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1.1 BACKGROUND OF THE STUDY
Every organization set out to achieve one objective or two other such objectives are usually streamlined through the planning process. In planning process involves setting out objectives, examine the various ways of achieving them and directing on the best ways future it brings about the problem of budgeting. Consequently, every business organization employs the principle and concept of budgeting as a tool in order to attain management performance efficiency and effectiveness to achieve set of goals.
According to Fiomgen, James M. (2013)” a budget is a comprehensive and coordinated plan expressed in financial terms, for the operations and resources of an enterprise to some specific period in the future. M.O. Peter (2014) went further to defined a budget as simply as financial and or quantitative statement prepared prior to a defined period of time of the policy to be pursued for the propose of attaining a given objective. On the other hand, it may be regarded as a plan expressed in financial and quantitative terms which may involve income, expenditure and the use of capital.
Budgeting is a conscious articulation of plan of an organization for a given time period. As such a budget can also be a plan expressed in monetary terms prepared and approved prior to a given period of time usually stating the objectives to be pursued within the period and the resources to be employed in achieving those objective. It is a well known fact that without a plan control it is not possible and as such budgeting is an integral part of planning.
The basic element of budgeting are:-
1. It is a comprehensive and co-ordination plan
2. It is expressed in financial terms
3. It is a future plan for the firms operations and resources
4. It is a plan for a specific period
It is therefore imperative for management of any organization to have plan of actions as a means of protecting profit in a continuous basis. It is very rare for an organization to operate successfully without planning for the future. Since any integral part of effective planning is budgeting which invariable is interned to fall. An assist management in the process of economizing the use of business resources and efficient decision making process.
1.2 STATEMENT OF THE PROBLEM
For an organization to achieve its objective effectively there has to be efficient budgeting and budgetary control in the organization. Lack of proper budgeting and budgetary control in the organization may result to officers including expenditure without approval which may subsequently lead to deficit budget. This study is designed to find out whether money deposit bank (union Bank particular) comply with as specified in their internal control.
1.3 OBJECTIVE OF THE STUDY
In this project, the researcher intends to identify and highlighting the effectiveness and some problem involved in the preparation and application of budgeting and budgetary control in the bank industry with special references to union bank of Nigeria plc. With a view to suggesting ways and means of improving the operations and effectiveness of the system. There is strong belief that good operating of budgeting and budgetary control is of great value to money deposit bank planning and control are indispensible in the money deposit banking industry.
The objectives of the study are the following:
1. To know the type of budgets and budgetary control in operation
2. To ascertain the efficiency and effectiveness of the system of budgeting and budgetary control
3. To determine whether the system of budgeting and budgetary control has led to improvement in money deposit banking system
4. To determine it budget and budgetary control are worth while.
5. To highlight the problem of budgeting and budgetary control and ways of improving on them.
1.4 RESEARCH HYPOTHESIS
In order to realistically assess the contribution of budgeting and budgetary control to managerial decision making, some hypothesis have been postulated
H0:That budgeting and budgetary control are useful established better financial control
HI: That budgeting and budgetary control are not useful established better financial control.
1.5 RESEARCH QUESTIONS
- Does the process of budgeting and budgetary and budgetary control enhance the bank profit?
2. Does the central bank policies and guideline affect the bank budget?
3. Do you consider control as a great benefit to your bank?
4. How does budgeting and budgetary control useful in banking sector?
1.6 SIGNIFICANT OF THE STUDY
The significance of this study is to enhancing proper budgeting and budgetary control in money deposit bank system. Many companies or organization have folded up because of incompetency of the management body and also poor implementation of the policies of the organization. This is usually due to the fact that most organization find it reluctant to engage in proper budget planning this has led to lack of predictions and eventually unforeseen circumstance override the policies of the organization; this is why written up is provided. When this write up is eventually complex. Many organization will realize that budgeting and budgetary control are priority for the successfully achievement of the organization objective.
1.7 SCOPE OF THE STUDY
The union bank of Nigeria plc has been chosen as a case study for the purpose of this research. A look at budgetary control shows that it encompasses the process of planning. The preparation of budgeting based on this plan, recording and comparing actual performance with that budgeting.
1.8 HISTORICAL BACKGROUND OF THE CASE STUDY
Union bank is a large money deposit bank, serving individuals, small and medium sized companies as well as large corporations and organizations. In July 2009, it was raked the 556th largest bank in the world and the 14th largest bank in African as of June 2012, the bank’s asses base was estimated at US$6.784 billion (Nown 1.049 trillion): The shareholder equity at that time was estimated at U$$ 1.22 billion (NGN. 188.4 billion) the bank has several subsidiary companies and non-subsidiary affiliations.
– Union Homes savings and loans plc
– Union Trustees Limited
– Union Assurance company limited
– Banque international due Benin contonon
– Considerate discounts limited
– HFC Bank Ghana Limited
– Unique venture capital management company.
The history of union bank of Nigeria plc with the opening of the colonial bank official in Lagos, Jos and Port-harcourt in 1917. In 1925, the bank acquired by backlogs bank and its name was change to Barclays bank DCO (Dominion colonial and overseas). The bank developed and grew rapidly over the years by 1954 branches had been opened in almost all parts of the country. For instance, Kano, Zaria, Ibadan and Ebute meta branches were opened in 1918. Aba branch opened in 1926. Ijebu-odu in 1931 Bida in 1953, Katsina in 1955 Sepels or 1958.
As a result of the Nigeria enterprises promotion degrees of 1972 and 1947, the federal government of Nigeria acquired 52% the banks shares leaving 40% of Barclays bank international limited (new Barclays bank plc) while the remaining 8% was taken up by the Nigeria public. Barclays bank plc sold 50% of its shares to Nigeria in 1979, thus reducing the quality holding to 20% following this development. The bank name was changed to union bank of Nigeria ltd. To replaced than new ownership structure i.e.
Federal government of Nigeria 55%
Private Nigeria invest 28%
Barclay bank plc 20%
With the new name the bank is now an indigenous bank and no longer or subsidiary of Barclays bank plc, although Barclays bank plc still continued to offer technical and correspondent services as in the past. Today the bank has over 225 branches spread all over the country and a branch in the city of London and Johannesburg the bank also have a staff of over 11,300 employees out of which only five (5) are expatriate and in specialized field. The bank is indeed the largest employee of labour in the banking industry in Nigeria and with five training centre (7,000 in Lagos Yaba and Ijora one each in Jos, Zaira and Port-Harcourt.
1.9 Definition of Terms
Budget: A comprehensive and co-ordinated plan expressed in financial terms for the operation and resources of an enterprise for some specific period in the future expressed in quantitative and financial terms. This is to say that budgeting is a process of budget formulation.
Budgeting control: A system of controlling cost which includes the preparation of budgets co-ordinating the department and establishing, comparing actual performance and acting upon result to achieve maximum profitability.
Flexible budge: It is a budget, which recognized the difference between fixed and variable cost in relation to fluctuation in output or turnover. Its designed to charge appropriately with fluctuations.
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