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THE ROLE OF BUDGETING IN THE PRESENT NIGERIA ECONOMIC SITUATION

THE ROLE OF BUDGETING
IN THE PRESENT NIGERIA
ECONOMIC SITUATION (A CASE STUDY OF INSTITUTE
OF MANAGEMENT AND
TECHNOLOGY) I.M.T

ABSTRACT

Budgeting have a role to play in this
present economic development of Nigeria.  Budgeting which is defined as “A financial
statement prepared and approved prior to a defined period of true of the policy
to be purpose of attaining that period for the purpose of attaining a given
objectives is primarily a process of planning and control.  A well prepared budget provides management
with a planned programme based on research by the entire organization.  In addition, a carefully planned budget,
provides owing to co-ordination the various actions of the organization.  Budgeting is the most comprehensive financial
technology widely used within an organization. 
When it is properly applied as a management process and toll it unites
all parts of the institution and all aspects of management task into one
complete management approach to profitability.

Budgeting positions one’s mind of the
actual result or outcome with the predetermined plan.  In other words, with good budgeting, the
result of every effort can be forecasted. 
Through a good budgeting by exports there will be a standard economy,
Budgeting reduces wastage of manpower, it also reduces wastage of finance.

Therefore, in order to avoid problems in
carrying or preparing budget, budgeting should be carried out exactly there way
it is being laid down by the experts if there is any correction or variation to
be made in future, the experts should be involved.

PROPOSAL

Budgeting has a role to play in Nigeria present
economic situation role to play in Nigeria present economic
situation.  Budgeting which is defined
and approved prior to a defined period of time of the policy to be pursued
during that period for the purpose of attaching a given objective is primarily
a process of planning and control.  A
well prepared budget provides management with a planned programme.  It also provide a way to co-ordinate the
various actions of the organization.

Budgeting is the most comprehensive
financial technology orderly used within an organization.

Budgeting will position one’s mind of
the actual result on outcome with the predetermined plan.  The result of every efforts of different
organizations and field, will be fore-casted.

Budgeting will reduce wastage of
manpower, wastage of finance, goods and services. 

 

TABLE OF CONTENT

Title Page                                                                                ii

Approval page                                                                        iii

Dedication                                                                               iv

Acknowledgement                                                                   v

Abstract                                                                                  vi

Proposal                                                                                  vii

Table of content                                                                      vii

CHAPTER ONE

Introduction                                                                                       1

1.1     Background
of the study                                                         3

1.2     Statement
of problem                                                    4

1.3     Objective
of the study                                                    7

1.4     Hypothesis/Research
Question                                                8

1.5     Significance
of the study                                                         8

1.6     Scope/Limitations
of the study                                                9

1.7     Definition
of terms                                                                  10

CHAPTER TWO

Review of related literature                                                     13

2.1     History
of Budgeting                                                     13

2.2     Early
History of inflation                                              15     

2.3     Control
of inflation                                                        18

2.4     Accounting views in I.M.T                                            20

2.5     Different views in Budgeting                                         20

2.6     Budgeting process                                                                   23

          Reference                                                                       25

CHAPTER
THREE                       

Research design and area for the study                                    27

3.1           
Population
of the study                                                 28

3.3     sample and
sampling procedure                                              28

3.4     instrument for
data collection                                        28

3.5     method of
administration of the instrument                            29

3.6     Method
Of Data Analysis                                            29

CHAPTER
FOUR

Data Presentation                                                                     31

4.1     Data
Analysis                                                                32

CHAPTER
FIVE

Summary of findings, conclusions and recommendation.                 58

5.1           
Summary
of findings                                                     58

5.2           
Conclusion
                                                                    59

5.3     Recommendation
                                                          60

5.4     Suggestion
for Further Study                                        60

          Research
methodology                                                  27

Research design and area for the study                                    27

3.2           
Population
of the study                                                 28

3.3     sample and
sampling procedure                                              28

3.4     instrument for
data collection                                        28

3.5     method of
administration of the instrument                            29

3.6     Method
of Data Analysis                                                       29

CHAPTER
FOUR

Data Presentation                                                                     31

4.1     Data
Analysis                                                                32

CHAPTER
FIVE

Summary of findings, conclusions and recommendation.                 58

5.3           
Summary
of findings                                                     58

5.4           
Conclusion
                                                                    59

5.3     Recommendation
                                                          60

5.4     Suggestion
for Further Study                                        60

                            

CHAPTER ONE

1.0     INTRODUCTION

The
world generally had been in a state of permanent economic crisis for quite sometime,
every government and organization (public and private) round the globe is faced
with the issue of how to combat economic depression and stablize their economic
affairs.

In Nigeria presently, there has been
the problem of unexecuted plans and abandoned project by the federal and state
governments and industries not because there was no completion fund to compound
these project to completion, but because of lack of well certiculated plans and
control measure coupled with scarcity of resources.  Institute
of Management and
Technology for instance have such projects, which have been abandoned for years
such as the uncompleted building in campus 11, the research institution
(Bakassi) and many others.

Because of the above mentioned
the researcher has decided to vary out her project titled “The role of
budgeting in the present Nigeria
situation”.” Budgeting evolved to and management optimize scarce resources
which  have alternative uses.  Tertiary institution being a non – profit
making organization requires stability and order units affairs in the face of
inflationary  economic situation facing Nigeria
currently.

There has been to be a more
certain long to improve the management function of planning and control so as
to be able to find its activities and projects adequately, this is on
explanation for the growing interest in the role of budgeting.  Although, budgeting has been scourced by some
as exercise in futility because of is depending upon the fore casting future events
which cannot be fore told with precision is yet being found by most business
executive to be the best to find a tranquil harbour in the storm battered world
economy.

Budgeting which is defined as a
financial statement prepared and approved prior to a defined period of time of
the polving to be pursued during that period for the purpose of attaining of
given objective.  (Moore, C. L. and
Jaedike, R. K. Managerial Accounting 5th ed. (USA; S.W.
Publishers (1980): is primarily a process of planning and control. A
well-prepared budget provides management with a planned programmed based on
research by the entire organization.  in
addition, a carefully planned budget provides away to co-ordinable and various
actions of the organization.

There
are many write-ups in books, journal, magazines and newspaper on budgeting both
this project will critically examine its examine its role in non-profit making
organization, especially to institution of management and Technology (I.M.T) Enugu.

1.1           
BACKGROUND TO THE
STUDY

The
Institute of Management and Technology came into life
as a result of the merging of two schools – institute of Administration
and college of Technology in April, 1972.

In October of the same year a
provisional council of the proposed new Institute was appointed by the cast
controls state government.  the council
was commissioned to determine and recommend to the government the Institute
that would produce high quality technologists as well as Professional
Managerial Manpower in subject areas directed by the state and national
needs.  The council submitted its reports
in early April, 1983.

On
31st May 1973,
ediction No. 10 of 1973 titled “The Institute of Management and Technology
(IMT) Enugu
(Source Senior Staff Establishment of IMT Enugu).

1.2           
STATEMENT OF PROBLEMS

Polytechnics
and other Tertiary Institutions in Nigeria or edicts by the government
as a non-profit making organization most of their capital and recurrent
expenditures are being financed by the federal and state government.  And they are regarded as government parastatals.  Financing, Tertiary Institute in Nigeria
requires a huge human and material resources especially with their ever
increasing number disciplines students, and staff coupled with the recent
economic situation the role of funding the tertiary institute has become too
heavy for the government to carry, therefore the financial positions of our
Tertiary Institution has become deplorable.

With the above background in
view, the researcher is  being spurred to
investigate without bias the various avenues through which the Institute of
Management and  Technology raises her
income and how prudently she manages, control and accounts for it.

Budgeting is futuristic in nature
and any attempt to quantitatively state the future is an estimate or at best a
far approximation of the future best a far approximation of the future events,
problem in budgeting is either over or under approximation.  This in other words is variance, sometimes,
the variance, may be totally out of the range, making its use for control
purpose difficult.

(a)             
The
rate of inflation is hard to predict so that budgeting for the price levels
seems to be largely guesswork.

(b)            
The
volume of activity cannot be foreseen limiting factors (mostly government
policies) arise to restricts out put below budgeted levels.

Budgeting encompasses all aspects
of organization’s activity such that any problem at one point of it generates
multiple and effects.  Because of this,
it is feared that there will be problems of organization and attempts to into
an optimal master budget may be unsuccessful. 
Also, the human element in budgeting increases its probabilistic nature
and therefore, is likely to make its more probabilistic.  There may be strike and inadequate motivation.  The period of high inflation rate as it is
now, often goes with frequent wage salary negotiations and strike in adequate
motivation is said to have always been a problem of budgeting since different
workers are motivated differently according to their different needs.  The problem of motivation must have made
worse by the excessive loss of purchasing power of the naira in the foreign
exchange market.  This is because of
financial incentive believed to be main motivational method desired and
practiced in Nigeria.  This is also because where the level of
education is low and where skilled manpower is short in supply, the highest
level of aspiration of many workers remains the in range of satisfying the
lower level needs which more often that not tree of emotion, (emotional
distress set in which management is not committed, educated persuasive or
intelligent enough to convince its subordinate that budgeting is a positive
device to help management choose and reach goals.  When this happens, subordinate and executive
manager may like budgeting to strike, lay off and pressure device as “cure-alls”.  The control aspect of budgeting may have a
number of budgeting may have a number of serious problems to over come in
applying theory in practice.

All the problems, aforementioned,
where in existence jeopardize budgeting in the face of inflationary pressure in
tertiary institutes.  This research
therefore, highlights budgeting in the face of Inflationary Pressure with due
consideration to these and other problems, suggestions for their possible
solution are made to enhance budgeting in the face of inflationary pressure, in
tertiary institution.

1.3           
OBJECTIVE OF THE STUDY

The objective of the study will
be to appraise the role of budgeting to Nigerian tertiary institution in the
face of inflation.  Specially, the study
will attempt:

(a)             
To
find out the various sources of income to tertiary institutions (Institute of Management and Technology Enugu)

(b)            
To
find out the extent to which the federal and state government funds the
institution.

(c)             
To
ascertain the impact of inflation and other unforeseen variables.  On the usefulness of budgeting in tertiary
institution management.

(d)            
To
ascertain the role of budgeting in the face of inflationary pressure.  To analyse impact of the role of budgeting in
the face of inflationary pressure in tertiary institution management with
particular attention to Institute
of Management and
Technology, Enugu.

1.4           
HYPOTHESIS / RESEARCH
QUESTION

In order to validate this
research effort, the following research questions will be addressed.

(a)             
Do
Tertiary Institutions engage in budgeting?

(b)            
Do
Tertiary Institutions need budgeting during inflationary periods?

(c)             
Is
budgeting cost effective during economic boom than necessary or inflationary
period.

(d)            
How
does the institution react to budgeting during economic depression budgeting
fails to achieve its obligation?

(e)             
Is
there a clear cut difference between  the
role of budgeting during economic boom and depressionary periods.?

1.5           
SIGNIFICANCE OF THE
STUDY

This project provides a
beneficiary insight into the nature and rules of budgeting in the face of
inflationary pressure to the Rector, Registrar, bursar and budgeting officers
of Institute of Management and Technology Enugu.

This study also will be of
immense benefit to other organization (profit and non profit making) which
insight in time past doubted the effectiveness of budgeting in inflationary
period.

The society at large will also
benefit from this project, the federal, state and local government in
particular who continually seek for ways to stabiles its undertaking a critical
review of this study, this project provides material guide to such people.  The will also serve as reference to students
who are writing on the topic related to this in future, and lastly, to the
researcher, understanding and appreciation of the subject matter.

1.6           
SCOPE
AND LIMITATION OF THE STUDY

For a more critical analysis of this subject. This
study was limited to budgeting as obtainable in Institute of Management
and Technology. The major work problems that militate against these works are
as follows:

TIME:

Apart from the
normal academic work, theme were other related classroom work that engages the
researcher in partial fulfillment of relevant courses, the time constraints is
the principal budget fact or the limiting factor of this research. Inadequate
time therefore had primary affect on this research and limited it accordingly.

 

FINANCE:

To find a
research work requires a huge sum of money. This research is single handedly
funded by the researcher who also have other financial commitment in regards to
their relevant course.

 

COLLECTION OF DATA

Data
collection in Nigeria
are always a difficult task due to the fact that officers are afraid of being
exposed or afraid of exposing the institution.

 

1.7          DEFINITION
OF TERMS

In order to validate this
research effort, the following terms are being defined.

 

BUDGET

A budget as
defined by the institute
of Cost and Management
Accountants is “A financial and quantitative statement, prepared and approved
prior to a defined period for the purpose of attaining a given objective of the
policy to be pursued during that period. 
It can also be defined as “A short-term financial plan, which guide
mangers in achieving the objectives of a firm.      

A budget may be defined as a comprehensive and co-ordinate plan,
expressed in financial terms, for the operations and resources of an
enterprises for some specific period in future.

 

BUDGETING:  This is one of the
tools adopted by management for effective cost planning and control.

 

BUDGETARY CONTROL:  This is the planning
in advance of the various function of a business so that the business as a
whole can be controlled.

 

PLANNING:  This is defined a
deciding in advance what to do how to do it, when to do it, and who is to do
it.  It bridges the gap between where one
are and where one would like to be in future. 
Planning is also an inculpable part of all human activity and can be
defined as the establishment of objectives, and the founulation, evaluation and
selection of policies, strategies, tactics, and action required to achieve
these objectives.

 

INFLATION:

This is a
continues rise in prices of goods and services. 
That is, a situation of persistent increase in prices of commodities
without a proportionate increase in the supply of the commodities.  When the expansion in the supply of money is
greater than the expansion in the supply of commodities that is, when there is
too much money in circulation.