Budgetary Control As A Tool For Effective Management In Tertiary Institution

Budgetary Control As A Tool For Effective Management In Tertiary Institution (A Case Study Of  Enugu State University Of Science And Technology (Esut)

Abstract

The research was on budgetary control as a tool for effective management in tertiary institutions. (A study of Enugu State University of Science and Technology (ESUT). The aim of this research is to find out whether budgetary control has a significant effect on revenue generation and expenditure of tertiary institutions, and also to find out whether budgetary control has improved the efficiency and effectiveness of tertiary institutions. Data for this resreach work were gotten by the way of administering questionnaires, published textbook, and journals presentation and analysis of data were carried out using the simple percentage method and the formulated hypothesis were tested using analysis of variance (ANOVA) statistical technique. The resreach shows the following findings: that budgetary control system has a significant effect on the revenue generation and expenditure of  tertiary institutions, that budgetary control system has improved the management efficiency and effectiveness of tertiary institutions. The researcher recommended that their should be education and should based on management by objective (MBO), their should be rewards and incentive to budge workers for favourable budget variance and the management should also encourage team work among themselves by stressing group reward above individual reward for all heads of departments at a reasonable large of attainment of the institutions objectives.

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CHAPTER ONE

1.0 INTRODUCTION

        Every organization or institution be it private or public have some objectives or goals which they aimed at achieving. These goals includes profit maximization for a project making organization, achieving a satisfactory level of performance and ensuring growth and survival of the institution. Realization and utilization objectives requires the acquisition and utilization of both human and material resources. The scarcity of these resources imposes constraint on the institutions, goals, it then suggest that in a bid to achieve these objectives, management must have a prepared organizational plan. The planning and controlling of the activities of an organization are done through the budgetary control which serves as a tool for effective management, which also forms the topic of this  research work. Budgetary control is one of the scientific techniques used by management in formatting and forecasting the organizational plan so that objectives of such organization could be achieved in the most efficient manner. A properly constructed operating budget is not a plan which predicts precisely what is going to happen. It is a plan that shows what will have to happen to achieve certain profit result, such a plan breaks the total operating figures. It measures these units individually and regulates their actions and interactions to the profit goals.

The management of any institution normally set objectives or goals so that the institution will clearly identify what it want to achieve in a future time. These targets or goals may be quite different according to different institutions. Budgeting therefore involves the setting of targets and monitoring of actual performance against the anticipated performance. It is a technique which is widely used in business and which involves all levels of management and all functions of the organization.

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Traditionally, budgeting was seen as a way of limiting expenditure hence a great part of management time is usually spent on the budgeting today merely shows an expected revenue and projected expenditure. This implies that a budget project and control the way management reacts to proposals brought before it, it must look into the present and future cost as well as benefits of that proposal and in doing this however, it must not loose sight of the environment in which it operates. The same principle goes with the preparation of  a budget. In preparing a budget, management must realize that it is just a part of economic system and as much can influence as well as being influenced by events and activities within the economic system.

According to Lucy (1984-23) budgeting can be defined as a quantitative expression of a plan of action and an aid to co-ordinate the organization activities. Also, it qualifies the expectation regarding supporting plans. However, budget serves as a variety of additional function like evaluating performance of workers, co-ordinating activities implementation of plans, communicating motivating and authorizing actions.

Furthermore, a budget is a pre-determined statement of management policy at a given period of time which provides a standard for comparison with the result. Budgeting control is a system of controlling cost which includes the pre parathion of budget, co-ordinating the departments and establishing responsibilities.

According to Osisoma (1987-15) the purpose of controlling is to ensure that operation and performance conformed with the plan or the target of the year.

In this study, the researcher set to give an overview of budgeting control as a tool for effective management in tertiary institution with a particular reference to Enugu State University of Science and Technology (Esut).

1.1     Historical Background

Historical background of Enugu State University of Science and Technology (Esut).

Enugu State University of Science and Technology (Esut) was found in 1979 by Jim Ifeanyichukwu Nwobodo, who was then the governor of the  old Anambra State, the institution was known as Anambra State University of science and technology (ANATECH) Anambra. It was the first ever state owned university in Nigeria but the 3rd state university owned by the government and has three campuses located at Awka, Abakiliki and Enugu. The institution equally had the first state owned teaching hospital located at Nnewi. Following the creation of Enugu State in 1991, the university took its present name, and was relocated in its permanent site at Ebeano City, in 2006 under Governor Chimaraoke Nnamani’a administration. Its former site was found at Enugu but now shifted to Agbani. Almost 75% of Esut block is now being occupied by IMT, its law faculty block is now the female hostel other departments like engineering management science etc are now shifted to Agbani their permanent site.

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There are nine faculties in Enugu state university:

  1. Natural and applied science
  2. Medicine
  3. Management science
  4. Social science
  5. Education
  6. Law faculty
  7. Environmental science
  8. Agriculture
  9. Engineering

They also do matured students programme (partime) and also post graduate students (PGD) and master degree programme.

The staff of the institution is about 350 in which 210 are academic staffs and 170 non academic staff. Among the 210 academic staffs, 80 are senior lecturers while the remaining 130 staffs are junior lecturers.

The Governing body/council of the university is made up of twenty five (25) embers with the pro-chancellor Davide Igbodo as its Chairman. The current vice chancellor of the institution is Ikechukwu Chidobem. The institution was established to promote education within the state and nation at large.

1.2     Statement Of Problem

It has been observed that most organizations and institutions do not see budgetary control as an important management tool which has to be given proper consideration in order to achieve the organizational goals. Inadequate implementation of budget has resulted in low performance by the institution and organizations as in the case of Enugu State University of Science and Technology (ESUT) also criteria for approving expenditure have become more political and action providing instead of lobbing to get funds. This tend to encourage corruption in the release of funds.

Constant changes after the budget has been approved makes the budget a series of patches, thereby result in expenditure above authorized limited.

1.3     Purpose Of The Study

In view of problems associated with poor budgetary control, the researcher intends to fund out the procedures of an annual budget in the tertiary institutions.

One of the objectives of this study is to determine whether budgetary control as a management tool contributes to the improvement of management efficiency and productivity. The objectives will be utilized as follows:

  1. To find whether the achievement of budgetary control is as a result of setting unrealistic target thereby demoralizing the workers.
  2. To find whether budget in the case study organization contributes to effective management.
  3. To examine if the appraisal of the management performance is based on the budgetary analysis.
  4. To examine the extent to which the officers in-charge of budget center account for their responsibilities.
  5. To disclose whether budgetary performance is used as a means of reward.

1.4     Research Questions

Based on the problems mentioned above the following questions were addressed.

  1. What degree of confidence can be placed on budgetary control as a tool for effective management in tertiary institutions.
  2. How has budgetary control improved the management efficiency and effective of tertiary institutions.
  3. To what extent does the problem of implementation and inadequate co-ordination of the budget affect the institution.
  4. How has budgetary control affect the revenue generation and expenditure of tertiary institutions?

1.5     Resreach Hypothesis

Hypothesis I

Ho:    Budgetary control has not improved in the management efficiency and effectiveness of tertiary institution.

H1:    Budgetary control has improved in the management efficiency and effectiveness of tertiary institution.

Hypothesis II

Ho2:  budgetary control has no significance effect on the revenue generation and expenditure of tertiary institution.

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Ho1:  budgetary control has a significance effect on the revenue generation and expenditure of tertiary institution.

1.6     Scope And Limitation Of The Study

The scope of this study covers all the budgetary control system of tertiary institution with a particular reference to Enugu State University of Science and Technology (Esut). It’s critically reviews the efficiency and examines the major problem of non-compliance of the various budget operators to limitations to this includes on the other hand, the limitations to this includes the ability together substantial information from most of the staff of the institution especially the senior staff who felt that they need to ensure confidentiality. Also limited time frame which hindered the researcher from more resreach was also a limitation.

Finally lack of fund which hindered the researcher from making all the necessary materials needed in this study available.

1.7     Significance Of The Study

The successful completion of this work will be of great significance to future researchers who may have little or no idea about budgetary control in tertiary institution. This work will also improve the internal control system of the management of Enugu State University of Science and Technology (Esut) in particular and other tertiary institution in general. Furthermore it will be very useful to the federal and state government, stakeholders of tertiary institutions and the general public.

1.8

Definition Of Terms

Budget: An expression in financial quantitative terms of an organizations plan of action.

Budgetary Control: This is a statement of expected cash receipts and disbursement over a period of time.

Capital Budget: This is the long term planning for proposed capital outlay and there financing.

Controllable Factors: These are factors which can be changed by management decision.

Forecast: This is a projection of what the future should be.

Planning: This is the process by which objectives are determined to be attained.

Variance: This is the difference between the actual result and the budgeted result.

Fixed Budget: A fixed budget is a budget that expresses only one level of activity.

Flexible Budget: This is a budget that vary from one level of activity to another.

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