2.1 CONCEPTUAL FRAMEWORK
A budget is defined by the Institute of Cost and management Accountants as â€œa planned outcome to be generated and for the expenditure to ensure during that period and the capital to be employed to attain a given objective. Ezeugwu (1999), defined a budget as a quantitative plan of action of how to carry out an operation/process by a business/establishment. Osisioma (1989), defined a budget as a different phases of business operation aimed at helping management towards the attainment of organizational objectives. Horngren and Foster (1987), see a budget as a quantitative expression of a plan of action and an aid to coordination and implementation. Matz and Ivory described a budget simply as a plan expressed in a financial and other quantitative terms and stressed that the terms "Budgeting, Profit and Planning" are synonymous. Pogues opined that a budget is a plan or target I the form of a quantitative statement for a specified time-span. He stated that a budget for the future time-span attempts to look over the hill into the future t where the business hopes to be in a future period of time and how it intends to get there. The budget, therefore, attempt to look at tomorrow's business world (in a short time frame) and management is forced to think a tomorrow's opportunities. Budget was also described as comprehensive and co-ordinated plan, expressed in financial terms, for the operations and resources of an enterprise for some specifies period in future. A budget involves every level of activity integrating revenue plans, expense plans, asset requirements and financing needs. To Pandey (1985) a budget is a plan of the organization's manipulation 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. According to Osisioma (1989) a budget has a number of characteristics, namely. It is a plan of action The plan is stated in quantitative or financial terms or both. It is prepared prior to a defined period of time for the control of performance within the period. It states performance expectations over a defined period of time, in different phases of business operation - sales, production, marketing and so on. It integrates the resources and costs of an organization, to plan for anticipated level of performance. It is aimed at the attainment of organizational objectives. From the foregoing, it could be seen that a budget is a quantitative state of plans in a future period. The process of preparing budget is known as budgeting. Planning, according to Osisioma (1989) is the management function concerned with the identification of objectives and target and, the selection of policies and methods necessary to achieve those objectives. Planning is a process of deciding what action should be taken in the future Furthermore, it was defined by Homgren and Foster as the delineating of goals, predictions of potentials, results under various ways of attain described results. The purpose of business planning is to minimize uncertainty about the future and through co-ordination of plans to increase the chances of making a satisfactory profit. Planning is, therefore, required at all levels of an organisation, departmental/sectional plan must synchronize in order to achieve the broad objectives of the organisation. Controlling as a management function which according to Matz and Usry is the measurement and correction of performance of activities of subordinates in order to make sure that enterprise objectives and the plans devise to attain them are being accomplished. Meigs concurred with this view or the managerial controls includes, planning, action, reporting and evaluation. They explain that planning is the setting of organizational objective standards of performance and choosing among alternative course of action while action is to see that the plans are put into effect and that policies are followed reporting in the ensuring of the results of actions taken and evaluation represents the accessing of the quality of performance and taking necessary steps to correct deviation from plans. Chartered Institute of Cost and Management Accountants (1975) defined budgetary control as the establishment of departmental budgets relating the responsibilities of the executives to the requirements of policy and continuously comparing actual with budgeted results either to secure by individual action the objective of that policy or to provide a basis for it revision. According to Anthony (1970), control is a process by which management assures itself that so far is possible, actions taken by the members of the organization conform the management's plans and policies. Control is seen by Osisioma as the regulation of activities of an organization so that performances are in accordance with the functions of management. According to Shim and Siegel â€œat the beginning of the period, the budget is a plan or standard, at the end of the period. It serves as a control device to help management measures whether its performance may be improved. However, it has been said that a good control, planning, according to Lucey (1996), is concerned with internal resource allocation to achieve certain objectives whereas control is concerned with the task of co-ordinating and using the allocated resources (labour, machine, space and finance) to achieve predetermine level of efficiency. He is of the opinion that there are very real practical problems in developing separated budgets but it remains that a single budget used for planning and control, which appear to be the norm, is attempting to achieve two different objectives which may conflict The above notwithstanding, budgeting is very essential in all organizations in order to enhance the efficiency and effectiveness of business operations. Budgeting is means whereas planning and control are the yardstick for achieving corporate goals.
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