THE EFFECT OF BUDGET AND BUDGETARY CONTROL IN THE LOCAL GOVERNMENT SYSTEM
CHAPTER ONE
INTRODUCTION
- Background of the Study
Budget and budgetary control has played a very significant role in and organization whether government or private yet, its importance cannot be over-emphasized. In simple terms, budget is a critical evaluation and financial planning of organization’s income and expenditure. Andrew (2012) observe that budget is the overall financial estimate and analysis of an organization financial Obligations. It is important to note that even individuals also have a financial budget of his income and the resources at its disposal. With this understanding, budgetary control therefore means the act of regulating the process o financial planning in an organization.
Akwaowo (2015) noted that one of the most important and widely used approach to the planning and control function in an organization is budgeting involves the He further added that budgeting involves the establishment of predetermined goals, the reporting of actual performance result and evaluation of performance in terms of predetermined goals.
Budgetary control system is universal and have been considered an essential tool for financial planning. The purpose of budgetary control is to provide a forecast of revenues and expenditures. This is however achieved through constructing a model of how our business might perform, financially speaking of certain strategies, events and plans are carried out, (Akwaowo 2015). Budgetary control enable the management team to make plans for the future through implementing those plans and monitoring activities to see whether they conform to the plans. Dunk (2009) in his contribution assert that with a budget control, an organization can prepare a good budget as a basis for performance, management and standard on a regular basis in order to compare actual performance with the budget to analyze differences in the result and take corrective measures, which mainly involves the process of budget of implementation, evaluation and control.
Budgeting is the mechanism involved in developing a budget, while budget can be defined by the institute of cost and management accountant “1982” ( ICMA) as a financial and quantitative statement prepared and approval prior to a defined period of time, of the purpose of attaining a given objective. It may include income, expenditure and employment of capital.
Conclusively, since budget and effective budgetary system is seen as a compass that can ensure the attainment of an organization financial plans, aims and overall objective therefore this research work is set to critically examine the effect of budget and budgetary control in local government system.
- Statement of the Problem
Even as budget and budgetary control plays a very significant role in attaining an organization goal yet, most organization has so much underestimated the effectiveness of budget and budget control. Akwaowo (2015) pointed that it is one thing to prepare a budget and another to effectively implement the budget.
Although some organization may be involve in preparing budget. Yet, plans towards the implantation of the budget are not in place why. Because of poor budgetary control system.
This however result in extravagant spending of the organization’s income or fraud as the organization gradually run down. Hence there is need for budgetary control and auditing. Therefore this study become necessary to examine the significant on the effect of budget and budgetary control system on Local Government System.
- Objective of the Study
The study was set to achieve the following objectives.
- To find out the effect of budget and budgetary control in local government system.
- To identify the variable tools for sound budgetary control in local government system.
- To find out the challenges facing budget implementation in local government system.
- To identify the solutions to the problems facing budget implementation in local government system.
- Research Question
- What is the effect of budget and budgetary control in local government system?
- What are the viable tools for sound budgetary control in local government system?
- What are the challenges facing budget implementation in local government system?
- What are the solution to the problem facing budget implementation in local government system?
- Significance of the Study
With the findings of study by adopting proper measures of budget control to ensure efficient and effective utilization of available fund. The study having examined principle of budgeting, preparation; implementation and control, it is believed that this work will be of interest to budget officers and managers of all government ministries, parastatals that engage in planning an forecasting. This work will provide government administrators with vital information on the effect of budgetary control for the smooth running of budget procedures and implementation process in the public sector and also its major challenges. This research work will also serve as a vital material to those who want to carry out work of such nature.
- Scope and Limitation of the Study
This research study was on the effect of budget and budgetary control in local government system. Ikot Ekpene Local Government Council was used as a case study for this research work.
In term of limitations, there were factors which serve as limitation to this research work which are being reluctant on the part of respondents in giving accurate information thereby making it so hard for the researcher to gather data. Also, attending to some academic work at the same time, this research work was a very tedious process. This resulted to limited time to attend to the commitment of this study.
- Organization of the Study
This research work is organized in five (5) chapters, chapter one gives the overall introduction and background of the study, it statement of the problem, objective of the study, the major research questions, the significant of the study and definition of terms relating to the study.
Chapter two (2) reviews related literature to this study as opinions of various authors are sought.
Chapter (3) emphasizes on the research methodology which include: Design of the study Area of the study, population of the study sample and sampling techniques, Instrument for data collection and the data analysis techniques
Chapter four focuses on data presentation, analysis and interpretation of results, finally chapter five (5) conclude the research work with its findings and major recommendations based on the finding from the research.
- Definition of Terms
The following terms will be defined based on their usage in this research work.
BUDGET: Budget may be define an s the annual estimates, prepared and presented by the presidency and approach by the National house of Assembly, stating the expected revenue and the estimate expenditure for a particular financial year.
BUDGETARY CONTROL: It is part of overall system of responsibility accounting within an organization Adenji (2009, P.575).
