CRITICAL ANALYSIS OF BUDGETARY CONTROL: ITS EFFECTIVENESS AND EFFICIENCY IN A NON PROFIT MAKING ORGANIZATION

(A CASE STUDY OF NCRI BADEGGI)

INTRODUCTION 

The essence of budgeting is to provide an essential element of control in an organization in order to facilitate the achievement of set objectives. The control process is the fundamental organization link between the manager and the other people in an organization in a non profit making organization output various with the objective with which they were established. The objective of public organization could be social and or development in nature . however this does not means that public organization can not make profit if government policy changes to privatizing or commercializing them. The main structural problem of these type of organization is the sacrifice of the organization profitability for social efficacy which must be achieved in research institute Badeggi falls into this category. With the use of budget as a control tool, there is Ned for planning a the performance of an organization. Planning as defined by C.I.M.A is an the establishment of objective and the formulation evaluation and selection of the formulation of the policies strategies tactics and action required to achieve these objective, by planning activities in advance more economical use is made of the organization resource and facilities and a fairly accurate estimates of it s future resources requirement can be determined. One of the outstanding features of budgetary control is that policy plans resource s and activities of the organization are coordinated integrated and controlled to achieve the desired objectives. Budgetary control is a means of providing some centralizing control where activities and also responsibilities are decentralized. It is also the use of budget for assigning responsibilities planning and controlling performance and guiding managerial and other activities of the firm towards the achievement of organizational objectives. It involves, setting out clearly defined forgets of output , income and expenditure for each section of the organization .Embodying these forgets of performance in sectional divisional and departmental budgets comparing these budget standards with actual performance .identifying deviations or variances from the budget and taking corrective action or bringing performance in line with budget targets .this is because all the heads of departments in the organization are involved in the preparation and implementation of budgets, while management control the whole activities of the organization. Budgets are prepared as a result of committee work. Each committee constituting of representatives of various departments and functions to be controlled. The heads of departments are responsible for the respective department budget.

Each executive or manager can then fully appreciate his responsibilities ,as they are reflected in his department budget. Any deviation of the actual result from the estimate and forecast are traced back to the department head or manager.

1.1 PURPOSE OF THE STUDY 

Most of the non-profit making organization in Nigeria are governmental in nature, this is because they are mainly set up for social and developmental purposes, this usually leads to a poor planning and control measures. The purpose of this study is to critically analyze the budgetary control system as a planning tool in non_ profit making organization using National cereals Research institute as a case study. This research work intend to bring about clearer understanding of the need for an effective and efficient budgetary control in a nonprofit making organization which will also be of benefit to other similar organization leading to an improvement in government owned organization budgetary control system.

1. 2 STATEMENT OF PROBLEMS

public sector and other nonprofit making organization are often noted for inefficiencies and poor management, which is as a result of poor planning through repetitive budgeting. Recent studies in the area of budget and resources allocation have shown lack of proper analysis. There is a general lack of the concept of why we have a budget at all. This issue calls for immediate investigation of budgeting as a tool for resources planning and performance control and to recommend how it can function properly.

1.3. OBJECTIVE OF THE STUDY 

The main objective to be achieved from this research work is that, it will; serve as a means of measuring the output or the work performed and to compare it with the cost of input. This comparison provides a basis for indicating efficiency and effectiveness.

The process of comparing actual results with planned and evaluating variance if any set a control frame works which help expenditure to be kept within an agreed limit. If this deviations are noted, so that action can be taken to correct this in the future.

1.4 SCOPE OF THE STUDY 

The study intend to cover budgetary control as it affect National cereals Research institutes {N.C.R I} . it will examine its budgeting control as a measure of performance.

1.5 RESEARCH QUESTIONS 

The followings are the research questions of the study.

1. Historical Background A Was there any Decree/Act by Government that established the institute? (If any, quote with date.) B What are the objectives of the Federal Government in establishing the institute? C How does the institute relates with the ministry? D What is the organization structure of the institute like? E Looking at the organization structure, what are the function of this department?

2. Funding/Expenditure: A How do you budget for the institute/or what are the Department that participate in the preparation of budget and disbursement of the fund to Department etc? B Do you have a budget committee for the preparation of budget. What does it comprise of? C It is understood that Federal Government plays a major role in funding, what are the other sources of fund, with regard to sponsorship, loans, etc. Take a look at three consecutive financial fear.

3. Budgetary Control A How does the management control the activities of the institute with regards to administration of budget, in respect of resources, personnel etc? B Is there any external monitor agent from the parent ministry that supervise the management? How is this carried out? PROVISION FOR NO 2 © Funding/Expenditure for a particular fiscal year Sources of fund Federal Government Grant Sales of produced crops Sponsorship Loans Budget Actual Variance remark

EXPENDITURE S/N 1 2 3 4 5 6 7 8 9 10 11 12 13 14 14 Description Staff salaries/wages Branch members allowance Insurance and iciness Rents Electricity water and gas Professional charges Stationeries, printing Admin/establishment Gener. expense Advertisement Board meeting expenses Transport and travelling Audit fees and expenses Bank changes and commission Staff training and conference Research works: – Mechanical

– Field work etc. Budget Actual Variance remark

1.5 RESEARCH HYPOTHESIS 

The underlisted hypothesis from the framework for carrying out the study HO: Budgetary control effective and its efficiency is not facilitated by the financing inducing role of government.

HI: Budgetary control effectiveness and its efficiency is facilitated by the financial inducing role of government.

HO: Effectiveness and efficiency of budgetary control does not depend excessively on the provision of basic infrastructures.

H1: Effectiveness and efficiency of budgetary control expends excessively on the provision of basic infrastructures.

HO: Budgetary control are not the hallmark for development of the economy

H1: Budgetary control are the hallmark for development of the economy.

1.6.1 RESEARCH QUESTION 

SECTION A

1. How effective is the financial inducing role of government towards non profit making organization by the use of access to borrowing loans etc? Very adequate Adequate Very poor Poor

2. Does inadequate infrastructure facilities like access good road telecommunication, electricity etc. effect budgetary control in on profit making organization? Very much Much Very low Low.

3. Has establishment promotion and development of non profit making organization been identified as a strategy to tackling poverty and sustenance of economic development. Totally agree Agreed Totally disagreed Disagreed.

4. Has the funding of non-profit making organization contributed satisfactorily to budgetary control effective in the development of the economy. Highly satisfied Satisfied Highly Dissatisfied Dissatisfied

5. Does non profit making organization has the hallmark for development of economy Yes No Don’t know SAMPLE QUESTIONNAIRE (STRUCTURED) PROJECT TOPIC: The critical Analysis of budgetary control, its effectiveness and efficiency in a non profit making organization. A case study of National cereal research institute, badeggi, Instruction: Kindly tick ( ) in the boxes provided or supply simple answers where applicable.

1.7 LIMITATION OF THE STUDY 

The constraints include: Time factor, the period within which the research work is expected to be completed is rather two short for any meaningful work to be done. financial difficulty, considering the bad economy situation in the country, effort to have sufficient research material to be able to write extensively on the Subject matter proves abortive. LACK OF ADEQUATE RESEARCH MATERIAL Many libraries visited offered little help as regard text books for the project. POOR RESPONSE FROM THE EMPLOYEES

The employees are unable to disclose some information about the company which made some difficulty in writing the research work.

1.8 DEFINITION OF TERMS 

Actual Performance – Is the real facts on how well or badly the targeted objective was achieved.

Budget – Is a statement showing how money will be spent over a period of time.

Critical – Expressing disapproval on the expected performance.

Efficacy – The ability to produce.

Effectiveness – Ability to produce the intended or actual result being efficacious and efficient.

Evaluation – Finding out or stating the value of something.

Forecast – To budget in advance what is likely to happen

HO – Null hypothesis

H1 – Alternative hypothesis Alternative hypothesis is what the researcher thinks most of the respondent will agree with in relation to the research problem or the true description of the phenomena. Null hypothesis is not and the opposite.

Hallmark – Mark to indicate standard.

Inducing – Persuade, bring in labour

Planning – Is the act or process of intending to achieve an objective in advance.

Variance – Is the amount which brings difference between the actual and the budgeted.