1.1 BACKGROUND OF THE STUDY
Budgeting is a planning process which underlines predicting and quantifying the future in financial terms and predicting the future needs for finance. Aside from the planning role of budgeting, numerous articles on management accounting constantly stress the multi-purpose role of budgeting in business organization. Budgeting is used for forecasting, planning, coordination, communication, control and motivation. In the past few decades, considerable attention has been paid in particular to the role of management control of budgeting (Otley & Pollanen, 2000). In order to reveal the nature of budgeting at business organizational level, it would be best to begin by comparing budgeting with accounting. Budgeting and accounting have different meanings among managers, planners, and the personnel who use these. Both are critical components that must interact to achieve the goals and objectives of an organization. Accounting is a system used to record, classify, and summarize business operation (Meigs, 1996). The role of keeping the financial information and on-going analysis necessary to provide management and outside interests with the facts necessary for decision, is also considered as accounting (Grigg, 1988). Relying on certain standards and GAAP (General Accepted Accounting Principles), the accountant of a company develops and reports data to measure firm performance; to assess its financial position, to comply with and file reports needed by securities regulators; to file and pay taxes; and to prepare the balance sheet, financial statements, and the cash flow of the company to recognize sales revenue, expenses etc. when they are incurred. Therefore, accountants provide accounting information used for individuals external to an organization such as shareholders, customers, suppliers, tax authorities, as well as for employees (so-called financial accounts) and internal managers of an organization (so-called management accounts). Financial accounting systems ensure that the assets and liabilities of a business are properly accounted for, and provide information about profits etc. to shareholders and to other interested parties. In contrast, management accounting systems provide information specifically for the use of managers within an organization to assist in their decision making (Ryan et. al, 2002). Based on the classification above, budgeting is, traditionally, classified in the management accounting domain by the existing accounting literature. In this sense, budgeting is a narrower concept with more specific focus. Budgeting, if it covers financial aspects, reflects the management’s expectations regarding income, cash flow, and financial position in monetary terms. (Horngren, 2002) It focuses on a forthcoming accounting period, rather than on the past period on which the accounting is based to make records. Therefore, budget planning focuses more on a forecast purpose to estimate what is likely to occur in the future and how organizational resources are allocated to realize future operations. Moreover, another important part of budgeting is that of feedback, in which both the plan and the action are compared, providing the opportunity to analyze variances, the causes and to revise future budgets in line with experience. This is called budgetary control. As a common example of a financial plan in management accounting, however, budgeting pays attention to the administrative function internal to a firm, especially in terms of planning and control. Budgeting is viewed as a critical element of management control (as above mentioned) by a number of scholars (Anthony, 1965; Flamholtz, 1983; Otley and Pollanen, 2000; Otley, 2003). Given the control-required standards against which performance could be assessed, the budget is the natural standard of comparison. This leads to using the budget with an annual planning period, in practice in many organizations this...
... University of the Punjab, PAKISTAN
THE IMPACT OF COMPLIANCE WITH ACCOUNTING STANDARDS
ON ASSET AND PROFITABILITY OF NIGERIAN QUOTED
basis with the aim of ensuring that better
business practices are enforced using the
instrument of standardization and that
standards should be better complied with by
Abubakar Sadiq Kasum, B. Sc., M. Sc., Ph.D.,
The primary reason for standardization is to
protect the interests of both shareholders and
other stakeholders. The level profitability and
extent to which business assets are secured,
therefore become important items of concern to
all stakeholders. Before standardization could
be said to be effective it must protect the
important items. The objective of this study,
therefore, was to examine the impact that
compliance have on profitability and asset
Key Words: Compliance; Accounting Standards;
Assets; Profitability; Nigeria Quoted Companies
Freedom of incorporation prevails all over the
world, and that includes in Nigeria.
same manner, businesses grew continuously
and more and more people continue to own
stocks. Ownership of businesses is diverse and
widely spread. The owners rarely control the
corporations, instead, managers were running
the company at their whims and accountable to
no one (Drutman, 2005). Most...
...The Impact of Budgeting and BudgetaryControl on the Performance of ManufacturingCompany in Nigeria
This study, the impact of budgeting and budgetarycontrol on the performance of manufacturingcompany in Nigeria, was conducted using Cadbury Nigeria Plc, as case study. Since wants are plenty while resources are limited, every organisation tends to find means by which it can get what it wants with the limited resources at its disposal. Therefore, firms seek to adopt the concept of budgeting and budgetarycontrol to satisfy their needs at the least possible cost and at the same time fulfil their stewardship obligations to the numerous stakeholders. We adopted a descriptive research design with data gathered through questionnaire administered to respondents. Non-parametric tool of chi square was employed to analyse the data. Hypotheses were tested and analysed on a 5% level of significance and it was revealed that budgeting is a useful tool that guides firms to evaluate whether their goals and objectives are actualised. Considering the changing environment in which firms now operate, it can be concluded that budget, which is a continuous management activity, should adapt to changes in the dynamic business environment
Budget is the process of stating quantitavely, set aside for carrying out specific activities in a given period of time.
It helps to co-ordinate the activities of the organisation. Budgets are prepared for the whole company and for sub units.
Tapal Pvt. Limited designs budget for each department in the organization and each department head is required to give their respective budget to the Cost and Budgeting Department.
A control technique whereby actual results are compared with budgets.
Any differences (variances) are made the responsibility of key individuals who can either exercise control action or revise the original budgets.
The Cost and Budgetting Unit under the Finance Department is responsible for controlling the budget and approving the cost submitted by each department of Tapal Pvt. Limited.
A responsibility centre can be defined as any functional unit headed by a manager who is responsible for the activities of that unit.
There are four types of responsibility centres which are followed by Tapal Pvt.Ltd:
a) Revenue centres
A revenue centre is where budgetary outcome is measured by ability to generate set revenue level.
Tapal Pvt. Ltd operates as a revenue centre for eg. In the sales and marketting department for the sales generated in...
Human Capital is the most important resource for an organisation to succeed. The quality of the human resource and the work performance directly impact an organisation’s performance. Thus, human resource management plays an important role to ensure the efficiency in an organisation’s daily operations via efficient recruitment, training and development, and staff retention. Besides, efficient human resource management may create competitive advantage to an organisation.
There are various theories explained how human resource management impacts an organisation’s performance. This essay focuses on two theories – Reinforcement Theory and Resource-Based Theory.
2.0 Reinforcement Theory and the Implementation
Reinforcement theory was proposed by BF Skinner and his associates. It focuses of shaping human behaviour by controlling the consequences of the behaviour. In reinforcement theory a combination of rewards and/or punishments is used to reinforce desired behaviour or extinguish unwanted behaviour.
It has similar base as “law of effect” where it states that individual behaviour leads to different consequences. Thus if a behaviour leads to positive consequences, the individual tends to repeat the same behaviour in the future. On the other hand, if a behaviour leads to negative consequences, the individual will try to change their behaviour to avoid the unpleasant consequences....
...assistance of certain people who contributed to its success.
Our special gratitude goes to our tutor Mst. Maksuda Begum for her direction during the programme and encourage us when we had difficulties, and also grateful to
all the other members of our group for making available to us their wealth of experience and
Our thanks also go to all the students in the Entrepreneurship & Small Business Management.
Budgeting has come to be accepted as an efficient method of short-term planning and control. It is employed, no doubt, in large business houses, but even the small businesses are using it at least in some informal manner. Through the budgets, a business wants to know clearly as to what it proposes to do during an accounting period or a part thereof. The technique of budgeting is an important application of Management Accounting. Probably, the greatest aid to good management that has ever been devised is theuse of budgets and budgetarycontrol. It is a versatile tool and has helped managers cope with manyproblems including inflation.
A formal statement of the financial resources set aside for carrying out specific activities in a given period of time.
It helps to co-ordinate the activities of the organisation.
An exa mple would be an advertising budget or sales force budget.
Essentials of a Budget
An analysis of the above said definitions reveal the following essentials of a...
...Budgetarycontrol is part of overall organisation control and is concerned primarily with the control of performance. The use of budgetarycontrol in performance management has of late taken on greater importance especially as a more integrative control mechanism for the organisation. Discuss.
“It’s clearly a budget. It’s got a lot of numbers in it” (George W. Busch 2005). This definition of a budget can be supplemented using the Oxford dictionary, which states that a budget is an estimate of income and expenditures for a set period of time. Nowadays almost every business uses budgets and managers use them as a tool in order to set targets. In other words managers can, with the use of budgets, explain in a financial way what are the objectives of the business for a period of time, usually one year. Budgetarycontrol is described as the process of planning, controlling and coordinating through money values and departments within an organisation (Buckley and McKenna 1972), and has recently taken a greater importance in performance management. In parallel, the relation between the corporation and the capital market has kept increasing, bringing to light many problems. This essay will then define and explain the benefits of budgetarycontrol as well as its limits regarding the...
Business Intelligence Journal
Impact Assessment Of Corporate Culture On Employee Job Performance
This research study assesses empirically the impact of corporate culture on employee job performance as well as organisational productivity using Nigerian banking industry as the case study. We try to ascertain if organizational culture affects employee jobperformance, and to formulate recommendations regarding corporate culture and employee job performance. In order to achieve the above objectives, the following research questions were asked: Does corporate culture have any effect on employee job performance? And in what way does corporate culture impacts employee job performance? Two hypotheses were advanced: (i) There is no positive relationship between organizational culture and employee job performance, and (ii) There is no positive relationship between corporate culture and organizational productivity in Nigerian banking industry. The study uses survey research method. The case study companies were selected using stratified and simple random sampling techniques; while our respondents were selected using simple random sampling technique. The findings of this study are that a large number of respondents (57.7%) strongly agree that corporate culture...
the New Partnership for Africa’s Development (NEPAD), which has the attraction of
foreign investment to Africa as a major component.
This study investigated the empirical relationship between non-extractive FDI and
economic growth in Nigeria and examined the determinants of FDI into the Nigerian
economy. Secondary data were sourced from the Central Bank of Nigeria, International
Monetary Fund and the Federal Office of Statistics. The period of analysis was 1970–
2002. An augmented growth model was estimated via the ordinary least squares and the
2SLS method to ascertain the relationship between the FDI, its components and economic
Results suggest that the determinants of FDI in Nigeria are market size, infrastructure
development and stable macroeconomic policy. Openness to trade and available human
capital, however, are not FDI inducing. FDI in Nigeria contributes positively to economic
growth. Although the overall effect of FDI on economic growth may not be significant,
the components of FDI do have a positive impact. The FDI in the communication sector
has the highest potential to grow the economy and is in multiples of that of the oil sector.
The manufacturing sector FDI negatively affects the economy, reflecting the poor business
environment in the country. The level of available human capital is low and there is
need for more emphasis on training to enhance its potential to contribute to economic...