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Budgetary Control as a Tool for Effective Management of Resources A Case Study of General Hospital Owerri Imo State

Budgetary Control as a Tool for Effective Management of Resources

Project / Seminar Material
Reference ID: PS-127-TM

DEDICATION

This research material titled “Budgetary Control as a Tool for Effective Management of Resources” is dedicated to God for his enabling grace, and to all computer enthusiasts who contributed to make life a pleasant experience during my research documentation.

ACKNOWLEDGEMENT

I extend my sincere gratitude to all those who contributed to the completion of this project. Special thanks to my Supervisor (Name of your Supervisor), the Head of Department (Name of your HOD), the Lecturers in the department of Accountancy / Accounting, Book Authors and Profound Scholars of existing or related project material on “Budgetary Control as a Tool for Effective Management of Resources” for their invaluable guidance, support, and expertise throughout the journey.

I am also grateful to your study area (mention any funding organizations, if applicable) for their financial assistance. This research would not have been possible without the encouragement and assistance of some stakeholders (mention any mentors, teachers, or colleagues). Additionally, I would like to acknowledge the understanding and patience of my family and friends during this endeavor. Your unwavering support has been a constant source of motivation. Thank you all for being part of this meaningful endeavor.


Budgetary Control as a Tool for Effective Management of Resources (A Case Study of General Hospital Owerri Imo State)

TABLE OF CONTENTS

PRELIMINARY PAGES


CHAPTER ONE

  • 1.0 Introduction
  • 1.1 Background of the study
  • 1.2 Statement of the problem
  • 1.3 Objective of the study
  • 1.4 Research question
  • 1.5 Significance of the study
  • 1.6 Scope of the study
  • 1.7 Limitation of the study
  • 1.8 Definition of terms

CHAPTER TWO

  • 2.0 Literature review
  • 2.1 Introduction
  • 2.2 Nature of budgeting and budget
  • 2.3 Budgetary control system
  • 2.4 Features of budgeting control system
  • 2.5 Basic concept of budgeting and budgetary
  • 2.6 Types of budget for planning and control
  • 2.7 Innovation in the area of budgeting zero base
  • 2.8 The need of a budgetary control
  • 2.9 Essential of a budgetary control system
  • 2.10 Summary of the overall literature review

CHAPTER THREE

  • 3.0 Research design and methodology
  • 3.1 Introduction
  • 3.2 Research design
  • 3.3 Sources / methods of data collection
  • 3.4 Population and sample size
  • 3.5 Sample Techniques
  • 3.6 Validity and reliability of measuring instrument
  • 3.7 Method of data analysis

CHAPTER FOUR

  • 4.0 Presentation and analysis of data
  • 4.1 Introduction
  • 4.2 Presentation of Data
  • 4.3 Analysis of data
  • 4.4 Interpretation of result

CHAPTER FIVE

  • 5.0 Summary / conclusion and recommendation
  • 5.1 Introduction
  • 5.2 Summary of findings
  • 5.3 Conclusion
  • 5.4 Recommendations
  • Area of further research

REFERENCES

APPENDIX / QUESTIONNAIRE

ABSTRACT

This research investigation in to the Budgetary Control as a Tool for Effective Management of Resources with general hospital Owerri, Imo state as a case study. The research is a deliberate investigation by the researcher to find out if actually the appraisal of management performance is based on the budgetary analysis, the extent to which the officers- in-charge of budget centers account for their responsibility and whether variances are built in to the incentives or disciplinary system of the institution.

This research was carefully carried out and conclusion reached for the reader to properly comprehend and appreciated this project work. Samples of 30(thirty) workers were drawn from the organization. Questionnaire was used to collect the data that was analyzed by frequency by using chi-square. Finding from the study shows that budget has relationship as in basis of controlling cost, low level of revenue generation has relationship in setting unrealistic target.

Further finding indicated that problems of budgets in the institution can be solved. To further improve on the situation, it was recommended that there should be budget education and should be based on management by objectives (MBO), which is a situation where by everybody in the organization will participate in budget formulation. There should be a taskforce instituted to check and detect fraud on the part of budget implementation.


Budgetary Control as a Tool for Effective Management of Resources (A Case Study of General Hospital Owerri Imo State)

CHAPTER ONE

1.0 Introduction

1.1 Background of the Study

A government budget is blue print which clearly outline government expenditure vis-à-vis government revenue and retains plans ahead, etc. consequently, nations plans ahead in terms of revenue and expenditure within a specific period of time, so as individual or an state conceptualizes anticipated revenue and disbursement within a specific period of time.

Every organization whether economic, social, political, public or private sector has set out objectives ,they make plans for future. Since every organization has set out objectives, the way it tend to achieve these objectives could be the maximization of profits, prove services and Minimization of cost. Each organization has to plan in order to meet such objectives and budgeting is part of planning, some organization liquidate due to poor planning, while some others fail due to poor budgeting control techniques.

The realization of organizational objectives requires the requisition and utilization of both human and material resources. To achieve this objective, the organization tries to economize or manage its scarce resources and produce a means of achieving its pre-determined goals. As a result of these scarce resource, it is very essential that organization has to determine the most effective way of reducing cost of production while maximizing its production . modern business management requires the use of some techniques in the formulation and adoption of plans (good tools and system) with a view to achieving set out goals. Such tools and systems include budgeting, variance analysis and budgetary control.

The process setting goals or objectives to be achieved by some future point in time and determine there goals are to be reached is described a planning while the process of translating the planning into financial target can be described as budgeting. The term budgeting and accounting in which all operations are forecasted in advance and actual results championed with budgeted and differences slipped and explained. Budgetary control techniques here help ed many organizations since the success of any organization depends on the planning and execution of budget plans.

According to lucey(1984)p.23, budgeting can be defined as the process of preparing a short term and detailed plan of activities of an organization and converting the strategies long term plans into action. The degree of importance attached to this plan and the effort made in controlling the deviation from the planned performance differ among business and government and between private and public corporations. Some organization especially government parastatals view budgeting as a mere accounting tool, which a meant to be exceeded. The department heads in government parastatals believe to get more money (allocations) in the next budget the present allocation must be fully utilized whether reasonable or unreasonably.

More so, Horngreen and forester(1987)p.139 defined budget as a quantitative expression of a plan of action and an aid to coordination and implementation. It qualifies the expectation regarding future incomes, cash flows, financial position and supporting plans. however, budget serve as a Variety of additional functions like evaluating performance of workers, coordinating activities, implementing plans, communicating, motivating and authorizing actions. Authorizing action seems to predominate in government budgeting and non- profit budgeting.

A budget is predetermined statement of management policy at given period, which provides a standard for comparison with the results actually achieved. The process of establishing budget is known as budgeting while the process of assigning responsibility for achievement while comparing it with the planned performance is known As budgetary control. Consequently, budgetary control is a system o controlling cost, which includes the preparation of budgets, coordinating the departments and establishing responsibilities, comparing actual upon results to achieve maximum profitability, osisioma(1989).

The purpose of control is to ensure that operation and performance confirm to the plan. The control aspect of budgetary control activities is a management function variance that is controllable. Budgetary control therefore acts as a guide on the executive capacity by controlling their scope of expenditure. Based on this, it also coordinates the functions and efforts of different departments and ensure effective supervision of workers in the organization.

In view of this, variation from set standard can be detected and corrected at the early stage.

This study is aimed at finding out the budgetary control Systems adopted and applied by government parastatals. This budgetary system aims at providing all ranks of management with enough information for recording, planning and measuring performance in relation to set objectives. It also determines the control techniques applied in cost reduction and the comparison between the planned and actual performance. The focal point of this study is general hospital Owerri ,which is one of government parastatals.


1.2 Statement of the Problems

  1. Poor planning
  2. Non adherence to budgetary control techniques(implementation)
  3. Improper record keeping
  4. Inadequate coordination
  5. Low level of understanding
  6. Inefficient communication

1.3 Objectives of the Study

On view of the problems associated with poor budgeting control, the researcher intends to find out the procedures of annual budget in the hospital. One purpose of study is to determine whether budgetary control as a management tool contributes to the improvement of managerial efficiency and productivity. The purpose will be analyzed as followed.

  1. To find out whether the achievement of budgetary control is as a result of setting unrealistic target thereby demoralizing the workers.
  2. To ensure whether the appraisal of the managements performance is based on the budgeting analysis.
  3. To examine the extent to which the officers-in-charge of budget centers account for their responsibility.
  4. To determine whether variance are built in to the incentives or disciplinary system of the hospital
  5. To proffer solution to the problems of poor implementation of plans and inadequate coordination of budgetary procedures that affect the hospital.

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.

  1. Does budgeting control contributed to the improvement of managerial efficiency and high productivity?
  2. Is low level of revenue generation as a result of setting unrealistic target, thereby demoralizing the workers?
  3. Are the appraisals of the management's performance based on the budget?
  4. Are the officer-in-charge of budgeting accountable for the objectives?
  5. Are variances built in to the incentives or disciplinary system of the institute/hospital?
  6. To what extent does the problem of implementation and inadequate coordination affect the hospital?

1.5 Significant of the Study

The successful completion of this research work will be of increase benefit to the society at large and general hospital Owerri ,lmo state, being my case study in particular.

This research work will improve the internal control system of the management of general hospital Owerri ,imo state in particular and other corporate entities in general.

The management of general hospital Owerri, imo state will benefit more from this research work as the research work enhances it's (management) information on the day to day running cost of the hospital.

The study will also reveal any financial recklessness of any department/factory head(s) of the hospital.

However ,this research will create a fresh awareness to the management of general hospital Owerri, imo state chosen as a case study and will also explore the weakness prevailing in its budget system.

The government is not left out, they can make use of the study will be of significant to several categories of person such as investor s and other users of the accounting information in decision making, it will broaden their horizon of ideas and knowledge.


1.6 Scope of the Study

This stud focuses on the budgetary control as a tool for effective management of government agencies, with general hospital , imo stat as a case study.


1.7 Limitation of the Study

The researcher uncounted a number of constraint in the limitation of the study.

Finance:

This study was a carried out on the limited resources available to the research and this hampered the extensive coverage of the study

Time:

This is another constraint that affected the study. The researcher had limited time with which he was to complete the study on time.

Material:

Getting materials that ill assist the researcher in reviewing related literatures were not easy to come by as there few test books on the study and the researcher had to resort to journals, magazines the internet etc to get information and the cost was much.

Respondents:

The respondent constituted another constraint to the study. Some of them were relevant to divulge information while some did not pay attention to the researcher.


1.7 Definition of Terms

Some of the terms used in the research work/study are explain below.

Budget:

Budget is a standard with which to measure the actual achievement of people, departments, firms etc. The institute of cost and management Accountants(ICMA) defined budget as “a plan quailed in monetary terms, prepared and approved prior to income during that period and the capital to be employed attain a given objectives.

Budgetary Control:

Budgetary control is the planning in advance of the variance functions of a business that the business as a whole can be controlled. It also relates expenditure to the person who incurs the expenditure so that the actual expenditure can be prepared, thus affording a convenient method of control.

According to ICMA, budgetary control is the establishment of budgets relating the responsibilities of executives to the requirements of a policy, and continuous comparisons of actual with budgeted results, either to secure by individual action the objectives of their policy or to provide a firm base for its revision.

Variance:

Variance are sign posts, which alert management to the need for enquiry into causes of standard results, cost variance is the difference between the standard or budgeted cost and the comparable actual cost for a particular period.

Responsibility Center:

It can be defined as any functional unit head by a manager who is responsible for the activties of that unit. This enables the manager to monitor organizational functions.

Revenue Centers:

This is an organizational unit in which outputs are measures in monetary terms but are not directly compared to input costs.

Expense Center:

These are unit where inputs are measured in monetary y terms but output are.

Profit Center:

This is where performance is measure d by the difference between revenue (outputs) and expenditure (input). Inter-departmental sales are often made using “transfer prices”.

Investment Center:

This is where output are compared with the assets employed in producing them.

Budget Committee:

This my consist of senior member of the organization e.g. departmental heads and executives (with the managing director as chairman) every part of the organization should be a represented on the committee, so there should be a representative from sales, production, marketing and so on.

Budget Officers:

The budget officers control the budget administration which involves liasing between the budget committee and managers responsible for budget preparation.

Budget Manual:

This document charts the organization detail the budget procedures, contains account codes of items of expenditure and revenue, time tables the process and clearly defines the responsibility of persons involved in the budgeting system.

Sales Budget:

This involves a realistic fore east. This is prepared in units of each product and also in sales values.

Production Budget:

This is expressed in quantitative terms only and is geared to the sales budget. Here the production manager analyzes plant utilization, work –in- progress budget, know whether to hire or buy additional machinery.

Labour Budget:

This is both quantitative and financial. This is influenced by production requirements in man hours available, greatest of labour required, wages rates etc.

Cash Budget:

This is a cash plan for a defined period of time it summarizes monthly recieptes and payment. Hence, it highlights monthly surplus and deficits of actual cash. Its main uses are to maintain control over a firm's cash requirements e.g. stock and debtors.

CHAPTER TWO

2.0 Literature Review

2.1 Introduction

This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

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