Budget And Budgetary Control In The Banking Industry

The worldwide use of budgets in one form or the other and its inherent problems is the focal point of my interest in this study.

It is one thing to plan a budget using the best projected figure; it is another thing to ensure that the process of establishing lie budget is both highly efficient and effective in accomplishing the set objective. This is simple terms in basically what budgetary control entails.

Therefore budgeting as a tool of planning and control expressed in financial terms based on predetermined objectives must represent what is likely to happen after a careful balance has been struck between the ambition of management and the constraints facing the business.

1.0 Introduction

An organization is referred as a group of individual who perform different functions with a view to accomplishing certain objectives. In management setting, it is assumed that an organization will continue to exist for an indefinite period of time. To ensure effective management of the resources of an organization, budgetary planning and control should play predominant roles. In the operating life cycle of an organization like Double Diamond Plastic Industry Ltd, Aba. Budgeting process is very important. It is connected to its complete administration ranging through planning to management control. Hence for a firm to be viable, it must be planned and controlled so as to ensure that certain objective are achieved.

Arison (2002, 1-20) stated that effective management and administrative structure through which performance of the approval budget will be executed in an organization are needed.

Planning is a means of achieving them. It has to do with deciding in advance what to do, how to do it, who should do it and when to do it. Without planning, actions must become merely random actively producing nothing (knous, 1999: 157) if an organization is to succeed, planning must be taken as a predominant tool.

The budgeting process is the tool through which planning process is made operational. An organization to run its affairs effectively, it must have income period. This avails the management as a long measure to obtain operational decisions of his firm in respect of the income and expenditure budget the management can ascertain how viable his organizational operations are.

In the same vein, if various budgets are properly executed, an indication will reflect showing the effective attainment of organization objective.

1.1 Background Of The Study

The company, Double Diamond plastic Ltd, Aba started in 1989 as a private Limited company, the company manufacture various types of plastic containers, plastic hangers of different designs and size, sheeting.
Budgeting is essentially concerned with planning in every service oriented organization because any service oriented organization that does not plan and implement its budgeting is expected to encounter a lot of problems. These problems range from mismanagement of limited research to reckless management adopt to achieve it task of planning co-coordinating directing and control in an service oriented organization.

Planning is mainly concerned with the future and selection of policies, strategies, tactics and action required to achieve these objectives.

Planning was previously based on historical cost conventions. This process increase the emergency decision which top management had to make because historical cost conventions are aid future oriented they do not aid planning.

In order to reduce to management"s emergency decision making process and planning variable manager want to know more than they have done currently in relation to cost period performance they also wants to know how they have done currently in relations to their current targeted performance.

Control on the other hand follows closely after actual performance is compared where by actual performance is compared with targeted/budgeted performance any deviation from his target are investigated for an in-depth or positive explanation given.

Budgetary control is the techniques used for this purpose and when it is combined with budgeting, it becomes part of reasonability accounting. This aim of budgetary control is to provide a formal basis for monitoring the progress of the service oriented organization as a whole and of its components part towards that achievement of the objective specified in the planning budgets.

Budgeting enjoy a wide application, they can be used in our private houses where a civil servant who earns a monthly income will map out his objectives and plans effectively with what he has to achieve those objectives.

1.2 Statement Of The Problem

Budgeting is the formulation of plans, both long and short range for future activities that seeks to substitute carefully studies action of how to attain the desired goods and provide measure through deviation from planned achievement can be evaluated.

The process of budgeting lead to budgeting, which the institute of cost and management accountant defined it as a financial and quantitative statement prepared and approved period of time of the policy to be pursued during the period for the purpose of attaining a given objective. It may include income expenditure and the employment of capital.

Since the sole purpose of organization is profit maximization a properly concerned budgeting may or may not lead to a goals because of problems involved in budgeting and budgetary control. The variation between the actual performance and the budgetary result could be checked and corrective measure taken immediately

This leads to the need to control the budget.

The institute of cost and management accountant defined budgets relating the responsibilities of executive to requirement of a policy and continuous. Comparison of actual with budgeted result either to secure by individual action. The objective of that policy is to provide a firm basis for it revision.

1.3 Objective Of The Study

This study is to be carried out with the aim of discovering whether budgetary planning and control will really serve as guide of effective management to operate human and material resources in Double Diamond Plastic Industry Limited Aba.

Empirical evidence will also be used to prove that budgetary planning and control are widely used as management tools.

1.4 Research Questions

On view of the problem associated with this topic, the following research question, which is vital for the in-depth analysis of this topic are addressed by researcher.

Does budgeting planning and control contribute to the improvement of management efficiency and high productivity?

Is low level of revenue generation as a result of setting unrealistic target, there by demoralizing the workers?

Are the appraisals of the management"s performance based on the budget?

Are the officer -in-charge of budgeting accountable for the objectives?

Are variance built in to the incentives or disciplinary system of the institute or hospital?

To what extent does the problem of implementation and inadequate coordination affect the industry?

1.5 Statement Of Hypothesis

HO: There was no significant relationship between budgetary planning, control and resources management in Double Diamond plastic industry limited.
HI: There was significant relationship between budgetary planning, control and resources management in Double Diamond plastic industry limited.

Ho: There was no major deviation between budgetary planning and control and effect management of resources in Double Diamond in Nigeria.
HI: There was major deviation between budgetary planning and control and effect management of resources in Double Diamond industry limited.

1.6 Significance Of The Study

It is assumed that the management of Double Diamond Plastic Industry Aba will corporate with research by completing the questionnaire and returning them on time to enable the researcher carry out the study.

Summary, it is also assumed that there will be enough related work in the library and facilitate easily completion of the study. The researcher will be good health throughout the period of conducting the study so as to complete it on time.

1.7 Scope Of The Study

This is limited to Double Diamond Plastic Industry Limited Aba. The study will look into budgetary planning and control implementation for effective and efficient management of its resources profit management of its resources profit maximization predominant, the aim of the industry.

Their investigation will highlight on the result obtained from the management of Double Diamond Plastic Industry limited Aba.

1.8 Limitation Of Study

The scope of the study is limited to the study of how the Double Diamond Plastic Industry Aba used budgetary planning and control to manage its resources effectively, inconsequent of this, therefore, data collection would be limited to the staff and management of Double Diamond Plastic Industry Limited Aba. They include the following:

Time factor is a serious limitation of this work because the researcher has to combine manual academic work, writing of examination, writing of project and submitting it with the specific period.

Financial constraint is the cause of most poor output of research work. This ugly trend hinders some more development in research.

Poor infrastructure and inadequate academic material including lack of this research work.

The researcher depends on primary data from the respondents mainly from the organization of my study implying that only factors the respondents are deduced.

Summary, Conclusions and Recommendations

5.1 Summary of Findings

Findings were made based on the analysis of data presented in chapter four.

These are summarized as follows;

Commercial banks, such as Access Bank PIc, are conscious of budgeting, make use of budgets and intact have a budget review committee.

It was gathered from the research that the type of budgeting system in use at Access - Bank is incremental budgeting, at Access Bank is incremental budgeting and functional budget are prepared by the various heads of department and collated into a budget by the budget review committee.

It was also discoursed that, budget statement for the whole organization is prepared department, prepare smaller quartiles budget for their own use.

It was also revealed that, employee performance and production is enhanced through the application of budget and budget control.

Furthermore, it was gathered, that problems are encounter in implementing control measure due to inherent lags and delay in the system resulting in feedback problems that cause resulting various to be of value as a guide to current operation and also due to poor human relation and undue pressure motivation.

Finally, it was discovered that information technology has been embraced. The employees are computer literate and computers are in use for banking and non-banking operation

5.2 Conclusions

The worldwide use of budget and budgetary control in one form or the other in most organization has been the sources of interest In many studies, from this study, the following conclusion are made:

Organization cannot operate in vacuum, more so financial constitution. They require a plan of action and regular systematic monitoring of result compared to plan budgets and budgetary control have been recognized as tools though which this can be done.

For budgeting and budgetary control to be effective, those in charge such as managers must be conversant with the economics, social cultural, technology and even legislative trends in their operating environment. Knowledge of the organization past is also required upon which forecasts are carried out an extrapolations made into the future to project what is likely to occur after a careful balance has struck between the ambition of management and the constraints facing the organization.

Budget and Budgetary control activities need to be people oriented even in the banking industry has budgetary system that do not consider that human factors are disaster prone.

Information technology has found its easy into all works of life including business and economic system, hence its application to budgeting and budgetary control systems in the banking industry.

5.3 Recommendations

Recommendations are made here of how letter result can be achieved through improved practice of budgeting and budgetary control to overcome or alleviate some short coming that were in identified.

The commercial banks and other financial institution should take budget and budgetary control more seriously than even before because an organization without a course. They are necessary for considering and redefining the aims and objective of the organization and assessing the external proceeds structures and resources.

Managers should be less rigid allowing budgets to be flexible so as to incorporate the dynamic and ever changing environment since organization cannot exist in isolation.

It is also recommended, that organization budget review should be conducted biannually instead of annual as is currently the case to make the budgetary control system more effectively and beneficial to current operations.

That budget and budgetary control system should be more people oriented. It is imperative that each employee with a target feel that the budget for his section is realistic and relevant and not imposed on him from above. Undue pressure should not be applied on the employees so as not diminish other motivation or made their attitude incorporative.

Finally, proper training should be given to all those involved with budget and its control from the executives to the officers. This should be conducted through periodic talks and seminars. Therefore, these recommendations if considered and practice will improve the practice of budgeting and budgetary control in the banking industry and other organization.

Preliminary Page(s)

Title Page

Declaration

Approval

Dedication

Acknowledgement

Abstract

Table of Content

Chapter One

1.0 Introduction

1.1 Background of the study

1.2 Historical Background

1.3 Statement of Problems

1.4 Purpose of Study

1.5 Significant of the study

1.6 Scope and Limitation of Study

1.7 Research Methodology

1.8 Research Questions

1.9 Research Hypothesis

1.10 Definition of terms

Chapter Two

2.0 Literature Review

2.1 Types of Budgets

2.2 Budgetary Control

2.3 Budgetary control system

2.4 Corporate Planning

2.5 Management Control system

2.6 Budgetary Process

2.7 Budgeting Improvement Techniques

2.8 Problems Associated with Budgeting

2.9 Benefits of Budgeting

2.10 The Concept of Budgeting

Chapter Three

3.0 Research Methodology

3.1 Introduction

3.2 Research Design

3.3 Sources of Data

3.4 Population and Samples Size

3.5 Samples and Sampling Technique

3.6 Research Instrument and Administration

3.7 Method of Data Analysis

Chapter Four

4.0 Presentation, Analysis and Interpretation of Data

4.1 Introduction

4.2 Presentation of Data

Chapter Five

5.0 Summary, Conclusions and Recommendations

5.1 Summary of Findings

5.2 Conclusions

5.3 Recommendations

Bibliography

Questionnaire

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