ABSTRACT
The purpose of this project was to examine the relationship
between budgetary control and organizational performance of manufacturing
companies in Nigeria. In order to achieve the purpose of the study, data was
collected through the issue of 32 structured quetionnaires to manufacturing
companies operating in Port Harcourt. The collected data was analyzed using
Spearman Rank Correlation. The findings of the research showed that: There is a
positive correlation between budget committee and the effectiveness of an
organization. The findings further show a positive correlation between budget
committee and organizational efficiency. This finding indicates that improved
budget committee performance boost the efficiency of the organization. The
findings also show that there is positive and significant relationship between
budget period and the effectiveness of an organization. Finally, the findings
show that there is a positive relationship between budget period and the
efficiency of an organization. Based on the findings, we conclude that: The
activity of the budget committee is a very important determinant of the
efficiency of the organization. We also conclude that the budget period is also
a very important factor in the effectiveness of the organization. Setting time
limits within which a budget must run and attaching goals/objectives which
staff management must achieve within the set period acts as a stimulus for
better performance. Given the findings and conclusions, we make the following
recommendations. Considering the importance of the budget committee in
enhancing the efficiency and effectiveness of manufacturing companies in Port
Harcourt, we recommend that all manufacturing companies be encouraged through
the dissemination of information to establish a well funded budget committee.
Finally, we recommend that manufacturing companies impress on their staff the
importance adhering strictly to established budget periods as this will help to
boost effectiveness and efficiency.
86 Pages
Project Reference Code: C046
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND TO THE STUDY
Top
or line managers of manufacturing firms, and other business organizations, are
faced with the problem of allocating scarce resources and
this is why the concept of budgeting as a tool for planning and control is
pertinent (Oporiopo, 2012). Budgeting and budgetary control is concerned with
making plans for the future, implementation of the plan, and monitoring of
activities to see whether it conforms to the plan. Budget is thus, a formal
expression of managerial plan in quantitative and monetary terms encompassing
different phases of operation aimed at assisting management in the realization
of organization’s objectives.
Budgeting
involves the establishment of predetermined goals, the reporting of actual
performance results and evaluation of performance in terms of the predetermined
goals. Budgetary control has been considered an essential tool for planning.
The purpose of budgetary control is to provide a forecast of revenues and expenditures
which is achieved through constructing a model of how our business might perform
financially if certain strategies, events and plans are carried out (Churchill,
2001 as cited by Kimani, 2014).
Most firms use budgetary control as the primary
means of corporate internal controls, it provides a comprehensive management
platform for efficient and effective allocation of resources. Budgetary
controls enable the management team to make plans for the future through
implementing those plans and monitoring activities to see whether they conform
to the plan.
Budgetary
control is the process of developing a spending plan and periodically comparing
actual expenditures against that plan to determine if the plan or the spending
patterns need adjustment to stay on track. This process is necessary to control
spending and meet various financial goals. Organizations rely heavily on
budgetary control to manage their spending activities, and this technique is
also used by the public and the private sector as well as private individuals, such
as heads of household who want to make sure they live within their means (Dunk,
2009 as cited by Kimani, 2014). Management of organizations
implements budgetary control to prevent losses resulting from theft, fraud and
technological malfunction. These instructions also help management to ensure
that expenses remain within budgetary limits.
The
organizations have a role to play in the implementation and proper utilization
of the allocated budget. The resources of an organization should be managed
effectively and efficiently to achieve its purpose. This implies that the
organization should be able to achieve its objectives by minimizing cost. Thus
managing implies co-ordination and control of the efforts of the organization
for achieving organizational objectives. The process of managing is facilitated
when management charts its future course of certain objectives in advance, and
takes decision in a professional manner, utilizing the individual and group
efforts in a coordinated rational manner (Drury, 2006 as cited by Kimani, 2014). With a well formulated budget, the management of an organization
can effectively plan, coordinate, control and evaluates its activities. It is a
device intended to provide greater effectiveness in achieving organizational
efficiency.
In order to introduce budgetary
control system in an organization, there are important aspects to be considered
and they are; organizational chart, budget center, budget officer, budget
committee, budget manual, budget period and key or limiting factors. For this
study, we will consider only two which are budget committee and budget period.
1.2
STATEMENT OF THE PROBLEM
In Nigeria today, we have very few
manufacturing companies because many manufacturing companies that would have been
in existence have collapsed and this is as a result of poor management,
unfriendly government policies, and poor infrastructural facilities (Osundina
& Osundina, 2012). Part of the problem of poor management facing
manufacturing firms can be traced to poor budgetary control techniques. Most
manufacturing firms do not appreciate the relevance of budgetary planning and
control for its survival (Oporiopo, 2012; Okafor, 2010). Poor planning by organizations
have caused problems of low profitability and liquidity which has affected
their ability to maximize shareholders wealth (Osundina & Osundina, 2012).
There
are, however, a lot arguments or criticisms associated with the adoption of
budgetary control in an organization and these may include the following: budgetary
control been seen as a pressure device imposed by management to attain its
objectives which results in bad labour relations; departmental conflicts
arising from disputes over resource allocation method, departments blaming each
other if targeted objectives are not being attained, and conflicting
objectives; managers’ over-estimation of cost so that they will not be blamed
in the future, should they over spend (Chukwuka, 2013).
1.3
PURPOSE
OF THE STUDY
1.4
RESEARCH
QUESTIONS
1.5 RESEARCH HYPOTHESES
1.5
SIGNIFICANCE
OF THE STUDY
1.7 SCOPE OF THE STUDY
1.8 LIMITATIONS OF THE STUDY
1.9 DEFINITION OF TERMS
1.10 ORGANIZATION OF THE STUDY
REFERENCES
CHAPTER
TWO
REVIEW OF RELATED LITERATURE
2.1 Introduction
Every
action is motivated by human need and wants and the means of achieving the
needs. The effective and efficient allocation of scarce resources to achieve
organizational objectives is a great challenge to business organization. It is
on the heels of allocating scarce resources to various competing alternatives
that the concept of budgeting emerged. This chapter is concerned with the
review of related literature on the subject matter of this study. Here, the
articles, journals, seminar papers, etc containing the findings and
contributions of previous scholars relating to budgetary control and the
performance of manufacturing firms were extensively reviewed to provide a
theoretical and empirical evidence for the study. Areas discussed here include:
v Theoretical
framework of budget
v Concept
of budget, budgeting and budgetary control
v Dimensions
of budgetary control
v Concept
of firm performance
v Measures
of firm performance
v Relationship
between budget techniques and firm performance
v Budget
committee and firm performance
v
Budget period and firm
performance
2.2 Theoretical frame
work of Budget
2.3
The concept of budget, budgeting and budgetary control
2.3.1
Types of budget
2.3.2
Approaches to budgeting
2.3.3
Importance of Budgeting in an Organization
2.3.4 Budgetary Control
2.4 Dimensions of Budgetary Control
2.5
Concept of Firm Performance
2.6
Measures of Firm Performance
2.6.2
Effectiveness
2.7
Budgetary Control Techniques and Firm Performance
2.7.1
Budget Committee and Firm Performance
2.7.2
Budget Period and Firm Performance
REFERENCES
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.1
INTRODUCTION
This study provides a detailed
account of the methodology used in carrying out the study. It is organized in
the following order:
Ø Research
design
Ø Population
of the study
Ø Sample
size determination and sampling procedure
Ø Data
collection method
Ø Data
analysis techniques
Ø Validity
and reliability of study instruments
Ø Operational
measures of variables
Ø Questionnaire
design
3.2
RESEARCH DESIGN
3.3 POPULATION
OF THE STUDY
3.4 SAMPLE SIZE DETERMINATION AND SAMPLING PROCEDURE
3.5 DATA COLLECTION METHODS
3.6 DATA ANALYSIS
TECHNIQUES
3.7 VALIDITY
AND RELIABILITY OF THE STUDY INSTRUMENTS
3.8 OPERATIONAL
MEASURES OF VARIABLES
3.9 QUESTIONNAIRE
DESIGN
REFERENCE
CHAPTER FOUR
DATA PRESENTATION ANALYSES AND HYPOTHESES TESTING
4.0 INTRODUCTION
4.2 DATA PRESENTATION
4.3 DATA ANALYSES
HYPOTHESES TESTING
CHAPTER
FIVE
SUMMARY
OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1 SUMMARY OF FINDINGS
5.2 CONCLUSIONS
Based on the findings, we conclude that:
i.
The activity of the
budget committee is a very important determinant of the efficiency of the
organization. The committee boosts the performance of other units by playing an
oversight role to ensure that other units play their roles within set
standards, timeframe and at established or close to established costs. However,
the committee’s performance in terms of the effectiveness of the organization
is below expectation.
ii.
We also conclude that
the budget period is also a very important factor in the effectiveness of the
organization. Setting time limits within which a budget must run and attaching
goals/objectives which staff management must achieve within the set period acts
as a stimulus for better performance. However, budgeting period seem not have
commensurate influence on the efficiency of the organization.
5.3 RECOMMENDATIONS
APPENDIX І
QUESTIONNAIRE
Project Reference Code: C046
The COMPLETE version of this
project requires payment of N3500 only
If you like to ORDER the
COMPLETE version please contact us on: 0803-544-6622
Via Call or WhatsApp for instructions
on how to make payment
The project will be sent to
you via E-mail or WhatsApp within ONE HOUR of confirming
payment
OR
.
No comments:
Post a Comment