BUDGETING IN ALL INFLATIONARY ENVIRONMENT

(A CASE STUDY OF BINEZ HOTELS LTD ABA)

ABSTRACT

This topic was designed to highlight the importance and prominence budgeting in a very dynamic economy like ours as well as the difficulty to forecast the rate of inflation with accuracy and the problem posed by changing price level and how these problems are addressed in making budgeting decisions.

Highlighting the advantages as well as he problem associated with budgeting will enhance the managers skill and ability in the preparation and implementation of budgets. They will also see the correlation between budgeting and success as well as appreciate it students on the dynamics, complexities and mechanics of today’s business decision making. a part from making some contribution to knowledge, the study would also add to the existing. Finally, the study is significant as it is in partial fulfilment of the polytechnics requirement for the award of Higher National Diploma (HND) in Accountancy. This study report is five chapters. The first chapter introduces the topic, present the nature of the problem, the objective of the study significant of the study, the significant of the study the scope of the study as well as statement of hypothesis. The chapter also given a brief history of the company and the aware ship structure. Hence the first chapter serves as a prelude to the main study.

The second chapter examines the work of the other people on the study. Review is divided into sections top cover areas like of meaning and purposes of budget  and the techniques of the data treatment will be explained and the limitation to which we are subjected in the data treatment. The data collected will be analyzed and discussed so as to develop our findings in the context of the purpose for which the study was conducted chapter four.

Here, the statement of fact in connection with the study will be made. The finding of the study will determine whether the hypothesis were true or not.

Finally, in chapter five, statement of findings is made, conclusion are draw remarks and recommendations based on the study are made.

CHAPTER ONE

• Introduction 1

1.1     Background statement                                         1

1.2     Nature of the problem                                          3

1.3     Statement of hypothesis                                                5

1.4     Objective of the study                                          6

1.5     Research question                                                          7

1.6     Significance of the study                                                8

1.7     Scope of the study                                                         9

1.7.1  Brief history of the company                               10

1.7.2  Ownership structure                                            11

1.8     Organisation of the study                                     11

1.9     Definition of terms                                               12

 

CHAPTER TWO

• Review of related literature                                 16

2.1     Introduction                                                         16

2.2     Meaning and purpose of budgeting                      21

2.3     Types of budgeting                                              23

2.3.1  The operating budget                                           23

2.3.2  The finance budget                                               26

2.4     Stamps in preparing budget                                 28

2.5     Techniques of budget                                           29

2.6     Meaning of inflation                                             31

2.7     Rates of inflation                                                  32

2.8     Types of inflation                                                          33

2.9     Pos and cons inflation                                          35

2.10   causes of inflation                                                          36

2.11   Control of inflation                                              39

2.12   How Binez Hotels Ltd, Aba take care of inflation in

their budgets.                                                                 40

2.13   Budget planning implementation and control in Binez Hotel Ltd. 41

2.14   Types of budget prepared in Binez hotel             42

2.15   Budget preparation implementation and control procedures in Binez Hotel Ltd.                                                                    43

2.16   Data presentation, interpretation and various analysis. 45

2.17   Summary                                                             45

 

CHAPTER THREE

• Research design and methodology 47

3.1     Research design                                                    47

3.2     Area of study                                                       48

3.3     Determination of sample size/population             48

3.4     Sample and sampling procedure                          49

35      Types of data used                                               49

CHAPTER FOUR 

• Data presentation and analysis 53

 

CHAPTER FIVE

• Findings, recommendation and conclusion 67
  • Introduction 67
  • Recommendations 69
  • Suggestions for further research 70
  • Summary/conclusion 71

Bibliography                                                        72

Appendix                                                                       77

 

 

 

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND STATEMENT

The concept of budgeting is as old man. In history, we learnt that the early man had to determine whatever he needed in advance before it eventually materialized. This very obvious in the present days in lives of individual, a state or a nation, as nation plans ahead in terms of revenue and disbursements within a specified period of time. Every establishment, be it public or private, finds it necessary to prepare budget and institutes budgetary control for the purpose of translating policies the best possible activities as well as financial control in order to achieve the best result. A budget had been defined as “a financial and /or quantitative statement prepared and approved prior to a defined period of time of the policy to be pursed during that period for the purpose of attaining a given objective. It may include income, expenditure and the employment of capital. The institute of cost of management accountants (ICMA) defines budgeting control as’ the et of departmental budgets relating the responsibilities of executives to the requirements of a policy and the continuous comparison of actual with budgeted results, either to serve by individual action the objective of that policy or to provide a firm basis for its revision. In a nutshell a budget is a permute which measures the actual achievement of people , artments, ministries, firms etc.

Statement for review and control purposes. These financial statement as a guide to chief executives had of parastatals etc. In the operation of the resources at their disposals.

However, in recent times, increases in the general level of prices has in no small way unlimited the numerous advantages of budgeting planning as well as increased the degree instability and uncertainly in the business environment. No rigid reliance on budgeting as a management tool to provide direction basis for performance appraisal and for profit measurement can be grossly misleading inflationary result in reduced profits. It can equally create a false sense of well being for a company. For instance, where a company makes holding gains by merely deliberately holding its stock and reselling at a much higher price when actual supervisor managerial ability has not been demonstrated nor has capacity utilization or sale volume increased. Also during inflation, the value of fixed assets are usually understated because the replacement or current cost of the assets are usually higher than their book values. This is turn understates the amount of deprecation charged for these assets and consequently overstate profit. The distribution of this Phony profit as dividends may result in capital depletion. This a negation of fundamental principle of income determination, which state that provision should be made to maintain the of existing capital intact.

Budgeting in an inflationary environment therefore requires considerable forecasting and predication of the economic, social political, and even legal trends in the business environment and their impact on both the centre economic factor in today’s activities of the particular business enterprise. As a recurring factor in business environment the need to recognize and incorporate inflationary pressure in budgeting decision is therefore very paramount.

 

• NATURE OF THE PROBLEMS

The dynamic complex, unstable and competitive environment under which Nigerian operates to day has made advance planning very crucial and infact a key factor for success. a business plan is usually actualized through the use of a budget. However, no matter how through and painstaking the preparation of a budget may be unforeseen fluctuations in general price level may cause unfavourable distributions or deviations between actual and budgeted activities.   

As a result of the dire need to plan effectively and keep pace with developments in the business environment, the following problems are addressed.

1. Inflationary pressures are incorporated in budgeting decision.
2. This is no flexibility in the preparation and implementation of budgets in order to contain changes in volume of activities or other variables.
3. To de-emphasis the under reliance on historical cost accounting be it presents a worry picture of the state of affairs in on inflationary environment as a result of the decline in the purchasing power of money during inflation.
4. Also the need to de-emphasis the use of budgets as the sole basis for performance evolution inspite of the deviations and fluctuations which price level increases or even decreases can create.

1.3     STATEMENT OF HYPOTHESIS

All scientific enquires are geared towards providing or disproving a phenomone or a preconceived notion about issues social. Scientific, economic or political. The particular issue to be examined and the objective of the inquiry often deman the formulation of certain hypothesis which would be validated or disproved through the scientific testing of the data generated from that enquiry. Hypothesis in this case refers to tentative statement of fact that is subject to empirical validation by treating.

The following are the hypothesis to be tested.

1. Ho: Increased in the general price level do not affect

budgeting decision in Binez Hotel Ltd Aba.

Hi:     Increased in the general price level affect

budgeting decision in Binez Hotel Ltd Aba.

2. Ho: A company cannot succeed without budgeting.

Hi:     A company can succeed without budgeting.

3. Ho: Variance between actual and budgeted revenue and

expenditure in Binez hotel are accounted for by inflation.

Hi:     Variance between actual and budgeted revenue and

expenditure in Binez hotel are accounted for by inflation.

 

1.4     OBJECTIVE OF THE STUDY

The use budgeting as on indispensable managerial tool in today’s business decision, has become very necessary as a result of the highly competitive and complex business environment under while business operate. The risk of just forging ahead without a concrete plan is enormous. Businessmen and investors fear leaving their fortunes to chance. To survive an remain profitable, a business must continually assess its strengths and weaknesses, its current position, where it is today where it wants to be tomorrow, the means of getting there well as the constraints that ill militate these goals and objective and how to contain them.

The objective of the research, which is conducted with particular reference to Binez Hotel Ltd Aba include the following:

1. To examine the procedure and techniques employed by the economy in budgeting decision.
2. To examine how the management of Binez Hotel copes with inflationary pressures in its periodic budgeting decisions.
3. To examine to problem posed by inflation in the economy generally and Binez Hotel Ltd in particular and how it is addressed.
4. To find out the possibility of the company to operate without budgeting its activities in today’s uncertain business environment.
5. The study will equally evaluate the soundness or otherwise of the budgeting procedures employed by Binez Hotel ltd Aba.

 

• RESEARCH QUESTION       

1. The what extent has procedure and technique employed by the company influenced its budgeting decision.
2. How to periodic budgeting decision copes inflationary pressure in Binez Hotel Ltd.
3. How to Binez operate without budgeting its activities.
4. To what extent has budgeting procedure by Binez Hotel evaluate its operations.

 

 

1.5     SIGNIFICANCE OF THE STUDY

          This topic was designed to highlighted the importance and prominence of budgeting in a very dynamic economy like ours as well as the difficulty to forecast the rate of inflation with accuracy and the problems posed by changing price levels and how those problem are addressed in making budgeting decisions.

Highlighting the advantages as well as the problems associated with budgeting will enhance the managers skill and ability in the  preparation and implementation of budgets. They will also see the correlation between budgeting and success as well as appreciate its difficulties during inflation.

The study is also intended to enrich students on the dynamics, complexities and mechanics of today’s business decision making. Apart from making some contribution to knowledge, the study would also add to the existing body of knowledge, and literature  in the subject area of budgeting finally the study is significant as it is in partial fulfilment of the Polytechnics requirements for the award of a Higher National Diploma (HND) in Accountancy.

 

1.7     SCOPE OF THE STUDY

The subject matter of the research budgeting in an inflationary environment is broad so that a very comprehensive and detailed analysis of its may not possible because of the limitations on its volumes as well as the constraints of time and money. In order to make the cost the result affordable and to be able to finish within the short time available, the study was restricted only to Binez Hotels Ltd Aba.

The finding from the research may be peculiar to the company under study only and may not have necessarily represented the situation or what is obtainable in similar comprises in the same or related industry. Therefore the result cannot be very confidently generalized but may indicate a picture. The result study examined the types of budgets and the types of budgetary. Preparation and procedures adopted by Binez Hotel Ltd Aba. The study equally elicited answers form questionnaires administered on how Binez Hotel addresses the problem of inflation in it budgeting decision.

Finally a comparative analysis of the budgeted and actual revenue and expenditure of the company of company for the period of 1997 – 2000 was also made.

1.7.1 BRIEF HISTORY OF THE COMPANY

What we now know as Binez Hotel ltd was formally called Binez Hotels and was incorporated a private limited liability company in 1997, with an authorized share capital of N3,000,000 with ordinary share of N1.00 each.

Following the advent of a new Binez Hotels the share capital was increased to N50,000,000 with an ordinary share of N1.00 each issued and fully paid in.

 

 

 

• OWNERSHIP STRUCTURE

The company is owned by Nze Dr C. O. Maduako with directors of which he is also one of them.  The directors are:

Nze (Dr) Maduako

Late joy Maduako

Bar Chimezic Ogiabo

Mr. Uchenna Maduako

Mr. Nnanna maduako

 

• ORGANISATION OF THE STUDY

This study report is in five chapter introduces the topic present the nature of the problem the objective of the study significance of the study the scope of study as well as statement of hypothesis. The chapter also gives a brief industry of the company and ownership structure. Hence this first chapter serves as a pretend to the main study.

The second chapter examines the work of other people on study review of related literature. This chapter is divided into section to conver area like meaning and purpose of budget and the techniques of budgeting, it also cover the meaning types and pros and constitution of inflation.

The third chapter deals with the methodology of research. In this chapter, the source of data and method of collection will be discussed analytical techniques of the data treatment will be explained and the limitation to which we are subjected to the data treatment. The data collected will be analyzed and discussed so as to develop our finding in the context of the purpose for which the study was conducted in chapter four.

Here he statement of fact in connection with the study will be made the finding of the study will determine whether the hypothesis were true or not.

Finally in chapter five statement of finding is made conclusion are draw remarks and recommendation based on the study are made.

 

• DEFINITION OF TERMS

In this research study, the following words terms or concepts are used either in a bread or restricted sense.    

 

1. BUDGET

This refers to a quantitative and financial expression of a future plan of action. The chaptered institute of management accountant s (CIMA) defined, it as a plan quantified in monetary term prepared and approved prior to defined period of term usually showing planned income to be generated and/or the expenditure incurred during that period and the capital to be employed to attain a given objective.

 

1. BUDGETING

This is the process of predicting the financial behaviour of a business enterprise over a specified period of time.                   

1. BUDGETING CONTROL

This has been defined as the establishment of department budgets relating the responsibilities of executive to the requirement of a policy, and the continuous comparison of actual with budgeted result, either top to secure by individual action the objective of that policy or to provide a firm basis for its revision in a nutshell budgetary control ensures that actual result are positively in accordance with the overall financial and policy objective of an establishment.

1. INFLATION

This refers to the rise in the general level of prices in the economy as a whole as distinct from a rise in the level of prices in a given sector of the economy in other words, inflation is a high and persistent rise in the general price level. But not all price increase are inflationary for example an increase in the price level, which is not remnant, cannot be regarded as inflationary. When the price level is rising very rapidly – hyper inflation or galloping inflation. When it is rising gently – creeping inflation.

1. EFFICIENCY

This simple means the accomplishment of desired objective with minimum resources or lost.    

 

 

1. EFFECTIVENESS

This term is defined as the degree success with which a give objective is accomplished.

1. HOLDING GAINS

Profit arising during inflationary periods as a result of just holding goods in stock and not from the or ordinary occurs of business.

1. VARIABLE

This refers to the difference between actual and budgeted activity or performance.    

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BUDGETING AS A CONTROL STRATEGY

(A CASE STUDY OF UNIONBANK OF NIGERIA PLC ENUGU OGUI ROAD)

PROPOSAL

          The research work is expected to provide the importance of budgeting and relevance of budgeting information system to some firms and even organization with respect to union bank Nigeria plc Enugu.

The study among other things will consider the relevant concepts adopted in Budgeting and control and various works by some authors, it will also examine the extent of utilization and effect of budgeting as a control strategy on the divisional earning view our five years.

The entire project work will be divided into five chapters and the data for the study will be grouped into five chapters and the data for the study will be grouped into primary data and also secondary sources,the researcher will also make use of questionaires, textbooks, literally materials and journals to carry out his research work. Even oral interview from the employees or management of the organisation will also be carried out.

The constraints to be encoutered as a researcher are as follows:-

-Insufficient fund:-There is no sufficient fund to carry out this research, and this research will a large amount of money.

-Limited time:-As a researcher, a lot of  my time is needed for the objective to be achieved.

-Unwillingness to disclose the information:-The employees may be unwilling to give every information needed in order not to loose their job as a result of that.

However, I believe that this project will make the private and public sector organisation employ a better way of accesing their budgeting system.

CHAPTER ONE

 

INTRODUCTION

• Background of study

               Union Bank of Nigeria plc is one of the first generation banks started to the colonial era. Formally known as Barclays bank DCO (Dominion Colonial and Overseas) it was opened in1917.

In compliance with the directive of the government in 1968, that all companies (Including Banks) must be incorporated  locally in Nigeria in1969 and its name was consequently changed to Baraclays Banks of Nigeria Limited with its registered Head office at 40 Marina Lagos.

As a result of Nigerian Enterprises promotion decree of 1972 and 1977, the federal government of Nigeria acquired 52% of the Bank shares Leaving 40% for Barclays Bank international ltd (Now Baraclays-Bank plc) while the remaining 8% was taken up by the Nigerian public Baraclays Bank plc sold 20% of its shares to Nigerian in 1979 and the remaining 2% in June 1989.  Thus, it became an indigenous bank wholly managed by Nigerians.  And the name was changed to Union Bank of Nigeria Limited.  In 1990 the name was further changed to Union Bank of Nigeria Plc.

The bank is one of the commercial bank that survives and strives during the nations economic unsteadiness.  Union bank of Nigeria plc currently has her corporate head office at 40 marina Lagos.  This Head office building “The STALLION PLAZA” is a 32 story edifice and is now the most magnificent and tallest building in Africa.

The bank now has 9 Area office branches, including full indigenous branch in LONDON and SOUTH AFRICA respectively.  It has 5 staff training centres with on LAGOS, IBADAN, PORT-HARCOURT, ZARIA JOS.  The bank which is regarded as the largest employer of labour in banking industry in Nigeria, now has a staff strength of 8 workers.  It has some group of company such as union merchant bank, union assistance and union Homes.

The bank is about 75% computerian and has an outstanding record in term of profitability.  As at Septembers 30^th 1998 bank’s gross earnings total assets and deposit base stood at N13.8 billion N102.4 billion and N77 billion respectively.

The principle and consent of budgeting centres around the optional allocation scarce resources.  Resources are limited but human wants are not only unlimited but also multifarious.  In order to make the best use of available resources, the principle of budgeting has to be adopted.

Every business organization, government, sole propertor and banks employs the principle of budgeting as a control strategy.  Even individuals like salary earners hardly know that they are adopting the principle of budgeting when at the end of the month,  they try to reconcile their monthly salaries with their expenses for the month.

The budgetary control strategy calls for the preparation of plane in the form of ideas and values for the future.  Budgeting cannot be performed in isolation.  This is one of the reasons that all managers should be financially aware because almost every decision taken will have financial implication and will therefore effect other department, even if this means they have less money available for their Own budget.

Clearly, once a budget has been established it is necessary to set up  control and procedures which enables the  budget to be monitored.

Budgetary control is the establishment of budget relating the responsibilities of executives to the requirement of actual with budgeted results either to secure by individual action the objective of the policy or the provide basis for its revision. It should be pointed out that there is on significant difference between the principles of budgeting control in either the banks or public sectors, the statement implies that as budgets are established for various elements of the bank managers are given responsibility foe the management  of  budget resources in those.

Clearly, a strategy require information which has to be related to the delegate responsibilities within the bank, these should be related to the objectives of the  budget and then be monitored as  out turn figures  become available.  Overall, it was  felt that the budgetary control process and demand that it places on financial management skills represents the major challenges of change being faced by the bank.

The budget can be a powerful tools for motivating people to achieve the bank objectives or it can lead to either bad or good consequence according the way it applied in various type of organization.

Budgeting is essentially concerned with establishing a t plan or target of performance which co-ordinates all the activities of the business and calculating differences or various and analysising the reason for them. One general purpose of budget in bank, sole proprietor and government is to enable them to plan their financial resources which will be consumed and generated during the course of the budget period

The period generally adopted for budgeting is one year and this usually coincides with the financial year of the bank.

Finally, in introducing an effective budgeting strategy, management has to make penetrating critical and uncompromising study of the business to determine its strength and weakness in relation to what it is trying to achieve.  Budgets should be capable of change when circumstances changes so that the yardstick is a realistic attainable one. The strategy should operate to assist motivation and not simply be used as a bigstick or a pressure device.

 

• STATEMENT OF RESEARCH PROBLEM

It is generally agreed that every business organization, government and sole-proprietors should employ the principle and concept of budgeting control as a tool in achieving set goals. Consequently, for this research work, the following are the problems which this study hope to provide solution to:

1. The inability of banks to property forecast expenditure matched to revenue given the instable economy and monetary policies generating therefrom
2. Inability of the bank to state a detailed plan of action thereby reducing uncertainty.
3. Inadequate policies formulated for budget implementation in union bank for budget Ogui road branch .
4. Budgeting will lower moral and productivity if unrealistic targets are set and if it is use as a pressure tactic.
5. The inability of the bank to know fully which future cost it will incure in rending certain service to the public and also the rev to be received as a result of jobs carries in each department .
6. Lack of well-oriented programs to felicitates the need to use budget as a control strategy.

 

 

• PURPOSE OF RESEARCH STUDY.

There is a strong belief that good operation of budgeting controls os great value to Union Bank planning and control are indispensable in the banking industry.

The following are the purpose of the study:

1. To know the type of budgets and budgetary control strategy applied.
2. To ascertain the efficiency and effectiveness of the strategy applied
3. To ascertain how budgeting and budgetary control strategy assist management in decision making.
4. To highlight the problems in the present day system of budgeting in Union Bank 4 need be, the ways of improving on its budgeting.
5. Efforts will be made to compare the accepted rules of budgeting control strategy as contained in the view of the related literature and what obtained in practice as discovered from data collection.

 

• STATEMENT OF HYPOTHESIS

For the purpose of this research, the following assumptions were made:\

1. Null Hypothesis (Ho): Bank run some motivational programme so as avoid conflict and also budgeting as a control strategy help your bank to achieve efficiency in its operation

Alternative Hypothesis (Hi):  Banks do note run some motivational programme so as to avoid conflict and also budgeting as a control strategy do not help banks to achieve efficiency in its operation.

2. Null Hypotehsis (Ho): Bank managers prepare budgeting as a control strategy alternative hypothesis (Hi): bank managers do not prepare budgeting as a control strategy.

 

• SCOPE / LIMITATION

The study is a case study of Union Bank Ogui Road Branch Enugu. The time period under consideration is four (4) years that is between 1994 to 1998.

It is worth mentioning that personnel problem affecting this bank are not within the scope of this study expect where such problem directly related to budgetary control.

In general it is also worth mentioning that for practical purpose it would be impossible to discuss all these areas in department in this research. It should be noted that out of the so many tools of control employed by Union Bank to achieve their various objective this study is only concerned with the budget aspect of it.

 

• RESEARCH QUESTIONS.

The following research questions were formulated by the researcher for the conduct of this project.

1. How long does it take the bank to prepare a budget.
2. To what extent does the lower management participate in budget formulation of the bank by given their view and ideas on how things should be done?
3. What does the bank consider to be major objective of a budgeting control strategy?
4. To what extent does the central bank policies and guidelines affect the Union Bank budget.
5. What type of budget does the bank prepare?
6. What measure should be taken to ensure that budget implementation strategies are properly used?
   • SIGNIFICANCE OF STUDY

It is expected that the result of this study will help improve banks budgeting control strategy.

Budgeting as a control strategy assist the banks in control of costs by providing a budget yardstick by which actual cost can be measured.

Budgeting enables management more effectively to plan co-ordinate, control and evaluate the activities of the business. The budget provides relevant information to decision makers and at the time they must choose between alternatives, therefore a budget implicitly incorporates control at the point of the decision. The most important of budget is to aid in the accomplishment of corporate objectives.

 

• DEFINITION OF TERMS.

The definitions contained in the text are from accounts books, journals and lectures used as references.

Budget; A financial or quantitative statement prepared and approved prior to  defined  period of time of the policy to pursued during that period for the purpose of attaining a given objectives.

Budgetary control: Measures taken to ensures that approved provision are not over spent with out approved additional or supplementary provision.

Budgeting : A word given to the formulation of plans for a given future period expressed in quantitative financial terms.

Appropriation: Statement showing that amount voted and expenditure there of with a view to indicating an excess of expenditure over the or surplus of the vote to another with in the expenditure.

Vire –Warrant: Is an authority to vire fund  from one sub- head to other with in the same head of account.

Fixed Budget: Budget prepared for only one level of activity and consequently, one that is not adjusted automatically to changes in the level of volume.

Flexible Budget: Budget which by recognize variable costs in behavior between fixed and output or turnover is designed to change appropriately with such fluctuation.

D.V.E.A: Means  department vote expenditure and Account. This is a ledger where the amount released for use in the financial year is allocated is spent per each sub –head.

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THE NATURE AND CONSEQUENCES OF JUVENILE DELINQUENCY IN NIGERIA: A STUDY OF ENUGU NORTH LGA, ENUGU STATE

Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
 Account Number:  0117780667. 
Swift Code: GTBINGLA 
Dollar conversion rate for Naira is 175 per dollar. 

ATM CARD:  YOU CAN ALSO MAKE PAYMENT USING YOUR ATM CARD OR ONLINE TRANSFER. PLEASE CONTACT YOUR BANK SECURITY FOR GUIDE ON HOW TO TRANSFER MONEY TO OTHER BANKS USING YOUR ATM CARD. ATM CARD OR ONLINE BANK TRANSFER IS FASTER FOR QUICK DELIVERY TO YOUR EMAIL . OUR MARKETER WILL RESPOND TO YOU ANY TIME OF THE DAY. WE SUPPORT CBN CASHLESS SOCIETY. 

OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.

form>DELIVERY PERIOD FOR BANK PAYMENT IS  LESS THAN 24 HOURS

CALL OUR  CUSTOMERS CARE  OKEKE CHIDI C ON :  08074466939,08063386834.

AFTER PAYMENT SEND YOUR PAYMENT DETAILS TO

08074466939 or 08063386834, YOUR PROJECT TITLE  YOU WANT US TO SEND TO YOU, AMOUNT PAID, DEPOSITOR NAME, UR EMAIL ADDRESS,PAYMENT DATE. YOU WILL RECEIVE YOUR MATERIAL IN LESS THAN 2 HOURS ONCE WILL CONFIRM YOUR PAYMENT.

WE HAVE SECURITY IN OUR BUSINESS.   

MONEY BACK GUARANTEE

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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BUDGETING: A SYSTEMATIC APPROACH TO PROFIT PLANNING AND CONTROL

(A CASE STUDY OF MOBILE TELECOMMUNICATION NETWORK NIGERIA LIMITED’ (MTN), ENUGU STATE)

PROPOSAL

 

          Budgeting – A systematic approach to profit planning and control is a work that will be centered on the use of budgeting a tool for planning and control in order to maximize profit using mobile Telecommunication Network Nigeria Limited (MTN) Enugu, as a case study.

This research will be carried out through series of oral interviews and distribution of questionnaires in the collection of data and relevant information to the employees of mobile telecommunication Network Nigeria Limited Enugu.  The data that will be collected, will be analyzed as well as interpreted by the research from the testing and proofing of hypothesis.  The researcher will also source information from secondary data which includes text books, magazines, journals etc.

The researcher will be faced with the following constraints:

• Insufficient money to distribute as much questionnaires as possible.
• Poor response from the employees because they will be afraid of losing their job
• Insufficient time

In order for the company to achieve their objectives, the researcher will recommend that there should be budgetary control so that workers will be aware of the objective of the organization and subordinates opinion considered in the preparation of the departmental or company’s budget estimate.  This will help in encouraging goal congruence.

ABSTRACT

 

          Budgeting – A systematic approach to profit planning and control is a work centered on the use of budgeting as a tool for planning and control for profit maximization in a mobile telecommunication network Nigeria Limited Enugu as a case study.

The objective of the study is to show the importance of budgeting as a tool for systematic profit planning and control in the mobile telecommunication network Nigeria limited which has profit maximization as its principal objective.

The research is also aimed at identifying the steps adopted in the formulation of annual budget of MTN Nigeria.

Consequent upon this, the following hypothetical question were used for the study.

1. Managers use budgeting as a systematic approach to profit planning and control in attaining the goals of the business.
2. Decision making is performed in mobile telecommunication using budgeting
3. Utilization of resources is achieved with the use of budget and budgetary control

Following the investigation and analysis of data, the following findings were made

1. The organization uses budgeting in achieving the goals and objectives
2. The main objective of the organization is profit maximization
3. Efficiency and effectiveness of the organization is achieved through the use of budgeting.

From the findings, the conclusions were arrived that budgeting is very essential and indispensable tool for profit planning and control.  It helps management to be well structured in sustaining the growth and expansion of the organization.

CHAPTER ONE

1.0     Introduction                                                                            1

1.1     Historical Development of the Firm                              4

1.2     Background of mobile Telecommunication                    5

Network Nigeria Limited/Present state of Affairs

1.3     Statement of problem                                                    8

1.4     Objective of the study                                                    8

1.5     Research Question                                                                   9

1.6     Research Hypothesis                                                     10

1.7     Scope and limitation                                                      10

1.8     Significance of the study                                                         11

1.9     Definition of terms                                                                  12

 

CHAPTER TWO

2.0     Literature review                                                            14

2.1     Introduction                                                                            14

2.2     Definition of budget                                                       15

2.3     Types of Budget                                                            17

2.4     The Budget period                                                                   20

2.5     Administration of the Annual Budget                                     21

2.6     Stages in the Budget process                                         24

2.7     Appraisal of fixed, flexible and other budget                          43

2.8     Planning function                                                           45

2.9     Controlling function                                                      46

2.10   Budgeting control                                                          50

2.11   Variance analysis                                                           51

• Additional Tool for Budgeting and Budgetary

control: Zero Base Budgeting (ZBB)                                       57

 

CHAPTER THREE

3.0     Research Design and methodology                                58

3.1     Research design                                                             58

3.2     sampling technique                                                        58

3.3     Sampling design and population size                                      58

3.4     Sources of data                                                              60

3.5     Interview questions                                                        60

3.6     Method of data analysis                                                60

 

CHAPTER FOUR

4.0     Presentation, Analysis and Interpretation of Data                  63

4.1     Analysis of questionnaires returned                              63

4.2     Hypothesis testing and proofing                                             71

 

CHAPTER FIVE

5.0     Summary of findings recommendations and conclusion         77

• Summary of findings 77
• Recommendations 79
• Conclusion 80

Bibliography                                                                  81

Appendix                                                                       83

 

 

 

CHAPTER ONE

 

• INTRODUCTION

The growing complexity of the business environment and the ever increasing competition among firms in the modern time, make planning an invaluable tool for business success.  Successful management is no longer just a matter of flair, skill and determination, a conscious effort is needed to harness available resources towards the achievement of enterprise objectives.  Budgeting is one of the tools adopted by management for effective cost planning and control.

A budget is commonly understood  the forecast by a government, organization nor society of its expenditures and revenues for a specific period of time.  The  period covered  by a budget is usually a year known as financial year.  Budgeting is concerned with the utilization of financial resources to serve human needs.  Although a budget may be characterized by a series of goals with price tags attached.  It is mainly a mechanism for making choices among alternative expenditure.  When such are coordinated so as to achieve desired goals, the budget becomes a plan.  If there are specifications on how the goals are to be achieved, the budget becomes a psychological device to make administrators thin.  If however, the emphasis is placed on achieving the desired objective at the lowest possible cost, then the budget is an instrument for ensuring efficiency.

An enterprise which is effectively and efficiently managed produces good and rewarding result.  Management is efficient if it is able to accomplish the objectives with minimum efforts and costs.

Profit planning and control or budgeting is an integral part of management.  The financial manager has a particular interest in profits planning and control because he helps to regulate flows of funds which is his function.  The decision making process of management starts with planning.  ‘Planning is the design of a desired future and of effective ways of bringing it about.  In other words, planning involves the determination of the future course of action for accomplishing the objectives of the enterprise.  The basic purpose of planning is to provide guidelines for making decisions. It is a forward process to reducing uncertainty about the future.

Planning is a continuous process which would generally involve four fundamental steps.

1. Establishing the objectives
2. Determining the goals
3. Developing strategies
4. Formulating profits plans or budget.

Objectives are the statements of broad and long term desired state or position of the enterprise in the future. They are directional and motivational in nature and are generally the qualitative expressions of the desired future state.  For instance, the primary objective of an enterprise may be customers satisfaction, employee welfare, long-run- survival which depends upon the maximization of the long-run profit, that is wealth maximization.

Goals represent the operational specifications of the broad objective with time and quantity dimensions.  Goals are the quantified targets to be attained within a specific period e.g. long run profit maximization in order to increase the market value of the firm to shareholders is the broad objective of the firm.  But the goal for the next year may be to earn a 20% after tax profit on investment or a 5% profit on sales.

Strategies specify the ways of achieving the goal operationally.  For example, the strategies of a firm may include the use of retained earnings for expansion, keeping debt at a reasonable level, expanding sales through price reduction and aggressive advertisement.  Financial plans may take many forms, but any good plan must be related to the firm’s existing strength and weakness.  The strengths must understood, if they are to be used for proper advantage and the weakness must be recognized if corrective action is to be taken.

Finally, the formalization of objectives, goals and strategies for operational purposes is called the profit planning or budgeting.  It is called the profit plan or budget because it explicitly state the goals in terms of time expectations and expected financial results for each major segment of the entity.

1.1       HISTORICAL DEVELOPMENT OF THE FIRM

It is important at this point to review briefly the history of the company mobile telecommunication Network Nigeria Limited (MTN).  It was incorporated in Nigeria on November 8. 2000 as a private company.  It secured a license to operate digital (Global system for mobile telecommunications GSM) telephony on February 9 2001, from the Nigerian communications commission.  On May, 2001, MTN emerged as the first to make a call on its GSM network in the new dispensation. Thereafter, the company launched full commercial operations beginning with Lagos, Abuja and Port Harcourt in the company now provides coverage to 85 cities and well over 5,000 communities and villages, spanning every geo-political zone and 31 of Nigeria’s 36 states.

It is the first to erect a country wide microwave radio transmission backbone, offering unrivalled value for money evidenced by a loyal customer base attracted by MTN’s convenience, mobility, roaming on 30 international networks and economical Tarrifs.  MTN’s product and services are available at its friendship centres and a nationwide network of dealership, banks and convenience channels including entries, petrol stations and neighourhood stores.

 

• BACKGROUND OF MOBILE ELECOMMUNICATION NETWORK NIGERIA LIMITED/PRESENT STATE OF AFFAIRS

The company through systematic planning and control represents several millions of Nara in investment.  The company as at May 31, 2004, had a total of 21 mobile switching centres and over 940 radio base stations across the country. Several more are in the process of being installed.  On January 20, 2003, MTN commissioned the first phase of its digital microwave transmission backbone, Y’ello Balm.  Constructed  at a cost of $120 million.  Y’elloBalm is Africa’s most extensive transmission infrastructure and has significantly helped to enhance call quality on MTN’s network.  Y’ello Balm spans 3,400 kilometers and traverses over 120 cities, villages and communities; while coverage has been extent to more than 90 major towns and a total of over 5,000 villages and communities across Nigeria.  The second phase of Ye’llo Balm is currently on going and will spand another 4,500 kilometers.

MTN subsists on the core brand values of leadership, integrity, innovation, relationships and a ‘can do’ attitude, a passionate optimistic focus on the future.  It prides itself on its ability to make the impossible possible – connecting people with friends, family and opportunities.  The ownership structure is currently as follows:  Mobile telephone Networks International Limited 76.44%

Nigerian partners                                 20.56%

International finance corporation and infrastructure investment arm of the world bank                                                                               3%

100%

 

TECHNICAL ASSISTANCE/COMEMRCIAL SERVICE AGREEMENT

            The company is technically supported by Nami Tech in south Africa who doe the prepaid voucher and supplier to MTN.

COMPAY’S CONTRIBUTION TO NIGERIA ECONOMY

            MTN currently employs more than 1,200 Nigerians.  In addition, more than 160 Nigerian companies are currently MTN distribution partners.  Of these, more htan 25 are banks, many of which have spun off subsidiary companies, many of the dealerships have branches nationwide and employ dozens of people.  Another 6,000 companies, including petrol statiosn, supermarkets and many others, serves as sub-dealerships.

Yet a great may other Nigerians earn a living as self-employed proprietors, recahrge card or mobile phone accessory vendors, many others operate the hundred of business centres scattred allover our cities.

VISION

• To improve telecommunications infrastructures and access throughout the countries in which we operate
• Quality service
• High profile distribution and accessibility of our services and products
• Setting up a good base for future expansion.
• Training and transferring skills to local staff.
• Becoming a good corporate citizen and becoming a major player in the Nigerian economy.

 

MISSION

• TO BE A CATALYST FOR Nigeira’s economic growth and development, helping to unleash Nigeira’s strong developmental potential not only through the provisionof world class communiations but also through innovative and impactful corporate social responsibility initiaties.
• We want the cals you make on our network to be of the best quanlity in Nigeira
• We want our network to cover the broadest areas of Nigeira and athe continuous enhancing of convenience and value derived from using our network.
• Every call made shoukd re-inforce your conviction that MTN is needed.

 

• STATEMENT OF PROBLEM

It is the primary duty of management of the organization to ensure the achievement of the company.  The company was faced with high operational cost due to inadequate infrastructure, security of lives and property, low disposal income, high import tariffs.

This research work is therefore intended to help in determining and highlight the problems that militate against the application and utilization of budgeting as a tool for profit planning and control. The research work will help in providing solution to the following problems;

1. Inability of the company’s objective.
2. Insufficient appraisal of the company’s performance based on budget.
3. Inability of functional officer in the cost centers to standard pre-planned by the company.
4. Insufficient mortuary of compliance as well as derivations from the departmental and over-all budget.

 

OBJECTIVES OF THE STUDY

Budgeting, planning and control are the major components for a successful management in mobile Telecommunication Network Nigeria limited. These are the areas of responsibility of management, and to an extent, present a yardstick for performance evaluation of management function. Hence, this study  includes in it’s purpose the following;

1. To highlight the importance of budgeting as a tool for planning and control in the operations of a Telecommunication company with profits maximization as it’s main objective.
2. To identify the procedures adopted in the reformulation and implementation of annual budgets in mobile Telecommunication Network Nigeria Limited Eungu.
3. To determine whether or not budgetary control as a management tool contributes to the improvement of managerial efficiency and highlight productivity.
4. To determine whether there is a correlation between the types of budget implemented and their actual performance.

 

1.5       RESEARCH QUESTIONS

1. Are workers communicated of the company’s objective (s) when preparing the budget?
2. Is there deviation of the actual from the standard set?
3. Does the budget imposes a threat to the managers rather than a challenge?
4. Does management ensure adherence to the budget

 

• RESEARCH HYPOTHESIS

The following are the basis for the research study

1. NULL HYPOTHESIS: HO:1: Managers use budgeting as a systematic approach in planning and control in attaining the goals of the business.

ALTERNATIVE HYPOTHESIS: H1:1: managers do not use budgeting as a systematic approach in planning and control in ataining the goals  of the business.

2. NULL HYPOTHESIS: HO:2: Decision making is perofrmed in a Mobile telecommunication company using budgeting as a tool for planing and control

ALTERNATIVE HYPOTHESIS: HI:2: Decision making is not performed in a mobile telecommunication company using budgeting as a tool for planning and control.

3. NULL HYPOTHESIS: HO3: Utilization of resources is not achieved with the use of budgeting and budgeting control.

 

1.7       SCOPE AND LIMITATIONS

            Budgeting – a systematic approach to profit planning and control will be limited to Mobile Telecommunication Network Nigeria Limited Enugu both in accessibility to certain information and the distribution and collection of questionnaires.

The major problems faced were insufficient fund to cover the cost of printing questionnaires, distribution and collection of same to and from the respondents.

Fear on the part of the respondents for loss of their job should they disclose information without due authorization from their superior or the top management.

Finally, demands were also enormous both in terms of time and finances, as well as final semester works.  These problems were reasonably taken care of and allowing a  limit of error, the project was competed.

 

1.8       SIGNIFICANCE OF THE STUDY

            In all business endeavours, the primary objective is profit maximization.  This is achieved through provision of goods and services at fair, competitive and affordable prices.  No management and ignore profit maximization, otherwise, at will find itself out of business. Hence the study is significant with the following reasons:

• The study will determine whether budgeting as a tool for planning and control plays any significant role towards ensuring profitability and efficient rendering of goods and cervices.
• Ascertain the role played by the management in budgeting and whether they ensure adherence to the budget
• Ascertain the roles of budget as a tool for effective and efficient utilization of scarce resources.
• The study will help future researchers on budgeting and budgetary control with emphasis on mobile telecommunication Network Nigeria limited.

 

• DEFINITION OF TERMS

BUDGET: The chartered institute of management Accountants (CIMA) defines budget as “a plan quantified in monetary terms, prepared and approved prior to a defined period usually one year, showing planned income to be generated and expenditure to be incurred during that period, and he capital to be employed to attain that objective.

BUDGETARY CONTROL:  This is the establishment of a budget relating the responsibilities of executives to the requirements of a policy and the continuous comparison of actual with budgeted results either to secure the individual actions with the objective of that policy or to provide a basis for its revision.

PLANNING:  This is the establishment of objectives, and the formulation, evaluation and selection of the policies, strategies, tactics, and action required to achieve these objectives.

CONTROL:  This s the process of ensuring that a firm’s activities conform to its plans and that its objectives are achieved.

VARIANCE: this is the difference between planned (budgeted) and actual results.

FAVOURABLE VARIANCE:  This is excess of the budgeted result over the actual result, in the case of cost.  But in the case of revenue it is the excess of that result over the budgeted.

UNFAVOURABL VARIANCE: this is the excess of actual result are the budgeted in terms of cost  and vice-versa in terms of revenue

BUSINESS: Any establishment which has profit motive or maximization as its major objectives.

ORGANIZATION:  All establishment whether government or privately owned

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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
In the immediate past decade and this present decade, there have been seminars, conferences, articles, Journals and various publications by both local, national and International Organizations on the sharp decline in Agricultural production on these various programmes, some of these workshops, conferences and seminars include the followings:
– The 13th Annual workshop of the South – West Research Extension Farmers impute Linkage system (REFILS) helped at the Institute of Agricultural Research and Training (I.A.R.T), Moor plantation Ibadan in March 2000 with topic “Adaptive Research and Method in Agriculture”.
– An Annual conference Organized by Agricultural Extension society of Nigeria (AESON) held at university of Ibadan Conference Society of Nigeria Centre, Ibadan on 10 – 12 April, 2000.
They emphases on the need to promote agricultural production to reduce the unguided population explosion which is at geometrical progression (G.P) while Agricultural production was only growing in an arithmetical progression. These seminars, workshops, conferences also reminded the populace world wide of the impending danger posed by the continuous deforestation practices of our forest reserve, bush burning overyrazury, continuos coming and other environment gradation hazards.
They panted out little or on concerted effort are made in replacing the deforested areas. They called on the need to embark on a national forestation scheme and forest conservation
In Nigeria, there bad been various campaigns for to inhabitants nationally to plant at least one tree crop in his vicinity annually (tree planting compaign) All these would have been uncalled for but for the indispensable role played by agriculture in Nigeria economy, justly this project work, Agriculture sector in developing and under – developed countries. It provides foods required for the teeming population in both the rural land populace. It also provides raw materials for our agricultural industries like Cotton to our textile industries.
Agriculture provides employment for about 60% of the labour force in developing countries. Agriculture also provides incomes to individuals, states, and the nation, to the peasant farmers and traders aluce. It provides money as income and means of live holds to the farmer who sells this farm wares to the populace. To the states, like Enugu state the cashew plantation at Ohhe not only provides raw materials to industries but also provide income to the state government and to the nation, it provides a means of export, thereby learning foreign exchange and consequently reducing the chorus balance of payment deficit prevalent in these region.
In 1969, Agriculture contributed 31% the cross Dmester product (GDP) in sierra Leone, 1957, it contributed over 61% to GDP in Nigeria and in the year 2001, proceeds from sales of grain (Agricultural product) in Nigeria amount to over N2.5N Billion (CBN Bullion Jan / March 2001) The percentage contribution of Agricultural sector to the national has seen declining since when the petroleum sector started contributing heavily to the national income. Presently, agriculture has assured a wider scope as against those days when agriculture was viewed as a narrow feed which includes the propagation of seeds and crops and the rearing of animals for man use. This does not fully inculcate all the relevant aspect of agriculture. Some agriculture in of seeds and crop, include souring and buying of farm input like seedlings machinery’s etc and the selling of its output (agricultural marketing) and the use and provision of credit in agricultural – financing). This later view is more prevalent now especially among the literate populace. The use and provision of agricultural credit will equally assist us in appreciating the role of commercial banks in financing agricultural project in Emugu state their problems and prospects. This forms the course of this project.
1.2 STATEMENT OF THE PROBLEM
The major concern of this study us to know from the lender (First Banks as the Commercial Bank) and the recount (Farmers and Agriculturists) loan effectively agricultural project are Financed in Enugu State a result of the donnreeening and indispensable role of commercial banks. Since the establishment of the bank in 1894, they has been carry out financial assistance to agriculturist.
Farmers encounter various difficulties when trying to get financial aids from commercial banks – some of these difficulties are as follows:
(i) Agriculturist / Farmers do not get financing aids such as Bank Loans / credit when they need it.
(ii) Commercial banks granting loan to farmers due to adequate collateral for such loan .
(iii) Illiteracy among the farmers also crenate a very difficulties because of this farmer do not o to banks to receiving advisory services which might help then to