimed at achieving the following objective:

  1. To identify the case of poor performance in an organization.
  2. To examine the problem of inadequate allocation of resources to meet organizational goals.
  3. To provide standard on the past and present budgets in forecasting and predicting the future.
  4. To identify how prepared budget can be used in achieving efficient result.
  5. To under stand numerous pressure in job contraries on managers in budget preparation.

1.4 Research Question

  1. What relationship exists between budgetary control and organizational performance?
  2. What are the cause of inadequate allocation of resources in an organization?
  3. How can an organization use past and present budget in predicting the future?
  4. Does prepared budget has any impact in achieving organizational goals / result?
  5. Does numerous pressure in job constrain on managers affect budget preparations?

1.5 Significance of the Study

The addition of knowledge is basically the aim of every research and this research work seeks to achieve more importantly, this research is necessary in understanding how the budgetary control affect organizational performance.

Also it is a tool which measures managerial performance of an organization in bring solution in allocation of resources and promote good morale and harmony in the organization.

The research apart from explaining the concept of budget and budgetary control looks into the comparison between the past and present budget in future prediction.

It will contribute immensely to the existing knowledge on the concept on how banking industry in Nigeria can part take in budget preparation in Nigeria in order to achieve an organizational goal.

In conclusion, numerous pressure that are mounted in job constrain to manager are reduced and more measures are taken in dressing the issues.

1.6 Scope of the Study

Element of a successful budget plan the success of the budgetary process in an organization depends on the following essential element on accurate forecasting of business activities and communicating the budget acceptance and cooperation reasonable flexibility. All in reference on first Bank Nigeria Plc Asaba Delta State.

1.7 Definition of Terms


Budget is a plan that is usually expressed in monetary terms approved before the period of use and it usually covers one year.

Budgetary control:

According to the chartered institute of management accountants (CIMA) Budgetary control is the establishment of budget relating to responsibilities of executive to the requirements of a policy and the continuous comparism of actual with budgeted results, either to secure by individual action of the objective of that policy or provided a basis for its revision.


This is an account opened by individuals who wants to save small account of regular basis and income after expenditure / expenses.

Current Expenditure:

Is the expenditure that are repealed yearly, example salary of cookers, road repairs and other similar expenditure of reoccurring nature.

Capital Expenditure:

This is incurred when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset with a useful life extending beyond the taxable year. In the national budget is the expenditure of permanent nature, the expenses are on project that will last for more years example school, roads, hospitals bridges etc.


Is an acquiring in share, stock debenture of other companies, investment can be acquired by an individual on company by or investing other company.

Budget Balance:

This means that planned government expenditure is equal to estimated government revenue.

Budget surplus:

This means that proposed government expenditure is less than the estimated government revenue during a financial year.

Budget Deficit:

It means that government planned expenditure is greater than its estimated revenue for one year.


This is he process of thinking about an organizing the activities required to achieve on objective. A process of making arrangements for in advance.

Chapter Five

Summary of Findings, Conclusion and Recommendation

5.1 Summary of Findings

This study is set out to review the fundamental issues embodies in budget and budgetary control which serves as a tool for planning and control with special reference to first bank Nigerian Plc, Asaba branch as a case study. The general study could be summarized as follows.

The study reveals the introduction and brief overview which really went vividly into the statement and objectives of the study, and identified the problem of poor performance in various organization and also achieve proper solution to problems. It went further to identify the cause of inadequate allocation of resources in meeting organizational goals and also analysed the past and present budget forecasting for future reference. The study looks further to the preparation of budget and numerous pressure in job constrains on managers in budget preparation.

On the upsurge of budget and budgetary control which usually expressed in monetary terms approved before the period of use and it is always annually or quarterly, and it enable review of all know literatures. That has relevant and significant to budget and budgetary control as a managerial tool for planning and control in both the manufacturing and non manufacturing concern.

From the analysis undertaken in this work mainly in chapter three with brief outline of what the reader will be caring out in chapter your which shows the methodology of what was used in executing the study. In going through the work the one would discover that budget is usually a systematic and formalized approach for stating and communicating the firms expectation and accomplishing the planning, co-ordination and control responsibility of management in such a way as to maximize the use of a given resources.

Finally, through the analysis of data and other information received relating to the system of budget and budgetary control and various highlighted findings and discussion of finding, thus, enhancing pure and proper presentation of budget in an organization / financial institutions.

5.2 Research Conclusion

Budget is an essential tool for management that wishes to exercise comprehensive control of the activities of the paramount important to a business entity; it is used by managers to carry out their day to day functions especially in financial matters in the areas of planning, controlling and appraisal.

This study has discovered the relevant of budget and budgetary control as a managerial tool for planning and control. It is often said that the effectiveness of good plan lies in the built control system, without provision for effective control, a plan may become an unguarded missile in action which may crash in the business that formulated it.

Finally, budget should be presented in detail on the various description involved and also analysis should be made on how the budget capital should be spend. It look forward on proper allocation of resources and reduction in certain problems affecting budget in an organization.

5.3 Recommendations

In view of the foregoing review the following recommendations are suggested for the improvement of budget and budgetary control in Nigeria.

  1. The bank should enlighten its staff as to the aim of the budget and how it’s a control device which would enhance their performance through this, it is hoped that the view held by some members of staff that budget is just a figure no paper would be erased.
  2. Since the company is service contended and not output oriented, therefore, the employment of zero budgeting allocation of resources in an organization and substantial cost of saving and elimination of wastage spend.
  3. Also, since budget relates to future period, budget estimates of past and present prediction, should not only be based on cost and expenditure bring during the future period, but also to put past results and period into consideration to ensure efficiency and effective control in operation.
  4. For better budgetary control of operation, budget should be properly prepared and also reduction in cost of execution in order to achieve organizational goal or objective.
  5. Finally, management auditors should be called in from time to time to make enquiry in reducing the stress and constrain involved in budget preparation in other to actualize effective management.

5.4 Limitations of the Study

Time Factor:

Is a factor that limits the researcher scope. The time lag between the projects, the lecturer, and preparation of quiz, exams and other commitment is a constraint that limits the researcher from carrying out this work conveniently.

Inadequate Data:

Gathering of information form staffs for this research project was not easy because they felt that researcher current information will mean contravening against the policy in budget and budgetary control.


As a student source of income was poor except form the little pocket money given by our guardians. The researcher finds it difficult to reach all the required people that information need to be obtain form the researcher also finds it difficult to travel and source for information due to lack of finance.

5.5 Suggestions for Further Research

The following suggestions made for further research

Further research should be conducted in order to ascertain more significant in improving performance of an organization and also measures on how to eliminate lack of effectiveness and efficiency in budgetary control system. Also, more pressures should be made to improve allocation of resources to meet organizational standard and maximize performance.

More knowledge should be put in place in prediction of past and present budgets in future references.
Strategic measures should be imposed to control the preparation of budget and managers should apply some measures in reducing the pressures and constrains affecting them in budget preparation.

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