BUDGETING AND FISCAL DISCIPLINE: A PRACTICAL TOOL OF CONTROL IN GOVERNMENT ESTABLISHMENT (A CASE STUDY OF SELECTED GOVERNMENT ESTABLISHMENT)
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BUDGETING
AND FISCAL DISCIPLINE: A PRACTICAL TOOL OF CONTROL IN GOVERNMENT ESTABLISHMENT
(A
CASE STUDY OF SELECTED GOVERNMENT ESTABLISHMENT)
ABSTRACT
This research work is aimed at examining the use of budgeting and other form of
fiscal discipline, that is taxation and other forms of government spending or
expenditure in public corporations or parastatals. Data are collected through
primary and secondary sources outfow of government funds.
Usually the procedure for raising and expending funds in the public corporation
go through stages. The statistical tools used in the analysis of data include
the simple percentage, weighted ranking techniques and chi-square test.
The findings of the research are that the major types of budget used are
capital and recurrent budgets, fixed and flexible budgets, budgetary of
planning, control and as a standard for performance measurement/evaluation. The
finding shows that there is a positive relationship between budget estimates
and actual expenditures.
TABLE OF CONTENTS
CHAPTER ONE
1.0
Introduction
1.1 Background of
Study
1.2 Problem Analysis
1.3
Research Objectives
1.4 Research Hypothesis for the Study
1.5
Scope of the Study
1.6 Relevance and Significance of
the Study
CHAPTER TWO: LITERATURE REVIEW
2.0
Introduction
2.1 Types of
Budgeting
2.2
Problems of Budgeting
References
CHAPTER THREE: RESEARCH METHODOLOGY
3.0
Introduction
3.1 The Research
Design
3.2
The Research Instrument
3.3
Procedure For Processing Collected Data
3.4
Limitations of the Study
References
CHAPTER FOUR
3.0
Data Presentation and Analysis
3.1
Introduction
3.2
Presentation and Analysis of Data According
to Research
Question
3.3
Presentation and Analysis of Data According to
Test
Hypothesis
3.4
Analysis of Other Data
CHAPTER
FIVE: SUMMARY, RECOMMENDATION AND CONCLUSION
5.0
Introduction
5.1
Summary of the Findings
5.2
Discussion of the Findings
5.3
Policy Recommendations
5.4
Recommendations of Future Research
5.5
Conclusion
Bibliography
Appendix
CHAPTER ONE
1.0
INTRODUCTION
1.1 BACKGROUND
OF STUDY
Organizations are
usually established with the aim of achieving certain goals or objectives. Most
times, those in private sector of the economy are guided by the aim of
maximizing profits and minimizing cost. The government
organizations are for good towards
achieving goals/ objectives as the provision of the necessary social, political
and economic infrastructures for the general well being of its citizens.
Prior to the
establishment of most of these organizations, intended goals and objectives are
care fully planned as well as finance is been made by the authorized agencies,
plans are executed and policies are implemented. Usually all of these are
executed in an organized and control manner.
Thus, it becomes
imperative that all government and non-governmental agencies should plan,
control, organize, direct and implement their policies toward achieving desired
goals and objectives. It is the basis that determines the success or otherwise
of most firms.
As defined by Lucey
(2004), budget is the expression or quantitative representative of the entire
plan of action of an organization, as shown or represented in monetary terms.
Stated otherwise, it is a thorough and detailed presentation of the entire
plans of an organization and the set goals of such in a monetary or
quantitative form.
Again as argued by
Prof. Nathan Jones of the school of business in the University of Michigan It
is a detailed financial statement that is prepared and approved by the
authorized alms of government for a given or definite period of time. If the
policies to be pursued within the period for the purpose of attaining specific
goals or objectives”.
Basically in the
iteming of goals and objectives there should be a corresponding display of the
source and intended expenditure of funds that will be needed in pursuing these
goals. In the display of most budgetary outlooks it is a fitting companion that
is the source areas of needed expenditure authorization and other forms of
control mechanism are embedded.
On the other hand,
the execution or implementation of a budget or budgetary plans of action is known
as budgeting. It was defined by Prof. Anao, in the journal of management (2002)
as the implementation of budgetary plans as a budget”.
Here, much control is
embedded and as constant review of policies and results are carried an in order
to ensure compliance with intended results.
In the public or
government sector of the economy, divergent interests are represented.
Businessmen, students, politicians etc. are usually allowed to express opinions
as regarding government policies based on the past, present and future revenue
source and expeditions theory. This will show a detailed assessment of the
benefit and cost of alternative uses of funds.
Budgets are usually
prepared by the executive arm of governments and then submitted to the
legislative arms for proper scrutiny debate and if agued upon, passing into law
or asserted unto by the commander-in-chief before it becomes law and then
authorization for spending issued.
It is a well
recognized and acceptable fact that all enterprise, be it privately funded or publicly
managed should be managed effectively and efficiently. All management
irrespective of sector is adjudged efficient if it is able to accomplish the
set objectives of an enterprise or firm with minimum cost and effect. Achieving
this desires monitoring operations planning and comparing actual results with
planned or budgeted result / outcomes.
All of these acts of
imbibing control mechanisms in achieving goals and objectives are known as
budgetary control system.
Budgetary control is
argued for in order to ensure the appropriate co-ordination of scarce resources
in achieving profitability.
Among the other forms
of fiscal policies that may be used by the government in regulation and
attaining goals and objectives is taxation and some firms of internal controls.
According to Prof.
Nduka (2006), of the University of Nigeria (NSUKA), budgetary control system is
a system where set plans or goals of an organization is monitored and options
are taken to review performance and to review goals that have become
unrealistic.
Reviewing performance
and comparing outcomes with budgeted ceiling necessary.
To ensure attainment
of goals, limits should be set to which a firm confirms and acknowledge
acceptable operating performances. These limit together with expected results
are shown in the master budget of the firm and actual outcomes compared with
expected results as the year progresses without budget such comparisms would be
impossible and a firm (government or not) might find that it’s cost exceeded
acceptable level.
As a way of lending a
professional voice, the need for budgeting and fiscal control in expending
funds in an organization the Institute of Certified Accountant of Nigeria
(ICAN). The provision in 1997 is clearly stated in following manners:
i. Determining government policies
and objectives.
ii. Preparing preliminary for-cast.
iii.
Considering alternative plans and uses.
iv.
Preparing functional budget for individual department.
The budgeting process serves several purposes
which includes the fact that it provides a financial blue point that enable
managers to project the outcome and adjust strategies where needed before
operations begins, thus avoiding error.
Also, the budgeting
process forces the managers to re-examine past performance, which may enable
them to discover and correct inefficient and outmoded planning methods and
operations.
Thirdly, budget
enables manager to implement the planning and control functions. Some
government organization see the preparation of formal budgets as time consuming
and expensive, but the cost of not budgeting may be for greater and may
ultimately lead to the company’s failure. The planning process of an enterprise
would involve four fundamental processes:
i. Establishment of
objectives
ii.
Determination of short-range objectives.
iii.
Development of strategies.
iv.
Formation of profit plan or project.
1.2 PROBLEM ANALYSIS
Budgeting and fiscal discipline over the years, has since colonial era been
used to control government expenditure but the application has not been filling
effective in government administration. Budgeting and its application has not
been effecting co-ordinated because, the money projected sometimes has not been
accomplished or not have been used as it is required.
Problem that are associated with this budgetary system and the fiscal
discipline includes:
a.
The delay passage of budgetary proposal into law before becoming an efficient
development to work with.
b.
To find out whether budgeting can help in effective communication and
performance evaluation.
c.
To find out whether budgeting can help in effective planning and control of
financial activities in the government establishment and parastatals.
d.
To find out whether budgeting guides against waste and how it help in reducing
cost and increasing profit earnings which of the budgeting techniques is
recommended for budget preparation in government ministries and parastals.
Those questions which need to be addressed is traceable to the type or caliber
of people handling the budgetary processes and on what basis are real sources
of these finances used in achieving budgetary allocation.
1.3 RESEARCH
OBJECTIVES
The main objectives of this study are synonymous with the research work/topic.
It is to ascertain how the adoption and implementation of budgetary system and
fiscal discipline apply in government ministries and parastatals in achieving
goals.
The other specific of the study objectives are:-
a.
To determine how budgetary system assist in regulating the inflow and outflow
of government funds.
b.
To identify the procedure for formulating, preparing and evaluating budget
performance, To drawn conclusion and suggest useful recommendation based on the
findings.
c.
To ascertain the reasons for the adoption or adopted techniques, its
effectiveness and areas of adjustments as necessary in the budgetary control
system.
d.
To analyze the weaknesses and other forms of deficiencies in the application of
budgetary control system and how they affect budgets and fiscal disciplines in
government parastatals to examine the effect of implementing budgets in
government ministries and parastatals and to examine the positive and negative
effects in budget implementation in government ministries and parastatals
1.4 RESEARCH
HYPOTHESIS FOR THE STUDY
As
defined by Dr. Ezeocha (2006), of the University of Ilorin, Hypotheses are
tentative statement of fact
Otherwise stated, they are to be held and assumed not to be truth, until proven
to be. In the course of this research work, the following hypothesis will be
trusted.
Hypothesis One
H0:
Budgeting help in effective planning, controlling and management of the
financial activities of government ministries.
H1:
Budgeting does not help in the effective planning, controlling and management
of the financial activities of government ministries.
Hypothesis Two
H0:
Effective performance evaluation and review is sustained and encouraged as
result of budgeting.
H1:
Effective performance evaluation and review is not sustained and encouraged as
a result of budgeting.
Hypothesis Three
Hypothesis Three
H0:
In the long run, there is a positive relationship between budgeted estimates
and the actual estimates.
H1:
In long run, there is no positive relationship between budgeted estimates and
the actual estimates.
1.5
SCOPE OF THE STUDY
This study is aimed at assessing the budgetary system and fiscal discipline
measure/control as a tool of instrument of achieving government policies and
objectives in some selected government ministries and parastatals. In the
course of this study, the researcher intends to look at the importance of
budgeting and fiscal discipline and other factors that can improve the economic
and social performance in government ministries. Attention must be focuses on
the fixed flexible budgets, incremental budgets, zero based budgets, production
and administrative budgets, sales budget, master budget, partial and which
budget e.t.c.
Consequently, the scope will encompass the following:
a.
A review of budget and budgeting control system.
b.
Fiscal policies measures.
c.
Types of budget and budgetary system.
1.6 RELEVANCE
AND SIGNIFICANCE OF THE STUDY
The
importance of this study cannot be overemphasized. It is the opinion of the
researcher that this study will be beneficial to the following:
a.
The management and members of the board of directors of government ministries
and parastatals is aiding their decision-making and implementing processes.
b.
It is hoped to aid in understanding the inherent benefits embedded in drawing
up a budget for different purpose and working within it.
c.
It will contribute to the work of knowledge and further research.
d.
To other individuals and scholars who may be interested in the budgetary and
fiscal discipline measures in government ministries and parastatals.
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