Washera Broad View Collage Assessment of Budget Preparation

And Implementation (In Case Debremarkos Town Budget Finance Office)

A senior Essay Submitted In Partial Fulfillment of the Requirementsfor Award of Degree I n

Management

Prepared by :

No, Name ID, NO

1. ………………../10

2. ………………. /10

3 . Abreham Addis …………………… 214 /10

Advisor|:-

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CHAPTER-ONE…………………………………………………………………. 1

1. Introductions………………………………………………………………………………..1

1.1 Background of the organizations…………………………………………………………..1

1.2 Background of the study…………….……………………………………………………..1

1.2.1 Budget in Ethiopia……………………………………………………………………….2

1.3 Statement of problem……………………………………………………………………….2

1.4 Objectives………………………………………………………………………………….4

1.4.1 Specific objectives …………………………………………..…………………………4

1.5 Significance of the study……………………………………………… …………………..4

1.6 Scope of the Study ……………………………………………………………………..5

1.7 Organization of the Study………………………………………………………………….5

2.1.3 Budget and budgeting cycle………………………………………………………….....5

CHAPTER- TWO………………………………………………………………………………7

2. Review of Related Literature………………………………………………………………7

2.1 Theoretical Literature……………………………………………………………………….7

2.1.2 Historical Development of Ethiopia Budget…………………………………………...7

2.1.4 The objective of Budgeting ……………………………………………………………7

2.1.5 Types of Budgeting ……………………………………………………………………8

2.1.6 Characteristic of Budgeting……………………………………………………………. 12

2.1.7 Budget Period ……………..………………………………………………………….14

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2.1.8 Procedures of Budget Preparation ……………………………………………………15

2.1.9 The Budget Process in Ethiopia ……………………………………………………..15

2.1.10 The Budgetary Process in Ethiopia ………………………………………………...16

2.2 Empirical Review Studies ……………………………………………………………..17

2.2.1 Research gap ……………………………………………………………………….19

CHAPTER –THREE ……………………………………………………………22

3. Research Method …………………………………………………………..….22

3.1 Research Design ………………………………………………….…………..22

3.2 Type and Resource Data…………………………………………………………22

3.3 Methods of Data Collections Tools … ………………………………..…………22

3.4Sampling Design……………………………………………………….…………23

3.5 Target Population and Sampling Techniques…………………………………….23

3.6 Methods of Data Presentation and Analysis………………………………………23

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 Acronyms

MOF…………….Minister of finance economic development

IBEX……………….Integrated budget expenditure

POF…………………Prime minister

MOF……………….Minster of finance

MOED………………Minister of economic development

NACSLB………………National advisory councils of states& local budget

NGOS……………….Non-governmental organization

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Chapter -one
Introductions

1.1 Background of the Organizations

The city was named Debre Markos after its principal church which was constructed in 1869 and
dedicated to st. Debremarkos was the capital city of Tklehaymanot king of Gojjam during his
religion and as result, Ankhurst notes, and the population of Debre Markos fluctuates greatly.
Based on the 2004 national census were conducted by central statistical agency of
Ethiopia. Debre markos an estimated population of 262,497 from this129,921 were men and
132,576 were women. According to 20th century edition the place of king Tekelhaymanot, in
the style of European building after his tour of Europe in party of RASTEFERI in 1935 the
town had postal telegram and phone service Debre markos Wikipedia, 1987.

1.2 Background of study

The word budget is derive from the Franc word ‘’bogutte’’ meaning a small bag or pouch.
The oxford dictionary define as ‘’a statement of the probable revenue and expenditure for the
ensuring year with functional proposal funded there on’’ it is also defined as a financial or
quantitative statement prepared prior to define period of time (Quick & new 2001).

Budget implementation is responsibility of the budget directory, communication and support

determine the success of budget implementation process proper communication of expectations
and target to all key people in the company is essential. All employees invoice in the operation of
the business must know what is expected of them and they must receive direction on how to
achieve their goal. Equally important top management must support the budgeting processes and
encourage implementation of the budget the process will succeed only if middle and lower level
manager can see that top management truly is interested in the outcome and willing you reward
people for meeting the budget goal ( Horngren.et.al 2010)

Budget is a thought full ongoing decision making process for allocating resources and setting
priorities and direction it is strategic in nature encompassing a multi-year financial and operating
plan that allocating resource on the basis of identified goal NACS .budget should be flexible
multi- year plans for receiving and monitoring different type of revenue and
Distributing specific of this revenue across program and facilities that produce
benefit in support of organization mission and objectives (park &technical recreation

agency.1999] Budgets a quantitative expression of plane of action and aid to coordination and
implementation it is a financial plan that indicates a proposed expenditure for the year and the
mean of financing them. Since budget Is a financial plan of any activates. It serves as evaluating
performance, coordinating activities implementing plan and communicating motivating and
authorizing action in governmental and nonprofit organization budget appropriates serve as
outdoor and selling for management action budget is also a tool that aids manager in both their
planning and control function. However the manager also uses them to evaluable what happened
in the (institution .et .al 2006)

A budget can function as advice not only for planning and co –ordination but also for content
whereas budget control is use of comprehensives system of budgeting to aid measurement in
caring out its function of planning co - ordination and control operation a budgetary control is
one of the important t too of control. It involves checking and evaluation take corrective action
where every necessary.

1.2.1 Budget In Ethiopia

Budget in Ethiopia since imperial has been initiated by the government starting the budget cycle
each various ministries and agencies 11 by issuing a collator budget proposal supposedly process
these organization and agencies adhered to dead hones in completing the budgetary process these
organization submitted current and capital budget proposal to the minister of finance annual
budget call in July or august with preliminary information and guidance ….(Gordon shilling law
2001 5thedition ) budget is a predetermined statement of management policy during a given
period which provide a standard for comparison with result actually achieved

Budget is a crucial tool for every organization government unit business and profit organization
as a means of planning controlling and utilization scars resource so as to attain their goal
effectively and efficiently moreover budget also a tool to encourage and Develop
communication among department a budget is a business financial plan for a specific period it is
also the foundation of affirm financial control system once financial goal is established the
budget use to check and control system

1.3 statement of the problem

Budget is an essential of the long term goal and intimidate object when someone developer
budget they should match their organizational goal with the resource necessary to accomplish
those goal during the budget process they evaluate tactical value chain and capacity issue how
resource for operating investing and financial activities are currently being using and how they
can be efficiently and effectively ( Horngren et.-al 2005 )

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Budgeting plays an Important role in the flow of fund in the economy and it also important
effects on the working economy through various fiscal policy and measures an in all other
country one of the purpose of budget in Ethiopia is promote coordination communication among
sub units within the organization and motivate manager and other employees

Horngren e.t.al(2006) explain budget as comprehensive activity that requires detail planning
analysis and it is the enter process of budget controlling reporting . allocating and managing of
available financial be exposed for an economic and misappropriation in allocating recourse this
is the obstacle for the organization to achieve its objective in order to achieve these activities
effective and proper budget preparation and implementation prepared budget is important tool
for the organization generally fundamental problem that related to budget preparation and
implementation have been resulted from the gap between theoretical and practical aspect of
budgeting in organization or governmental unit which is failed to plan and implement its budget
properly is exposed to uneconomic and miss appropriation on its resource .

the sub –city overall performance depend on properly designs assessment budget preparation
and implementation the sub – city always preparing annual for the budget for the current year
activates budget is quantitative expression for set period of line and planned or proposed future
plan for action management the planned budget should guide by the period of time chosen for
future budget. Budget are prepared for material needed to purchase raw material /for
manufacturing firm/and for material known desired level of inventories in developing
budgetary process.

Recognition must be given to board of director or higher official the organization (essays et.al
2006) effective implementation of budget enables a firm to effectively and efficiently utilize its
resources the past decade has been many non- governmental organization establish a result
oriented or performance based (PB) budgeting approach the emphasis on result or performance
in the budget process reflect a new belief that donor accountability should focus on what
organization does with the money it spend rather than just how it controls such expenditure when
budget was preparing money problem were encounter even it the organization effectively
implemented is budget variance were observed when compared to actual result because of
unforeseen circumstances increase general administration expense increase in price of good or
inflation

According to GIzache (2003) assessment of budget preparation and implementation a case

study Aksum university finance bureau . the

previous not show the effects of auditors performance for the organization , not assess the
challenge for the use of integrated budget expenditure knowledge of the employees &
experience for the employee are those factors affects budget preparat
ion and implementation in general previous researcher more concern on budget control
activities of the organization but before budget control they critically concerned on a budget

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preparation and implementation because it affect all over the organization of activities . budget
preparation and implementation is prepare efficiently and effectively no gap is exist in planed

and actual budget use the resources efficiently the researcher conduct on budget preparation and
implementation to fulfill the gap above researchers .

As per researcher point of view no research is conduct in Debremarkos town budget finance
office, this is the fact that the researcher motivate to study the problem that related with budget
preparation and implementation D ebre M`arkos town finance office

The researchers will tries to answer the following research questions

 What are the procedures that should be follows to prepare the budget?
 What are the factor affecting budget preparation and implementation?
 Does actual budget meets which planned budget?
 Who responsible for budget preparation and implementation?
 What type of budget system uses by the organization?

1.4. objectives

The overall objective of this study will to assess the budget preparation and implementation in
Debre markos town finance office

1.4.1 Specific objective

 To identify the procedures for budget preparation and implementation that the
organization use.
 To assess the factor that effect budget preparation and implementation.
 To check actual budget meet with planned budget.
 To identify the responsible body for budget preparation and implementation.
 To assess the budget system used by the organization.

1.5 significance of the study

The finding of this study will be use by Debre Markose town budget finance to narrow the gap
between plan budget and actual budget the finding will help to the organization to know about
the procedure for budget preparation and implementation to improve budget review and decision
at all level of the management of the company & to create good awareness to the staff member
of the organization about budgetary issue it also serves as starting point tomake further study on
budget preparation and implementation & will help improve the way to those who are interested
to undertake to detail research on some team in the future.

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1.6 Scope of the study

This study will focus on budget preparation and implementation of in D ebre markos town
finance office Even though the budget preparation and implementation will be different in
different organization this study will important for conduct at country & world level but because
of knowledge gap and abilities to conduct the study will delimits in Debre markos town budget
finance in2012

1.7 The Organization of study

This study will be dividing in the five chapter. first chapter deals with background of
organization background of the study statement of the problems objective signifies of the study
limitation of the study &scope of study .The second chapter deals about review related
literature. third chapter will be research methods type and source of data target population of
the study method of data collation and method of data analysis sampling methods and sampling
techniques.

The budgetary system varied in diffident regimes based on the administrative structure each
government followed in centralized system , resource allocation and financial administration is
the major responsibility of central government the entire spending process was also under a
closer supervision of executive body at central government In a decentralized governmental
structure on other hand responsibility financial administration is developed in to autofocus and
semi- autofocus governmental unit like ministry offices regional and local government Ethiopia
budgeting system reach to this current situation after a number of modification (Gordon shilling
2001 5thedition).

2.1.3 Budget and budgeting cycle

A budget is the quantitative expression of proposal plan of action by manager or management for
future time period and is an aid to the coordination and implementation of the plan.

A budget can cover both financial and non - finacial aspect as a blue print out the organization to
follow in the oncoming period. budget covering financial aspect qualities management
expectations regarding future income cash flow and financial position just as individual
financial statement are preparing covering part paired so they can be prepared covering future
period for example a budget statement of cash flow a budget balance sheet .

Uncertainty these finical budget can be non finical budget for say unites manufacturing sold head
count and number of new product being introduce to the market ( H.Garrison 2006 11th edition )

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Well manager companies usually cycle through budgeting step:

 Planning the performance of the company as a whole as well as planning the

performance of its submit.
 Provide a frame reference a set of a specific election against which actual result can be
completed.
 Investigating variation from plan if necessary corrective action to follow investigation.
 Planning again in light of feedback and change condition hangmen et.al 2006.

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Chapter –two
2. REVIEW OF RELATED LITERATURE

2.1 Theoretical Literature

The chapter mainly given much attention to what has been said by different authors about the
matter discussed under this study. there are some point investigate from different source the
regarding the reparation for budget and implementation in order to give theoretical
background.

Budget is the most widely used accounting tool for planning and controlling organization budget
system turn manager are able to anticipate and correct potential problem before they else
manager can then focus on exploding opportunity instead of fighting fires as one observe said
for business plan to fail but many of those that flop failed to plan budget can financial reflect
many of the evaluating cost accounting and management themes for example budget can quality
the plans finical effect of activity aimed at continuous improvement and cost production (Horn
green et.al 2005 )

The budget also a planning tool and if force people to copier the benefit of virus project which
the cost of such project and many there for put such people in a better position to make wise
dissection. modern budget procedure contain projection of expenditure and revenue ( Wilson
2010 ) budget is an itemized estimate of the operating result of enterprise for a future time period
from of budget vary from organization to organization budget is eventually summarized in to the
form of normal finical statement the major difference between budget and the finical statement is
the date used to develop each finical statement are based in actual result of operation whereas
budget are based on planning operation for future time period because of budget is performance
statement.

2.1.2Historical Development of Ethiopian Budget

Ethiopian starts the practice of government budget early at the regimes of Hailesilase.However,at
the beginning ,it was not structured in such a way as to permit efficient financial
administration ,but through time period continuous modification of the budget system was made
before it attained its present status.

2.1.3 Budget and budgeting cycle

A budget is the quantitative expression of proposal plan of action by manager or management for
future time period and is an aid to the coordination and implementation of the plan.

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A budget can cover both financial and non - finacial aspect as a blue print out the organization to
follow in the oncoming period. budget covering financial aspect qualities management
expectations regarding future income cash flow and financial position just as individual
financial statement are preparing covering part paired so they can be prepared covering future
period for example a budget statement of cash flow a budget balance sheet .

Uncertainty these finical budget can be non finical budget for say unites manufacturing sold head
count and number of new product being introduce to the market ( H.Garrison 2006 11th edition )

2.1.4 The objective of Budgeting

The first objective consists of allocating resources between the various function consumption and
investment that between the public and private sector. The distributional sector (objective)
necessitates the consideration of public expenditure and the income groups that are anticipated to
be served. It is the policy maker or government that decides who will be benefited how much
from the available resources among the society. This may achieve by expenditure policies such
as, subsidies, pension or social welfare schemes as much as taxation on income and capital.

Budgeting may be the most important responsibility of government legislator or manager.

Citizens expect, government leaders to prioritize community program and services goals ,
authorize the expenditure of resources of meet those goals, comply with law over spending
appropriations improve the quality of services in the meatier and demonstrate for public funds in
the long term.(Ketema,2007).

2.1.5 Types of Budget

Budgets must be classified and then charged to the different general ledger account the projected
financial statement are the end product of the budgeting process.

Budget Based On Time

 Long range objective: Identify the direction a company of over a 5 year to 10 year the
goal are stated in general term but deal with specification in which the company intended
to be successful
 Short term objective: Is budget or annual forecast, identify the activity to be
accomplishing during the coming year.
 Intermediate objective: Identifies the specific stages that will lead to accomplishing the
long term goals, they provide a link between short term plan and long term objective
 They are basically two categories of the budgets

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Operational budget

Capital budget

Operating budgets are developed each year to plan and allocate financial resources that will be
used during the normal course of operations in the upcoming year operational budget. Which
reflect the result of operating decision of the first? Lists the amounts and costs of the goods and
services of the organizations plans to consume during the operation period and expects its
activity to produce.

Types of operating budget

 Line Item Budget

Line item budget are one of the earliest and still most commonly employed budgeting type used
in the public sectors, they were developed around the turn of the century as alternative to the
traditional numb-sum budgeting approach and give more control over spending major strength
relatively easy to understand and control and therefore it is preferred and perpetuated by money
elected official (Management of park & recreation agency)

Weakness of line item budget it does not require or support the evaluations 'of programs or
decision relating to curtailing or reducing levels of supports to current programs and facilities.

 Zero Based Budgets(ZBB)

The Zero-based budgeting (ZBB) approach is one that forces managers to assets the value of and
to justify the connection of each activity under their supervision. Zero based budgeting is a
combination of though and action processes, a series of budget units is developed .Each unit
consists of descriptions the project or activity.ZBB institutionalizes evaluations as part of
budgeting by requiring the existing programs compete on equal footing with proposed new
unlike line item budget there is no assumption that existing program and eliminate duplication,

Establish priorities, identities alternative approaches and levels of spending for current and
proposal programs and describes the cost and service implication of different finding levels.

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  Revenue Budget

Many park and recreation organizations including government agency, now depends on a
greater variety of revenues source including fees and changes grants, donations and products
sales

 Cash Flow Budget

A form of operating budget that emphasis is not expenditure but on the amount and time of cash
in inflows and outflows of cash flow in the amount of cash from varies source coming in to and
going out flow of an organization during a specified of time

 Program budgeting

Is a term same times used synonyms with performance budget the term is none generally
used to referred to budget performance /format that discloses the full costs of programs or
function without regarding to the numbers of organizational units that might be involved in
performing the various aspects of a program or function.

Program budget address the fundamental issues of whether in program should, exist at all and
how to allocate scarce resources among competing programs the integration of planning.

Programming budgeting and accounting has considerable appeals has to persons concerned
with public administration because an integrated system should ,logically, provide legislators
and administration with much better information for the management of governmental
resources than has to been provided legislators separate systems.

 Performance budgeting

The evaluations of the concept of a budget from an estimate of proposed expenditures and
the proposed & means of financing them ῝to an operating plan” it was mutual
accompaniment to the development of the concept professional management in public
administration

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 Financial budget: which reflect the financial decision of the firm? Financial budget shows
the amount of cash to be generated or consumed during operation, together with
dividends, capital expenditures, new borrowing and other source and use of cash during
the budget period.
 Fixed budget

A fixed budget is prepared for a particular activity to present the cost details.This types of
budget is not of much help to the management as no adjustment is made to the cost for
difference in the level of activity.

Static versus a Flexible Budget

A. Static Budgets

The static or inflexible because they are based on fixed levels because they based on fixed
levels of future activity. Recall that the master budget is based solely on the level of planned
activity. Because of its rigid dependency on a single estimate of volume (for example, one
volume of sales activity),the master budget is frequently called estates budgets. In other
words, the master budget remains static stays the same when the volume of activity changes.
The statue budget approach is suitable for planning purposes, by it is inadequate for
evaluating how well costs are controlled. If the actual costs to the static budgets
(Horngren,et.al2006)

B. Flexible budget

A flexile budget is not based on only one level of activity .Instead, a flexible budget covers
arrange of activity with in which the firm may operate ,flexible overhead budgets is defined
as a detailed plane for controlling overhead costs that is valid in the firm ‘s relevant range of
activity. Thus flexible budget is prepared to different levels of activity within a firm’s
relevant range and is designed to change as volume of activity changed.

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2.1.6 Characteristic of the Budget

As per definition shown above a budget has the following characteristic;

It is quantitative statement expressed in terms of money.

To as prepared in advance and provide period a defined period of time during which it is to
operate.

If relates to future .In other words budgets are prepared for future implementation.

A budget is prepared for the implementation of the policy formulated by management for the
purpose of attained a given objective.

Budget is means of coordination and implementation purpose among the various units for the
organizations and also prepared at the beginning of the year…(Habetamu,2003) Budget
implementation is the responsibility of the budget directory. Communication and support
determine the success of budget implementation process proper communication of
expectation and targets to all key people in the company is essential. All employees involved
in the operations of the business must know what is expected of them and they must receive
directions on how to achieve their goals. Equally important top management must support the
budgeting processes and encourage implementation of the budget. The processes will
succeed only if middle, and lower level managers can see that top management truly in
interested in the outcome and willing to reward people for meeting the budget
goals2.1.7challenges of Budgeting preparation

Budget is a time consuming process that involves of management. Top managers what
lowers level managers to participate in the budgeting process because lowers level managers
have more specialized knowledge and first –hand experience. With day today day aspect of
running the business participation create greater commitments accountability forward the
budget among lower level managers this is bottom –up aspects of the budgeting process.
Foremost organization the annual budget process is a long month exercise that consumes a
tremendous amount of resources. Budget should not be administrated rigidly attaining the
budget is not an end in itself especially. when a conditions changes grammatically. A

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 managers may commit to a budget, but if a situations arises in which some an planed repairs
or an unplanned advertising program would serve the long interest of the company , the
managers should undertake the additional spending (Charles,THorngreen,2006).

According to mariachi,(2005)Majority of NGOs today are manned by personnel’s who do

not possess the requisite leadership and managerial skills to deliver the gains of society
transformation. The principle of education qualifications are not been followed and as such,
made the NGOs dumping ground for education for illiterates In recent time training outlays
are typically treated as expenses rather than investments.

Lack of community participation

The level of participation by the targeted community is highly limited especially the NGOs
located at the rural areas. The reason is attributed to high illiteracy level and the poverty rate.
Thus, the psyche of the people is very low. In addition, there is no law that encourages
community participation in governance and also no access to information and participation.
In the absence of this, the community, no matter how vibrant and enlightened, cannot achieve
anything.

Lack of dynamic structure

Present day economic environment demands that organization adapt new structural practices

Given the new competitive realities, there is needs for management to embrace flexible and
adaptable budgetary planning and control system which has the ability to quickly respond to
environmental changes and complexities.

Lack of Budgetary Accuracy

Accuracy is critical to the effectiveness of performance management. Assessments of how well

objectives are met depend on how realistic these objectives were from the start.

Nongovernmental organizations spend too much time ensuring calculations and formulas are

Correct, as well as addressing the mechanical details of rolling up and consolidating department
and organization unit budgets to ensure that the budget is consistent with their strategic
objectives..

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Nongovernmental organization should allocate the right resource to the activities that will
produce the highest return (Getachew, 2018)

2.1.7 Budget period

According grimace et.al (2010) budget period is length of time for which budget is prepared and
operated.

Budget period vary between short term and long term and no specific period can be laid
down for budgets, it varies among concerns and industries as result of several factors .

A budget is usually prepared for one year which corresponds to the accounting year . It is
then subdivided into quarters and interne each quarter is broken down into three separate months
,when a business experiences seasonal fluctuations .

The budget period may be fixed to cover one seasonal cycle .Along term budget should be
prepared to cover that period this long period may then be broken down into smaller period by
preparing short term budget. Budget for capital expenditure are usually prepared on a long term
basis for example in electricity companies which insure very heavy capital expenditure. The need
for new power stations is possibly forecast five to ten years in advance such long term budget is
suppose emanated by short term ones. An important point to note is that short term budget will
be much more detailed are costly to prepare and operate white long term budgeting is
considerable affected by unforeseen conditions.

Budgeting process in a State or Legal Government

According to Getachew (2003) budgeting governmental appropriation budget are an

administration requests for an authorization policy liabilities for goods and services any facilities
for specific purpose. The preparation and appropriation budget for any one year is related to the
administration budget of revenue, since the revenue is budget is the plane for financing the
purposed appropriations.

According to Habtamun ,(2003)the researcher concludes that; If the program are performance
budget concept is followed appropriation budget are prepared for each existing and continuing

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work program or activities of each of environmental and sub-decision for each program or
activities authorized or required by action of part legislative body for approval. The organization
use inappropriate budget allocation. Because of no planned budget.

Since budget is financial plan of the organization for the period of year and it enable to
predicting financial result and the contents of the financial statement over the year. There for
effective implementation of budget should enable to achieve the desire objectives of the
organization.

2.1.8 Procedures for Budget Preparation

A. Identify the objectives or goals the governmental unit plan to achieve.

B. Identify investigate and measure existing activities or program which the governmental limit
under take to achieve, this helps in establishing costs standards and achieving goal with
maximum of possible efficiency.

C. Determine the units of source the governmental entity plan to offline a given time period.

Determine the budgeted i.e. the amount of resources needed by multiplying the expected unit of
service by the cost per unit prepared budget should also include narrative description of each
panned activity, the enacted budget in viewed somewhat or performance contact between the
legislative body and administrate.(2003).

2.1.9 The Budget Process in Ethiopia

Budgeting from the initial stages of forecasting the annual revenues & expenditures to the final
stages of approval of the annual budget by the council of people representative passes through
sequential and an iterative process this budget process includes

 Preparation of the macro-economic & fiscal frameworks

 Revenue fore cast and determination of the expenditure budget
 Allocation of the expenditure budget between federal & regional government
 Allocation of federal government expenditure budget between recurrent and capital
budget
 Budget calling &selling

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 Budget review by MOF& MOED
 Budget hearing &recommendation
 Submission of the budget to the council of ministers
 Submission of the budget of the budget to the council of people representative
 Notification and publications of the budget
 Allocation

The budget process thus includes all the stages which obviously are sequential (one after the
other) and iterative (Ramaswami.p, 2005 p 40-42)

2.1.10 the Budgetary Process at the Federal Level

Step-1macro-economi & fiscal framework

The framework is composed of macro-economic forecast gives the forecast gives the forecast
of gross domestic product based on past performance and estimate for future years and
provide base line information in preparing the fiscal forecast

Step2 determination of federal government expenditure and subsidy to the regional

government after the revenue and expenditure of the government are estimated through the
fiscal framework. The POM will decide on the shares of federal government expenditure and
sub sides regional government.

Step-3 allocation of federal expenditure between recurrent and capital budget

Step-4 budget call and ceiling notification

A recurrent MOF will release the budget ceiling to the line ministers in the budget call

B capital budget MOED issues detailed capital budget preparation guide lines to spending
public bodies along with the ceiling provided each sectors

Step-5 budget review by MOF & MOED

1. Recurrent budget by MOF

2. Capital budget by MOED

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Step-6 budget hearing & defense

1. Recurrent

2. Capital

Step-7 review and recommendation

Recurrent budget after hearing is over the budget committee of the MOF will review the
discussions and make a recommendation

Capital budget after hearing and defense with POMO & MOED

Step-8 submission to the council minster Recurrent budget the recommended budget will be
submitted to the depute prime minster for the economic affairs first reviewed by ministers &
vise ministers and presented to the prime ministers

B Capital budget brief analysis will be prepared by MOED on the final recommended budget
and along with the consolidate capital budget will be submitted to the council of ministers
Step-9submission to the council of people representative once approved by the council of
ministers.

Step-10 notifications and publication the approved budget will then get the legal status
through the publication in negaritgazita (ramaswwwami.p, noveber, 2005p-40public finance
and tax on)

Step -11seplmentary budget in the course of the budget year supplementary additional
/budget will be proclaimed when necessary following almost the same process

`2.2 .Empirical Review Studies

According to Getachew ,(2005)Assessment of budgetary control procedures and utilization a

case of Debre Marko’s University .’’The researchers carried out through. The research use
select from, table by census 5 employees were select from budget office sector

The researchers finding was the cause of mismatch between plan and budget in the
organization are due to Less attention is given to the preparations of plan and budget to the
organization ,Lack of proper management of budget ,Lack of feeling responsible, Lack of

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regular training for the workers and Lack of enough knowledge.

According to Gebeyehu , (2005)’’assessments of budget preparation utilization and budget

performance a cause Addis Ababa mass media agency..The researcher use survey employed
structured questionnaires with opened and closed ended types of questions. The researchers
use census methods from the total 20 respondents 13 were select as a sample size. The major
finding was poor budgetary utilization, the annual budget allocation mechanism. According
to the budget code, the professional incompetency of the concerned bodies is major one.

According to Elias,(2010)‘’assessment on budget implementation and controlling a cause of

Addis Ababa city administration finance & economic development Bureau. ‘Basic finding
was the challenges that hinder the plane and budget integration, budget expenditure
implementation and controlling and auditing performance in the city administration budget
based on evidence from the BOFED of city government.

According to Gizachew,(2003)’’assessment of budget preparation and implementation a case

study Aksum University finance BEARUO.’’ The researchers used both primary and
secondary data are used. From the target population 28 respondents were selected as a
sample size in census methods.

According to Getu ,(2004)’’budget preparation and implementations a case study of

Diredawa city municipality ‘’The researchers use tabulation and percentages were used to
make analysis the data and use non probability sampling use 13 select as judgmental
sampling. The researchers finding was subdivision is not adequately disclosed their need
certainly or the exact amount of their needs that directly or exact amount of their needs that
directly influence the preparation and implementation. When budget was prepared many
problems were encounter. Even if the organization effectively implemented its budget,
variances were observed were compared to actual result because of an foreseen
circumstances, increase general administration expense, increase in price of goods of
inflation. While they prepared budget they may face different kinds of problems. Their also
while Dire Dawa city municipality finance department personnel’s prepares budget faces
problems. The response to interviews shows the following problems, some sector may not
know or don’t have full knowledge of the exact amount for their department need. Due to

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this, the budget designated for that sectors may be lower or higher their need. If the budget is
lower than the need, it will create budget transfers, which will again create or other problem
budget shortage. Lack of experience, according to the interview response from the
department head reason out that, even if the organization was the oldest , did not enable the
employees to have enough experience. Unexpected circumstances like breakage of
machineries, cars equipment. Natural disasters and like may require the organization on the
budget.

2.2.1 Research gap

A previous researchers conduct research on budget, for instance

According to Getachew ,( 2010)”assessment budgetary control procedures and utilizations a

case of Debre Markos University “The researchers carried out through descriptive research
design, tables and use qualitative and quantitative research approach. The research use select
from the total population by census 5 employees were select from budget office sector. The
researchers finding was the cause of mismatch between plan and budget, Lack of proper
management of budget, Lack of feeling responsibility, Lack of regular training for the
workers and lack of enough knowledge. The researchers not assess employees experience,
ages& educational level are those factors the budget & use census to select the respondents.
However census methods are not important for budget because all respondent not known
about budget so judgment sampling is important for budget.

According to Gebeyehu ,(2005) “ assessment of the budget preparation utilization and budget
performance a case Addis Ababa Mass media agency “The researcher use survey employed
structured questionnaires with opened and closed ended types of question. The researches use
census methods from the total 20 respondents 13 were selected as sample size. The major
finding was poor budgetary utilization,

The annual budget allocation mechanism According to the budget code, the professional
incompetency of the concerned bodies is major one. The researcher not assess auditing
performance in Addis Ababa mass media agency the effects of budget utilization &
performance.

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According to Elias,(2010) “assessment on budget implementation and controlling a case
Addis Ababa city administration finance & economic development Boreas. Basic finding was
the challenges that hinder the plan and budget integration, budget expenditure
implementation and controlling and auditing performance in the city administration budget
based on evidence from the BOFED of city government. In the above researcher were good
finding in budget performance, controlling procedures ,utilization in different organization
,place and time .however the researchers do not assess budget preparation and
implementation. Budget preparation and implementation are the back bone of an
organization. Before budget performance, controlling procedures, utilization preparation and
implementation are the formers one. The above researchers use census methods to select
respondents. This affect the information because no skillful persons are include in the sample
for instance secretary, grading , driver are include in census so miss presentation of
information are exist.

Few researchers were assessing on budget preparation and implementation.

According to Gizachew, (2003) “assessment of budget preparation and impel mention a case
study Aksum university finance office.”The researchers used both primary and secondary
data are used. From the target population 28 respondents 20 respondents were selected as
sample size in census methods. However the researchers do not identify the problems which
affects the organization briefly and clearly, like employees ‘knowledge, experience, the
participations of employees, motivation &inflations goods &materials.

According to Getu (2004)”budget preparation and implementations a case study of Diredawa

city municipality” The researchers use tabulation and percentages were used to make analysis
the data and use non probability sampling use 13 select as judgmental sampling. The
researchers finding was subdivision is not adequately disclosed their need certainly or the
exact amount of their needs that directly or the exact amount of their needs that directly
influence the preparation and implementations. When budget was prepared many problems
were encounter. Even if the organization effectively implemented its budget ,variance were
observed when compared to actual result because of unforeseen circumstances ,, increase
general administration expense, increase in price of goods or inflation The researchers were

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not show the effect of auditors performance for the organizations , knowledge of the
employees ,experience to Diredewa city municipality& the challenges of the integrated
budget expenditures. In general the researchers more concern on budget control activities of
the organization but before budget control they critically concern on the budget preparation
and implementation because it affect all over the organization of the activities. If budget
preparation and implementation is prepared efficiently and effectively no gap is exist in
planned and actual budget, use the resource efficiently and effectively. The researchers
conduct on budget preparation and implementation to fulfill the gap over the researchers, As
per researchers point of view no research in conduct in Debre Markos town budget fiancé
with budget preparation and implementation in Debre Markos town finance office

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 CHAPTER –THREE

3. RESEARCH METHODS

3.1Research Design

In order to achieve the research objective , the researchers use descriptive research design as
a name implies describe the preparation and implementation of budget in Debre makos
budget finance office by describing summarizing and presenting both quantities and
qualitative research approach .Data will be collect through structure questionnaires’
,&structure and un structure interview and also collect by document review that are design to
get significant information from the employees and the manager of Debre markos town
budget finance office

3.2 Type and Source OF Data

To meet pre-specified objective in chapter one the researcher use both primary and secondary
data. Primary data will collects from primary data source those are sample respondents from
Debre markos finance bureau and secondary data were collect from secondary data source
which are annual reports.

3.3 Methods of Data collection Tools

The necessary for this study will collect through questionnaires’, interview and document
review. The questionnaire contains both open ended questions and also five Liker scale type
&the interview were organize in to structure way. A survey using qualitative and quantative
approach was conducted to assess the budget preparation and using as a control mechanism
for operation.

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3.4 Sampling Design

Sampling design is a definite plan for obtaining a sample from a given population it refers
to the technique or procedures the researches would adapt in selecting items for the sample.

From the target population of 52 employees (including garden keeping)from this the
researchers selected 15 employees as A sample respondent (small portion of the population
using a survey design)

3.5 Target Populations and Sampling Techniques

The total populations of Debre Markos town budget finance office were 52 employees
including the garden keeping .To select the sample respondents from the target population
the researchers the used mental sampling techniques. From 52 employees 15 employees were
selected as a sample respondent because budget is prepare by one and impalement by
employees of the organizations as researches point view to identify the concern body for
budget preparation and implementation and collect information from the respondents.

3.6 Methods of Data Presentation and Analysis

After the data will be collect and organize and the data will be present by using different
statistical tool that are appropriate analysis to the researchers like: tabulations, and
percentages accompanied by relevant data and analyze by using descriptive statistical
analysis techniques. The descriptive analysis shows how the employees in the institution of
budget preparation & implementation for preparation in finance offices.

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