THE EFFECT OF BUDGETING AND BUDGETARY CONTROL ON ORGANIZATION PERFORMANCE

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

It becomes more and more challenging for a business to consistently generate a profit that represents a reasonable return on the capital investment due to the growing complexity of business operations and the constantly shifting conditions of the business environment, including social, economic, technological, and political factors. It has been a very long time since a company operated internally using financial instruments; management needs to create a plan of action to track profit and maintain financial control.The established foundation for financial control, planning, and profit is the budget. Many forward-thinking businesses have used it in profitable and productive ways, and they generally see it as one of the most crucial management processes rather than just a routine operation. One management tool that forces managers to perform to a certain standard of expectation is budgeting.The budgeting process forces the CEO to improve as an administrator. Because it enables managers to concentrate on the operational problem early enough, it places planning in the first key and budgeting at the center of attention. Budgeting is typically incorporated into various plans and provides feedback for the actual result in order to facilitate effective planning or action. There are various reasons to budget. The main goal of budgeting is to manage financial resources effectively. It goes without saying that a corporation that budgets will typically perform slightly better than a similar one that does not.

Budgetary control is a method of quality assurance that involves comparing the intended state of affairs to the actual state of affairs and continuously coming up with ways to address deviations. To make sure that the budget is as realistic as feasible, it entails using tools like operational research, computer science, and other methods that are now available. Without a doubt, the budget is the most often employed control mechanism in both business and political circles. The budget is created with the intention of controlling the course that the business is following.Budgetary control is a method of quality assurance that involves comparing the intended state of affairs to the actual state of affairs and continuously coming up with ways to address deviations. To make sure that the budget is as realistic as feasible, it entails using tools like operational research, computer science, and other methods that are now available. Without a doubt, the budget is the most often employed control mechanism in both business and political circles. The budget is created with the intention of controlling the course that the business is following.The total system or responsibility accounting within an organization includes budget planning and budget control. In Nigeria, a large number of organizations and businesses are engaging in budgeting and budgetary control in a variety of ways, but the approach that appears to be garnering the most prominence is one that is based on the concepts and ideas created in budgetary control.

statement of the problem

There are some issues that are known to cause public sector organizations to have deficit budgets. These issues consist of:

unable to examine and determine the organization’s viability.
What tools should be used to compare an organization’s performance—actual or future—with that which is planned or anticipated, and how may tools be used to effectively manage deviations?
What instruments should be used to evaluate an organization’s performance in terms of its just return on capital?
In light of these issues, how does the study’s analysis of budgeting and budget control affect local government organization performance?

Objective of the study

The objective of the appraisal and evaluation of business organization in the following areas:

1. To itemize the impact of budgeting and budgeting control in local government.
2. To exemplify by using budgeting and budgeting control by management for planning, control and decision making.
3. To know what is budgeting and budgeting control and why it is of interest and to whom.
4. To look into ways of encouraging human support for budgeting control.

SIGNIFICANCE OF THE STUDY

The outcome of this study cannot be overemphasized. These are:

1. The effectiveness of budgeting on achieving their corporate goals.
2. The study will help in the formulation of corporate policies concerning local government.
   1. It will help management to to understand ways in which budgeting could be a powerful tool for planning, control and decision making.
   2. It will reveal how rational allocation of resources can be ensured.
   3. It will serve as a tool for further research studies.

1.6  SCOPE AND LIMITATION

The researcher intends to cover budgeting and budgeting control as it relates to the private sector and special consideration been given to in the manufacturing or industrial sector.

The expected limitation form a thorough analysis includes the following:

1. Time
2. Respondents
3. Finance