Budgetary Control: An Indispensable Tool For Effective Performance of An Organisation (A Case Study of Beta Glass PLC, Ughelli)

BUDGETARY CONTROL: AN INDISPENSABLE TOOL FOR EFFECTIVE
PERFORMANCE OF AN ORGANISATION
(A CASE STUDY OF BETA GLASS PLC, UGHELLI)
ABSTRACT
The focus of the research project is to examine the budgetary control

system of Beta Glass Plc to access its effectiveness and make necessary
recommendations for improvement. The project begins with the
introduction and review of related literature centered on works written on
budgetary control and budgeting. Concern is also given to the operational
framework of the budgeting control system of Beta Glass Plc. And a
critical look at the theoretical framework of the minimum requirement and
composition of a typical budgetary control system and the management
structure. Most small scale business in Nigeria do not plan ahead and only
deal with events or issues as they occur. It therefore seems that there still
exist a wide gap between what theories postulated and their application by
the Nigeria business. However, Beta Glass Plc does not have a very
efficient budgetary planning system and the complementary budgetary
control been practiced in concentrated on some types of budget to the
neglect of others, which is not supposed to be. It is based on these facts
that recommendations were made to assist the management in improving
the entire budgetary control system of the company and for effective
management of her periodic budget.
1
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
There are varied and diverse organisations that exist. They include
social, political and economic organization, such as business, churches,
political parties, chambers of commerce, educational institutions and clubs.
They need effective management and accounting system to succeed.
Most of these organisations are complex in nature and this cause problem
in their management and so needs proper and well articulated accounting
system for them to survive.
Budgetary control is the process and the former provides the basis for
the exercise of the later. While budgetary focuses on planning, budgetary
control is the act of executing those plans.
The Chartered Institute of Management Accountants (CIMA) London
has defined budgetary control in the following words. “The establishment of
departmental budgets relating the responsibilities of executive to the
requirement of a policy and the continuous comparison of actual with
budgeted result, the objectives of that policy or to form basis for its revision.
2
In a nut shell, while a budget may be described as a standard with
which to measure the actual achievement of persons, department and
organizations; budgeting control is the plan in advance of the various
functions of an enterprise so that the business as a whole can be
controlled.
According to Jim Riley (2012), A budget is a financial plan for the
future concerning the revenues and cost of a business. However, a budget
is about much more than just financial numbers. Budgetary Control is the
process by which financial control is exercised within an organization;
budgets for income/revenue and expenditure are prepared in advance and
then compared with actual performance to establish any variances.
Managers are responsible for controllable cost within their budget and
are required to take remedial action if the adverse variance arises and they
are considered excessive. There are many use of budgets for example,
budget are used to;
i. control income and expenditure,
ii. establish priorities and set targets in numerical term,
iii. monitor performance,
iv. improve efficiency, and
3
v. motivate staff
1.2 Statement of the Problem
Over the years, business organisation have had deficiencies in
effectively managing their budget. This is as a result of inadequate
effective budgetary control system. The inability of the managers to control
the organizational budget has created a major set back in the attainment of
their goals. The crucial problems this research will address therefore
include:
i. The inadequate budgeting and controlling by the various
managers during budgeting process.
ii. The means of knowing which management tool that is most
effective in managing organizational resources by means of
budgeting.
iii. The ways of measuring efficiency and effectiveness of such
management budget.
iv. The relevant information required by management in making
sound decision for the attainment of the business objectives
through budgetary control.
1.3 Objectives of the Study
The objectives of the study include the following:
4
i. To determine how budgetary control system plays a significant role
in assisting various managers in achieving management
objectives.
ii. To analyse various types of budget, benefit and problems of
budgeting in the business firm.
iii. To advance useful recommendations (based on finding) to the
company on how to improve on their system of budgeting as a tool
for managerial planning and control.
1.4 Research Questions
The relevant research questions include:
i. Is there a direct relationship between managerial efficiency and
budgets?
ii. What is the effect of budgeting control on organizational
performance?
iii. Is it necessary to compare actual results against pre-determined
estimates?
iv. Does budgetary control system assist the managers of a business
firm in overcoming some difficulties encounter in managing its
resources?
5
1.5 Significance of the Study
This research work will be of great help to accountant as well as
administrators and managers within and outside Eternit Ltd, Sapele, Delta
State of Nigeria.
In identifying the character and potentially of budgetary control
system in business management to know the concepts and benefit of
budgetary control and as a means of evaluating economic recourses and
the development of the business organisation which depends on such
economic resources.
It will also help the managers and administrator of the firms to utilize
the availing opportunities that are endowed in budgeting.
It will be of great importance to students especially accounting
students who may wish to write their project related to research work.
1.6 Scope of Study
The study is designed and carried out with the view that finding got
could help in increasing the management potentialities in the business
organisation and also sought for solutions to the problems associated with
budgetary control system in the firm and data obtained from the exercise
6
utilized in planning and directing the affairs of the company or business
organization toward the attainment of the company’s goals.
The study revolved round a critical examination of budgetary control
system in Eternit Ltd, Sapele. The emphasis is to come out with better
methods of tackling the problems associated with the preparation, uses,
performance, evaluation and control and authorization of budgets in
business organisation in a way to bring about an improved budgetary
control system.
1.7 Limitation of the Study
The factor that limits the scope of this work can be grouped into two
categories they are controlled and uncontrolled variables. Some staff treat
questionnaires that are retrieved while some vital information that would
have added to the substance of the work was not given as it was claimed to
be the management decision and they view such request as probing into
their facilities. In addition to this, time is also another thing that slows down
the work and the issue of not on seat each time I went to the company to
retrieved my questionnaire from them.
1.8 Definition of Terms
Some of the more frequently used terminology in the study are;
7
i. Effect:- The impact of something or how it has changed a situation.
ii. Budgetary:- The actual statement containing annual budget.
iii. Control:- Monitoring of a particular project to see that all adhere to
plans i.e. to avoid deviation.
iv. Management:- Is a social process of the activities of others to
ensure a complete adherence to objectives of an organization. In
other words, it is getting things done by other people’s efforts.
v. System:- Is a group of things or parts working together in a
regular relation or an ordered set of ideas, theories or principles.
Elicit: Is the act of getting information or a reaction from somebody.

FOR THE COMPLETE MATERIALS PLEASE CONTACT ME ON:
07065249143, 08181827646 or you can send me an E-
Mail Via: [email protected]. Cost of Materials is N 3,000
Payments should be made to the following Banks listed below;

ACCOUNT NAME: ODEMUDO EDWARD OHWOTU
ACCT NO: 3056748577
BANK: FIRST BANK PLC

ACCT NO: 0222299605
BANK: G.T BANK

ACCT NO: 0026933746
BANK: UNITY BANK

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BUDGETARY CONTROL: AN INDISPENSABLE TOOL FOR EFFECTIVE

(A CASE STUDY OF BETA GLASS PLC, UGHELLI)

The focus of the research project is to examine the budgetary control

1.1 Background of the Study

social, political and economic organization, such as business, churches,

political parties, chambers of commerce, educational institutions and clubs.

They need effective management and accounting system to succeed.

in their management and so needs proper and well articulated accounting

system for them to survive.

the exercise of the later. While budgetary focuses on planning, budgetary

control is the act of executing those plans.

The Chartered Institute of Management Accountants (CIMA) London

has defined budgetary control in the following words. “The establishment of

departmental budgets relating the responsibilities of executive to the

requirement of a policy and the continuous comparison of actual with

which to measure the actual achievement of persons, department and

organizations; budgeting control is the plan in advance of the various

functions of an enterprise so that the business as a whole can be

According to Jim Riley (2012), A budget is a financial plan for the

future concerning the revenues and cost of a business. However, a budget

process by which financial control is exercised within an organization;

budgets for income/revenue and expenditure are prepared in advance and

then compared with actual performance to establish any variances.

budget are used to;

i. control income and expenditure,

ii. establish priorities and set targets in numerical term,

iii. monitor performance,

iv. improve efficiency, and

1.2 Statement of the Problem

Over the years, business organisation have had deficiencies in

effectively managing their budget. This is as a result of inadequate

effective budgetary control system. The inability of the managers to control

i. The inadequate budgeting and controlling by the various

managers during budgeting process.

ii. The means of knowing which management tool that is most

effective in managing organizational resources by means of

iii. The ways of measuring efficiency and effectiveness of such

iv. The relevant information required by management in making

sound decision for the attainment of the business objectives

through budgetary control.

1.3 Objectives of the Study

The objectives of the study include the following:

in assisting various managers in achieving management

ii. To analyse various types of budget, benefit and problems of

budgeting in the business firm.

iii. To advance useful recommendations (based on finding) to the

company on how to improve on their system of budgeting as a tool

for managerial planning and control.

1.4 Research Questions

The relevant research questions include:

i. Is there a direct relationship between managerial efficiency and

ii. What is the effect of budgeting control on organizational

iii. Is it necessary to compare actual results against pre-determined

iv. Does budgetary control system assist the managers of a business

firm in overcoming some difficulties encounter in managing its

This research work will be of great help to accountant as well as

In identifying the character and potentially of budgetary control

system in business management to know the concepts and benefit of

budgetary control and as a means of evaluating economic recourses and