International Journal For Research In Business, Management And Accounting ISSN: 2455-6114

CHAPTER ONE

INTRODUCTION

1.1.Back ground of study

Budget is a quantity of future plan of action and aid to the coordination and implementation
of plan. Most people associated with the word budget with limitations on spending. A budget
is a tool that helps managers in both their planning and control functions. It is a formal
business plan which helps manager with their control function not only by looking forward
but also by looking backward. Budget, of course, deals with what managers plan for the
future and also how they control them (Horngren, cost accounting,12th edition,2004).
Budget allocation is one of an integral component of the annual financial plan or budget of
every organization. It indicates the level of resource that an organization committing to a
department or program. The annual financial budget of the organization is prepared by taking
the aggregate revenue it earns from different sources and ti develops the appropriate annual
budget (Horngren,cost accounting, 12th edition,2004).
Budget can be utilized under every economic activity and every economic resource. Most
people, firms and governments have limited fund to be spend, and they must decide which
expenses must be spend first and most important to achieve the organization’s prostrated
objectives. Generally, budgeting is the act of preparing budget and get ready for the future
action (Horngren, p 270,(2004)
Budget is systematic and formalized approach for stating and communicating the firm’s
expectation. A budgeting system builds on historical or actual performance.
Budget is the most widely used method of its unique feature in controlling financial
resources. Because of its unique feature in controlling financial resources, preparation of in
annual or otherwise budget is amendatory in most of the entities. Also it is a financial or
quantitative statement, prepare containing the planning and controlling procedures, policies
and regulation to be pursued during the period.

Budget identities source of income and assist in planning expenditure most organizations and
many individual find careful planning is an essential activity in achieving goal.
 International Journal For Research In Business, Management And Accounting

1.2. Statement of the problem

Budget is a quantitative expression for set of time period and a proposed future plan of action
by management. Budget is also comprehensive activity that requires details planning, analysis
and it is entire process of budget controlling, reporting and allocation of available financial
resource. Four years ago, a research is conducted around Jimma, in case study of Silte zone
finance and economic development office on this three issues; budget preparation, allocation
and utilization, However; there is no study in case of Gambella region in the same issues after
four years, and what it seems like in case of lare woreda finance and economic development
office currently. In any organization who fails to prepare its budget systematically is expose
to uneconomic and misappropriation in allocating and utilizing its resource. Based on the
above clarification the researchers raise the following basic questions that was answered in
this course of study.
1.3 Research Question
1,What are the budget preparation approaches used by the organization?

2, What are the problems of budget allocation process?

3, What looks like budget utilization in the organization?

4.How the proper implementation of budget is done by the office?

1.4 Objectives of the study

1.4.1 General objective

The general objective of this study is to assess the preparation, allocation and utilization of
budget in Lare woreda finance and economic development office.
1.4.2.Specific objectives
The specific objective of this study are ;
● To explore and identify the approaches of budget preparation used by the office.
● To asses a problem that faces the department in the budget allocation process.
● To assess the budget utilization of the finance department of the organization.
● To evaluate the budget implementation method used by the office.
1.5. Significance of the study
The major significance of the study are; to create awareness to the organization about budget
utilization and controlling, helps the department to know what looks like its budgeting system
after this study has conducted, and this paper may use for other researcher who wants to make
further investigation in the area of budget practice and to conduct detailed research on issue.
Beside this, this study is used the researcher to increase his research working experience.
 International Journal For Research In Business, Management And Accounting

1.6. Scope of the study

This study is very important, if it is conducted in the country level. However; due to the
constraints related to finance and time, the researcher has to perform the research in case of
Lare woreda finance and economic development office by focusing only budget preparation,
allocation and utilization section.

1.7. Limitation of the study

The researcher had faced certain problems at the time of conducting the study among them:
● At the time of data collection some design respondents were not present that elongate
data collection period more than expected.

● There was reluctance on the part of some numbers of the respondents to returning back
the questionnaire.

1.8. Organization of the paper

This paper will include about five chapters. The first chapters present the introduction part
reflecting the background, the statement of the problem, objective of the study, significance
of the study, scope and limitation of the study. The second chapter deals with literature
review. The third chapter prevails that the research methods, The fourth chapter presents the
data analysis and presentation and finally the fifth chapter will consists conclusion and
recommendation on study.

Chapter Two

2. Literature review

2.1. budget and budgeting concept

Definition of budget and budgeting

Different scholars defined budget and budgeting in different manners. However, most of them
have come up with similar idea of budget and budgeting some of selected are presented
below.
Budget is the process, of preparation of budget which determines the target for budget and it
includes preparation of plans, implementation and evaluation.
 International Journal For Research In Business, Management And Accounting

A budget is an itemized estimate of the operating result of an enterprise for a future time
period. The form of a budget varies from organization to organization, but it is eventually
summarized in to the form of the financial statement. The major difference between the
budget and financial statement is the data used to develop each. Financial statement are based
on actual, result of past operation ,whereas budgets are based on planned operation of a future
time period. For this reason, budgets may be referred to as preform statements, (OWEN
CHERRINGTION) page 140

2.2 historical development of modern government budget

Historically, the practice of budgeting generally originated in the central, government of great
Britain at the year of 121. However, an entirely new approach to government budget was
initiated during the year 1930’s economic depression in the advanced capitalist countries.
During the period, new possibilities of using financial measures to require were recognized
(Hiness, II and Edward K.J 1954). The historical development of modern budgeting suggests
two significant generalization concerning the distribution of budgetary responsibility.
The budget system developed as an instrument for democratic control over the executive. The
power of the purse come to raised in the legislature in order arbitrary tax payments in his
subject. The budget is an expression of ultimate legislative authority. The patterns of
responsibility characterizes the budgetary process may be examined from a number of points.
● As a legal institution, the budget is on expression of the constitution and statutes of
government
● Viewed in terms of organization.
● As ammeter of procedure, the budget s the product of a time sequence of decisions
made in on organization as a context. (Jesse Burkheed 2001).

2.3 budget and budgeting cycle

A budget is a quantitative expression of proposed plan of action by management for specified

period and aid to coordinating what needs to be done to implement that plan. A budget can
concern both financial and non financial aspect of the plan and serves as blueprint for the
company to follow in an upcoming period. A budget that covers financial aspect quantifies,
management’s expectation regarding in come, cash flows, and financial position . Just as
financial statement be prepared for future period
Well managed companies usually cycle through the following budgeting steps:

1. Planning the performance of the company as a whole, as well as planning the

performance of its subunit.
2. Provide a frame reference, a set of a specific expectation against which actual result can
be completed.
 International Journal For Research In Business, Management And Accounting

3. Investigating variation from plans. If necessary, corrective actions to flows investigation.

4. Planning again, in light of feed back and changed condition (HORNGREN ) pp175.

2.4 advantages of budget

● Compares strategic planning and implementation of plans.

● Provides success the companies goal of objectives.
● Motivate managers and employees.
● Provide a frame work for judging performance.
● Promotes co-ordination and communication among sub units with in the company
(HORNGREN) page 177.
2.5 Types of budget

2.5.1 Capital Vs current budget

Sound governmental fiscal management requires continual planning for several period in the
future. Most governments are involved in programs to provide certain good or services
continuously, in acquisition of building can or other major items of capital, out lay that must
be scheduled and financed long term debt service commitments. Although some prepares
comprehensive multi year plans, which include all of these more common practice is for such
plans to include only the capital outlay plans for the organization.

Capital budget

A plan of proposed capital outlays and means of financing them for the current fiscal period.

It is usually apart of the current budget.

Current budget

The annual budget prepared for and effective during the present fiscal year or in the case of
some state government (Lynn and freeman 1983: pp55-56)

2.5.2. Fixed Vs flexible budget

Fixed budget are those in which preparation are for a specific fixed dollar amount and may
not be exceed because of changes in demand for governmental goods or services. On the
other hand , expenditure authorized by flexible budget are fixed per unit of good or services
but are variable in total , according to demand for either production or delivery of the goods
or services.
 International Journal For Research In Business, Management And Accounting

2.6. Budget planning and preparation at the regional level

One component of the federal budget is a grant from the federal government to the state
governments. The allocation of grant is determining by the federation council, which bases
their decision on a formula that includes variables such as the population in each state and the
capacity of each state to generate their own revenue. The states with less capacity to generate
their own revenue are entitled to get a larger allocation of this money.
The state government follows similar budget planning and preparation procedures to the
federal government regional finance bureaus prepare ceiling for expenditure by the. Regional
bureaus for each sector, which include allocations for capital and recurrent expenditure. This
is done after the grant for each state from. The federal government is announced. The finance
bureaus at the zonal and woreda levels also follow this process at their levels of the
administration. The regional finance bureaus submit their budget proposals to the regional
councils for approval. Once the budget proposal have been approved , they are published in
the regional Negarit Gazeta (ministr of finance, proclamation No. 57/1996.

2.6.1. Budget allocation and utilization

Budget utilization is an important part of all business and not -profit-organization financial
plans. Budgets are typically set annually and involve allocating, anticipated income, and
resource between different departments and business interest. The amount of funding
allocated to each area impasses restriction on the scope of department’s development. Budget
are normally set on the bases of the previous years expenditure, plus or minus any change in
spending , such as for example Lare woreda finance office, each department is given a set of
amount of money to spend over the course of the year . the department head normally takes
responsibility for allocating the funding to his staff. A budget aims all expenditures including,
state salary, cost of buying resources as well as miscellaneous expanse for any un for seen
needs.

2.7. Role of Budget

Budget plays a number of vital rules in economic measurement of public sector. According to
UNESCO (1963). The role of budget is grouped in to three categories. This include
distribution of resources, allocation of resource and control activities.
Distribution of resource: though national budget, one can distribute the scarce resource to
different to different public sectors and produces goods and services. The budgeting activities
should play a major role in planning and programming.
 International Journal For Research In Business, Management And Accounting

Allocation of resources; As resources are limited human wants are unlimited at times the
government should identify the most relevant activities to be done first and allocate the
necessary resources.
Controlling activity: government taxation and spending influences the nation’s general level
of economic activity that is, when the tax allocation is less than or equal to or greater than the
spending of government activities it will have it’s own impact on economy. As the case may
be budget is a mechanism of controlling and establishing the economy. Further, through beget
records, the controlling authority can variety the legality and correct implementation of public
resources.

2.8. Budget approach

The several general approaches to governmental budgeting have marked difference in their
emphasis on planning, control and evaluation. At this point it may be useful to point at that
the principal groups that excise control are executive branch official and the legislator the
most common approach to operating expend items, budgeting may be characterized as
follows.

2.8.1 Expenditure approach

It is often referred to as the transitional approach and expenditure control orientation. It

becomes popular as the basis for legislative control over the executive branch. This method
involves subordinator, agencies, submitted budget request to the chief the chief executive in
terms to be made that is the number of people to be hired in each specified position and salary
level and the specify goods and services to be purchased during the upcoming period.
Request for the organization to the legislative in some object of the expenditure terms and
frequently thorough not necessarily the request along object expenditure input lines
performance of program, data may be included in the budget documents but they are used
only to supplement of support the object of expenditure request.
This method facilitates accounting control in the budget execution process and that
comparable data may be accumulated for a series of years in order to facilitate trend
comparison. They content that most program are of an ongoing nature, and most expenditures
are relatively in available decision must in the real world on change programs and affection
can most reading be giving to change proposed compare with prior year data and the object
of expenditure approach does not preclude supplementing object of expenditure (Lynn and
Freeman, 1983, pp60-63).
 International Journal For Research In Business, Management And Accounting

2.8.2 Performance approach

The performance approach originates near to turn of the century and came in to popular usage
in the fifties. This approach embodies shifting of in phases from object of expenditure to
measurable performance of activities and work program. The primary focuses in an
evaluation of the efficiency with which existing activities are being carried out its primary
tools are cost accounting and work measurement. The total budget for an agency would be
the sum of the products of its unit cost standards multiplied by the sum of the products of its
unit cost standards multiplied by the expected unit of activity in the UN coming period. The
enacted budget is viewed somewhat as a performance contract between the legislate branch
and the chief executive. The most important contribution of this approach it its emphasis on
the inclusion on the need to measure output as well as input. The performance budget
emphasizes the activities for which funds are requested.
The performance approach provides the chief executive with and additional revenue of
control over his subordinates, rather than being restricted merely to how much has his
subordinate spend, he may evaluate the performance of activities in terms of dollar and
activity unit standards. (Lynn and Freeman 1983).
The program and planning – programming budget approach (PPB).

The national council on governmental accounting (NCGA) defined a program budget where
in expenditure are based primarily on program of work and secondarily on character and
object a transitional type of budget between the traditional character and object class budget.
On the other hand program budget in refers to a planning oriented approach which
emphasizes up on evaluation or control performance measurement is not prefer quiets to
program budgeting or budget it may be a useful act.
The major distinctive characteristics of PPB are
1. Future year implication are explicitly identified
2. All pertinent costs are considered.
3. Systematic analysis of alternatives is performed.
 International Journal For Research In Business, Management And Accounting

Among the benefits to state and locality attributed to the PPB approach are:

- Plans and programs are reviewed continuously

- Inter government planning is improved.
- Inter-agency coordinating of program is strength.

Chapter Three

Research Design and methodology

3.1. Research design
This research was designed to a quantitative types of research, since this research is more
related to numbers, and the researcher tries to use the descriptive data analysis and attempt to
assess the overall budget preparation, allocation and utilization, the researchers will prefer
this type of research to conduct the research.
3.2. Sampling design
The sample selection is carried out by a researcher, so that it has reliable as to the
representation of the total population who has been working in the organization. The eligible
respondents are the budget preparers, the manager, accountants, head of budget control and
implementation office and also others that have some responsibility in the organization. The
total personals worked permanently in the organization were numbered about 13.
The researchers distributed the questionnaire to the individuals who were most familiar with
the budget preparation and for individuals who concerned the budget section to get and
collect more relevant information for this study.
3.3. Sampling technique
The sampling techniques applied in this study was judgmental sampling in selecting the
element that the questionnaire for whom distributed because of their difference in educational
 International Journal For Research In Business, Management And Accounting

level, experience and responsibility. Judgmental sampling is a non-probability sampling

technique in which either an authority picked by the researchers or the researchers by them
self-select units to be sampled.
3.4. Sources of data
To conduct the research, the researchers used a primary data source which has been obtained
from the respondents by using questionnaire and in some extent secondary data sources
include: records, procedures and manuals of the office.
3.5. Method of Data collection
To collect the necessary data, the researchers were used both primary and secondary data
sources. The primary data was collected through questionnaire. The method of questionnaire
which the researchers used possesses the number of questions with close ended types that are
relevant and exhaustive as to the objective of the study and designed in the way that the
respondent fills easily. On the other hand, to get detail information about the factors affecting
the budgetary process, the researchers will use an open ended questionnaire.
Additionally, the researchers were used secondary sources of data collection method which
obtained through reviewing the records, procedures and different manuals of the organization.
3.6. Method of data analysis
The data was analyzed quantitatively and descriptions statistics were used for analysis.
The data gathered from primary and secondary sources of information were organized,
summarized and analyzed by using quantitative (table of frequency distribution, simple
percentage, ratio) and other relevant statistical methods). Information collected through
opened questionnaire and direct observations were analyzed qualitatively.
 International Journal For Research In Business, Management And Accounting

Chapter four

Data analysis and presentation

In this chapter data collected through questionnaire that are distributed to respondents was
analyzed and discussed. The researchers distribute 13 questionnaires out of those 12
questionnaires were returned and the rest one respondent did not return the questionnaire.

4.1. Characteristics of respondents

To start the basic part of the study it is appropriate to know the characteristics such as
educational background of respondents and their work position. Because, it enables the
researcher to know the work experience and educational level of the respondents.

Table 4.1. Description of respondent’s respect to their age and educational level
No Item Respondents
No %
1 Age
below 25 - -
(25-35) 5 41.7
36-45 5 33.3
Above 45 3 25
Total 12 100
2 Educational level
Master
Degree 7 58
Diploma 5 42
Grade 12 complete - -
Grade 10 complete - -
Total 12 100
source; field survey 2013 e.c
 International Journal For Research In Business, Management And Accounting

Item 1 of table 4.1 above describes the age composition of the respondents with a percentage
of 41.7% were found between the age of 25-35 , 33.3% were between 36-45, and 25% were
above 45. From this the researcher found out that most of the respondents are between 25-35
age.
When we come to the educational level, from out of the total of 12 respondents 7(58%) of
respondents are degree holders and the left 5(42%) are diploma holders. There is no master,
no 12 grade complete and 10 grade complete and no others. This implies that the workers of
this office are more of degree and diploma holders. Budget related activities in the office are
largely performed by them.
● According to the response of the respondents on the question related to the source of
budget, the source of budget of this woreda is come mostly from federal government
revenue, from internal source and from foreign aid.

Table 4.2 Respondent response to consider the past performance for today’s budget
preparation.
Types of response No of respondent Percentage
Yes 12 100
No 0 0
Total 12 100
Source; Field survey 2013e.c.

Table 4.2. above clearly indicated that full of respondents replied that the office considers the
past performance for today’s budget preparation.
● This woreda prepares budget by creating integration with other offices. That means
one office had a duty of ratifying or approving the budget prepared by the other
departments. The cited office was the budget officer of the other departments.

Table 4. 3. Assessment of budget revision in order to update for any special case.
Types of response No of respondent Percentage
Yes 12 100
No 0 0
Total 12 100
Source; Field survey 2013 e.c. As
shown clearly in the above table 4.3, a full of 12(100%) of the respondents responded that
the office revise its budget in order to update for any special case .
 International Journal For Research In Business, Management And Accounting

Table 4.4. Assessment of fair budget allocation among woradas

Types of response No of respondent Percentage

Yes 10 83.4
No 2 16.6
Total 12 100
Source; Field survey 2013 e.c.
Table 4.4 above clearly indicated that 10 (83.4%) of respondents replied that there was fair
budget allocation among different kebeles of this worda. On the other hand 2(16.6%) of
respondent responded that there is no fair budget allocation among kebelles due to their
difference in population number and level of development. The researcher understand that
there was a fair distribution or allocation of budget among different kebelles if they had not
difference in popullation number and level of development.

Table 4. 5. The response of sample respondents on if they think that there exists proper
implementation of budgetary system developed by MOFED.

Types of response No of respondent Percentage

Yes 12 100
No 0 0
Total 12 100
source; field survey 2013 e.c
According to table 4.5 above from total 12 respondents, 12(100%) of the respondents are
responded that there was proper implementation of budgetary system that is developed by
MOFED in the office. Butte office sometimes perform activities by its own method to
conduct some special cases.

Table 4.6. Respondents response for periodic training given by the organization
regarding budget planning utilizing.
Types of response No of respondent Percentage
Yes 8 67
No 4 33
Total 12 100
 International Journal For Research In Business, Management And Accounting

source; field survey 2013 etc.

As stated in the above table, about 8(67%) of the respondents responded as they have periodic
training given by the organization regarding to budget planning and utilizing. On the other
hand, about 4(33%) of the respondents responded as they have not periodic training given by
the organization regarding budget planning and utilizing, because of financial scarcity which
budgeted for training program.

Table 4. 7. Assessment of take part of employees in budgeting planning and controlling

process.
No Items Respondents
№ %
1 Do you participate in budget
planning and utilizing?

Yes 10 83.4
No 2 16.6
2 If your response for question № 1
above is yes in which types?

Administrative 3 30
Project/ capital 1 10
Planning and utilizing 6 60
Total 10 100
3 If your answer for question 1 above
No what is your reason?

It is not your responsibility 2 100

Only special workers participate 0 0
Because of random selection 0 0
Total 2 100
source; field survey 2013 etc.
Table 4.7. above clearly indicated that 10(83.4%) of respondents replied that they have
participated in budget planning, controlling and utilization of the office. On the other hand
2(16.6%) of respondents indicated that they did not participate in budget activities.
In the same table (4.7) about 3(30%) of respondents who were participated in budget work in
budget administration,1(10) is replied that he was mainly prepared the capital budget
undertaken in this office and the remaining 6(60%) of respondents responded that they are
participating in the preparation of general budget and controlling function.
 International Journal For Research In Business, Management And Accounting

For question No 3 in the same table above employees that do not take part in budget planning,
allocating and utilizing because it is not their responsibility.

Table 4.8. Respondents response to budget deficit occur within the organization.
Types of response № of respondent Percentage
Yes 12 100
No 0 0
Total 12 100
source; field survey 2008 etc.
From the above table(4.8), out of the total of 12 respondents all 12(100%) of respondents
replied budget deficit occur with in the woreda. From this data the researcher can understand
that this woreda is highly affected by budget deficit due to its quickly growth.
Table 4. 9. problem related to budget request
№ Problem 1 Strongl Agree Disagree Strongl Cant Total
y agree y deter
mine
disagre
e

№ % № % № % № % № % № %

1 In appropriate budget - - 11 92 1 8 - - - - 12 10
request 0
2 Accepting budget 1 8 7 58 4 33 - - - - 12 10
request without 0
examining their
relevance, timing and
fairness

3 No disclosing the - - 5 42 7 58 - - - - 12 10
approved budget 0
among department
4 Not spending 1 8 4 33 7 58 - - - - 12 10
according budget title 0
5 In appropriate budget - - 5 42 7 58 - - - - 12 10
transfer 0
source; field survey 2013e.c
 International Journal For Research In Business, Management And Accounting

The survey analysis in table 4.9 portrays that 92% of the respondents agreed to the proposed
question revealing inappropriate budget request by the organization, and 8% of respondents
are disagreed. This shows that inappropriate budget request is the valid and existing problem
of the office.
In the same table (4.9) item 2 reveals that 58% of the respondents agreed on accepting budget
request without examining their relevant, timing and fairness results. In table (4.9) item 3
show s58% of respondents disagreed on the question that asserts there is no disclose of
approved budget among departments,and 42% are agreedon this same issue. This shows that
have not such problem, but in some extent there may be some problem. According to this
survey 58% of the respondents are disagreed that machakel woreda finance and economic
development office had not spending it’s budget according to their title.Item 5 in the same
table preveals that 58% of the respondent replied that there is no appropraite budget transfer
in this office.This shows that the office is not affected by such problem. The analaysis shows
that the office faces some problem related budget request.

Table 4.10. Respondents opinions regarding to the existing budget problem Problem
related to budget system
№ Problem 2 Strongl Agree Disagree Strongly Cant Total
y agree disagree determi
ne

№ % № % № % № % № % № %
1 Unsuitable budget - - 2 16 10 84 - - - - 12 100
system
2 Complexity of the orgn. - - 4 34 8 66 - - - - 12 100
3 Lack of proper - - 2 16 10 84 - - - - 12 100
monitoring and
controlled by MOFED
4 Improper recording or - - 1 8 10 84 - - 1 8 12 100
budget entries

source; field survey 2008 e.c

From the above table 4.10 shows that 84% of the respondent replied that they diagreed on
the unsuitable budget system of the organization. item 2, 66% of respondent disagreed on the
 International Journal For Research In Business, Management And Accounting

complexity of the organizations operation regarding the problem related to budget system.
Accordingly, 84% of respondents are disagreed on the variable which dealing lack of proper
monitoring and control of the approved budget by MOFED. The other survey finding in the
above table is that 84% of the respondents agreed that there is a proper recording of budget
entries in the organization.Generally, machakel woreda finance and economic development
office have no such above listed problems, as studied this paper,we can say that there is no
problem related to budget administration and allocation.

CHAPTER FIVE

Summary,Conclusion and Recommendation

5.1 Summary and conclusion

This research is concern on assessing and investigating the over all budget
preparation,allocation and utillization performance of machakel woreda finance and
economic development office.To get answer for the research questions, the researcher used
the questionnaire filled by respondents. The data collected are analayzed and discussed by
percentage method with proper descriptive explanation.

Depending on the data analyzed in chapter four before, the researcher has concluded the
following main points.

❖ To summarize the employee educational level more than half of the worker were degree
holders, but no one who have MBA. Form this the researcher can understand that
organization have lack of well experianced workers.

❖ The office considers the past performance for today’s budget preparation.
❖ Most of the time there was a fair distribution/allocation of budget among different
kebelles.

❖ The office perform its budgetary activity based on the system developed by MOFED.
❖ There was training given for employees,but it may not periodically due to the scarcity of
finance.

❖ The office ussually faced a budget deficit,because of the increament in investment more
than expected since the woreda grows fast.

❖ The major problems related to budget request are inappropraite budget request by
kebelles,and accepting such budget request without rellevance and proper timing by
office.
 International Journal For Research In Business, Management And Accounting

❖ The office had no problems related to budget administration and allocation,but to the
some extent there may be minor problems due to the complexity of the organization
operation since it have numerous kebelles.

5.2.Recommendation
As mentioned earlier there were more or less problems which hinder the smooth flow of
budget to each kebelles and any related activities,then researcher gives his recommendation
as a solution that assumed to avoid or reduce identified problems. These are as follows:

❖ The office is better to hire well experianced workers in order to achieved well the
organization’s goal and objectives as well as to have effective efficient budget
preparation,allocation and utillization in the woreda.

❖ Eventhough there was employee training program,it is not sufficient;to make it

sufficient,perform the training more frequently and in more organized way.

❖ The office should set sound budget implementation,allocation and control system to
avoid the problem of frequent budget deficit in woreda.

❖ To avoid or reduce the problem related to budget request,the office should register
strictly the investments and infrastructures constructed during the year before it
approves the budget that transfered to that specified kebelle.This helps the office to
identify which kebele had request appropraitely and which are not.

❖ Generally,the budget department of this woreda should use appropraite budget

preparation,allocation, utillization and control mechanisim by adopting good
coordination system with department workers.

Reference
Charles. T. Hongren; cost accounting, 10th edition, New Delhi (1999).
Charles.T. Horngren; cost accounting,12th edition, New Delhi(2004).
Donald Axerod ; government budgeting (1989)
Edwad B. Deakins and et al. (1991), cost accounting 3rd edition (1991)
Hangreen and etal (1997), cost accounting ,9th edition practice Hill of India, new Delhi.
Herman son, (1989), Principles’ accounting.
Lain, Malland (1997), budgeting for non financial managers.
Jones, Regional(1991), budgeting: Key to planning and control.
Lynn. (1983) ,fund Accounting theory and practice.
 International Journal For Research In Business, Management And Accounting

Own cherrington; cost Accounting ; managerial approach, 2nd edition(1980).

Robert G. finng (1993) , powerful Budgeting for Better planning and management.
UNESCO (1983), the role of budgeting and education planning paries.

APPENDIX

DEBRE MARKOS UNIVERSITY COLLEGE OF BUSINESS AND

ECONOMICS DEPARTMENT OF ACCOUNTING AND FINANCE

1, Is lare woreda Finance Bureau considers the past performance for today’s budget
preparation?
2, Is the office revise its budget in order to update for any special case?

3, Is there fair budget allocation among different kebeles of this worda?

4, Is there proper implementation of budgetary system that is developed by MOFED in the

office?
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5, Is there periodic training given by the organization regarding to budget planning and
utilizing?

6, Do you participated in budget planning, controlling and utilization of the office before.

7, If your response for question № 6 above is yes in which types?

Administrative Project/ capital Planning and utilizing

8, If your answer for question 1 above No what is your reason?

A, It is not your responsibility B, Only special workers participate C, Because of random
selection
9,Is budget deficit occur with in the woreda? A, Strongly agree B, Agree C, Disagree
D, Strongly disagree E, Can’t deter mine

10,In appropriate budget request A, Strongly agree B, Agree C, Disagree

D, Strongly disagree E, Can’t deter mine

11,Accepting budget request without examining their relevance, timing and fairness A,
Strongly agree B, Agree C, Disagree
D, Strongly disagree E, Can’t deter mine

12,No disclosing the approved budget among department A, Strongly agree B, Agree C,
Disagree
D, Strongly disagree E, Can’t deter mine

13,No disclosing the approved budget among department A, Strongly agree B, Agree C,
Disagree
D, Strongly disagree E, Can’t deter mine

14, Not spending according budget title A, Strongly agree B, Agree C, Disagree
D, Strongly disagree E, Can’t deter mine

15, In appropriate budget transfer A, strongly agree B, Agree C, Disagree

D, strongly disagree E, Can’t deter mine

16, Unsuitable budget system A, strongly agree B, Agree C, Disagree

D, strongly disagree E, Can’t deter mine

17, Complexity of the organ. A, strongly agree B, Agree C, Disagree

 International Journal For Research In Business, Management And Accounting

D, strongly disagree E, Can’t deter mine

18, Lack of proper monitoring and controlled by MOFED A, strongly agree B, Agree C,
Disagree
D, strongly disagree E, Can’t deter mine

19, Improper recording or budget entries A, strongly agree B, Agree C, Disagree

D, strongly disagree E, Can’t deter mine

2.9 Chapter Summary and Knowledge Gap

This study was conducted in the budget preparation, utilization and allocation in case of lare
woreda finance bureau.
In this chapter most essential theories was discussed about budget.
view, there are disagreements existed between theories and also empirically studies about the
effect of debt financing on corporate profitability. In line with the above theoretical as well as
empirical review, debt financing affect performance of the firms weather positively or
negatively. Therefore, evaluations of the effect of debt financing on profitability are
important to all business
organization, especially for banking industry. The banks performance can be affected by
different
factors such as bank specific, macroeconomic and regulatory factors. From those factors the
firm
financing decision is the most crucial parts in a bank business activity.
According to the empirical study, few studies have done on the area of commercial banks
capital
structure determinates. This indicates the banking industry is unexplored area in developing
countries, especially in Ethiopia. To this end, there is no direct empirical literature which
related
with effect of debt financing on profitability of commercial banks in Ethiopia. So far, to the
knowledge of the researcher, the effect of debt financing on profitability of commercial banks
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not studied directly. Even the existed study was concentrated on determinates of capital
structure
and financial performance of commercial banks, insurance company, constriction and other
listed
firms. To this end, the researcher interested to put his own contribution on effect of debt
financing on profitability of commercial banks in Ethiopia.
Lastly, the next chapter discusses about the research methodology that are applied for the
study
along with proper justification for the selection of appropriate research methods.