Budgeting and budgetary control techniques and implementation In the institution of higher learning
(A Survey Of Enugu State University Of Science And Technology)
In an institution of higher learning, effective budgeting and budgetary control techniques are paramount for managing resources efficiently and achieving strategic goals. This process typically involves forecasting financial needs, allocating resources to various departments or projects, and monitoring expenditures against the budget. Techniques such as zero-based budgeting, activity-based budgeting, and variance analysis are commonly employed to ensure financial accountability and transparency. Implementation requires close collaboration between academic and administrative units to align budgetary allocations with institutional priorities while ensuring compliance with regulatory requirements. Regular reviews and adjustments are essential to adapt to changing circumstances and optimize resource utilization, ultimately supporting the institution’s mission of providing quality education and research opportunities.
This study was focused on the application of budgets and budgetary control, techniques and implementation in the institution of higher learning a survey of Enugu State University of Science and Technology (ESUT).
The aim of the study is to determine whether budgets and budgetary control technique is a key factor in planning and controlling functions of the management in the Universities, to find out how ESUT can forecast and plan further operations and co-ordinations to ensure harmony, again to determine the role of budget as a tool for effective and efficient management of resources.
To guide this study more a review of literature was done to expose the researcher to what has already been done to ensure that budgeting department have role to played in the university.
A structured questionnaire was developed and administered to 80 staff of ESUT Enugu (50 middle level and 30 top level management staff.
Fourteen (14) items questionnaire was used and data collected were analysed using cluster variables hypothesis was also tested. Findings were made and recommendations based on the findings were also made thereafter.
Title Page ii
Approval Page iii
Dedication iv
Acknowledgement v
Table of contents vi
List of table ix
Abstract x
CHAPTER ONE
1.0 Introduction 1
1.1 Background of the Study 1
1.2 Objectives of the Study 4
1.3 Research Questions 5
1.4 Hypothesis 6
1.5 Significance of the study 7
1.6 Delimitation of the Study 7
1.7 Definition of Terms 8
CHAPTER TWO
2.0 Review of Related Literature 10
CHAPTER THREE
3.0 Research Design and methodology 37
3.1 Research Design 37
3.2 Area of Study 38
3.3 Population of the Study 38
3.4 Sample and Sampling producer 39
3.5 Determination of sample size 39
3.6 Instrument of Data Collection 40
3.7 Method of Data Presentation 41
3.8 Method of Data Analysis 41
CHAPTER FOUR
4.1 Data Presentation and Results 43
CHAPTER FIVE
5.0 Discussion, Recommendation and Conclusion 56
5.1 Discussion of Findings 56
5.2 Recommendation 58
5.3 Conclusion 59
5.4 Limitation of the Study 59
References 60
Appendices 62
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The success of an organization can be derived from the efficiency and effectiveness of its resource use. Some organizations can do well with minimum resources, but there are others which do not do well even with abundant resources. The difference, between both depends on the method of allocation of resources and the use to which they are put. As a result, the importance of resources management in achieving organizational success cannot be under estimated. And so the need for a planning and control, management of any university must always look into the post, present and plan for the future. The performance is helpful in planning for the future, in sense that it provides basic for estimating the probable future operating conditions.
Fundamentally, management is the con-ordination of human efforts that is the accomplishment of goals by utilizing the effort of other people. The management process may be viewed as the total management effort operating in a particular endeavour that include that basic management functions planning,. Co-ordination and control to accomplish specific objectives.
One of the most important approaches that has been developed for facilitating effective performance of these management functions is budgeting.
A budget is a plan quantified in monetary terms prepared and approved subject to a defined period of time, usually showing planned income to be generated or expenditure to be incurred during the period and the capital employed to attain a given objective. Budget has been defined by different people, Economist defined it as an official document showing the expected revenue and expected expenditure for a given fiscal year.
Cost accountant defined it a plan quantified in monetary terms, prepared and approved prior to a defined period of time, usually showing planned income to be generated or expenditure to be incurred during that period and the capital employed to attain a given objective.
To the management accountant, it is a formal expression of managerial plans. Its quantities and financial terms encompassing different phases of business operations and aimed at helping management towards the attainment of organization objectives.
Planning, which according to Ogbozor (1999) involves mental effort by which the executives anticipate the possible census or factors that may effect or change the activities and objectives of a particular organization. With the end in view of controlling the nature and direction of changes and determining what measures or actions necessary to accomplish pre-determined goals, is an important function of budgeting.
Budgeting is concerned about making plans for the future, implementing these plans and monitoring activities to see whether they conform to the plans.
Co-ordination is the synchronization of individual action with the result that each sub-division of an entity effectively works towards the common objectives. It involves the interpersonal relationship of people in the work situation, as they exchange view, ideas, prejudices and other attitudes. Budgeting provides for the co-ordinations of activities, particularly through master budget which summarize all the supporting budgets.
Planning and controlling functions of management has budgetary control as its accounting tools. Budgetary control may be described as a managerial activity that relate to responsibility centres of an organization. It is also the use of budgets for assignment of responsibilities, planning and controlling performance and guiding managerial and other activities towards the achievement of organizational goals.
There are various budgeting techniques like zero-base budgeting, planning programming budgeting system, traditional budgeting. Budgeting control techniques and budgets is a key factor in planning and controlling function of management in Nigeria Universities.
It tried to find out if the profitability of universities depends on the effective budgetary control system is use.
To know which of the budgetary techniques is best used for efficient management and period of which it lovers.
1.2 OBJECTIVES OF THE STUDY
The objective of the study is to determine and suggest techniques that can be used efficient and effective management .
To find out how universities can forecast and plan future managerial operations and co-ordination to ensure harmony.
To know what brings about failure in many universities.
To find out which of the budgetary technique is best used for efficient management of the universities.
1.3 RESEARCH QUESTIONS
1. Do budget serve as an effective means of planning the universities activities.
2. How does ESUT (Enugu) regards the preparation of annual budget and its subsequent use to control the activities of the university as a strategic decision.
3. What factor bring about failure in many universities.
4. Which of the budgetary techniques is best used for efficient management and what period does ESUT operational budget cover.
1.4 RESEARCH HYPOTHESIS
Ho Budgeting has no significance effect (p<.05) in financial management of higher institution.
Hi Budgeting has significance effect in the financial management of higher institution.
2. Ho There is no significant relationship (p<.05) between the preparation of annual budget and strategic decision.
Hi There significant relationship (p>.05) between
The preparation of annual budget and strategic decision.
3. Ho There is no significant relationship (p<.05) between the failure of universities and budget implementation.
Hi There is significant relationship between the failure of universities and budget implementation.
4. Ho There is no significant impact (p<.05) between restriction to one budgetary technique and performance of universities.
1.5 SIGNIFICANT OF THE STUDY
The study will contribute a lot human endeavours especially as the control would reveal variance between actual and budgeted result.
Then therefore significant in that it will.
(a) Determine whether budgets and budgetary control technique is a key factor in planning and controlling functions of the management in the universities.
(b) Ensure that universities operates within the scope of its corporate objectives.
(c) Evaluate the role played by top level management staff on budgetary process and its adherence to the budget.
(d) Limit the great difference between actual and budgeted performance.
1.6 DELIMINATION OF STUDY
Determining from the crucial role played by budgets and budgetary technique in managerial decisions process their use is by no means restricted to any one from of educational institution.
As a result of this the study is limited to educational institutions not the whole of the country or state but within Enugu zone in Enugu state, therefore a major limitation of its study is its focus on the input of application of budget and budgetary control, techniques on the profitability of Enugu State.
1.7 DEFINITION OF TERMS
i Budgeting : This is a formal process for planning through the use of estimated financial and accounting data.
ii Budgeting control : This involves, the use of budget for assigning responsibilities planning and control performance and guiding management and other activities towards the achievement of organisational goal. Control performance and guiding management and other activities of organisational goals.
iii Planning : This is managerial function that concerns the identification of objectives and aims and choosing the appropriate policies and methodology necessary to achieve these objectives.
iv Survey Research : This is the systematic gathering of information from respondent for the purpose of understanding and or predicting some aspect of the population of interest.
Budgeting and budgetary control techniques and implementation In the institution of higher learning:
Budgeting and budgetary control are critical financial management techniques for institutions of higher learning. These techniques help these institutions plan and manage their financial resources effectively to achieve their educational and strategic goals. Here’s a guide on budgeting and budgetary control techniques and their implementation in higher education institutions:
1. Budgeting Techniques:
a. Incremental Budgeting: – This is the most common budgeting technique where the previous year’s budget serves as a base, and adjustments are made for changes in enrollment, inflation, and other factors.
b. Zero-Based Budgeting (ZBB): – In ZBB, all expenses must be justified from scratch for each budgeting cycle. This technique encourages cost efficiency and can lead to a more accurate allocation of resources.
c. Program-Based Budgeting: – Budgets are structured around academic programs or departments. This method aligns budgeting with the institution’s educational goals.
d. Activity-Based Budgeting: – This approach focuses on the cost of activities and allocates resources based on the activities that drive the institution’s mission.
e. Performance-Based Budgeting: – Budgets are linked to performance metrics and outcomes, emphasizing accountability and results.
2. Budgetary Control Techniques:
a. Variance Analysis: – Regularly compare budgeted figures to actual results to identify and address discrepancies. This helps in cost control and performance evaluation.
b. Cash Flow Management: – Monitor cash flows to ensure that the institution has enough liquidity to meet its financial obligations.
c. Financial Forecasting: – Use historical financial data and trends to make future financial projections, allowing for proactive decision-making.
d. Budget Committees: – Establish committees to review and approve budgets, ensuring that they align with the institution’s strategic objectives.
e. Benchmarking: – Compare the institution’s financial performance with peer institutions to identify areas where improvements can be made.
3. Implementation Steps:
a. Establish Clear Financial Goals: – Define the institution’s financial objectives, taking into account academic and strategic priorities.
b. Involve Stakeholders: – Engage academic and administrative departments in the budgeting process to ensure that budgets align with the institution’s mission and goals.
c. Create a Budget Calendar: – Develop a timeline for the budgeting process, including key milestones and deadlines.
d. Collect Data: – Gather historical financial data, enrollment figures, and other relevant information to inform the budgeting process.
e. Prepare Budgets: – Use the chosen budgeting technique to create departmental and institutional budgets.
f. Review and Approve: – Budgets should be reviewed by relevant committees and approved by the institution’s leadership.
g. Monitor and Control: – Implement budgetary control techniques to track performance against budgets and take corrective actions when necessary.
h. Communicate and Evaluate: – Keep stakeholders informed about budget performance and conduct regular evaluations to make necessary adjustments.
i. Continuous Improvement: – Continuously assess and refine budgeting and budgetary control processes to adapt to changing circumstances and improve efficiency.
In conclusion, budgeting and budgetary control are essential tools for financial management in higher education institutions. When implemented effectively, these techniques can help institutions allocate resources strategically, enhance financial stability, and achieve their educational and strategic objectives.