Full Project on Budgeting and Budgetory Control

CHAPTER ONE

RESEARCH INTRODUCTION AND CONTEXT OF THE STUDY

1. 0 Background of the Study

Most organizations have different sub-units, all working towards the set organizational goals. It is the responsibility of managers to ensure that, the actions of the management are in line with the corporate objective. One of the best ways of achieving such coordination is by preparing a detailed plan of action which will incorporate all the various sub-units relating to a future time period. This plan will set out clearly what is required from each sub-unit within the given period of time.

Finance is the life blood of a business. Therefore, financial planning is of utmost significance to a business. In spite of the good financial plan, the desired result may not be achieved if there is no effective control to ensure its implementation. Various businesses face problems in attaining the optimum level of operations for their operations, mainly because, they can not ascertain which level of operation is optimum. In a competitive environment, a business which is not able to ascertain and maintain an optimum level of operation is likely to lose to its competitors.

According to Drury, (1996) a budget is a financial and a quantitative statement prepared prior to a defined period of time of the policy to be pursued for the purpose of attaining a given objective. Nweze (2004) defines a budget as a plan quantified in monetary terms, prepared and approved prior to a defined period of time, usually showing planned income to be generated and or expenditure to be incurred during that period and the capital to be employed to attain a given objective. Nweze (2004) defines a budget as a plan quantified in monetary terms, prepared and approved prior to a defined period of time, usually showing planned income to be generated and or expenditure to be incurred during that period and the capital to be employed to attain a given objective.

Furthermore a budget is an attempt made at the...