THE ROLE OF BUDGETING IN GOVERNMENT PARASTATALS ACCOUNTABILITY (A CASE STUDY OF ENUGU STATE HOUSING DEVELOPMENT AUTHORITY) BY OKAFOR DONATUS OKECHUKWU PG/MBA/11/60273 DEPARTMENT OF MANAGEMENT FACULTY OF BUSINESS ADMINISTRATION UNIVERSITY OF NIGERIA ENUGU CAMPS JULY, 2012

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TITLE The Role of Budgeting in Government Parastatals Accountability (A Case Study of Enugu State Housing Development Authority) By Okafor Donatus Okechukwu PG/MBA/11/60273 In Partial Fulfilment of the Requirement for the Award of Master in Business Administration (MBA) Department of Management Faculty of Business Administration University of Nigeria Enugu Campus Supervisor: Dr. E.K. Agbaeze July, 2012

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DECLARATION

I, Okafor Donatus Okechukwu, student in the

Department of Management with Registration No.

PG/MBA/11/60273 state that the work embodied in this project

is original and has not been submitted in any other University.

______________________ Okafor Donatus Okechukwu PG/MBA/11/60273 ___________________ Date

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CERTIFICATION

We, hereby certify that this project "The Role of

Budgeting in Government Parastatals Accountability (A

Case Study of Enugu State Housing Development

Authority)" by Okafor Donatus Okechukwu with Registration

Number PG/MBA/11/60273 under my supervision the project is

adequate in scope and quality, in partial fulfilment of the

requirements for the award of Master in Business Administration

(MBA) in the Faculty of Business Administration, University of

Nigeria, Enugu Campus.

___________________ ______________ Dr. E.K. Agbaeze Date Project Supervisor ___________________ _____________ Dr. C.A. Ezigbo Date Head of Department _________________ External Examiner _______________ Date

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DEDICATION

This project work is dedicated to the Almighty God for His

mercy and love and to my dear wife Mrs. Justina Okafor for her

support throughout this programme.

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ACKNOWLEDGEMENT

I am wholly grateful to my project supervisor Dr. E.k.

Agbaeze for showing a unique humility in correcting and

advising me in the course of this work and making me know the

rudiments in project writing.

I owe gratitude to the Head, Department of Management,

Dr. C.A. Ezigbo and the Dean, Faculty of Business

Administration Prof. U.J.F Ewurum, for providing the enabling

environment in this programme. I also appreciate my able

lecturers, Dr. O.C. Ugbam, Dr. C. Nnadi, Dr. V.A. Onodugo, Mr.

L.C. Odoh, Mr. B.I. Chukwu and others for their contributions.

I appreciate my follow 2011/2012 MBA students, staff of

management, my family members especially my wife Mrs.

Justina Okafor for their moral and financial support.

Above all I thank the Almighty God for His love and mercy

throughout this programme.

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TABLE OF CONTENTS

TITLE ......................................................................................... i

DECLARATION ......................................................................... ii

CERTIFICATION ...................................................................... iii

DEDICATION ........................................................................... iv

ACKNOWLEDGEMENT ............................................................ v

TABLE OF CONTENTS ............................................................ vi

ABSTRACT ................................................................................ x

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study .................................................. 1

1.2 Statement of Problem ...................................................... 5

1.3 Objectives of the Study .................................................... 6

1.4 Research Questions ........................................................ 7

1.5 Hypotheses ...................................................................... 8

1.6 Limitations of the Study .................................................... 9

1.7 Significant of the Study .................................................... 9

1.8 Scope of the Study ......................................................... 10

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CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Budgeting - An Overview ............................................... 11

2.2 Definitions of Budgets and

Budgetary Control .......................................................... 12

2.3 Budgetary Control .......................................................... 14

2.4 Administration of Budgetary Control .............................. 15

2.5 Decision on Budget and Actual

Comnparism Statement ................................................. 18

2.6 Types of Budget ............................................................. 19

2.7 Budgeting and Budgetary Controls in

Government ................................................................... 22

2.8 Financial Authorities and their

Legal Aspect .................................................................. 23

2.9 The Role of Government Budget for

Accountability ................................................................. 25

2.10 Major Types of Budget in Government .......................... 28

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CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research Design ........................................................... 34

3.2 Population of Study ........................................................ 34

3.3 Method of Data Analysis ................................................ 35

3.4 Sampling Method ........................................................... 35

3.5 Validity and Reliability of

Research Instrument ...................................................... 36

3.6 Sources of Data ............................................................. 36

3.6.1 Primary Data Sources .......................................... 37

3.6.2 Secondary Source ................................................ 38

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Data Presentation .......................................................... 42

4.2 Analysis of the Questionnaire ........................................ 42

4.3 Test of Hypotheses ........................................................ 46

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CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS

5.1 Summary of Findings ..................................................... 54

5.2 Conclusion ..................................................................... 55

5.3 Research Recommendations ......................................... 56

5.4 Direction for Further Research ...................................... 57

BIBLIOGRAPHY ............................................................ 59

APPENDIX ..................................................................... 62

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ABSTRACT The aim of this project is to address the role of budgeting in government parastatals accountability in Enugu State Housing Development Authority. It stresses the usefulness of budgeting and budgeting controls in government accountability. The major problems is the inability of organizations to plan and accomplish goals which can be traced to their inability to apply controls and accountability in the budgeting system. The researcher uses both primary and secondary data but reliance was placed more on primary data because of its relative factual nature. They include personal observation, interviews, questionnaire, about 60 personnel of the organization were interviewed and their responses analysed by simple percentage. The major findings reveals that there is a great degree of relationship between budgetary implementation and their actual performance. This lack or no implementation of the budget hinders the achievement of the organizational goal. Budgetary control also as a management tool contributes to efficiency and effectiveness of management productivity. The researcher based on these findings proposes many recommendations. Which include educating the other levels of management on the importance of adhering strictly on the provisions of the budgets and implement it as such. The organization should adopt technique that is easy to implement which include flexible and zero based budgeting techniques. The researcher concluded that when budget are effectively implemented at all levels, it will become an essential standard in ensuring actual performance.

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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

This project addresses the role of budgeting as a tool for

accountability in government parastatals in Enugu State

Housing Development Authority. This is not intended to be a

complete work on all budgeting system; rather it stresses on the

usefulness of budgets in promoting accountability in government

parastatals.

Like every other parastatals, Enugu State Housing

Development Authority is fast growing, hence the need for

accountability becomes necessary with the use of budgeting.

Budgeting system is the process involved in using the

scarce resources to achieve the desired goals and objectives of

the corporation (Ikpe and Oba, 2004:66).

Budget is also seen as a financial or quantity statement

prepared and approved prior to a defined period for the process

of attaining a given goal or objectives. It may include income,

expenditure and employment of capital (ICMA; 2008).

Therefore in order to achieve these objectives, the

organization must deploy the economic resources and

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discover the means of achieving these goals. These goals can

only be realized when the properly planned use of available

resources are controlled and coordinated effectively.

Thus the system of managing a business by making a

forecast of different activities imperative.

These forecast are guided by the formulation and adoption

of planned systems such as techniques in budgeting variance

analysis etc. Budgets may be prepared for the firm as a whole

or smaller units like departments, operations like production and

sales, financial and resource items like personnel, purchase,

cash and capital expenditure etc.

Budgetary control at same time is a system of controlling

cost through the preparation of budget coordinating

departments, establishing responsibilities, relating the

responsibilities of the executives to the requirements of a policy.

It entails comparism of actual performance with the budgeted

and ensuring that the remedial actions are taken promptly to

achieve organizational objectives.

It is therefore germane to say that the level of importance

that is attached to these plan and effort made in

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controlling the variance differ in organizations once goals are set

which must be based on the detailed analysis of feasibility within

the content of political and social values and the financial plans

will be enable to strive towards its attainment.

Often than not when these plans are put into operation,

condition prevails which tends to cause deviation to the plan and

corrective controls and measures are always taken to steer the

business back on the right track.

The process already mentioned as it is applied entails

budgets and its control. And to lend credence to goal

congruence, suitable techniques should be applied to specific

areas needs. Special attention, hence the measurement of

budgeted with actual to arrive at variance cannot be over

emphasis. A business is said to be on the right track; if the

outcome of budgeted estimates is favourable as against the

actual.

Enugu State Housing Development Authority a Historical

Background

The history of Enugu State Housing Development

Authority started in the days of East Central State Housing

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Development Corporation that was established in 1971; by Ajei

Ukpabi Asika's administration.

It was charged with the responsibility of building houses

and estates to be used for both industrial and residential

purposes.

However, following the creation of states by the then

Murtala Mohammed government in 1976, the corporation was

renamed Anambra State Housing Development Corporation

owing to the splitting of East Central State to Anambra and Imo

States.

In 1991, the government of Ibrahim Babangida once again

created Enugu State from the Old Anambra State thus changing

the name once again to the present Enugu State Housing

Development Corporation.

The corporation began its operation by utilizing the

premises and facilities of the old East Central State and

Anambra State Housing Development corporation, while the

present staff were made up of employees of former corporation

of Enugu State origin and new employees.

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Organizational Structure

The corporation followed the line and staff method of

organization. It shows who performs the actual functions of the

organization and those that performs the support or auxiliary

function.

Line functions are those who performs the functions as

plan, layout, location and actual construction of the buildings

while the support functions are those who do the other

administrative function, like, personnel department, public

relation departments etc.

Edict No. 10, of 1991, clearly established the corporation

and stipulates the functions of the board in section 5 which is

the governing body of the corporation and shall in its capacity,

manage the corporation, Exercise all the functions and powers

of the corporation, and perform all other business functions as

relate tot he edict.

1.2 STATEMENT OF PROBLEM

The success of any business organization rest upon its

ability to adopt a well organized budgeting and budgetary control

system.

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Lack of budgeting system in planning and controlling has

resulted in indiscriminate spending of scarce funds meant for

use in viable projects and activities. The results in many

problems for many organizations which include;

1.Inability of the company to plan and accomplish goals which

can be traced to their inability to apply controls and

accountability in the budgeting system.

2.Budgeting goals are not fully realized due to low level of

understanding of middle and low level managements.

3.Improper accountability of past jobs performed has resulted in

management not being able to use past information to

make proper and accurate budget for the future which

leads to ineffectiveness and inefficiency.

4.Improper coordination of various cost centres and information

on job progress are delayed and this results in delay of

prompt management decisions.

1.3 OBJECTIVES OF THE STUDY

The primary purpose of this study are:

1.To find out the role of budgeting and budgetary control in

government parastatals.

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2.To find out whether there is a relationship between budgetary

implementation and their actual performance.

3.To determine whether budgetary control as a management

tool contribute to efficiency and effectiveness of

management productivity.

4.To find out whether budgetary control can be used in

assessing management budgeting accountability.

1.4 RESEARCH QUESTIONS

The following questions will be addressed in this study.

1.What role do budgeting and budgetary control play in your

organization?

2.To what extent do budget implementation and their actual

performance relates?

3.To what extent does budgetary control enhances

management productivity?

4.What are the significant relationship between budgeting

control and management accountability?

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1.5 HYPOTHESES

Ho:Budgeting does not play any role in government corporation.

Hi:Budgeting plays a vital role in government

organization/corporations.

Ho:There is no relationship between budget implementation and

their actual performance.

Hi:There is a relationship between budget implementation and

their actual performance.

Ho:Budgetary control does not enhance management

productivity.

Hi:Budgetary control does enhance management productivity.

Ho:There is no significant relationship between budgetary

control and management accountability.

Hi:There is a significant relationship between budgetary control

and management accountability.

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1.6 LIMITATIONS OF THE STUDY

The limitation of this study are:

i)Financial constraints on the part of researcher.

ii)Time constraints on the part of researcher and school

timetable on the MBA programme.

iii)Government secrecy: the corporation personnel are not willing

to release information in the course of this research and

thus hinders the details.

1.7 SIGNIFICANT OF THE STUDY

The research is so useful in several ways:

Firstly, the government will benefit immensely from the

findings and recommendations. This study will highlight the

problems associated with inadequate budgetary control in

government business. It will also help government on how they

will effect controls in their businesses.

Secondly, corporate organizations will utilize the

recommendations to effect proper budgetary control is all their

affairs to ensure accountability in all its businesses.

Thirdly, the society at large will benefit because

accountability will eradicate corruption. This will ensure that

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all projects and activities budgeted for are completed and on the

specified periods of time to their benefit.

Finally, this project study will be useful for academic

purposes. It will act as a data bank to those who will carry out

further study on the field in the future.

1.8 SCOPE OF THE STUDY

The study focuses on using budgeting as a tool for

accountability in government and its parastatals.

However, its scope covers; the role of budgeting, the

relationship between budgeting and budgetary controls budget

implementation and its performance and budgeting controls and

accountability in management.

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CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 BUDGETING - AN OVERVIEW

The success of any organization both government and

private, is in its ability to plan, quantify the plan, organize, direct

and control its implementation.

The relationship between plan and budget is that budget is

a quantified plan control is closely involved in planning in the

sense that every plan by implication comes with its control

procedures.

To this extent Morse (1981: pg. 368) states that when all

the planning and control topics are fuztapositioned a very

dynamic budgeting and performance evaluation cycle appears.

The assumption of the cycle starts with the present budget

and as the budget period elapses, the actual operational

achievements and results are gathered and matched with the

present budget in the form of feedback control and performance

report.

The various levels of controlling managers on receiving

these reports burdening on the areas of variation from the

responsible managers.

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The next steps based on these reports managers takes

steps to ensure that future plans or budget are enhanced.

Budget is a very important managerial model which will no

doubt benefit the organization if properly and effectively

packaged and operationalized.

2.2DEFINITIONS OF BUDGETS AND BUDGETARY

CONTROL

Budget is defined as a quantitative analysis prior to a

defined period of time of a policy to be pursued for the period to

attain a given objectives (CIMA, 1974).

A budget is also defined as a comprehensive and

coordinate plan expressed in financial terms for the operations

and resources of an enterprises for some specific periods in the

future (Fremgem 1973, pg. 144).

A budget is a plan of the organization's manipulations of

relevant variables (controllable and uncontrollable) and reduces

the impact of uncertainty, it activates the management into

influencing the environment in the interest of the organization

(Pandey 1985, pg. 556).

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A budget is a formal plan of action expressed in figures,

that specified the objectives and the means of its attainment

(Copeland and Dasher, 1978 p.614).

Budget is a statement of plan and expected result

expressed is numerical terms (Koont et al 1980, pg.3).

According to Adeniyi (2001, pg 379)

Budgeting is a systematic and formalized approach for

performing significant phases of the management planning and

control of functions. It is the process of preparing detailed short

term corporate plan into action. When monetary values are

attached it becomes a budget.

Budget are approved prior to the defined period of time

usually showing a planned income to be generated and

expenditure to be incurred during that period and the capital to

be employed to attain a given objectives.

To Eneje (2005:142)

A budget is a quantitative expression of a plan of action

and an aid to coordination and implementation prepared in

advanced to a period it relaltes. It can be preparallel for the

whole organization or for departments.

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To Eze (2001:168)

Budgeting refers to the formulation of plans for future

activity, which lay down carefully determined objectives and

programme of activity and provides yardsticks by which

deviations from planned achievements can be measured.

It is the preparation in advance of the quantitative as well

as financial statement to indicate the intention of the

management in respect of the various aspect of the business.

2.3 BUDGETARY CONTROL

According to Eneje (2005:142)

Budgetary control highlights the control of plans by

comparing actual results against plans by comparing actual

results against plans to identify variance upon which corrective

action can be placed.

According to Eze (2001 pg 168), Budgetary control refers

to the principles, procedures and practices of achieving a given

objectives through budget and budgets reports.

According to Ikpe and Obah (2004:66) Budgeting control

is a system of controlling cost through the preparation of

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budget, coordinating the departments, establishing

responsibilities, relating, the responsibilities of the executives to

the requirement of the policy.

(CIMA, 1975), defines budgetary control as the

establishment of departmental budgets relating the

responsibilities of the executives to the requirement of the policy

and continuously comparing actual with budgeted results either

to secure by individual action the objectives of that policy or to

provide the basis for its revision.

It is the essential feature of budgetary control that the

periodic report should be prepared comparing the budget with

the actual expenditure and showing the variances between them

corrective measures.

Budget and actual comaprism statement are more

effective when prepared frequently and promptly.

2.4 ADMINISTRATION OF BUDGETARY CONTROL

The administration of budgetary control is the

responsibility of the budget committee through the budget

officer. It is also a common principle that the executive of the

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organization each have a responsibility for the budget of the

particular activity which they control. The function of the budget

officer being rather to interpret the guiding decisions of the

budget committee and to advise the responsible executive with

a view to securing a budget which is compatible with the other

sections.

It is important to ensure that the scheme budgetary control

is properly explained to each person concerned with its

operation in the manner more appropriate to defining what is

required of that person.

During the operation of the scheme, a full liason should be

maintained between the budget committee and the executive

and persons responsible for the implementation of the

departmental policies.

The budget committee must ensure that through its officer

or liason that periodic statement should be prepared, comparing

the budget with the actual expenditure and showing the

variances between them. Budget and actual comparism

statement are more effective when prepared frequently and

promptly and the accounting statement should be organized

with this in view.

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The frequency of this statement as suggested with regard

to the period of the budget should be largely determined by the

requirement of the person exercising the control. Consideration

should also be given to the point at which the cost of frequency

of the statement becomes excessive.

Normally it is a matter of routine to check that all items of

expenditure charged against a persons budget results from the

action taken by the person.

According to Adeniyi (2001 pg 379); Budgetary control is

part of the overall system of responsibility accounting within an

organization. It is a system of accounting in which cost and

revenues are analyzed in accordance with areas of personal

responsibilities so that the performance of the budget holders

can be monitored in financial terms,

Hence, budget plays an accountability role in

governmental and organization and circle. Defining budget with

government in mind.

Taylor (1992:50) describe budget as a forecast made by

individual government and governmental institutions of its

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expenditure and income for a specific period of time usually not

more than one year.

2.5DECISION ON BUDGET AND ACTUAL COMNPARISM

STATEMENT

The preparation of budget and actual comparism

statement is normally the responsibility of the budget officer and

it has been found as an advantageous procedure for the result

represented by the budget.

In reports comparing capital expenditure budget with

actual expenditure, the figures prepared from the normal

(accounting records may not be adequate in themself for control

purposes. To decide whether further items can be ordered

without ultimately overspending the budget, it may be necessary

to know, in addition, the value of outstanding orders to items not

yet received for which no entries has been made in accounts.

Following the careful consideration of the result shown by

the budget and actual comparism statement, decisions may be

taken as follows:

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1.To take corrective actions with regard to expenditure where

the budget standard is not yet achieved.

2.To investigate cases where the budget has been exceeded by

an appreciable margin and to consider the implication of

such results.

3.To adjust the budget.

4.To correct errors made in its compilation.

5.To allow for the introduction of improvements of methods not

anticipated in the initial setting of the budget or any other

changes.

6.To discard the budget in such cases as where the policy on

which the budget is prepared has become impracticable

and to substitute a new budget.

2.6 TYPES OF BUDGET

Each revenue and expenses activities of an organization

can be budgeted. There are several types of special purpose

budgets which can be graded in respect of its attributable

functions.

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They include:

i)Time factor - long term and short term budget.

ii)Function factor - sales budget, selling and distribution cost

budget, production cost budget, purchase budget,

personnel budget, research budget capital budget, office

and administration, budget plant utilization budget, cash

budget.

iii)Flexibility factor - Fixed budget and flexible budget

For the purpose of this research work budget are

classified as follows:

1.Long term budget,

2.Short term budget

3.Fixed budget

4.Flexible budget

1.Long Term Budget

This is a budget that last for more than one year. It is usually

used to determine long range plan for especially capital

expenditures.

In the government circle it is usually called a rolling plan. This is

because it is under focus for a lengthy period but touches

all the yearly budgets until its completion date.

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It is a guide to determining the research projects that may be

initiated and schedule expansion and growth. It is usually

in the hands top level managers.

2.Short Term Budgets

This is a short period financial plan use to estimate income and

expenditures for the period. It generally involves all of

coordinated planning in all aspect of operations.

3.Fixed Budget

Under this budget, estimate level of income and expenditure are

fixed in advanced and these levels are not raised

regardless of what the actual level turn out to be fixed

budget requires accurate forecasting and analysis of each

budget item. It is best for manufacturing companies.

4.Flexible Budget

This is a group of budget each based on different operating level

or volume at various levels of activities and prices.

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2.7BUDGETING AND BUDGETARY CONTROLS IN

GOVERNMENT

Unlike the private sector, the budgeting and budgetary

control systems in government is governed a whole lot of

regulatory framework, some of which has instruments of

controls as systems of authorization of expenditure by warrant,

virement, supplementary estimates, authority to incur

expenditure, auditing, budget implementation and monitoring

process, all of which are aimed at ensuring conformity with

budget efficiency, effectiveness and economy.

Ikpe and Obah (2003:109) highlighted the following

budgetary control systems in government.

a)Due Process Certification

This is a budgetary control measures aimed at the following:

i)To ensure that "due process" is followed in the award of

capital projects contracts.

ii)To reduce cost by scrutinizing every project awarded by

the government.

iii)To ensure that funds are no longer diverted to private

pockets.

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iv)To strictly monitor the capital expenditure.

v)To streamline the approval limits in the award of capital

projects.

b)Standardization of Government Accounting

This is a reform effort the federal government aimed at

standardizing all government accounts at all levels

through budgeting standards and reporting procedures.

2.8 FINANCIAL AUTHORITIES AND THEIR LEGAL

ASPECT

Government businesses whether in the making of policies,

programmes, activities or functions, in run in accordance with

laid down formalities. This formalities become more rigorous

especially in relation to accounting and reporting for the

collection and use of government funds which supports the

process of governance.

The legal formalities in the areas of government

accountability and financial control includes established laws,

rules, regulations, customs, and accepted norms of behavioural

guidelines.

The laws in Nigeria in view of the interchanging nature of

government between military, and democratically elected

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governments are of two types.

They are the laws made by the military both at the Federal

and State levels known as decrees and that made by the

elected governments both Federal and State House of

Assembly known as Act of parliament.

The authority for financial transactions in public sector is

derived from the constitution, the finance (control and

management) ordinance 1958, and various laws in respect of a

number of financial activities such as revenue collection

authorization, and incurring of expenditure, central banking,

foreign exchange markets, audit etc.

The constitution of the Federal Government of Nigeria

1999 as amended till date has a clear picture of the financial

rules and regulations of the three tiers of government.

These documents are actually an implication of the public

finance ordinance of 1958 and the finance (control and

management) ordinance 1958 from where they derive their

authority.

All these documented laws and regulations are aimed at

instituting accountability in the collection and management of

government finance.

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2.9THE ROLE OF GOVERNMENT BUDGET FOR

ACCOUNTABILITY

In order to really appreciate the important roles of

government budget in enhancing economic activities and

accountability in the country, these major functions must be

looked into:

1.Forecasting

A budget is an express provision of the government to generate

revenue and apply the same revenue on its economic

activities in the coming financial year.

This anticipatory nature of budget makes it an important tool of

forecasting. The budget is prepared prior to the year, it will

be implemented based on the anticipated revenues from

various services. In Nigeria shares from oil account and

other local taxes. It is a useful tool for forecasting future

trends in the economy which is usually for anticipated

revenues and expenditures for the coming year.

2.Planning

Budget is also a tool for government to plan its policies and

programmes and its implementation. Government

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uses the budget to plan how to generate revenues and the

priority projects to be embarked upon in the year with the

aim of engineering the economic activities of the

economy. It is therefore the qualification of government

proposed plans in financial terms for the following

accounting of year.

3.Authorization

The approval of the yearly appropriation bill is by the national

assembly or state assembly is an authorization to the

executives to sign and spend public fund as contained in

the budget documents and also for a specific project.

It is therefore a formal authorization the hands of the executive

to acquire resources and undertake a specified activities

for the accomplishment of governmental aims and

objectives in a given period.

4.Performance and Measurement

A budget is a veritable parameter for evaluating the

performance of government with respect to the

achievement of stated objectives. It serves as a basis for

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making comparison between the budgeted and the actual for the

period. The variance helps to prepare and implement a

better budget in the next financial year. This is the most

important function of the budget which forms a guide to

making a better decisions on plans and priorities in the

next financial year.

In working on the variance the various responsible government

parastatals and agencies are thoroughly evaluated on

their performance toward the whole budgeted aims and

objectives.

The various accountability reports and speeches to both

committees of the national or state assemblies and other

committees setup by the executives will help in setting up

the required standard to achieve the overall governmental

aims and objectives.

5.Communication

Since the budget contains all policies and programmes which

the government plans to execute the following year, it

serves as a communication tool between the government

through its agencies and the society. It

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gives a clear picture of the economy in next one year and what

to be expected at the end of its implementation. This is

why the budget elixirs a lot of interest in the people. It

communicates economic direction of the government to

the society and provides likely indices to be expected at

the end of its implementation.

The lack of accountability by the government its agencies and

parastatals in the past has led to some degree of aparthy

in the budget and budgetary process in Nigeria.

2.10 MAJOR TYPES OF BUDGET IN GOVERNMENT

Government's spending profile and the desired level of

economic activity will to a great extent determine the type of

budget to be executed by the government in any given period.

There are three main types of government budget:

1.Balance budget

2.Deficit budget

3.Surplus budget

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The level of economic activity of an economy can take the

form of prosperity, recession, depression, and recovery.

The various degree of economic activity will determine the

fiscal policies to be adopted by the government.

i.Prosperity

This is when an economy is experiencing an overall level of high

economic activity.

ii.Recession

When the level of economic activity in a given economy drop

drastically, it is called recession.

iii.Depression

This is when an economic activity drop to a given economic

cycle.

iv.Recovery

This when the economic activity begin to show an upward

movements or begin to rise.

The true position of any economy can be measured by

using such economic indices as Gross Domestic Product

(GDP), level of employment, per capita income and rate of

inflation of prices level.

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The measurement and determination of the real economic

level of any economy will then depend on these economic

indices of budgeting.

1.Balanced Budget

A budget is said to be balanced when total government revenue

equals total government expenditure for a given period. In

this case the total spending in the economy remains

unchanged, and as such economic activities will not be

affected. However the budget will have an expansionary

effect in the economy in some cases.

For instance, if government applies an idle cash/fund that will

otherwise be spent by individuals and business on

consumption and investment. Also the expansion of

effective demand through the balance budget multiplier

effect will depend on the propensity to consume or save. If

the propensity to consume is 100 percent there will be no

balance budget multiplier effect.

2.Deficit Budget

A deficit budget is normally characterized by a high spending

profile over and above the amount of fund anticipated by

the government for the financial year.

31

Government indulge in excessive spending which will in other

words was designed to increase the level of economic

activity.

Deficit budget has an inflationary impact in the economy as the

government spends more than it can generate.

Government finance such deficits by borrowing from banks and

other institutional lenders.

By borrowing idle funds, government tends to spend such funds

on economic activities and thus increase demand. During

the period of full employment in the economy, deficit

budget will result in inflation but will increase economic

activity when there is less than full employment.

Deficit budget is used when there is recession and depression

to increase economic activity and addressing the

problems of unemployment.

3.Surplus Budget

This is diametrically opposite the deficit budget in that its

implementation reduces economic activity.

This is when government receives more than it spends in a

given financial year. When government spends less

32

than it generates, it will impact negatively in the economic

activity and thus reduces the level of employment and as

such results in a net decrease in demand for goods and

services. This made some economics to consider surplus

budget as a fiscal drag on the economy, but can be

minimized by the government by employing the surplus

earnings to write off some of the national debt.

One remarkable plus to the surplus budget is that it enables the

government to reduce or prevent inflation during

prosperity.

Conclusion

For budgets to play a vital role of a tool government

parastatal accountability, there must be an active participation

and involvement acceptance and commitment of top level

management and line management who are responsible for

budget implementation.

Through all managers are not equally gifted and

positioned, they must be well carried along right from the

33

planning stage to the implementation and evaluation stage of

the budgeting process.

This will enable them to easily dictate the variance stage

of the budgeted and actual. It will enable them to dictable where

the implementation failed and what or who was responsible and

what punishment or corrective action to be taken for future

budgets.

It will also be necessary to note that all the established

budgetary control process are well adhere to by the responsible

managers so also when the budget is approved, every manager

knows what is expected of him and does not need further

instructions or directions than to start going on his own task of

the entire budget.

Subsequently, managers of parastatals should be held

accountable for under or lack of performance but if they work in

accordance with the provision of the budget they owe no

explanation.

However, this chapter highlights the gap that exist relating

to various aspect of budgeting its overviews and in government

circle which leads to the rationale in carrying out the primary

research on those issues.

34

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN

This study covers and concentrated on the role of

budgeting and budgetary control for accountability in Enugu

State Housing Development Authority. The various cost centres

were visited and personnel questioned for information on the

role of budgeting.

For the purpose of this work the researcher used the

research design type and this enables the researcher to collect,

analyse and interpret data collected.

3.2 POPULATION OF STUDY

For the purpose of this study; the staff of the corporation

were used as the population. Though the population consist of

manly of public servants, the members of the population differed

in their professional and occupational groupings.

The groupings considered were the various divisions and

department in the corporation.

35

3.3 METHOD OF DATA ANALYSIS

Data cannot be useful except it has been processed which

will eventually give rise to information. In processing data, the

researcher has to apply statistical and analytical tools

appropriate enough to yield a reliable result.

The purpose of this statistical analysis of data with a more

compact form is to shows general tend relationship between

variables.

3.4 SAMPLING METHOD

Taking the whole population is a difficult task therefore a

sample was used by the researcher.

The researcher adopted the probability sampling

technique this entails a deliberate and equal chance of selecting

any element of the population which serves as an invited

sample, because budget is a management tool, the sample

selected were made up of senior officers and departmental

heads of the corporation under study, the researcher therefore

selected a convenient sample of (60) sixty staff of the

corporation.

36

3.5VALIDITY AND RELIABILITY OF RESEARCH

INSTRUMENT

The validity of the instrument were validated through face

veniality and professional validity. The method adopted by the

researcher ensured that the instrument used for the data

collection method is measured in its face professional validity.

Reliability of the instrument is based on the test and retest

that was administered at different times with obtained result

considered over firms and this proved the reliability of the

instruments.

3.6 SOURCES OF DATA

The researcher used the primary and secondary sources

of data, but reliance was placed more on the primary source

because of its relatively factual nature.

37

3.6.1 Primary Data Sources

This sources of data consist:

1.Questionnaire

This was structurally designed to so that opinions of experts

such as Accountants and departmental and sectional

heads and senior and junior managers were collected.

This will help the researcher to analyse the situation under

study for a conclusive recommendation.

2.Direct Interview

This includes the interviews of the financial controller, senior

accountant and the secretary to the board. The interviews

were used for additional information on the question that

are not clear enough to reach a reasonable conclusion.

3.Personal Observation

This was used by the researcher during his visits to the

corporation at least to read the body language of some of

the staff of the corporation.

38

3.6.2 Secondary Source

The researcher made use of secondary data such as

journals, newspapers, magazines, annual budget financial

statements and textbooks both local and foreign.

The main statistical techniques employed in this study

include, tabulation, percentage frequency, distribution and chi-

square (X2), among others; these tools were used for testing the

validity of the stated hypothesis.

Tabulations

This involves the arrangement of collected data into

meaningful departments or groups. This enables the researcher

to prepare quantitative data so that they are readily understood

and their significant value appreciated.

Percentage Frequency Distribution

This is only one of the tools used in this work. It is used for

analyzing variables with regard to degree of contribution, in the

case of this work, the percentage frequency distribution was

used to access the degree of response from respondents based

on the questionnaire administered to them.

39

Chi-Square Technique

This statistical tool is used in testing the independence of

the variable from the other, it is also used to compare the

difference between observed and expected frequencies. The

observed frequencies are those obtained after the observation

has been carried out while expected frequency are merely

based on specification.

Formula X2 = Σ(O - E)2

E

Where

X2 = Chi-square

Σ = Summation

O = Observed frequency

E = Expected frequency

Expected frequency is calculated thus: - Row total x column total Grand total

Degree of freedom Df = (R - 1) (C - 1)

Where R = Number of Row

C = Number of Column

40

Decision

Accept the alternative hypothesis (Hi). If the calculated

values of chi-square, calculated value of chi-square is greater

than the critical value of chi-square (X2).

Tabulate and reject the null hypothesis (Ho). On the other

hand accept the null hypothesis (Ho) if the calculated value of

chi-square (X2) is equal to or less than the critical value of chi-

square (X2) tab and reject the alternative hypothesis (Hi).

Hence decision rule is mathematically put as follows.

Accept Hi if X2 cal > X2 tab

Reject Ho if X2 cal > X2 tab

Accept Ho if X2 cal < X2 tab

Accept Hi if X2 cal < X2 tab

Conclusion

The research philosophy method and strategies for

obtaining the primary and secondary data for this research has

been outlined and explained. The methods were carefully

chosen in other to obtain the best approach which assisted in

achieving the study aims and objectives.

41

The phenomenology paradigm as discussed above were

adopted stating the reasons for its selection. This basis of

combining both questionnaire and interviews was to provide

both the qualitative and quantitative data which will contribute to

an improvement of accountability of parastatals.

42

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 DATA PRESENTATION

In this chapter, the data collected from questionnaire are

presented, analysed and tabulated. Sixty questionnaire were

prepared and distributed to the respondent drawn from lower,

senior and management staff of Enugu State Housing

Development Authority.

The analysis were carried out using simple percentage

method, the hypothesis will be analyse using the chi-square

based on the analysis of the relevant questions.

4.2 ANALYSIS OF THE QUESTIONNAIRE

Question 1

What role does budget and budgeting control play in your

organization?

43

Table 4.1

Options No of Response Percentage

Very high 47 78%

Very low 13 22%

Total 60 100%

Source: Researchers Field Study (2012).

From the above table it was shown that 47 of the

respondent representing 78% agree that budgeting and

budgetary control play a vital role in the organization, while 13

respondents representing 22% disagree.

Question 2

To what extent do budgeting implementation and their

actual performance relate?

44

Table 4.2

Options No of Response Percentage

High 25 42%

Low 20 33

No idea 15 20

Total 60 100%

Source: Researchers Field Study (2012).

From the table 4.2 above it was revealed that out of 60

respondent 25 representing 42% believes it is high while 20

representing 33% believes it is low relationship while 15

representing 20% had no idea of the degree of relationship.

Question 3

To what extent do budgetary control enhance

management productivity.

45

Table 4.3

Options No of Response Percentage

Very high 55 92%

High 5 8

Low - 0

Total 60 100%

Source: Researchers Field Study (2012).

From the table above, it was shown that 55% of

respondents representing 92% said that there is a very high

degree of influence of budgetary control to management

productivity while 5 respondent or 8% stated otherwise.

Question 4

What are the significant relationship between budgeting

control and management accountability.

46

Table 4.4

Options No of Response Percentage

Strong significance 35 58%

Weak significance 15 25

No idea 10 17

Total 60 100%

Source: Researchers Field Study (2012).

From the table above, it is observed that 35 of the

respondents or 58% believe strongly, 15 or 25% believed

weakly while 10 or 17% of the respondent said no idea to the

notion that there is a significant relationship between budgetary

control and accountability.

4.3 TEST FOR HYPOTHESIS

With special reference to the purpose of this study, the

following shall be tested using the chi-square.

As in Question 1

Ho:Budgeting does not play any role in government parastatals

accountability.

47

Hi:Budgeting plays a vital role in government parastatals

accountability.

Table 4.5

Options (Observed Expected)

(Observed Expected)

(Expected Observed)

Very high 20(14.33)A 10(17.92)B 13(10.75)C 47

Very low 0(5.67)D 15(7.08)E 2(2.25)F 13

20 25 15 60

Source: Researchers Field Survey (2012).

Extracted from table 4.1, question 1.

The expected values for each of the cells in the table is

calculated from the methods before. Row cell A = 43 x 20 60 = 14.33 Row cell B = 43 x 25 60 = 17.92 Row cell C = 43 x 15 60 = 10.75

48

Row cell D = 17 x 20 60 = 5.67 Row cell E = 17 x 25 60 = 7.08 Row cell F = 17 x 15 60 = 4.25 Computation of Chi-Square Table 4.6

O E O - E (O - E)2 (O - E)2 E

20 14.33 5.67 32.1489 2.2435

10 17.92 7.92 62.7264 3.5009

15 10.75 2.25 5.0625 0.4704

0 5.67 5.67 32.1489 5.6700

15 7.08 7.92 62.7264 8.8597

2 4.25 2.25 5.0629 1.1912

21.9357

Source: Researchers Field Study (2012).

49

Extracted from table 4.5

The calculated chi-square is 21.9357

To determine the critical value, the associated degree of

freedom (DF) is DF = (R - 1) (C - 1)

Where R is number of rows

C is the number of columns

Therefore DF = (2 - 1) (3 - 1)

= 2

Significant level is 5% = 0.05

The critical value X2 for 2DF at 0.05 level of significance is

5.991.

Therefore Cal X2 = 21.936 (approx)

Tab X2 = 5.991 (approx)

Decision Rule

Since the calculated X2 value of 21.936 is greater than the

tabulated X2 value of 5.991 at 2DF. The researcher therefore

rejects the null hypothesis (Ho) at 5% level of significance. This

suggest that budgeting plays a vital role in government

parastatals accountability and should be accepted.

50

Hypothesis 4

Ho:There is no significant relationship between budgeting

control and management accountability.

Hi:There is a significant relationship between budgetary control

and management accountability.

Table 4.7

Options (Observed Expected)

(Observed Expected)

(Expected Observed)

Total

Strong 20(17.50)A 10(11.62)B 13(10.75)C 35

Weak 15(7.5)B 10(5.00)E 0(2.50)F 15

No 5(7.5)G 0(3.33)H 5(1.67)I 10

TOTAL 30 20 10 60

Source: Researchers Field Survey (2012).

Extracted from table 4.4, question 4.

The expected frequency for each of the cells are calculated

thus: Row cell A = 35 x 30 60 = 11.67

51

Row cell B = 35 x 20 60 = 11.67 Row cell C = 35 x 10 60 = 5.83 Row cell D = 15 x 30 60 = 7.50 Row cell E = 15 x 20 60 = 5.08 Row cell F = 15 x 10 60 = 2.50 Row cell G = 10 x 30 60 = 5.00 Row cell H = 10 x 20 60 = 3.33 Row cell F = 10 x 10 60 = 1.67

52

Computation of Chi-Square X2 for the test of hypothesis 4. Table 4.7

O E O - E (O - E)2 (O - E)2 E

10 17.80 6.25 32.1489 0.357

20 11.67 -1.67 2.7889 0.2390

5 5.83 -0.83 0.6889 0.1182

5 7.50 -2.50 6.25 0.8333

10 5.00 5.00 25 5.0000

0 -2.50 -2.50 6.25 2.5000

5 5.00 0 0 0

0 3.33 -3.33 11.0889 3.3300

5 1.67 3.33 11.0889 6.6400

19.0176

Source: Researchers Field Study (2012).

Extracted from table 4.7

The calculated of chi-square X2 is 19.0176 to determine the

critical value, the associated degree of freedom is determine

thus;

53

degree of freedom (Df) = (R - 1) (C - 1)

= (3 -1) (3 - 1)

= 2 x 2

= 4

Significant level = 5% = 0.05

The critical value X2 for 4DF at 0.05 level of significant 159.91.

Therefore X2 cal = 19.0176

tab = 9.91

Decision Rule

Since the calculated X2 value of 19.0176 is greater than

the tabulated X2 value of 9.91 at 4DF, the researcher therefore

reject the null hypothesis (Ho) and accept the alternative

hypothesis (Ho) and accept the alternative hypothesis (Hi).

This implies that there is a significant relationship between

budgetary control and accountability.

54

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS

This chapter presents the summary of research findings

conclusions and recommendations based on the findings of the

research work. It is in this chapter that the objectives of the

study will be fulfilled through the discussions of the major and

minor findings from which the conclusions will be drawn and the

necessary recommendations made.

5.1 SUMMARY OF FINDINGS

In the course of this study which is based on the role of

budgeting in government parastatals accountability with

reference to Enugu State Housing Development Authority.

The following findings were made:

1)Budgeting and budgetary control play a vital role in the overall

success of the government parastatals which will lead to

the achievement of the set goals and objectives of setting

up the parastatals.

2)The study also reveals that there is a great degree of

relationship between budgetary implementation and their

55

actual performance. This shows that if a budget set out at any

financial period is not implemented to at least 70% the

goal of the period will not be made or attained.

3)The research also reveals that budgetary control as a

management tool contributes to efficiency and

effectiveness of management productivity.

4)It also reveals that budgetary control can be used to assessed

management budgeting accountability.

5.2 CONCLUSION

Having examined in details the uses and importance of

budgeting and budgetary controls in the organization and the

role the play towards determining the corporate objectives (profit

making) one could rightly conclude that it is indespensible to any

business organization.

If budget are carefully planned and implemented by

management, it could lead to decrease in cost and an increase

in revenue. Though budgeting and budgetary controls enhance

the efficiency of the organization performance, it should be

56

noted that it is not the magic stick that could replace effectively

planned and efficiency implemented at all levels, it will become

an essential standard in measuring actual performance.

This in above all makes budget an essential tool for

management accountability.

5.3 RESEARCH RECOMMENDATIONS

On the whole the findings of this study supports the

conclusion that the propose of budgeting and budgetary controls

contributes in no small way tot he overall performance of the

organizational accountability.

In the light of the findings made earlier, the following

recommendations were made:-

1.For budgeting to play a vital role in government parastatals

accountability. Top level managers should educate other

level managers on the importance of adhering strictly to

the budget provisions and implementations. When every

staff understands the provisions of the budget its

implementation will lead to proper accountability.

57

2.For actual performance the organization should adopt the

techniques that is easy to understand by their managers

and staff such as flexible and zero based budgeting

techniques. This will make it easy for implementation and

reduces cost for actual performance.

3.Since budgetary controls leads to efficiency and effectiveness

of management productivity, the top level management

should allow inputs from all levels of management in its

budgeting decisions to ensure its decisive implementation.

4.Since budgetary control is used to assess management

accountability, constant and periodic review should be

introduced in the budgeting process to ensure that

corrective action are taken an deviations which occur as

they occur.

5.4 DIRECTION FOR FURTHER RESEARCH

Future research should need focus on larger populations

size. For validation purposes. This will lead to an upshot to other

areas that has not been covered by this research because of

time constraints and other variable.

58

1.Environmental influence in budgeting control as a tool for

transparency in government parastatals.

2.Problems and prospects of budgets and budgetary controls in

government parastatals.

3.The role of corporate budgetary system in government

parastatals.

4.The benefits and contribution of budgetary control in

government decision making.

Finally researchers should took for other ways of using

budgeting as a tool for accountability in government parastatals.

Overall the research has been an interesting experience

to the researcher and has given evidence to the aim and

objectives and well as justified the researchers rational and

viewpoint.

59

BIBLIOGRAPHY Adeneji, A.A. (2011), An Insight into Management Accounting. Lagos Value Analysis Publishers, pg. 379. Anyigbo, C.I. (1999), Cost and Management Accounting, Enugu, Hugotez Publishers, pg. 196. Baggot, J. (1985), Cost and Management Accounting Made Easy London, McDonald and Evans Ltd p. 125. Bryman, A. (2001), Social Research Method, New York: Oxford University Press. Broom, J.L. and Howard, L.R. (1975), Principles and Practice of Management Accounting, London, McDonald and Evans Ltd,

p.82. Cooper, D.R. and Schander, S.P. (2008), Business Research Method, 10th Ed.; New York, McGraw/Irwin. Cooper, C. and Locke, E. (2000), Industrial and Organizational Psychology, Blackwell Business, Qualitative. Gesswill, J.W. (1994), Research Design and Quantitative Approach, London, Sage Publications. Deenscombe, M. (2002), The Good Research Guide, England, Open University Press. Eneje, B.C. (2005), Cost Accounting Made Easy, Enugu: Computer Edge Publishers.

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Eze, J.C. (2001), Principles and Techniques of Management Accounting, Enugu, JTC Publishers p.158. Ezeugwu, V.U. (1999), Intermediate Accounting, Enugu,Hugotez Publishers. Foot, M. and Hook, C. (2005), Introduction to Human Research Management 4th ed. Esseze, F7/Prentice Hall. Hussey, J. and Hussey, R. (1997), Business Research - A Practical Guide for Undergraduate and Post-graduate Students,

London: Macmillian Business. Ikpe, D.N. and Obah, G.S. (2004), Management Accounting An Introduction Test. Lagos, Masdoc Pub. Jankoweez, A.D. (2005), Business Research Projects 4th ed. London, Thomson Learning. Kumar, R. (1999), Research Methodology, A Step by Step Guide for Beginners, London, Sage Publishers. McQueen, R. and Knussen, C. (2002), Research Method for Social Science, An Introduction, Harlow: Pearson Limited. Punch, K.F. (1998), Introduction to Social Research, Qualitative abnd Quantitative Approach, London, Sage

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Strauss, A. and Corbin, J.M. (1997), Grounded Theory in Practice, Thousand Oaks, California, Sage Pub. Saari, L.M. and Schneider, B. (2001), Going Global: Surveys and Beyond", Professional Workshop Paper Presented at the

Sixteenth Annual Conference of the Society for Industrial and organizational Psychology, San Diego CA.

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APPENDIX Department of Management Faculty of Business Administration School of Post-graduate Studies University of Nigeria Enugu Campus. Dear Respondent I am a student in the above-named institution carrying out a study on the role of budgeting in government parastatals accountability - A Case Study of Enugu State Housing Development Authority. I want you to assist me by providing the information required in this questionnaire. The purpose of the study is academic and so the information you provide will be treated with strict confidentiality. Thanks for your cooperation. Yours faithfully, Okafor Donatus Okechukwu

63

RESEARCH QUESTIONNAIRE Please complete the blank spaces below by kindly ticking [] the correct answer. SECTION A 1.Name

______________________________________________ 2.Address

___________________________________________ 3. Sex a) Male [ ] b) Female [ ] 4. Marital status ____________________________________ 5. Age _______________________________________________ 6. Educational level a) Post graduate [ ] b) Graduate [ ] c) Professional certificate [ ] d) HND [ ] e) OND/NCE [ ] f) SSCE/GCE [ ] 7.Position held presently a) Top level management [ ] b) Middle level management [ ] c) Low level management [ ] 8.Work experience (in years)

64

a) 0 - 4 [ ] b) 5 - 9 [ ] c) 10 - 14 [ ] d) 15 and above [ ]

65

SECTION B 1.Do you prepare budget in your organization? a) Yes [ ] b) No [ ] 2.What type of budget do you prepare to achieve your goals? a) Flexible [ ] b) Static [ ] c) No idea [ ] 3.Who prepares budgets in your organization? a) Chief accountant [ ] b) the departmental heads [ ] c) Budget committee [ ] d) Any other [ ] 4.Are budget used as a basis for controlling? a) Yes [ ] b) No [ ] c) No idea [ ] 5.What factor do you take into consideration before allocating

cost. a) Relevant of the item [ ] b) Market trend [ ] c) Statue of the handling officer [ ] 6.To what extent does budgetary control act as an essential tool

to management decisions? a) Strong extent [ ] b) Very weak extent [ ] c) None at all [ ]

66

7.To what extent does the state government influence the budgeting process in your corporation?

a) To a high extent [ ] b) Minimal influence [ ] c) No influence at all [ ] 8.What role do budgeting and budgetary control play in your

organization? a) Strong role [ ] b) Weak role [ ] c) No role at all [ ] 9.To what extent do budget implementation and their actual

performance relate? a) Very high [ ] b) Very low [ ] c) No idea [ ] 10.To what extent do budgeting control enhances management

productivity? a) To a very high extent [ ] b) To a minimal extent [ ] c) No enhancement [ ] 11.What are the significant relationship between budgetary

control and accountability? a) Very important relationship [ ] b) Very low relationship [ ] c) No relationship [ ]