Budgetary Control in a Non Profit Making Organization
Budgetary Control – The preceding heading in this chapter provides insight into the Budgetary control in a non profit making organization as it affects National cereal research institute (NCRI) badeggi; also as a focus of discussion, the historical background the organization structure and administration of budgetary control of the N.C.R.I was highlighted with respect to a non profit making organization.
BUDGETARY CONTROL IN A NON PROFIT MAKING ORGANIZATION
budgetary is a financial planning that serves as the basis for expenditure decision making and therefor subsequent control of expenditure.
Planning is a systematic and formalized process for purposely directing and controlling process for purposely directing and controlling future operation towards desired objectives lack of adequate planning will result in an organization “Reacting” to unexpected event which can be costly, risky and socially disruptive. However careful planning gives the organization chance to and or anticipated danger. It required the management to be considerable research before making decision as which action to be taken. Every organization some form of budgeting. It is essentially important in non profit making organization especial those whose annual receipts or revenue are fixed or determined to adhere closely to plans as expressed in the budget. Performance control in the managerial content to direct the organization system is the ability to direct the organization activities towards fulfilling its objective.
Budgeting is a management control tool used to ensure achievement of organization set objective with indications of performance. Budgetary control system are designed to monitor the variables that determine the discrepancies with executed performance and to take corrective action if those discrepancies would impede the completion of the expected result.
Budget has been defined by M.W. Biggs, a renowned authority on budgeting as “a financial and or quantitative statement prepared prior to a definite period of period for the purpose of attaining a given objective.’[ however it is realized from the definition that budget is a pre- request in performance control processing. Once the budget has been approved and the budget period commence management at once the must being to exert strong efforts to reach the projected goals and to review these effort as time goes by. This is the essence of budgetary control.
The management accounting in the civil service of Nigeria (1977) defined budgetary control as the establishment of budgets relating to the responsibilities of middle managers to meet the objectives of an organization and the continuous comparison of actual with budgeted result so that if remedial action is necessary, it may be taken at an early stage. The definition satisfies the description of an operating budget as “An operating short terms plan for managing the resources necessary to carry out a programme.’
Hence, budgets are assented feature of most control system. If well administered, they aid the planning process, provide performing criteria, serve as a communication tool, and co- ordinate organization activities. Thus , this makes it essential for non profit making organization whose service institute was established along side with other 22 research institutes by a Federal at Ibadan until 1984 when, for output are either social and or developmental to exert all effort to adhere. Strictly to the operating budget.
BACKGROUND INFORMATION OF N.C.R.I BADEGGI
The history of the organization date back to 1898 when the nucleus of the first federal department of agriculture was established by the British colonial administration moor plantation, Ibadan. The organization was later change to the federal Department of Agricultural Research in 1954. In 1975 the institute was established along side with other 22 Research institutes by a Federal government decree. The headquarters remained at ibandan unit 1984 when following a federal government directives, it was moved to the present location at Badeggi near Bida Niger state in Guinea Savannah which is the primary ecological zone of its mandate crop.
In addition to the headquarter of the institute located at Badeggi the institute maintains nine sub stations at different geo- political zones of the country. These includes
– NCRI Ibadan, Oyo state (Humid Forest)
– NCRI Amakama – Olokoro, Umuahia, Abia state (Humid forest/ Acid soil)
– NCRI Mokwa, Niger state (Guinea Savannah)
– NCRI Uyo, Akwa Ibiom state (Humid, marine Acid soil )
– NCRI Brinin kebbi, Kebbi state (Deep flooded rice)
– NCRI Bacita Kwara state (Sugar cane research)
– NCRI Numan, Adamawa state (sugar cane research)
– NCRI Warri, Delta state (Mangrove Swamp rice)
– NCRI Yander, Benue state (Soya Bean research)
The institute has the national mandate to conduct research into the genetic improvement of rice, Soya beans, benseed and sugar cane as well as over all faring system and resources management research and extension in the middle Belt zone of Nigeria comprising of eight states (Niger, Kwara, Kogi, plateau, Nasarawa, Benue Taraba and Federal capital Territory (FCT)
The main goal of the institute is to generate and disseminate improved technologies to agricultural production achieve self sufficiency National food security feed the industries and have surplus for export.
The specific function of the institute have now been incorporated in the new National co-ordinate research project as well as the National Agricultural research project funded sugar cane and farming system research and extension research programmes. The major highlight of the activities within these programmes are as follows:
- The improvement of the genetic potentials of rice, soybean beniseed and sugar cane
- The improvement of the economic and husbandry practice and storage of the mandate crops.
- Ecology of pest and diseases of the specified crops and methods of their control.
- Research on the over all farming system (indulging agro forestry fisheries, livestock, land resources and environment of the middle belt agro ecological zone as well as their socio economic effects on the rural population and
- The dissemination of useful research results obtained to the farmers, other collaborating agencies and end users.
MANAGEMENT AND ADMINISTRATION OF BUDGETARY CONTROL IN NCRI
The federal Government established the institute with the mandate earlier mentioned under an enabling legislation which regulates the activities of the management under the supervision of the board which is responsible to the federal ministry of agriculture.
Financial allocation to the institute is provided for in the federal ministry of agriculture budget. Other source of fund includes grant loan from external bodies, such as world bank, UNICEF etc.
The institute unlike the other sister institutes has no efficient revenue generating services or projects. The sudsy income available to institute comes from rice processing interest of staff loan sale of seeds, interest of fixed deposit, rental income constancy and information service, contracts registration and tender fees sales of unserviceable item. From the fore said items the institute generate little revenue.
The expenditure the institute I done under three major heading. That is, administrative expenditure, staff cost and the research programmes expenditure.
Occasionally, the institute may receive allocation of fund from the federal ministry of Agriculture for capital development on which appraisal for the expenditure of such allocation on any other item must be obtained.
The Administrative expenditure will include all expenses that has to do with the administration and maintenance of the institute with regard o building, vehicle, machineries etc. this will be discussed in .detail in the analysis of data.
The staff costs will include all expenditure incurred in respect of staff development and training, staff welfare and medical expenses,. Maintenance of staff quarters and local transport and travelling of staff.
The research programmes expenditure: this carries the lion share of the fund, it is the primary aim why the institu9te was set up. Funds are allocated between the three crops based research programmes patterned, along the mandate crops and the farming system. These research programmes are headed by the programme leaders whose duties are coordinated by the Asst. Director heading the research Division. Also the administrative expenditure and the staff cost can be group under one heading of as recurrent expenditures which include finance and supply.
BUDGET PREPARATION IN NCEI BADEGGI
Budgets are prepared based in divisional needs and objectives. The research division prepare their budgets and send to the head of research division for use in the budgets. While the head of finance prepares budget for the recurrent which includes finance and supplies.
The finance department finally collect the research budget and recurrent budget into the final budget, which is later send to the director for due approval and then to the federal ministry of Agriculture at the issuance of “Call up” circular.
BUDGETARY IMPLEMENTATION AND CONTROL PROCESS
The fiscal year of the institute like any other government establishment starts in January and ends December. The implementation of the budgets is the responsibility of finance and Account Division.
Fund are provided for as the budget are carried out by responsible officers except on emergency situations and funds approved for other expenditures are diverted to arrest the situation that are unfavorable in pursuance of the over all objective of the institute.
REASONS FOR THE PRODUCTION OF A BUDGETARY CONTROL SYSTEM IN NCRI BADEGGI
The budgetary control system is of many important to the institute which includes:
- To aid- the planning of the research process, so that corporate objective can be achieved.
- For coordination of the institute activities as planning brings staff together in the sense that administration of the budget requires that a budget committee be set up and that all staff are told how to participate in the budget and how it affect them.
- To serve as a communication tool: Top management can communicate corporate management can communicate their feelings to top management be cause of the team spirit generated.
- Budgetary control serves as a strong control tool to management, it enable the institute to apply the principles of management by exception and the divisional heads of department can be held responsible for not taken an action or for taking wrong action.
- The institute can use the budget for the evaluation of performance, because of the comparison of budgeted cash flow and actual cash flow.
PROBLEMS ASSOCIATED WITH THE BUDGETARY CONTROL SYSTEM OF NCRI BADEGGI
The problem in the budgetary process implementation and control of the institute can be analyzed as follows:
There was no standing committee to develop and coordinate budget as at the period which the project cover. This implies that the constancy budgeting monitoring evaluation was not functioning. However, the management controls the activities of the institute with a monitoring team set up to look at the performance on a quarterly basis. At the beginning of 1998 fiscal year, a budget committee was set up and was made up as follows: the director, the head of finance, project officer and other officers co-opted where necessary to prepare and coordinate the budget.
The heads of department that are made to submit budget estimates may not show through understanding of the procedure and even format of the budget. From the information gathered, the institute do not operate a budget manual whereby a documented procedure for budget preparation is adopted. This is evident from the variance between the actual and the budgeted variance to problem that are revealed by budgetary control.
However, because of the virtual absence of control reports, the budget/ actual/ variance in budgeting are never analyzed to investigate problems. The head of departments are not be there about variances, but to spend their allocations. If budget is used to measure performance, more attention with be given to the process of budgeting and their variances.
MONITORING OF BUDGETARY CONTROL SYSTEM IN NCRI
As a measure of proper accountability of financial allocation to the institute, the ministry of Agriculture, ministry of finance and National planning commission have established a machinery for monitoring and evaluating the performance of the institute by setting upon inspect orate unity which will monitor the performance of the institute by setting upon inspectorate units which will monitor the performance of the institute on a regular basis, in areas such as the research programmers, institute facilities and general management to resolve operation problems quickly and to evaluate the performance of the institute.
—This article is not complete———–This article is not complete————
This article was extracted from a Project Research Work/Material Topic
“A CRITICAL ANALYSIS OF BUDGETARY CONTROL:
ITS EFFECTIVENESS AND EFFICIENCY IN A NON PROFIT MAKING ORGANIZATION
(A CASE STUDY OF N.C.R.I BADEGGI).”