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AN EVALUATION OF THE EFFECTIVENESS OF FINANCIAL
PLANNING AND CONTROL IN THE BANKING SECTOR
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Planning is
required in all forms of decision making in order to ensure an effective and
efficient utilization of available scarce resources.
The
resources to satisfy the basic needs of the people and relatively scarce in
relation to their demand. Therefore, there is need to plan for available
resources in such a way that maximum satisfaction could be attained with
minimum resources. In planning consideration has to be given to the form of
control that should be exercised to ensure that the plan overall attains its
objectives.
Finance is
the most vital part of process of banking. This is because the level of success
a bank achieves is related to the size of its financial resource. Even with the
most liberal manpower, a bank cannot register any appreciable position. So,
financing of resources in bank does not only mean the acquisition of resources
but also efficient planning, management and allocation of this resources and
valuation of the capital of the organizational objectives or goals.
In any
business sector, an adequate balance and flow cash is essential. A business
must therefore, be able to meet its commitment at all times, for this a bank
must plan its capital requirements well in advances to ensure that it can get
the funds it needs and when it needs them most.
A bank
cannot afford to stand still. It needs cash for its daily transactions. It is
essential for any bank to effect
improvement to introduce other means of sourcing funds, and to expand where conditions
are favorable.
All these
cannot be achieved without effective financial planning and control. A bank
definitely does not remain static, there is always the tendency to go forward
or backward but not neglected to stagnancy. The direction the bank takes
therefore depends on the effectiveness of the financial management planning and
control team.
More than
ever before, a bank should mobilize its financial resources for the attainment
of their corporate goals. Financial and material wastes cannot be afforded in
this time of economic recession whatever the nature of the bank, the same
principles are followed regarding financial planning and control.
A lot of
banks liquidate due to resources today. Had the money realized at the time of
economic boom been invested wisely, the country would still have been
comfortable today inspite of the fall in the oil prices. This is what exactly
happens to some organization where knife and flesh are given solely to one who
does not know anything about management considering the investment of the
country surplus money made from profitable project and venture which would have
been beneficial in the future for the improvement of telecommunication,
settling upon research, Development project (R and D) and institute for both
engineering and Agricultural field as well as improving electricity supply in
the entire economy. Instead the resources are wasted on grandiose project for
some individuals, personal benefits. This paramount in most of the disable
organizations, where finance are embarked upon without planning within the
short time may lead to obsolesce, deterioration etc.
1.2 STATEMENT
OF THE PROBLEM
It is very
important to emphatically stress the importance of planning and control in
today banking section, which includes the followings:
a.
In choosing rationally money among risky endeavours.
b.
It provides us with a bench mark or print reference
against which accomplishment can be measured and also focuses attention on the
objective of the organization.
The
paramount consideration in business is profit without it, there can be no
business because the essential discipline in business is profit planning and
control and this requires the application of budgeting procedure.
1.6 SCOPE
OF THE STUDY
The topic “An
Evaluation Of The Effectiveness Of Financial Planning And Control In The
Banking Sector”, is a very wide one that requires a lot of resource work. In
view of these facts, the researcher has decided to limit the scope and to deal
on how resources are being procured, effectively and efficiently managed (i.e.
how assets and liabilities of an organization are being managed how are they
being allocated and valued in an overall basis for the achievement of
organizational objectives and goals. We shall look at fixed Assets management,
working capital management, internal control, budget and budgetary controls in
this respect.
1.7 HISTORICAL
BACKGROUND OF THE STUDY
The
background of the study is to carry out an evaluation of effectiveness of
financial planning and control and budgetary control system in service
industry. It deals with how service industry like first Bank of Nigeria Plc
secure adequate means of financing, provide complete method or procedure that
will allotted for the bank budgetary control system and ensuring re cords as
far as possible accurately the reliability of accounting records, the promotion
of operational efficiency policies and adherence to management and
administrative policies.
In
planning, consideration has to be given to the form of control that should
exercised to ensure that the plan attain the objective of the resource being
carried out.
Financial
is the most vital part of the process of banking, the objective of the study is
primarily aiming at ascertaining the effectiveness of the financial management,
planning and control in banking sector or otherwise.
The
research collection would be in a primary and
secondary form of data
collection; the project will hope to come out some out come: -
-
Improves the manpower of the organization so as to
gear the bank management towards effective financial planning and control.
-
Internal control system should be overhauled to ensure
appropriate use of resources
-
Determining the bank investment needs and choices has
given it growth objectives and overall strategy.
-
Analyzing the consequences of its financial plans for
the long term health and survival to banks
-
Forecasting the bank revenue and expenditure and needs
for funds based on it investment where financial planning is defective.
This
project work shall comprise of five chapters, chapter one shall deal with the
background of the study, statement of problems, objectives of the study etc.
Also chapter two focuses on theories of financial planning and control etc
chapter three has to do with the basic research methods, observation,
interviews and questionnaires. Chapter four is the data presentation, analysis, interpretation and
test of hypothesis. Chapter five being the final chapter shall deal with the summary,
conclusion and recommendation for the research findings.
1.8 DEFINITION
OF TERMS
a. PLANNING: “Planning proceeds control”
it is the selection objective and their means of attainment.
b. RESOURCES: This can be defined as
supplies of goods, raw materials, etc which a person, organization, country has
or can use in the process of production.
c. CONTROL: The implementation of decision
model and the use of feed back so that objectives are optionally attained.
d. FINANCE: To raise money necessary to
organized to extend an enterprise, whether by the sale of stocks, notes or
otherwise
e. FINANCIAL ANALYSIS: This is the
concentration of financial statement of an organization in relation with other
organization within the same environment (sector) over a given period or time.
f. FIXED AND CURRENT ASSETS: Fixed Assets
can be stated as those material whose value are of long life, which are held to
be used in banking and are not primarily for resale or for conversion into cash. Current assets are those materials
whose value changes with the change in the volume of investment.
g. BUDGET: A financial or quantitative
statement 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
objectives.
h. BUDGETARY CONTROL: “The establishment
of budgets relating to the responsibilities of executives to the requirements
of a policy and the continuous comparison of actual with budgeted results
either to secure by individuals actions, the objectives of that policy or to
produce a firm’s basis for its revision”.
i. FORECAST: This is a prediction of
future events which a re expected to happen in a life time.
j. MANAGEMENT: This is the process of
getting things done through other people in an organization which can be either
profit or non profit making.
k. ORGANIZATION: This means to structure
or arrange relationship between people, the work to be done, and the facilities
in doing such works so that goals and objectives of the organization can be
achieved.
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