BUDGETING AND BUDGETARY CONTROL IN LOCAL GOVERNMENT SYSTEM (A CASE STUDY OF ANINRI LOCAL GOVERNMENT)

LIST OF TABLES

Table 4.1:   Consideration of budget exercise as a strategic decision.

Table 4.2:   Disbursements of funds for projects as land down procedures

Table 4.3:   Adequately of accounting and control system

Table 4.4:   Achievement of budgetary goals of the local government

ABSTRACT

This study focuses on budget and budgetary control in local government system in Nigeria. A case study of Aninri local government area. The need for the study was necessitated by widespread misappropriation of funds of funs, abondment of contracts and constant disbursement of funds without recourse to financial regulations and budgetary allocations in respect of such contract.

Base on this, the aim of the study was to:

1. Determine the extent to which the local government regards the preparation of annual budget and subsequent use to control the activities of the local government as strategic decision.
2. To find out whether disbursement is online with budgetary allocations.
3. To find out whether there exist effective control system to ensure efficient of funds utilization.

In other to achieve the above objectives data were collected through the use of questionnaire which were administered to a sample population of hundred twice (103) staff of Aninri local government council office. Responses from the respondent were analysed using weighted mean approach major findings were:

• Aninri local environment area does not consider budget preparation exercise as a strategic decision (ie lip service is paid to the exercises.
• Disbursement of funds are not based on budgetary allocations.
• The accounting and administrative control are weak and ineffective
• The council is enable to achieve its budget objectives.

Base on the finding, the following recommendation were made:

The study concludes that effective budgeting and budgetary control system in the local government can promote efficiency in funds utilization and better community development.

CHAPTER ONE

Introduction                                                                                                1

• Background of study 1
• Statement of the problem 4
• Purpose/objectives of the study 5
• Scope of the study 6
• Research questions 6
• Significance of the study 7
• Definition of terms                                       8

CHAPTER TWO

• Review of related literature 10
  • Concept of budgeting and budgetary control 10
  • Major uses of budgeting control 17
  • Dimension of public budgeting and budgetary control. 18
  • Budgeting systems and its implication 20
  • Profile of Aninri local government revenue and expenditure 32
  • Summary of related reviewed literature 36

CHAPTER THREE

• Research methodology 38
  • Research design 38
  • Area of study 38
  • Population of the study 39
  • Sample and sampling procedures 39
  • Description of instruments used 40
  • Reliability and viability of instrument. 40
  • Method of data collection 41
  • Method of questionnaire administration 41
  • Method of data analysis. 42

CHAPTER FOUR

• Data presentation and results                    43

CHAPTER FIVE                                     

• Discussion of results, conclusions implications

and recommendations.                                                            54

• Discussion of findings/results. 54
• Conclusions 56
• Implication of the result 57
• Recommendation 57
• Suggestion for further research 59
• Limitations of the study 59

References.                                                                              60

Appendices                                                                             62

 

CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY

The success of an organization can be derived from the efficiency and effectiveness of its resource use. Some organizations can do well with minimum resources, but there are others which do not do well even with abundant resources. The difference between both depends on the method of allocation of resources and the use to which they are put. As a result, the importance of resources management in achieving organizational success cannot but under-estimated. And so the need for planning and control.

Fundamentally, management is the co-ordination of human efforts, that is the accomplishment of goals by utilizing the effort of other people. The management process may be viewed as the total management effort operating in a particular endeavour that includes the basic management functions planning, co-ordination and control to accomplish specific objectives. One of the most important approaches that has been developed for facilitating effective performance of these management functions is budgeting. Planning which according to Ogbozor, (1999) “involves mental effort by which the executives anticipate the possible causes or factors that may affect or change the activities and objectives of a particular organisation with the ends in view of controlling the nature and direction of changes and determining what measures or actions necessary to accomplish predetermined goals”, is an important function of budgeting.

Budgeting is concerned about making plans for the future, implementing these plans and monitoring activities to see whether they confirm to the plans. This requires co-ordination and control.

Co-ordination is the synchronization of individual actions with the result that each sub-division of an entity effectively works towards the common objectives. It involves the interpersonal relationship of people in the work situation as they exchange view, ideas , prejudices and other attitudes. Budgeting provides for this co-ordination of activities, particularly through master budget which summarizes all the supporting budgets. The attainment of co-ordination on a continuing basis, requires an effective control process through budget.

Budgetary control may be described as a managerial activity which involves the building of budgets that relate to responsibility centres of the individual managers and involves a periodic comparsion of actual results with expectations, the aim of which is to ensure through corrective action that plans are being met or to provide a basis for revising the budget.

Aninri local government like everyother local government system in Nigeria prepares twice sets of budgets.

• Revenue estimates
• Recurrent expenditure estimates
• Capital expenditure estimates

The most important aspect is not just preparing these estimates but how are resources or revenue collected utilized and controlled to ensure that there are no wastages misappropriation or neckless spendings for maximum benefits of the citizens.

This is the major trust of this study.

However it is necessary to know that Aninri local government budgeting activities of the local government in an attempt to ameliorate this problem became quite necessary.

 

 

• STATEMENT OF THE PROBLEM:

Healthy financial administration in the local government system in Nigeria rest on two prerequisite system accounting and financial control. These two system in turn rests squarely on the budgetary process ie continum of budget preparation, approval execution, reporting and review.

Inspite of the numerous benefits which a good budgeting and budgetary control system impact on the efficient and effective management of scarce resources, the following problems have continued to arise in Aninri government financial planning.

1. There is apparent lack of interest in preparation of annual budget and its subsequent use to control the activities of the local government council.
2. Discursement of funds are made without recourse to laid down procedures for projects and award of contracts.
3. There is widespread misappropriation of funds, abandonment of contracts and non challent attitudes towards the principles of probity and accountability in the local government council arising from poor control mechanisms.
4. The Aninri local government council has not been able to achieve its objective/goals in terms of community development and provision of social amenities.

 

• PURPOSE /OBJECTIVES OF THE STUDY:

The purpose of the study invariably imply the aims or objectives of the researcher in undertaking the study. It is an overview of the study itself and relate very much to its problem.

In view of the problems stated, the objectives of the study include.

1. To determine the extent to which the local government regards the preparation of annual budget and its subsequent use to control the activities of the local government as strategic decision.
2. To determine the extent to which the local government council follows lid down procedures in the disbursement of funds for projects and award of contracts.
3. To find out whether there are adequate system of accounting and control of funds receipt and disbursement in the local government so as to avoid misappropriation of fund.
4. To find out to what extent the local government council has achieved its budgeting goals and objectives in terms of development of the area.

 

• SCOPE OF THE STUDY

This research work is concerned with budgetary control in local government system. A case study of Aninri local government area in Enugu State.

 

• RESEARCH QUESTIONS:

Arising from the problems of the study, the following questions has been postulated as a guide for indepth study

• To what extent does the Aninri local government council regards the preparation of annual budget and its subsequent use to control the activities of the local government as a strategic decision?
• To what extent does the council followed laid down procedures in disbursement of funds for projects and award of contract?
• Are there adequate systems of accounting and control of funds receipt and disbursement in the local government so as to avoid misappropriation of funds?
• To what extent has the local government council achieve its budgeting goals/objectives in terms of development of the area?

 

• SIGNIFICANCE OF THE STUDY

Significance of the study refers to the importance or usefulness of the research to host of users and the general public, it must be emphasized that the aim of recreating local government system in Nigeria is to ensure even development in the local areas so as to ameliorate the sufferings of the less privileged people.

• Towards this, the study will enable the policy makers (the chairman and his councils) to be aware of the number of loopholes in the financial transactions of the local government and provide good and realistic suggestions for a possible way of making budgetary control system more reliable.
• The study will be f immense contribution towards ensuring that the local government embrace the importance of budget and budgeting control as a means of ensuring fund utilization
• The concept of cost benefit analysis discussed in the study will help to educate the council members of the needs for project appraisals so as to avoid constant abandonment of projects half way to completion.
• Finally, the study will provide a secondary source of data for further studies on the issues of budget and budgetary control.

 

• DEFINITION OF TERMS AND CONCEPTS

To make for better understanding and total assimilation of the topics treated in this work, it has been found necessary that some of the terms that have operational relevance in this research work be explained. The following terms are relevant.

• Local government budget: This is a document containing words and figures which proposes expenditures and revenue profile of the local government during a specified period of time.
• Budgetary control: This involves the use of budget for assigning responsibilities, planning and controlling performances and guiding management and other activities towards the achievement of organisational goals.
• Zero base budgeting: This is a budgeting system based on fresh justification without reference to previous or existing budget.
• Recurrent expenditures: This is an expenditure of the local government on services that will last within one fiscal year eg: salaries and alleivances paid to the local government staff, maintenance expensense etc.
• Capital expenditures: These are expenditures on programmes whose benefits are estimated to last for more than one fiscal year eg water scheme projects, building of hospitals and health centres etc.
• Financial accountability: This means that a public officer is responsible to render accurate and reliable account for his official duties, including provision of adequate financial records to show transactions involving revenue or expenditure and their approval instrument.

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