AN EVALUATION OF EFFECTIVENESS OF
FINANCIAL PLANNING AND CONTROL IN THE BANKING
SECTOR
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Planning is required in all forms of decision making in order
to ensure an effective and efficient utilization of available scarce resources.
The resources to satisfy the basic needs of the people and
relatively scarce in relation to their demand. Therefore, there is need to plan
for available resources in such a way that maximum satisfaction could be
attained with minimum resources. In planning consideration has to be given to
the form of control that should be exercised to ensure that the plan overall
attains its objectives.
Finance is the most vital part of process of banking. This is
because the level of success a bank achieves is related to the size of its
financial resource. Even with the most liberal manpower, a bank cannot register
any appreciable position. So, financing of resources in bank does not only mean
the acquisition of resources but also efficient planning, management and
allocation of this resources and valuation of the capital of the organizational
objectives or goals.
In any business sector, an adequate balance and flow cash is
essential. A business must therefore, be able to meet its commitment at all
times, for this a bank must plan its capital requirements well in advances to
ensure that it can get the funds it needs and when it needs them most.
A bank cannot afford to stand still. It needs cash for its
daily transactions. It is essential for any bank to effect improvement to introduce other
means of sourcing funds, and to expand where conditions are favorable.
All these cannot be achieved without effective financial
planning and control. A bank definitely does not remain static, there is always
the tendency to go forward or backward but not neglected to stagnancy. The
direction the bank takes therefore depends on the effectiveness of the
financial management planning and control team.
More than ever before, a bank should mobilize its financial
resources for the attainment of their corporate goals. Financial and material
wastes cannot be afforded in this time of economic recession whatever the
nature of the bank, the same principles are followed regarding financial
planning and control.
A lot of banks liquidate due to resources today. Had the
money realized at the time of economic boom been invested wisely, the country
would still have been comfortable today inspite of the fall in the oil prices.
This is what exactly happens to some organization where knife and flesh are
given solely to one who does not know anything about management considering the
investment of the country surplus money made from profitable project and
venture which would have been beneficial in the future for the improvement of
telecommunication, settling upon research, Development project (R and D) and
institute for both engineering and Agricultural field as well as improving
electricity supply in the entire economy. Instead the resources are wasted on
grandiose project for some individuals, personal benefits. This paramount in
most of the disable organizations, where finance are embarked upon without
planning within the short time may lead to obsolesce, deterioration etc.
1.2 STATEMENT
OF THE PROBLEM
It is very important to emphatically stress the importance of
planning and control in today banking section, which includes the followings:
a.
In choosing rationally money among
risky endeavours.
b.
It provides us with a bench mark or
print reference against which accomplishment can be measured and also focuses
attention on the objective of the organization.
The paramount consideration in business is profit without it,
there can be no business because the essential discipline in business is profit
planning and control and this requires the application of budgeting procedure.
1.6 SCOPE
OF THE STUDY
The topic “An Evaluation Of The Effectiveness Of Financial
Planning And Control In The Banking Sector”, is a very wide one that requires a
lot of resource work. In view of these facts, the researcher has decided to
limit the scope and to deal on how resources are being procured, effectively
and efficiently managed (i.e. how assets and liabilities of an organization are
being managed how are they being allocated and valued in an overall basis for
the achievement of organizational objectives and goals. We shall look at fixed
Assets management, working capital management, internal control, budget and
budgetary controls in this respect.
1.7 HISTORICAL
BACKGROUND OF THE STUDY
The background of the study is to carry out an evaluation of
effectiveness of financial planning and control and budgetary control system in
service industry. It deals with how service industry like first Bank of Nigeria
Plc secure adequate means of financing, provide complete method or procedure
that will allotted for the bank budgetary control system and ensuring re cords
as far as possible accurately the reliability of accounting records, the
promotion of operational efficiency policies and adherence to management and
administrative policies.
In planning, consideration has to be given to the form of
control that should exercised to ensure that the plan attain the objective of
the resource being carried out.
Financial is the most vital part of the process of banking,
the objective of the study is primarily aiming at ascertaining the effectiveness
of the financial management, planning and control in banking sector or
otherwise.
The research collection would be in a primary and secondary form of data collection; the project will hope to
come out some out come: –
–
Improves the manpower of the organization
so as to gear the bank management towards effective financial planning and
control.
–
Internal control system should be
overhauled to ensure appropriate use of resources
–
Determining the bank investment
needs and choices has given it growth objectives and overall strategy.
–
Analyzing the consequences of its
financial plans for the long term health and survival to banks
–
Forecasting the bank revenue and
expenditure and needs for funds based on it investment where financial planning
is defective.
This project work shall comprise of five chapters, chapter
one shall deal with the background of the study, statement of problems,
objectives of the study etc. Also chapter two focuses on theories of financial
planning and control etc chapter three has to do with the basic research
methods, observation, interviews and questionnaires. Chapter four is the
data presentation, analysis,
interpretation and test of hypothesis. Chapter five being the final chapter shall deal with the summary,
conclusion and recommendation for the research findings.
1.8 DEFINITION
OF TERMS
a. PLANNING: “Planning proceeds control”
it is the selection objective and their means of attainment.
b. RESOURCES: This can be defined as
supplies of goods, raw materials, etc which a person, organization, country has
or can use in the process of production.
c. CONTROL: The implementation of decision
model and the use of feed back so that objectives are optionally attained.
d. FINANCE: To raise money necessary to
organized to extend an enterprise, whether by the sale of stocks, notes or
otherwise
e. FINANCIAL ANALYSIS: This is the
concentration of financial statement of an organization in relation with other
organization within the same environment (sector) over a given period or time.
f. FIXED AND CURRENT ASSETS: Fixed Assets
can be stated as those material whose value are of long life, which are held to
be used in banking and are not primarily for resale or for conversion into cash. Current assets are those materials
whose value changes with the change in the volume of investment.
g. BUDGET: A financial 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
objectives.
h. BUDGETARY CONTROL: “The establishment
of budgets relating to the responsibilities of executives to the requirements
of a policy and the continuous comparison of actual with budgeted results
either to secure by individuals actions, the objectives of that policy or to
produce a firm’s basis for its revision”.
i. FORECAST: This is a prediction of
future events which a re expected to happen in a life time.
j. MANAGEMENT: This is the process of
getting things done through other people in an organization which can be either
profit or non profit making.
k. ORGANIZATION: This means to structure
or arrange relationship between people, the work to be done, and the facilities
in doing such works so that goals and objectives of the organization can be
achieved.