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BUDGET AND BUDGETARY CONTROL IN THE BANKING INDUSTRY (A CASE STUDY OF ACCESS BANK PLC)


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INFORMATION:
YOU CAN GET THE COMPLETE PROJECT OF THE TOPIC BELOW. THE FULL PROJECT COSTS N5,000 ONLY. THE FULL INFORMATION ON HOW TO PAY AND GET THE COMPLETE PROJECT IS AT THE BOTTOM OF THIS PAGE. OR YOU CAN CALL: 08068231953, 08168759420



BUDGET AND BUDGETARY CONTROL IN THE BANKING INDUSTRY (A CASE STUDY OF ACCESS BANK PLC)


ABSTRACT

The worldwide use of budgets in one form or the other and its inherent problems is the focal point of my interest in this study.

It is one thing to plan a budget using the best projected figure; it is another thing to ensure that the process of establishing lie budget is both highly efficient and effective in accomplishing the set objective. This is simple terms in basically what budgetary control entails.

Therefore budgeting as a tool of planning and control expressed in financial terms based on predetermined objectives must represent what is likely to happen after a careful balance has been struck between the ambition of management and the constraints facing the business.


TABLE OF CONTENTS

Chapter One

1.1     Introduction

1.2     Historical Background

1.3     Statement of Problems

1.4     Purpose of Study

1.5     Significant of the study

1.6     Scope and Limitation of Study

1.7     Research Methodology

1.8     Research Questions

1.9     Research Hypothesis

1.10   Definition of terms

Chapter Two

2.0 Literature Review

2.1 Types of Budgets

2.2 Budgetary Control

2.3 Budgetary control system

2.4 Corporate Planning

2.5 Management Control system

2.6 Budgetary Process

2.7 Budgeting Improvement Techniques

2.8 Problems Associated with Budgeting

2.9 Benefits of Budgeting

2.10 The Concept of Budgeting

Chapter Three

3.1     Research Methodology

3.2     Introduction

3.3     Research Design

3.4     Sources of Data

3.5     Population and Samples Size

3.6     Samples and Sampling Technique

3.7     Research Instrument and Administration

3.6     Method of Data Analysis

Chapter Four

Presentation, Analysis and Interpretation of Data

4.1 Introduction

4.2 Presentation of Data

Chapter Five

Summary, Conclusions and Recommendations

Summary of Findings

Conclusions

Recommendations

Bibliography

Questionnaire


CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Budgeting is fundamental to every project management. It is imperative because it is a means to ensure that desired organizations objectives are met. This is also accomplished by exercising control over scares resources. Strategically, for an organization to run effectively, there are four critical factors: organizations objectives of where it intends to go, plans or how it intends to accomplish such objectives, coordination or whether individual plans fit in the overall organization objectives and control or whether operation relating to that period. With this, budgeting and budgetary control are the devices that an organization makes use of for all these purposes.

Budgeting is an integral part of planning and coordinating, it is becoming increasingly important. While control is comparing where you are supposed to be so that corrective action can be taken when there is a deviation. When there is no plan, there is no control.

It is almost for an organization to exist and survive without some sort of budget. To be without one is like a ship without cores, cross along while being unaware of how far of the route it is or which rock it is likely to hit, only luck can save it from a catastrophic end and misadventure.

Individuals in their private affairs employ the use of budgets in their day to day activities. The practice of budgeting and its control is now established on a world-wide basis and it's still growing rapidly. Almost every company in Nigeria, indeed in the world at large has its budgeting and budgetary department.

In general terms, a budget is a plan. It also forms the standard with which to measure the actual achievement of people, departments, firms and even governments.

A budget can be viewed as the plan of the dominant individuals in an organization expressed in monetary terms and subject to the constraint imposed by other participant and the environment indicating how the available resources may be utilized to achieve whatever the dominant individuals agree to be the organization's priorities.

It is one thing to plan a budget using the best project figures; it is another thing to ensure that the process of establishing the budget is both highly efficient and effective; in accomplishing the set objectives. Thus, the simple term is basically what budgetary control entails.

All of this is necessitated by the economic concept of Scarcity. Though “scarcity” is a relative term, it is right to note that resources are scarce, consequently, they serve as constraints to management, in terms of materials, manpower, money and time. Resources must however be utilized in order to achieve an organization's primary and secondary objectives, (that of profit maximization and survival, growth, market share etc.).However budgeting as a tool of planning and control expressed in financial terms, based on predetermined objectives must represent what is likely to happen after a careful balance has been stuck between the ambition of management and the constraints facing the business.

1.2   HISTORICAL BACKGROUND

The Access bank was incorporated as a private limited liability company on February 8th, 1989. The bank was converted to a public limited liability company on March 24th, 1998 and its shares were listed on the Nigeria Stock Exchange on November 18th, 1998, the bank was issued a universal banking licensed by the Central Bank of Nigeria on February 5th, 2001.

Effective November 18t, 2005, the Bank acquired two existing and functional banks of Nigeria, Capital bank International PIc and Marina International Bank Limited through share exchange considerable and continue trading as Access Bank PIc.

The bank established a foreign subsidiary known as Access bank (Gambia) Limited on June 27th, 2006 and fide subsidiary commenced operation on October 27th, 2006 on receipt of Central Bank, of (Gambia) Limited have not been consolidated because of the Director are of the opinion that it would be of no real value to the members; in view of insignificant amount involved. The subsidiary's year end is December and it has only traded for two months up to December 31st, 2006.

In October, 2006, the Bank carried out a share reconstruction exercise to reduce the number of issued and paid ordinary share of the bank by 50%. The restricted shares were allotted to shareholders as fill in the ratio of 1 ordinary share for 2 ordinary share held. The new shares were revalued such that there was no loss of Values to shareholder as a result at the share reconstruction.

The principal activity of the Bank continues to be the provision of money market activities, retail banking granting of loans and advances, equipment leasing corporate finance and foreign exchange operation.

1.3 STATEMENT OF PROBLEMS

In an organization, standards of performance need to be set to act as guidelines in order to reach successful the budget plan. It is imperative that each manager feel that the budget for his section is realistic, relevant and not imposed upon him.

However, in practice, this is not always the case. Timing of expenditure, feedback, problems and human factors in budgeting pose a threat which hinders the process of providing accurate and suitable measures of performance and the preparation of performance reports that highlight areas of concern which eventually lead to wastage.

Statement of problems is as follows:

1.                There may be too much reliance on the technique as a substitute for good management.

2.               The budgetary system, perhaps because of undue pressure or poor human relations may cause antagonism and decrease motivation.

3.               Budgets are develop round existing organization structure and department, which may be inappropriate for 'current conditions, and may not reflect' the underlying economic realities.

4.                Lack of good communication system may be an underling factor affecting budget performance.

1.4 PURPOSES OF STUDY

The aims and objectives of this study are to:

1.                Study and examine the effectiveness of budgeting and how it is carried out at Access Bank PIc.

2.                To examine the budgeting policy and budgetary techniques actually in place.

3.  To highlight some of the problems inherent in the preparation and implementation of budgetary control encountered by Access Bank PIc.

4.  To what extent is the objective of control measures being achieved?

5.  Who are the principal actors involved in budgeting administration at Access Bank PIc?

1.5 RESEARCH QUESTIONS

The following research question will be answered during the course of this research project.

i.)        What is the relationship between Budget and Budgetary control in the Banking Industry?

ii.)    How Technology does affects budget performance and measurement?

 iii.)   How does human factors affect the preparation and implementation of budgets?

iv.) What are the problems encountered on preparation and implementation of budgeting in Access Bank?

1.6 RESEARCH HYPOTHESES

The following hypothesis will be tested:

Ho:  Technology affects budget performance and measurement.

Hi:  Technology does not affect budget performance and measurement.

Ho:  Human Factors affect the preparation and implementation of budgets.

Hi:  Human factors do not affect the preparation and implementation of budgets

1.7 SIGNIFICANT OF THE STUDY

The worldwide use of budgets in one form or the other end its inherent problems is the focal point of my interest in this study.

A study of this nature is of immense benefit not only to the Nigeria government and the economy but also to all stakeholdersin the financial system. It is of great importance to the banking industry as it offers strategies for successful implementation of budgets and budgetary control.

The findings of this study will improve the effectiveness of Access Bank particularly and the banking industry in general and make it more important creative tool for management rather than merely a means of expressing objectives.

This study will be benefit to me as a student as it will serve as a reference tool on related subject area. The government and, the economy will also be beneficiaries as any improvements to the banking industry impacts greatly on the economy.

It is also to create a citation or reference to the major function of managing, coordinating, deployment and control over resources to realize the maximum objectives of the organization.


1.8    SCOPE AND LIMITATION OF STUDY

This study is limited to Nigeria, hence its results may not be entirely regarded as universal, but Nigeria is a dynamic country representative of any 3rdworld nation. Limitation would also arise due to restriction on confidential information.

Extensive study of the general population or universe of the banking industry in respect to commercial banks is not feasible.

The scope of this study shall therefore be concentrated on Access

Bank PIc, Head office, Victoria Island; Lagos.

1.9   DEFINITION OF TERMS

MOTIVATION:- It is inner state that energies or activates and directs behavior towards goals. Motivation involves all the activities which give rise to the behavior aimed at satisfying one or another kind of want.

PERFORMANCE STANDARD:- This IS known to be the expected level of performance in each area in the organization. It is also analyzed how well an employee is expected to perform his duties so as to achieve the organization's aim.

PROMOTION:- This indicates a move to a more important job or rank in a company or organization which involves greater responsibility, skill, status and higher rate pay.


Promotion also involves the movement of a worker to a more important position with greater responsibility.

PRODUCTIVITY:- This is the rate at which a company produces goods and the amount produce compared with how much time and amount which was used for the production. It is also measured of how resource are brought together and utilized for accomplishing a set of results.

PERFORMANCE:- This is defined as multiplication function of motivation and ability.

EFFECTIVENESS:- This refers to the extent to which output is in line with organizational objectives.

MANAGEMENT:- This is defined as the art, science, or process of combining and utilizing the physical resources and human resources of the organization to achieve the objective for which that organization was established.

PROFITABILITY:- This may not result to any loss of production hour, net production times, no accidental or breakdown and with the standards or specification of particular products met.

EMPLOYEES:- These are the people engaged in physical and mental activities for which they are economic reward although this may not be the primary aim.


ORGANIZATION:- This is a form of organized industrial activity engaged in commercial or industrial activity providing goods and services to the society.

BUDGETS:- A budget is a financial and or quantitative statement prepared and approved prior to a defined period of timer of the policy to be achieved during that period for the purpose of attaining a given objectives.

BUDGETARY PLANNING:- This contains the goals and aspirations and serves as a control mechanism on the organization goal.

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