Accounting Project Topics

Budgeting and Budgetary Control and Effective Financial Management in Government Parastatals in Nigeria

Budgeting and Budgetary Control and Effective Financial Management in Government Parastatals in Nigeria

Budgeting and Budgetary Control and Effective Financial Management in Government Parastatals in Nigeria

Chapter One


The purpose of this research work is to examine how budgeting and budgetary has been used as effective tool for organizational planning and control in Guinness Nigeria Plc. Moreover, it will highlight among others the budgeting and budgetary control process and also conduct research into budget implementation in Guinness Nigeria Plc.

Objectives of Budget

  1.   An aid to control revenue.
  2.   To prevent waste.
  3.   To review the economy generally.
  4.   To give an estimate of both revenues and expenditures arranged in recurrent and capital groupings.
  5.   To conform with good business practice by planning for the future.
  6.   To coordinate the various divisions of the economy such as production, marketing, financial, and administrative divisions.

Objectives of Budgetary Control

  1.   To smooth out sensational variations.
  2.   To centralize management control.
  3.   To indicate where action is needed.
  4.   To provide a method of measurement.
  5.   To obtain a more economical use of funds




The success of any organization both government and private, is in its ability to plan, quantify the plan, organize, direct and control its implementation. The relationship between plan and budget is that budget is a quantified plan control is closely involved in planning in the sense that every plan by implication comes with its control procedures. To this extent Morse (1981: pg. 368) states that when all the planning and control topics are fuztapositioned a very dynamic budgeting and performance evaluation cycle appears. The assumption of the cycle starts with the present budget and as the budget period elapses, the actual operational achievements and results are gathered and matched with the present budget in the form of feedback control and performance report. The various levels of controlling managers on receiving these reports burdening on the areas of variation from the responsible managers. 12 The next steps based on these reports managers takes steps to ensure that future plans or budget are enhanced. Budget is a very important managerial model which will no doubt benefit the organization if properly and effectively packaged and operationalized.


The budget is a financial and/or quantitative statement prepared and approved prior to a defined period of time of the policy to be pursued during that period for the purpose of attaining a given objective. It may include income, expenditure and employment of capital. A budget is a detailed plan of operations for some specific future period. It is an estimate prepared in advance of the period to which it applies. It acts as a business barometer as it is a complete programme of activities of the business for the period covered. Budgets are usually, set up in the light of past experience after taking into account the changes that are expected to occur in the future. In the opinion of Anderson (1993), a budget is a financial plan of the projected expenditure and revenue of a unit of government for the ensuring fiscal period. It is a tool for selecting a particular mix of public services within the public sector; it performs the same allocative function that the price mechanism performs in the private sector. The author further opines that a budget is a tool for management direction and control of the work which an agency plans to do. In effect, budget can be termed a work programme converted into monetary term. The author maintained that four characteristics are common in a budget: (a) equilibrium-a balance between expenditure and revenue; (b) comprehensive- the summation of both total revenue and total expenditure; (c) unity of inclusion of all fiscal operations or 16 activities in one budget rather than their dispersion through series of special documents by class of operation; and (d) periodicity-operation on a fixed time basis with budgetary planning at regular intervals Many large parastatals take a highly formal view of planning the budget and make use of a budget manual, which provides a set of guidelines as to who is involved with the budgetary planning and control process. This process is conducted by a budget committee, which organizes the planning and control by bringing together representatives from the main functions of the business; for example, production, sales, administration and is headed by a budget co-coordinator whose job is to administer and oversee the activities of the committee. Whatever the size of the business, it is important, that the planning process begins well before the start of the budget period; this then gives time for budgets to be prepared, reviewed, redrafted, and reviewed again before being finally agreed and submitted to the directors or owners for approval. According to the Chartered Institute of Management Accountants of England and Wales (2010), Budgets are planned for specific sections of the business; these budgets can then be controlled by a budget holder, who may be the manager or supervisor of the specific section. Such budgets include: purchases budget – what the business needs to buy to make/supply the goods it expects to sell; sales budget – what the business expects to sell. Others are production budget – how the business will make/supply the goods it expects 17 to sell; labour budget – the cost of employing the people who will make/supply the goods; debtor budget – how much the business will receive from credit sales; creditor budget – how much the business will pay for credit purchases; and cash budget – how much money will be flowing in and out of the bank account. The end result of the budgeting process is often the production of a master budget, which takes the form of forecast operating statements – forecast trading and profit and loss account – and forecast balance sheet. The master budget is the ‘master plan’ which shows how all the other budgets ‘work together’. The idea of budgeting is one of Nigeria’s inheritances from Britain where it crops up in the struggle between the parliament and the sovereign to control the finances of the Government. According to Omopariola (2003), budgeting as a term was first used in England to describe the white leather bag or pouch that held the seal of the medieval court of the Exchequer. Later, the Minister’s bag containing his proposals for financing government expendirure likewise became known as his budget and the Minister, when presenting his proposals was said to open his budget. The author contended that budget came to be used in the context of the proposals themselves and therefore for any statement of plans and expenditure for a future period whether of public or private bodies. 18 According to Sikkim (2010), Budgeting is a numerical statement expressing the plans, policies and goals of an enterprise for a definite period in the future. It refers to the preparation of budgets in respect of sales, advertisement, production, inventory, materials cost and requirements, labour cost and requirements, expenses, research, capital expenditures and financial plans. Budgeting entails bringing together all segments of the parastatals in a cooperative way to think seriously about the planning. The views get enlarged than getting into contraction. Internal refinement, broad indexation of activities, concentrated details is the essential features in planning. All the staff concerned must be involved in the planning function to make it more successful and purposeful. In the opinion of Oti (2012), individual and collective wisdom should be considered in the preparation of budgets at all levels to make it a workable document for translation into reality. For this, adequate communication at all levels should be established. It is very important that each member of management must have perfect and clear cut knowledge. Budget helps to evaluate and examine whether the members of the management are working in a cooperative way or not.




Research design

The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to examine budgeting and budgetary control and effective financial management in government parastatals in Nigeria

Sources of data collection

Data were collected from two main sources namely:

(i)Primary source and

(ii)Secondary source

Primary source:

These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.

Secondary source:

These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.

Population of the study

Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on the study budgeting and budgetary control and effective financial management in government parastatals in Nigeria. 200 staff of Guinness Nigeria plc in Edo state was selected randomly by the researcher as the population of the study.




Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey.  This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.


The data collected from the respondents were analyzed in tabular form with simple percentage for easy understanding.

A total of 133 (one hundred and thirty three) questionnaires were distributed and 133 questionnaires were returned.





It is important to ascertain that the objective of this study was to ascertain the impact of budgeting and budgetary control and effective financial management in government parastatals in Nigeria

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of budgeting and budgetary control and financial management


Having examined in details the uses and importance of budgeting and budgetary controls in the organization and the role the play towards determining the corporate objectives (profit making) one could rightly conclude that it is indespensible to any business organization. If budget are carefully planned and implemented by management, it could lead to decrease in cost and an increase in revenue. Though budgeting and budgetary controls enhance the efficiency of the organization performance, it should be 56 noted that it is not the magic stick that could replace effectively planned and efficiency implemented at all levels, it will become an essential standard in measuring actual performance. This in above all makes budget an essential tool for management accountability.


Based on the findings of this study, the following conclusions were made to knowledge and budgetary control practices in government parastatals for effective management and performance with a view to instituting reforms that would ensure all year round services to the public. Cash from customers should be received only by authorized staff. Large cash deposits and withdrawals must be made with security escort. Signing of blank cheques must be prohibited and all cheques payments must be restrictively crossed. All special obligations to suppliers and creditors must be approved by the management. All source documents on sales and purchases must be received and issued on every transaction.


Based on the findings, discussions and conclusions of the study, the following recommendations are made:

  1. The adoption of a medium term budgetary framework where arrears and shortfall of expenditure and revenue are carried over to the new budget year within the medium term.
  2. Since due process, accountability and transparency are the hallmarks of a new budgetary system; a budget consultative forum should be convene where stakeholders are kept abreast of the previous budget and what is expected in the new budget.
  3. Provision for private partnership fund (PPF) to receive compulsory deductions from budgetary allocation without any form of arbitrariness and making substantial reduction in recurrent spending and overheads cost through rightsizing of the workforce and the number of parastatals to reduce duplications and unnecessary spending in the system.


  • Adams, R. A. (2002). Public Sector Accounting in Nigeria. Lagos: Corporate Publishers Ventures. 3rd ed.
  • Adedeji, A.A. (2004). Auditing and Investigation. Lagos: Value Analysis Consult.
  • Adedeji, B.A. (2004). Accounting Theory and Regulatory Framework with Questions and Answers. (ACA). Lagos: Value Analysis Consult.
  • Adeniyi, A. A. (2002). Simplified Management Accounting. Lagos: ELTODA ventures Ltd.
  • Akintoye, I. R. (2008). Budget and Budgetary Control for Improved Performance: A consideration for selected food and beverages companies in Nigeria. European Journal of Economics, Finance and Administrative Sciences. 4 (12).
  • Anderson, W. H. (1993). Financing Modern Government Parastatals. Boston; Houghton Mifflin Co.
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