1.0 Introduction
1.1 Background of the Study
Organizations be it public or private sector, finds it necessary to prepare and institute budgeting control for the purpose of translating policies, co-ordinating activities as well as financial control in order to achieve the best possible results in that organization.
Moreover, one of the most important responsibilities of management is to make sure that more ways or means of introducing new techniques that will help the organization in carrying out its budgetary work, which will reduce the element of uncertainty in making organization decision relating to their budgetary work in the public sector.
Budgeting is not a new invention, it has a wide application even before the advent of large scale business or governmental organization, but is has not developed to the state where it serves organization the way it should, besides there still exists lack of understanding of what budgets are and how it can be utilized to serve management. Also as the process of management increase in complexity and as the economy increase then the risk in budgeting should plan an increasing important role.
Furthermore, the effectiveness with which an organization manages its budget has come to be recognized in most instances as perhaps the single, most essential ingredient to large-scale success of an organization. therefore management is viewed from the process as the total management effort, which includes decision making, the application of selected techniques, procedures and motivation of individuals and groups to accomplish specified objectives for management is therefore dynamic and their activities are continuous.
Moreover, for the purpose of this study, the economy of a country like Nigeria should be understood as falling under two broad categories i.e the public section, which is represented by the three tiers of government namely the federal, the state and local government. Secondly the private section which is financed, owned and run by private entrepreneurs and it is based on the former (public sector) that the whole work has been carried on which confines to Isiala Ngwa south local government.
Also the public sector just like the private sector adheres to the standard principles of budgeting, note that not all these principles are adhere to practically, especially in the Nigerian context, but it is the (on this basis that the nations financial management is being appraised for the basis of the three tier of government which constitutes the public sector will depend mostly on its budgeting procedures in operation among other factors.
A budgeting system procedure which is not accurate with little or no adherence to the standard budgeting requirement will result in a weak management while an effective management all thing being equal is achieved if sound budgeting system with emphasis on the principles and procedures of standard budgeting.
Budgeting in its final form involves the qualification in monetary terms of the overall objectives which the government has set for itself and for affecting and controlling the numerous activities resulting from its operations which forms their yearly allocation within the overall availability of annual revenue and a part of plan execution. This help to determine the level of resources needed to achieve a plan objective, these resources set the policy for conducting the activities.
However, if budgets were not adjusted to meet changing circumstances they would be of hindrance, than an aid to management.
Obviously, budgeting in an organization is much more than accounting, this is because budget is a plan, actual performance is recorded and compared with the plan and necessary actions are initiated whenever planned and actual performance differs significantly since. Budgeting is such a comprehensive operation and involves planning, control and co-ordination. This is a realistic management function and fails within the authority of financial entity.
Basically, organization budget forces the executives to plan and their activities are properly co-ordinated for adequate records pin-point efficiency and inefficiency for the effectiveness of budgeting as a management tool and the public sector concerns itself mostly on the operational aspect of budgeting such as income and expenditure receipt and payment.
Also budgeting is a house hold in every organization and it touches the very heart of management because the success of it. Rests largely on the correctness of its assumptions and the support it receives from the subordinates for which it is drawn (Okoro Felix 188-p4).
Budget has been given varied definitions by various individuals and professionals though they all tend towards one thing-future i.e organizations plans and controls and some of these defines it as a plan expressed in quantitative and usually monetary terms, covering a specified period of time, normally the period covered is one year and C.T Horngren opined that budget is a quantitative expression for a set of time of a proposed future plan of action by management or government and it can cover both financial and non-financial aspect of the plans. Certified institute of management accounts (CIMA) in essence said that budget should represent management policy and plan carefully assembled from different competent sources and tested for feasibility by the management which helps to measure the actual achievement of individuals department.
Finally, properly applied budgeting can contribute significantly to greater efficiency, effectiveness and accountability in the management of an organizations financial resources.
1.2 Statement of the Problems
The cause of this work is to investigate the effectiveness of budgeting as a management tool in the public sector using Isiala Ngwa south local government area as our case and in the study attempt will be made to describe.
- What extent the local government has achieve budgeting as one of management tool in the publicsector
- Know the problems facing Isiala Ngwa south local government area.
- and to find out possible solutions to these problems.
There is doubt that the local government under study encounters some problems in the budget preparation for their various department and ministers for in the public sector the government may run into deficit budgeting as a result of inefficient budgeting which may be attributed to some people in the government circle.
However, the issue of effectiveness of budgeting in the public sector and the inefficiency in the management of the nations budget (Isiala Ngwa south) for the purpose of our study have been linked to various factors like a faulty public sector budgeting as achieved by some while others blame it on the officers at the helm of affairs who has little or no budgeting experience and knowledge and as to recognize the general requirements and principles of PUBLIC SECTOR BUDGETING and with the following assumptions will be raised for investigations and analysis.
- Is it the budgeting system that is really faulty or is the problem from those that run the affairs of the public sector, and if the later are these “players” conscious of the facts that public sector budgeting is a fundamental basis of evaluating management
- Is it the formulation of the public sector principles that is wrong are its implications on cost and standard of living on our civil right, responsibilities and objectives.
- To determine factors responsible for the problems and therefore making its budgeting to be efficient and effective in the department of management.
1.3 Objectives of the Study
The major objective of this study is to examine the effectiveness of budgeting as managerial tool in the public sector. Within the stated broad objective, the following specific objective are identified by the researcher for the work.
- The objectives of this research work is to ascertain the effectiveness of budgeting as a management tool in the public sector. That is the extent at which effective budgeting can play a significant role in management of the public sector. Through effective budgeting the challenges of mismanagement of resources will be reduced.
- Another objective is to assess how effectiveness budgeting is and how it can contribute to the growth of an organization. Through this research work it would be educate other researchers and give them bearing for other research work. It would also lead to proffering solutions and recommendations that would help organizations.
- To examine the extent at which a well design appropriation but have input and significance in the budgeting process and the implication of the wrong budget input in the achievement of public sector goal.
- Also to examine the effectives of budgeting as it pertains the management of the public sector; the case study is Isiala Ngwa south and involving effective budgeting it will resolve to the problems of misappropriation of funds. Budgeting is essential in the public sector and it will definitely make any establishment to be stable and channel it to the right direction.
- To recommend to the government and the general public sector stake-holders on the appropriate method for achieving effective budgeting and public sector administrative performance, and to identify the extent at which effective budgeting enhances administrative performance in the public sector.
1.4 Research Question
The research question is based on the effectiveness of budgeting as a management tool in the public sector and our case study is Isiala Ngwa south local government area. In research question certain questions are expected for the researcher to ask which will not only serve as guide in data collection but which the researcher is bound to answer. Such questions include:
- Is the effectiveness of budgeting a management tool in the public sector?
- Does budgeting improve the economy of a country?
- Is there any negative effect in efficient budgeting in the public sectors?
- Is it the fault of the officials at the helm of the affairs of budgeting that brings about the inefficiency of budgeting in the public sector (Isiala Ngwa south local government area)?
The researcher is bound to answer or reconcile the above questions. And the above can be answered by the researcher thus:
The effectiveness of budgeting is a management tool in the public sector in the sense that when budget is efficiently planned by the government or organization it transforms the economic and social level of that country and also it brings about development in all tiers of government. The money realized from the taxes which the public people paid, the finance is well managed by the government or organization and therefore it serve as a management tool for the public sector.
- A lot of things prompt the researcher to embark on this research for example
- The researcher embarks on this in order to find out the problems, facing Isiala Ngwa south local government area.
- To find out to what extent the local government has achieve budgeting as one of management tool in the public sector.
Deficit budgeting is also one of the issue that prompted the researcher to embark on the research etc.
Budgeting is a financial plan prepared and approved prior to a defined period of time, of the policy to be pursued during that period for the purpose of attaining a given objective. The objective mentioned is to transform the economic level from primitive system to modern system whereby the standard of living of the people of a country is normal improved.
There is no negative effect in efficient budgeting in the public sector.
In a situation whereby officials that are not experienced on the budgeting are employed it becomes the fault of the officials and also that of the government or organization that employed such official knowing fully well that he or she has no experience or knowledge of budget. For instance in Isiala Ngwa south local government area which is our case of study, there are many officials or personnel employed that are not specialize in budget.
1.5 Significance of the Study
The research on the effectiveness of budgeting as a management tool in the public sector is justified when one considers the scanty literatures on the topic this does not mean that there is no literature on the topic in Nigeria but they are sketchy.
Also the relevance of this study is to emphasis, on the effectiveness of budgeting as a management tool in the public sector. This study will benefit two groups on one hand is the public sector which encompasses the citizens and private organization on the other hand. The outcomes of this study restructure and encourage the effectiveness of budgeting as a tool for management appraisal.
This study also intends to highlight the salient points in the public sector budgeting principles and requirement, which are hitherto been ignored in the preparation of government budgeting. It is also believed that an adherence to the recommendations as man be seen later in this study based on the finding of this research will act as a guide for effective and efficient management or government budgets in the local government, this would have had on the nations troubled economy as is currently experienced. Moreover, public individuals and institutions like on its own part would be relived of this problem of inefficient and ineffective budget since it is true that they constitute the major source of the funds and it will enable the shareholders of commercial ventures than seeing their investment being well utilized, budgeted and accounted for by management, the same would also be applicable to the public sector the citizens and institutions in this regard whole investment in the form of taxes paid to the government are disturbed by officer at the helm of affairs.
Also the present study indeed is an attempt to find out the problems being encountered in the public sector budgeting how efficiently and effectively the local government needs to emphasis.
Finally, mentioned should be made in its importance to future researcher who may extract the relevant sections in order to improve on them. These improvements are necessary because they tend to provide for the fulfillment of an academic process for the award of ordinary national diploma (OND).
1.6 Scope of the Study
Realizing the financial and time constraints associated study of this study nature; the scope of this study is an integrated study of the effectiveness of budgeting as a management tool in the public sector and the exercise is limited to Isiala Ngwa local government.
This research work by its nature attempts to provide orderly framework or requires one to actually analyze and evaluates the budgeting techniques procedures and principles as used by the public sector, it strives to give a broader vision of the subject matter with the maximum attention to accept budgeting theories as effectively carried out by budget officers in the public sector and other non-essential details.
1.7 Limitations of the Study
In the process of carrying out this project or research the researcher encountered a lot of constraints while carrying out this research among which are:
Financial Constraints:
Due to the financial difficulty prevalent in the country and the resultant increase in the prices of commodities, transport fares etc and the researcher did not find it easy meeting all her financial obligations in the school as a result of which the work was affected
Time Constraints:
In the process of gathering information these serves as the major constraints in this research work were the researcher sacrificed some lecture period and other academic work that she is facing as a final year ordinary national diploma student. Hence time constraints posed a serious problem and serve limitation to the study.
Information Constraint:
The process of collecting updated and necessary information for this work was not easy due to the fact that the organization will not want or the scarcity of relevant materials and excessive bureaucratic “red tap” encountered in some of the departments where important information were sought. We must equally paint out at this juncture that the level of co-operation I got from the headquarters of Isiala Ngwa south local government as the case study were not impressive at all.
This attributed to the fact that the information I sought for were very sensitive, secret and private that are not made to the public.
1.8 Definition of Terms
For the purpose of this study the following terms are defined in order to gain effectiveness of budgeting in the achievement of management tools in the public sector.
Budget:
This is the process of making decisions about raising revenues and spending money for public purposes or a standard with which to measure the actual achievements of people departments, firms etc and the qualitative expression for a set time period of a proposed future plan of action by management.
Management:
This is a process by which the manager is involved in planning organizing, directing and controlling the organizations activities for the purpose of achieving human, material and monetary resources co-ordination, which are essential in the effective and efficient attainment of organizational objectives.
Co-Ordination:
This means to make people function together effectively and efficiently in an organized way to enable achieve the organizational map out goal.
Control:
Means measuring performance and making sure that it conforms to set out standard, which helps in the correction of the course of operation.
Planning:
This is a process of determining in advance what needs to be done and how to get it done. It is selecting from among alternative future courses of action for the enterprise as a whole and for every department or section.
