CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
It has become a normal thing for us as citizens of a country like Nigeria to wait for, the president to release the yearly national budgets, but very little of us even know what the budget actually means. A budget is an estimate or plan of income and expenditure that helps most companies, country and Organizations in taking care of projects mapped out. For this reason it is of importance that there should be a reliable system of budget analysis. A good budget analysis is a process of breaking the whole budget into separate units or parts with the sole aim of identifying and studying the structure of each part of the budgets, so that the budget would be error free, and in case of error provide possible solutions to them (Chandra, 2015).
A look at a brief history of budget. In January 1993 the African concord newspaper stated the budgets started in Britain when the then king asked for reports on the income and expenditure of the country in order to check fraudulent activities of their government, this was as a result of the countries growing population inability of those in charge to specify a given project at a given place and time, uncompleted project which were paid for and complaints laid by citizens of Britain were all the things that brought about the need for budgets (Arthus et al. 2012).
In other-word a budget helps managers manage and it can be said that having a budget has more advantages than it has any disadvantages.However the fact remains that not-withstanding the careful planning and execution of an organization’s budgets in Nigeria, the targets are still hardly met by any one organization while most budget even end up not being implemented at all. This work therefore, attempts to take a look at the methods adopted for budgets analysis or would be likely adopted for budgets analysis in an. Organization like the Anambra state ministry of finance.
- Statement of The Problem
It is easy to note that budget analysis entails large volume of work and a whole lot of calculation. This makes the job very difficult a task to go by the method of information storage and retrieval processing of accumulated figures is not an easy task in places were there are no sophisticated method of budget analysis. Inefficient and insufficient records will always result to a poor and inaccurate budget. The fact that humans tackle the ambiguous calculations and complex allocation involved in budget analysis easily without the help from computer this is also a delay factor for the releasing of an accurate budget statement. This work will look into reasons why many budget ends not to work and my case study will be the Anambra ministry of finance and I will also try to derive a good computer system that will take care of these problems.
- Research Questions
- How can the method adopted by the ministry of finance on budgeting be termed?
- In what ways can approaches to budgets analysis be divided?
- To what extent in the stated period have budget targets been met?
- How can the problems usually faced by the organization in managing their finances be resolved?
- Aims and Objectives
The aim of this study is to design and implement a budget analysis system for Anambra State ministry of finance.
The specific objectives of this study are to:
- Consider the method adopted by the ministry of finance on budgeting.
- Check and determine their approaches to budgets analysis.
- Find out if all budget targets have been meet during the stated period.
- Determine the problems usually faced by the organization in managing their finances.
- Design a new system that will take care of the above problems and lastly set up a sample budget for future use.
- Significance of the Study
Budget analysis is very important with our everyday life as it is also very important for us as humans to have a daily budget which guides our spending so also it is important at the end of the day to give an account of such spending which is in order ward an analysis of our expenditure. This is an important move for every organization. For an organization to survive it must plan ahead the amount it will receive and how it will allocate the money to different departments of such an organization and how such money should be spent. This is budgeting and the analysis is just a step to make sure it works. Hence this budget analysis should be of immense importance to government, institutions and even individuals. For government organization like the given case study, this work could serve as an eye opener to them by carefully exposing that problems inherent in budgets analysis and recommending the solution this would help them to avoid wasteful spending through budgets deficits.To private organization or companies this would also be of immense help use to them as they adjust themselves to the defect of economy by careful planning execution. To individuals and shareholder in companies this work will enable them know why companies and governments have tended to spend more than they budgeted for, while it will also act as a bedrock for other kinds of work similar to this on embarked by other researchers.
1.6 Scope of the Study
The research covers areas in budget analysis; this includes braking down of budget into units. Identifying and studying the structure and allocation of money to each department in the organization.
1.7 Limitation of the Study
Frequently, where budget are coordinated are compiled some modifications are need individually. My limitation in this work would be the bureaucratic system of government which we use here in Nigeria as most of my work would be based on assumptions, cause on visiting my case study almost no one was ready for questions to help me in my work and I was frequently asked for appointment letter and referred from one person to the other for answers to my questions. Budget segments may appear reasonable in the light of committed and planned work, but when the individual segment are super-imposed to make a composite picture the total budget found to be of keeping with expectation.