CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

For many years, individuals, governments and companies have tried to regulate their income and expenditure, but this was never as workable as expected because of certain problems and constraints.

These difficulties led to better suggestions and approaches, since most of the resources available at the time were not used judiciously. A number of problems pushed in this direction, among them the non-fulfilment of some basic needs of the masses, the growth of the country's population, delay and inaccuracy in the execution of work, and payment for uncompleted projects. It was therefore considered expedient to have a balanced and reliable budget, which in its traditional form means a manual estimate of revenue and expenditure that can be applied to individuals, organisations and government. People began to prepare budgets for their day-to-day expenditure and revenue.

Despite careful planning and execution of budgets in Nigeria, the targets are seldom met, and many budgets end in difficulty. Research on Nigerian tertiary institutions shows that budget implementation depends on, among other things, the timely approval of the budget and the timely release of the approved funds (Aloh, 2024). The way the budgeting process is carried out also has a statistically significant effect on how effectively a tertiary institution, such as a polytechnic, operates (Wuraola, 2023). In many developing regions, budget execution and accounting processes are still carried out manually, which affects the way income and expenditure are managed (Ahmed et al., 2023).

On this basis, the researcher considered it necessary to look into the budgeting system in institutions, with special emphasis on tertiary institutions. The Institute of Management and Technology (IMT), Enugu, being a tertiary institution, is required to have a planned budget to support objective-oriented operation.

1.2 Statement of the Problems

Governments, companies, institutions and individuals have in the past drawn up impressive budgets on a daily basis, but most of these budgets worked only for a while and then collapsed.

IMT has spent a great deal of time planning its budgets, even to the extent of setting up a budget monitoring committee to ensure strict adherence to budget requirements. Even so, budgets in this country, and institutional budgets in particular, have never produced the desired results. This work therefore sets out to find out why institutional budgets fail to achieve their goals, by carefully studying the budgeting system of the Institute of Management and Technology (IMT), Enugu, and to formulate a good and reliable computer system that will address these problems. Web-based budget management systems have been developed for universities to improve the recording and processing of financial transactions and to provide financial information on present and past performance (Ahmed et al., 2023), which supports the case for a computerised approach at IMT.

1.3 Purpose of the Study

The researcher does not claim that this work is a "philosopher's stone". Rather, the work is essential in various ways to a number of people, including businessmen, accountants, tertiary institutions, organisations and banks, both private and government-owned, in the field of budgeting. It will be of immeasurable benefit to tertiary institutions, banks and organisations over time.

Organisations that prepare budgets will know the measures to take to prevent the problems of manual budgeting, and if they are faced with such problems, they will be in a position to find a solution. Governments and institutions can also protect their offices, companies, organisations and schools against dishonest managers and fraudsters.

1.4 Aims and Objectives

The objective of this project work was to introduce a computerised budgeting system that would help the tertiary institution under study to calculate its profit and loss account at the end of each financial year. Because of the increasing errors encountered when accounts are balanced manually, the researcher considered it necessary to introduce the new system. The new system would help the organisation to avoid wasteful spending, and the budget deficits that result from it.

1.5 Scope of the Study

In this research work, the researcher set boundaries on the area of study. The researcher studied the budgeting system of the Institute of Management and Technology (IMT), Enugu, for one financial year.

1.6 Assumptions

Necessary assumptions were made to facilitate the carrying out of the research work. These assumptions include:

1. That all the information given to the researcher by the officials of the institution (IMT) is correct.
2. That income and expenditure are net.
3. That there are enough resources to implement the budget.

1.7 Definition of Terms

Budgeting: The process of designing, implementing and operating budgets. It is the managerial process of budget planning and preparation, budgetary control and the related procedures. Budgeting is the highest level of accounting in terms of the future, since it indicates a definite course of action and not merely reporting.

Account: A detailed record of all the money that a person or business receives and spends.

Capital budget: A budget used to determine whether an organisation's long-term investments, such as new machinery, replacement machinery, new plants, new products and research and development projects, are worth pursuing.

Sales budget: An estimate of future sales, often broken down into units. It is used to set company and sales goals.

Production budget: An estimate of the number of units that must be manufactured to meet the sales goals. It also estimates the various costs involved in manufacturing those units, including labour and materials. It is created by product-oriented companies.

Marketing budget: An estimate of the funds needed for promotion, advertising and public relations in order to market a product or service.

Project budget: A prediction of the costs associated with a particular company project, including labour, materials and other related expenses. The project budget is often broken down into specific tasks, with a task budget assigned to each. A cost estimate is used to establish a project budget.

Revenue budget: A budget consisting of the revenue receipts of government and the expenditure met from those revenues. Tax revenues are made up of taxes and other duties that the government levies.

Expenditure budget: A budget that includes spending data items.

Flexible budget: A budget established for fixed costs, in which a variable rate is determined per activity measure for variable costs.

Appropriation budget: A budget in which a maximum amount is established for certain expenditure, based on management judgement.

Performance budget: A budget used mostly by organisations and ministries involved in development activities, which takes the end results into account.

Zero-based budget: A budget type in which every item added to the budget needs approval and no items are carried forward from the previous year's budget. It has a clear advantage when limited resources must be allocated carefully and objectively, but it takes more time to create because every part of the budget has to be reviewed by management.

Personal budget: A budget type that focuses on expenses for oneself or for the home, and that usually involves an income to budget against.

System: A collection of elements or components organised for a common purpose.

Module: A separate unit of software.

References

Ahmed, A., Mohammed, C., Ahmad, A., & Abdulrazzaq, M. (2023). Design and implementation of a responsive web-based system for controlling the financial budget of universities. Journal of Technology and Informatics (JoTI), 5(1), 1–7. https://doi.org/10.37802/joti.v5i1.339

Aloh, M. A. (2024). Effects of budget implementation on goal achievement of state owned tertiary institutions in Ebonyi State, Nigeria. Certified National Accountant Journal, 31(4), 41–62. https://doi.org/10.70518/cnaj.v31i4.04

Wuraola, E. A. (2023). Budgeting process and organizational effectiveness in The Polytechnic, Ibadan, Oyo State, Nigeria [Master's thesis, Lead City University]. Lead City University Repository. https://repository.lcu.edu.ng/handle/123456789/697