Accounting Project Topics

Relationship Between Budgetary Control and Management Performance

Relationship Between Budgetary Control and Management Performance

Relationship Between Budgetary Control and Management Performance

Chapter One

Research Objectives

The objectives for this study are:

  • To identify the relationship between budgetary control and organizational performance.
  • To identify the problems associated with budgets and budgetary control in an organization.
  • To identify ways to improve organizational performance through budgetary control measures.



In this chapter, a number of issues will be discussed in relation to budgetary controls and the organizational performance.

The study is based on the work done by scholars about budgetary control and performance management with major reference to different writers who presented a variation of views about budgetary controls on performance of business organizations.

While reviewing the literature, the central focus is to establish the missing link that can be filled by the research gap between the previous researchers if any and the current situation.


This section gives the definitions on the issues of the study as identified by different writers.

Budget is defined as a comprehensive and coordinated plan, expressed in financial terms, for the operations and resources of an enterprise for a given future period. It is also a formal statement of the financial resources set aside for carrying out specific activities in a given period of time so as to help and coordinated the activities of organization.

Omolehinwa (1989) defined a budget as a plan of dominant individuals in an organization expressed in monetary terms and subject to constraints imposed by the participants and the environments, indicating how the available resources may be utilized, to achieve whatever the dominant individuals agreed to be the organization‟s priorities.

Lucey  (2003) in his recent definition of a budget defines it as „a quantitative expression of a plan of action prepared for the business as a whole for departments, for functions such as sales and production or for financial resources items such as cash, capital expenditure, man power purchase, and others‟.

According to Kamukama. (1992), a budget is a plan of action expressed in quantitative terms. It is a financial and or quantitative statement prepared and approved prior to a defined period of time for attaining a given organizational objectives.


The Tennessee Board of Regents (2006) defines budgeting as the process whereby the plans of an institutions are translated into an itemized, authorized and systematic plan of operation, expressed in dollars for a given period. Budgeting at both management level and operation level looks at the future and lays down what has to be achieved. Control checks whether the plans are being realized and put into effect corrective measures, where deviation or short fall is occurring(Egan,1997)

Budgeting control.

This is the process by which financial control is exercised by managers preparing budgets for revenues and expenditure for each function of the organization in advance of an accounting period. It involves the continuous comparison of actual performance against the budget to ensure the plan is achieved or to provide a basis for its revision (Collis and Hussey, 2007 )

Budgetary control is defined by the Institute of Cost and Management Accountants (CIMA) as „the establishment of budgets relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results, either to secure by individual action the objective of that policy, or to provide a basis for its revision‟.





In this chapter, we would describe how the study was carried out.

Research design

The research study will be conducted using a case study approach on the basis of time series in particular cross-sectional research. In this case data will be gathered just at once for a period of two weeks in order to answer a research question in form of a snap shot or one shot research. Both qualitative & quantitative research designs methods will be used. Qualitative method will be used to draw information from the accounts records while quantitative method will be used to collect information from the management and the employees of the hotel that will help to analyze & evaluate the effect. This will also give opportunity to the researcher to measure the attitude options of his respondents towards budgetary controls.

Sources of Data

The data for this study were generated from two main sources; Primary sources and secondary sources. The primary sources include questionnaire, interviews and observation. The secondary sources include journals, bulletins, textbooks and the internet.

Population of the study

A study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitute of individuals or elements that are homogeneous in description (Prince Udoyen: 2019). In this study the study population constitute of all 50 employees of Access bank plc in Enugu Metropolis.



This chapter covers data analysis, interpretation and the mode of presentation to support the relationship that exists between budgetary control and improved performance.  The various sections below therefore show the analysis and discussion of data collected from respondents through questionnaires.  The forty-two (42) questionnaires distributed to the various respondents, 25 were filled properly and validated.




This chapter considers the summary of findings, conclusion and policy issues of the study.  The findings are what the researcher found out during the study based on the responses given and interviews conducted.  This also includes the conclusion of the whole work and finally, what the researcher thinks can be done to enhance the performance and development of the Brewery industry.


The first objective of this study was to identify relationship between budgetary controls and the performance of an organization.  Findings from the study show that budgetary control has a strong relationship with organizational performance, because, budget itself forms the basis for decision making, foundation for sound planning, measure for performance of an organization, budgetary controls provide structural support for performance and it also acts as a tool for resource allocation and control (see table 4.2.4).

The above findings strongly  suggest that budgets are greatly linked to performance of an organization, hence, it should not be neglected.  The study also revealed that budgets and budgetary controls have a greater link to the performance of an organization because, it provide structural support for performance.  If the power of budgetary controls are not fully utilized or recognized by an organization, performance may not be fully maximized, as resources may be allocated and channelled to un-profitable projects/ventures.

The second objective of this study was to identify the problems associated with budgetary controls in an organization.  The study revealed that the biggest challenge facing budgetary control is that the organization’s managers do not fully understand or appreciate the importance of budgets/budgetary controls in the organization (see table 4.6).  other problems identified are:  inadequate/in-complete financial records, lack of integration with overall organization’s strategy, kacj of financial experts, and overestimation of cost (see table 4.2.6).  If these problems persist for long, it could lead to the organization performing below  expectation.  Losses may realised in the long run if organization do not address budgetary control problems effectively.  The third objective of the study was to identify ways of improving the performance of an organization.

Findings revealed that in actual fact, the performance of an organization can be improved (see table 4.2.9).  The study also revealed that the performance of an organization can be improved if budgets are linked with the overall organizational strategies.  Keeping proper and complete financial records  will also improve performance.  Others are: using budgets as bench marks, getting more experienced and skilled financial analyst, revising and debating on past, current and future budgets, and creating an enabling environment for effective and efficient budgetary control.  All of these solutions will go a long way in improving the performance of an organization if adopted.


This study conducted a preliminary investigation of budgetary control and performance of an organization, using Access bank plc as a case study.  The researcher reviewed previous literature and contributions to this study, the problems associated with budgetary control, various ways to improve performance through budgetary controls, various ways to improve performance through budgetary controls in previous and recent times, among other salient issues relevant to the subject of study.  The researcher found out that the performance of some organization in Nigeria leaves much to be desired, as a result of the various problems associated with budgets and budgetary control systems in some organization.  However, an empirical investigation was undertaken, using the descriptive research design, to aid easy understanding of the layman who is also expected to maximize the advantage of the result-oriented budgetary control system.  Following our findings, the researchers hereby advise mangers and business operators to pay more attention to their budgetary control systems, while those without any should endeavour to ensure the set-up of a result-oriented system as it goes a long way in repositioning businesses and organizations from their creeping performance level to an improved and high capacity utilization point.


After a preliminary investigation of how budgetary control are linked to the performance of an organization, the researcher through her findings and analysis, came up with the following recommendations to help organizations maximise performance:

  • First, organizations must recognize that budgets and budgetary controls are heavily linked to organizational performance.  Managers should endeavour to fully utilize the budget resource, since it has the power to completely transform the organization.  Organizations without budgetary control systems should endeavour to put it in place in their organization.
  • Second, organizations must at all times link their budgets to their overall corporate strategies and goals.  Budgets/budgetary controls must always be prepared in a strategically manner to fit into the organization’s goals and aims.  Budgets should not be prepared as a mere formality or function.
  • Third, accurate and complete financial records must be always kept by the organization.  Without proper financial records, organizations may not be able to achieve maximum performance.  Budgets will never be a useful tool for improved performance if financial estimates and records are in-complete or in-accurate.
  • Fourth, budgets/budgetary controls should be used as an internal control measure to check and measure performance in an organisation.  As observed by the study, budgets/budgetary controls form an integral part of an organization’s internal control, hence, it should always be used to control most of the organization’s financial operations and activities.
  • Finally, budgets/budgetary control should be made the sole tool and mechanism for resource allocation and control. All resources needed for a project should be authorized by the budget of the organization, as this will enhance greater accountability and transparency in the organization.


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