BUDGETING AND BUDGETARY CONTROL IN GOVERNMENT OWNED PARASTATALS A CASE STUDY OF ANAMBRA STATE HOUSING & DEVELOPMENT CORPORATION

CHAPTER ONE

INTRODUCTION

All organizations whether public or private, have some objectives or goods, which they aim to achieve. These objectives or goals could be the maximization of profit or rendering of services. The realization of an organization’s objective requires the acquisition and utilization of both human and material resources. To achieve these objectives, the organization tries to economize resources and means of achieving its pre-determined goals. With there resources, the organization determined the most effective way of reducing its cost of production or operation while it maximized its productivity, thus increasing its profitability and the efficiency of the services rendered. Profit optimization is achieved only by the properly planned use of available resources when the different activities are efficiently controlled.

This also applies to the efficient rendering of services by government corporations. Modern business management requires the use of some techniques in the formulation and adoption of planet and defined systems and tools with a view to achieving set goals such tools and systems include budgeting variance analysis and budgetary control. The process of setting goals or objectives to be achieve at some future points in time and determining how these goals are to be reached is described as planning, the process of translating this plan into financial targets/estimates can be described as budgeting can be likened to short term tactical planning” which is defined as” the process of preparing a short term and detailed plan of the activities of an organization and so converting the strategic long term plan into actions’.

The budget is a pre-determined statement of management policy during a given period, which provides a standard for comparism with the results actually achieved. The process of establishing a budget is know as budgeting while the process of assigning responsibilities for achievement of the budget, measuring actual performance and comparing it with the planned performance is known as budgetary control. Consequently, budgetary control is a system of controlling costs, which includes the preparation of budgets, co-ordination the departments and establishing responsibilities comparing actual performance with the budgeted and acting upon results to achieve maximum profitability.