AN ASSESSMENT OF BUDGET AND BUDGETARY
CONTROL IN NIGERIA COMMERCIAL BANKS
(A case study of Union Bank of Nigeria Plc,
Kaduna
TABLE OF CONTENT
Cover
Page – – – – – – – – – – i
Title
page – – – – – – – – – – – ii
Declaration
page – – – – – – – – iii
Approval
page – – – – – – – – – iv
Dedication
page – – – – – – – – – v
Acknowledgement
– – – – – – – – – vi
Abstract – – – – – – – – – – vii
Table
of contents – – – – – – – – – viii
CHAPTER ONE
1.0 Introduction
– – – – – – – – – 1
1.1 Background of the Study – – – – – – – 1
1.2 Statements of the Problems – – – – – – – 3
1.3 Objectives of the Study – – – – – – – 4
1.4 Research Hypothesis/Questions – – – – – – 4
1.5 Significance of the Study – – – – – – – 5
1.6 Scope of the Study – – – – – – – – 5
1.7 Historical Background of the Case Study – – – – – 6
1.8 Definitions of Terms – – – – – – – 8
Chapter two: Literature
Review
2.0 Literature review – – – – — – – –
2.1 Concept of Budgetary – – – – – – – – 10
2.2 Geographical spread of union Bank of Nigeria Plc
Activities – 11
2.3 Purpose of budgeting – – – – – – – 18
2.4 Essential of budgetary- – – – – – – – 19
2.5Capital secreting of Union bank of Nigeria – – – – 21
2.6 Principle budget factor- – – – – – – – 22
2.7 Usefulness of budgeting – – – – – – – 22
2.8 Budget committee – – – – – – – – 23
2.9 Budgetary
control – – – – – – – –
2.10 The concept of
control in Budgetary – – – – –
2.11 Usefulness of
budgetary control – – – – – –
CHAPTER THREE
2.0 Research
Methodology – – – – – – – – 27
3.1 Introductions – – – – – – – – – 27
3.2 Population and Sample Size – – – – – – 28
3.3 Sampling Techniques – – – – – – – – 28
3.4 Sources and Method of Data Collection – – – – 29
3.5 Method of Data Analysis – – – – – – 31
3.6 Justification for the Choice – – – – – – – 31
CHAPTER FOUR:
3.0Data
Presentation, Analysis and Interpretation
4.1 Introductions – – – – – – – – – 32
4.2 Data Presentation
and analysis- – – – – – 33
4.3 Data Analysis and interpretation- – – – – – 39
4.4 Testing of Hypothesis/Question and Interpretation – – 41
4.5 Summary of Finding – – – – – – – 47
CHAPTER FIVE:
5.0Summary,
Conclusion and Recommendation
5.1 Summary – – – – – – – – – 49
5.2 Conclusion – – – – – – – – – 50
5.3 Limitations of the Study – – – – – – – 51
5.4 Recommendations – – – – – – – – 51
References – – – – – – – – – –
Appendix/appendices
– – – – – – – 53
CHAPTER ONE
INTRODUCTION
1.1
Background
of the study
Every
organization set out to achieve one objective or two other such objectives are
usually streamlined through the planning process. In planning process involves
setting out objectives, examine the various ways of achieving them and
directing on the best ways future it brings about the problem of budgeting.
Consequently,
every business organization employs the principle and concept of budgeting as a
tool in order to attain management performance efficiency and effectiveness to
achieve set of goals.
According
to Fiomgen, James M. (1973:144)” a budget is a comprehensive and coordinated
plan expressed in financial terms, for the operations and resources of an
enterprise to some specific period in the future.
M.O.
Peter (1984:28) went further to defined
a budget as simply as financial and or quantitative statement prepared prior to
a defined period of time of the policy to be pursued for the propose of
attaining a given objective. On the other hand, it may be regarded as a plan
expressed in financial and quantitative terms which may involve income,
expenditure and the use of capital.
Budgeting
is a conscious articulation of plan of an organization for a given time period.
As such a budget can also be a plan expressed in monetary terms prepared and
approved prior to a given period of time usually stating the objectives to be
pursued within the period and the resources to be employed in achieving those
objective. It is a well known fact that without a plan control it is not
possible and as such budgeting is an integral part of planning.
The
basic element of budgeting are:-
1. It
is a comprehensive and co-ordination plan
2. It
is expressed in financial terms
3. It
is a future plan for the firms
operations and resources
4. It
is a plan for a specific period
It is therefore imperative for management of any organization
to have plan of actions as a means of protecting profit in a continuous basis.
It is very rare for an organization to operate successfully without planning
for the future. Since any integral part of effective planning is budgeting
which invariable is interned to fall. An assist management in the process of
economizing the use of business resources and efficient decision making
process.
1.2
Statement
of the problem
For
an organization to achieve its objective effectively there has to be efficient
budgeting and budgetary control in the organization. Lack of proper budgeting
and budgetary control in the organization may result to officers including
expenditure without approval which may subsequently lead to deficit budget.
This study is designed to find out whether money deposit bank (union Bank
particular) comply with as specified in their internal control.
1.3
Objective
of the study
In
this project, the researcher intends to identify and highlighting the
effectiveness and some problem involved in the preparation and application of
budgeting and budgetary control in the bank industry with special references to
union bank of Nigeria plc. With a view to suggesting ways and means of
improving the operations and effectiveness of the system.
There
is strong belief that good operating of budgeting and budgetary control is of
great value to money deposit bank planning and control are indispensible in the
money deposit banking industry.
The
objectives of the study are the following:
1. To
know the type of budgets and budgetary control in operation
2. To
ascertain the efficiency and effectiveness of the system of budgeting and
budgetary control
3. To
determine whether the system of budgeting and budgetary control has led to
improvement in money deposit banking system
4. To
determine it budget and budgetary control are worth while.
5. To
highlight the problem of budgeting and budgetary control and ways of improving
on them.
1.4
Research
hypothesis
In
order to realistically assess the contribution of budgeting and budgetary
control to managerial decision making, some hypothesis have been postulated
H0:That
budgeting and budgetary control are useful established better financial control
HI:
That budgeting and budgetary control are not useful established better
financial control
Research
questions
1.
Does the process of
budgeting and budgetary and budgetary control enhance the bank profit?
2.
Does the central bank
policies and guideline affect the bank budget?
3.
Do you consider control as
a great benefit to your bank?
4.
How does budgeting and
budgetary control useful in banking sector?
1.5 Significant
of the study
The
significance of this study is to enhancing proper budgeting and budgetary
control in money deposit bank system.
Many
companies or organization have folded up because of incompetency of the
management body and also poor implementation of the policies of the
organization. This is usually due to the fact that most organization find it reluctant
to engage in proper budget planning this
has led to lack of predictions and eventually unforeseen circumstance override
the policies of the organization; this is why written up is provided.
When
this write up is eventually complex. Many organization will realize that
budgeting and budgetary control are priority for the successfully achievement
of the organization objective.
1.6
Scope
of the study
The
union bank of Nigeria plc has been chosen as a case study for the purpose of
this research.
A
look at budgetary control shows that it encompasses the process of planning.
The preparation of budgeting based on this plan, recording and comparing actual
performance with that budgeting.
1.7
Historical
background of the case study
Union
bank is a large money deposit bank, serving individuals, small and medium sized
companies as well as large corporations and organizations. In July 2009, it was
raked the 556th largest bank in the world and the 14th
largest bank in African as of June 2012, the bank’s asses base was estimated at US$6.784 billion (Nown 1.049 trillion): The
shareholder equity at that time was estimated at U$$ 1.22 billion (NGN. 188.4
billion) the bank has several subsidiary companies and non-subsidiary
affiliations.
Subsidiary
– Union
Homes savings and loans plc
– Union
Trustees Limited
– Union
Assurance company limited
– Banque
international due Benin contonon
Affiliated company
– Considerate
discounts limited
– HFC
Bank Ghana Limited
– Unique
venture capital management company.
The history of union bank of Nigeria plc with the
opening of the colonial bank official in Lagos, Jos and Port-harcourt in 1917.
In 1925, the bank acquired by backlogs
bank and its name was change to Barclays bank DCO (Dominion colonial and
overseas).
The bank developed and grew rapidly over the years by
1954 branches had been opened in almost all parts of the country. For instance,
Kano, Zaria, Ibadan and Ebute meta branches were opened in 1918. Aba branch
opened in 1926. Ijebu-odu in 1931 Bida in 1953, Katsina in 1955 Sepels or 1958.
As a result of the Nigeria enterprises promotion degrees
of 1972 and 1947, the federal government of Nigeria acquired 52% the banks
shares leaving 40% of Barclays bank international limited (new Barclays bank
plc) while the remaining 8% was taken up by the Nigeria public.
Barclays bank plc sold 50% of its shares to Nigeria in
1979, thus reducing the quality holding to 20% following this development. The
bank name was changed to union bank of Nigeria ltd. To replaced than new
ownership structure i.e.
Federal government of Nigeria 55%
Private Nigeria invest 28%
Barclay bank plc 20%
With the new name the bank is now an indigenous bank and
no longer or subsidiary of Barclays bank plc, although Barclays bank plc still
continued to offer technical and correspondent services as in the past.
Today the bank has over 225 branches spread all over the
country and a branch in the city of London and Johannesburg the bank also have
a staff of over 11,300 employees out of which only five (5) are expatriate and
in specialized field. The bank is indeed the largest employee of labour in the
banking industry in Nigeria and with five training centre (7,000 in Lagos Yaba
and Ijora one each in Jos, Zaira and Port-Harcourt.
1.8
Definition
of Terms
Budget:
A comprehensive and co-ordinated plan expressed in financial terms for the
operation and resources of an enterprise for some specific period in the future
expressed in quantitative and financial terms. This is to say that budgeting is
a process of budget formulation.
Budgeting
control: A system of controlling cost which includes the preparation of budgets
co-ordinating the department and establishing, comparing actual performance and
acting upon result to achieve maximum profitability.
Flexible
budge: It is a budget, which recognized the difference between fixed and
variable cost in relation to fluctuation in output or turnover. Its designed to
charge appropriately with fluctuations.