CHAPTER ONE

1.0 Introduction

1.1     BACKGROUND OF THE STUDY

“The point make by Harold Genean” The builder of ITT legendary CEO for nearly two decades is that, the firms and organization get at most what they plan to achieve. A well manage firm implement the planned operations to attain the planned results. Planning is a process of charting the future course to attain goals, recognize opportunities and minimize the negative effects of unavoidable event. Successful organizations usually are the results of good planning. Conversely, failure to plan often results to compromising goals and can lead to financial disaster. The budget is one of the aspects of planning used by many organizations for profit and non -profit, large or small, services or manufacturing” Blocher, Chen

Therefore, a budget is a quantitative expression of a plan of action an as aids of coordination and implementation, it may be formulated for the organization as a whole or for any sub-unit.

Budget is very vital in management function, without plans and budget for future, the individual or organization cannot grow and prosper. Budget, simply put, as a plan quantified in monetary prepare and approves to a defined period of time usually showing planned income/revenue to be generated, expenditure to be incurred during that period and capital to be employed to attain a given objective.

Budgeting control is a part of the overall system of responsibility accounting within an organization. Responsibility accounting is a system of accounting in which costs and revenue are analyzed in accordance with areas of personal responsibilities so that the performance of the budget holder can be monitored in financial terms. Therefore, the aim of budgetary control is to provide a formal basic for monetary the progress or the organization as a whole and it’s a component parts, towards the achievement of the objectives specified in the planning budgets.

Adeniyi (2001), see budgeting as the process of preparing detailed short-term plans for the functions, activities are departments of the organization thus converting the long-term cooperate plan into action.

Invariably, the realization of this long-term will entail the realization of a least some levels of financial control in the short-term.

The budgetary control system provides some of the feedback necessary to be able to make corrections to current operations and activities in order to meet the original objectives and plans (i.e. single- loop feedback) and also some of the feedback upon which alternation to the plans are made, if necessary (i.e. double-loop feedback).

Usually, budgetary control is operated with standard costing as both systems are inter-related and mutually complementary. However they are not entirely, it can be operated without standard costing and this occur in industries where maybe difficult to operate a system standard costing in operation.

Financial planning, according to Pandy (2003:05) is the process of estimating the funds requirement of a firm and determining the source of funds” therefore, financial planning is a systematic approach for attaining effective management performance and also it indicates a firm growth, performance, investment and requirement of funds during a given period of time. On the other hand, financial control (controller) by and large, traditionally is functions of chief accountants or management accountants through the subsidiary control or budgetary control.

Financial planning and control is no doubt a goals pursued by all organizations including University of Ilorin (the case study organization). Budgetary control and budgeting has come to constitute independable tools of management decision making and control and so, should have some impact over this important goals to the attainment of financial planning and control. The existence of otherwise of the impact was what this project or research set out to investigate.

1.2     STATEMENT OF THE RESEARCH PROBLEM

There are many hindrances toward a prolong survival of some organization in Nigeria. One of such problem is the overcharging condition of the business environment coupled with the complexity of the business. This affects the objective/goal of some organization.

Hence, budgeting system was considered as a toll to eliminate poor financial planning and control and some optimality in some organization.

1.3     OBJECTIVE OF THE STUDY

The study will be of interest to the researcher as a result of study valve of budgeting and budgetary control as a tool for financial planning and control. This research work emphasized on how effectively budgeting and budgetary control can help in achieving the objective of educational institutions.

Specifically, the study focuses to:

1. Evaluate the meaning of budget and its effects.
2. Examine the role of budgetary system as a tool to effective financial planning and control in an organization.

• Consider various ways in which budget as being applied as a means of financial control

1. Recommend the possible ways of making budgeting system of an organization useful.

1.4     SIGNIFICANCE OF THE STUDY

Researches with useful outcome have been conducted in relation to budgeting and budgetary control and their respective impact on the financial planning and control of organization. However little among the research will be effective on budgeting system of financial planning and control especially of educational institution for instance, Oyinloye (2000), restricted his research work on budgeting and its uses in the organization and also Faluse (2003), limited his work on types of budgeting and budget operate in organizations. Little did he mention the impact of budgeting control on the financial planning and control of organization. To this end, this study will concentrate more on budgeting and budgetary control as a tool for financial planning and control in an organization institution.