AN assessment OF BUDGET AND BUDGETARY control IN NIGERIA COMMERCIAL BANKS
AN ASSESSMENT OF BUDGET AND BUDGETARY CONTROL IN NIGERIA COMMERCIAL BANKS
1.1 Background Of The Study
Every organisation sets out to attain one or two goals, which are frequently refined through the planning process. The planning process entails establishing objectives, examining various methods of reaching them, and directing on the best ways to achieve them in the future, which raises the issue of budgeting.
As a result, every business organisation employs the budgeting principle and concept as a tool to achieve management performance efficiency and effectiveness in order to meet a set of goals.
According to Fiomgen, James M. (1973:144), “a budget is a comprehensive and coordinated plan expressed in financial terms, for an enterprise's operations and resources to some specific period in the future.”
M.O. Peter (1984:28) went on to define a budget as simply a financial and or quantitative statement prepared prior to a set period of time of the policy to be pursued with the intention of achieving a specific goal.
On the other hand, it can be thought of as a financial and quantitative strategy that includes income, spending, and capital utilisation.
Budgeting is the deliberate articulation of an organization's plan for a specific time period. As such, a budget can also be defined as a monetary plan that is produced and authorised ahead of time, usually indicating the objectives to be pursued throughout the period and the resources to be used in reaching those objectives.
It is commonly understood that without a plan control, it is not possible, and hence budgeting is an essential component of planning.
Budgeting's fundamental components are as follows:
1. It is a thorough and well-coordinated plan.
2. It is expressed in monetary terms.
3. It is a long-term strategy for the firm's operations and resources.
4. It is a strategy for a specified time period.
As a result, it is critical for any organization's management to have a plan of action in place to protect profit on a constant basis. It is quite rare for an organisation to be successful without making plans for the future.
Since budgeting is an essential component of efficient planning, it will invariably decline. An aid to management in the process of economising the usage of business resources and making more efficient decisions.
1.2 Statement of the Problem
In order for an organisation to achieve its goals effectively, it must have efficient budgeting and financial control. In the absence of adequate planning and financial control in the organisation, officers may include expenditure without consent, resulting in a deficit budget.
This study is intended to determine if money deposit banks (in particular, Union Bank) adhere to the requirements established in their internal control.
1.3 objective of The study
The researcher seeks to identify and emphasise the effectiveness and certain problems associated in the preparation and application of budgeting and budgetary management in the banking industry,
with particular reference to Union Bank of Nigeria plc, in this study. In order to offer ways and means of improving the system's functioning and effectiveness.
There is a strong view that good budgeting and budgetary management are extremely valuable to money deposit banks. Planning and control are critical in the money deposit banking industry.
The following are the study's objectives:
1. understanding the various types of budgets and budgetary controls in use
2. Determine the efficiency and efficacy of the budgeting and budgetary control system.
3. Determine whether the budgeting and budgetary management system has resulted in an improvement in the money deposit banking system.
4. To decide whether or not a budget and financial control are worthwhile.
5. To draw attention to the problem of budgeting and budgetary control, as well as potential solutions.
1.4 research Hypothesis
Some hypotheses have been proposed in order to genuinely measure the role of budgeting and budgetary management to managerial decision making.
H0:Budgeting and budgetary control are beneficial in establishing greater financial control.
HI: It has been demonstrated that budgeting and budgetary control are ineffective.
1. Does the budgeting, budgetary, and budgetary control procedure increase bank profit?
2. Do the central bank's policies and guidelines have an impact on the bank's budget?
3. Do you see control as a significant value to your bank?
4. How is budgeting and budgetary control useful in the banking industry?
1.5 significance of The study
The importance of this research is to improve proper budgeting and budgetary control in the money deposit bank system.
Many businesses and organisations have failed due to management incompetence and inadequate implementation of the organization's policies.
This is mainly owing to the fact that most organisations are hesitant to engage in effective budget planning, which has resulted in a lack of projections and, finally, unforeseen circumstances override the organization's policies; this is why a written up is provided.
When this article becomes more sophisticated. Many organisations will recognise that budgeting and financial control are critical to achieving the organization's goals.
1.6 The scope of the research
For the purposes of this study, the Union Bank of Nigeria plc has been chosen as a case study.
A study at budgetary control reveals that it includes the planning phase. budgeted based on this plan, recording and comparing actual performance to the budgeted.
1.7 The Historical Background of the Case Study
Union Bank is a big money deposit bank that serves individuals, small and medium-sized businesses, and large corporations and organisations.
In July 2009, it was ranked the 556th largest bank in the world and the 14th largest bank in Africa. As of June 2012, the bank's asset base was estimated to be US$6.784 billion (Nown 1.049 trillion): the shareholder equity at the time was estimated to be US$1.22 billion (NGN. 188.4 billion).
Union Homes Savings and Loans Plc
Union Trustees Limited is a limited liability company.
Union Insurance Company Limited
– Benin International Banque Contonon
– Considerate discounts are limited.
HFC Bank Ghana Limited is a Ghanaian bank.
– A one-of-a-kind venture capital management firm.
The history of Union Bank of Nigeria Plc begins with the establishment of a colonial bank in Lagos, Jos, and Port Harcourt in 1917. Backlogs Bank purchased the bank in 1925, and the name was changed to Barclays Bank DCO (Dominion colonial and overseas).
By 1954, the bank had expanded and expanded fast over the years, with branches in practically every section of the country. In 1918, for example, Kano, Zaria, Ibadan, and Ebute meta branches were established. The Aba branch first opened its doors in 1926. Ijebu-odu was founded in 1931, Bida in 1953, Katsina in 1955, and Sepels in 1958.
As a result of the Nigeria enterprise promotion degrees of 1972 and 1947, the federal government of Nigeria bought 52% of the bank's shares, leaving 40% of Barclays bank international limited (new Barclays bank plc) to the Nigerian public, while the remaining 8% was acquired by the Nigerian public.
Following this outcome, Barclays Bank plc sold 50% of its shares to Nigeria, lowering the quality holding to 20%. The name of the bank was changed to Union Bank of Nigeria Limited. In order to be replaced, a new ownership structure, i.e.
Nigeria's federal government holds 55% of the vote.
Nigerians in the private sector invest 28% of their income.
20% Barclays Bank plc
With the new name, the bank is no longer a subsidiary of Barclays Bank plc, while Barclays Bank plc continues to provide technical and correspondent services as before.
Today, the bank has over 225 branches around the country, as well as branches in London and Johannesburg. The bank also employs over 11,300 people, with only five (5) of them being expatriates in specialised fields.
With five training centres (7,000 in Lagos, Yaba, and Ijora, and one each in Jos, Zaira, and Port-Harcourt), the bank is indeed Nigeria's greatest employer of labour in the banking industry.
1.8 Definitions of Terms
Budget: A complete and coordinated plan articulated in financial terms for an enterprise's operation and resources for some future period expressed in quantitative and financial terms. This is to imply that budgeting is the process of creating a budget.
Budgeting control: A cost-control system that comprises budget preparation, department coordination, setting, comparing actual performance, and acting on the results to achieve maximum profitability.
Flexible budget: A budget that recognises the distinction between fixed and variable costs in relation to changes in output or turnover. It is intended to charge in accordance with fluctuations.