Financial Planning And Control, A Key To Management Efficiency (a Case Study Of Nigeria Breweries Plc-ninth Mile Corner Enugu)

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A well designed system of financial planning and control is indeed a key to management efficiency and on this note, the study “Financial planning and control, a key to management efficiency-(a case study of Nigeria Breweries Plc, Ninth Mile Corner, Enugu) was undertaken with a kin interest in finding out the existing financial planning and control structures within the establishment; how operative and effective they are and possible ways to beef them up so as to either forestall the rate of fraud incidences, manipulations and or tendencies and to bring them to a manageable tolerable limit.


This research was deemed necessary because of the poor financial planning and control systems that have always been impediments to the growth of most business organizations.  Explicit in the exposition, however, is the realization that a profit and wealth planning and control programme must be tailor – made to fit each particular situation at hand. 


The Research design adopted was the cross-sectional form of quasi-experimental design which is widely used in administrative or social science research. Simple random sampling technique was employed and gathered facts and figures were analyzed and presented using frequency distributions, tables and percentages. Two hypotheses were postulated and their validity was tested using the chi-square test.


Major findings among others were on issues that bothered on porous internal control system, poor communication channel, breach of policy guidelines, inadequate segregation of duties, poor stock-take culture, high labor turnover, insufficient staff training, high cost of production, inept management and so on.


Amongst the recommendations were the need to have a comprehensive feasible staff training programme, disciplined and co-operative management, sound internal control system, effective job segregation, clearly defined roles, responsibilities and reporting lines, efficient communication channel with feed- back system, emphasis on cost control and reduction, staff welfare and consideration on environmental factors which are outside the control of the organization.


The study was rounded up by highlighting the implied implication of sound financial planning and control system as a cost process and the need to map out strategies that will regulate and monitor such costs and one of such strategies is total adherence to efficient financial planning and control procedures, practices and policies.

TABLE OF CONTENTS                                                                                      PAGE

Title page                                                                                                                                 i

Approval page                                                                                                                          ii

Dedication                                                                                                                                iii

Acknowledgement                                                                                                                    iv

Abstract                                                                                                                                   v

Table of contents                                                                                                                      vi - viii

List of Tables                                                                                                                            ix


Introduction                                                                                                                              1         

1.1       Background of the study                                                                                               1

1.2         Statement of the problem                                                                                              2         

1.3         Objectives of the study                                                                                     2         

1.4         Research Questions                                                                                                      3

1.5         Hypotheses                                                                                                                  4

1.6         Significance of the study                                                                                                4

1.7         Scope and limitations of the study                                                                                  5

1.8         Definition of terms                                                                                                         6


2.0       Review of related literature                                                                                            9

2.1       Financial management functions                                                                         9

2.2       Goals of Financial planning and control                                                              13

2.3       Environment of Financial planning and control                                                    13

2.4       Elements of a control system                                                                                         14 2.4.0           Cost control                                                                                                                        15

2.4.1.   Effective cost control/cost reduction                                                                              16

2.5       Production cost control                                                                                     17

2.5.0    Accounting for production cost elements                                                                       18

2.5.1    Material cost control                                                                                                     22

2.5.2    Labour cost control                                                                                                      26

2.5.3    Production overhead cost control                                                                                  29

2.6       Cost control methods                                                                                                    30

2.6.0    Budgetary control system                                                                                              30

2.6.1    Standard costing system                                                                                                33 standard costs                                                                                                   33 and disadvantages of standard costing                                                        34

2.7       Variance analysis                                                                                                          35

2.7.0    Material variance                                                                                                          35

2.7.1    Labour variance                                                                                                            36

2.7.2    Variable overhead variance                                                                                           37

2.7.3    Fixed overhead variance                                                                                               37

2.8       Historical background of Nigeria Breweries Plc.                                                            38

            References                                                                                                                   39


3.0       Research design and methodology                                                                                 40

3.1       Research method                                                                                                          40

3.2       Description of instrument used                                                                           41

3.3       Sources of data                                                                                                            41

3.3.0    Primary sources of data                                                                                                41

3.3.1    Secondary sources of data                                                                                            42       

3.4       Population and sample size determination                                                                      42

3.5       Statistical tools and decision rule                                                                                   43

          Reference                                                                                                                     46


4.0       Presentation, analysis and interpretation of data                                                 47

4.1       Data analysis and interpretation                                                                         47

4.2       Test of hypotheses                                                                                                        53

4.2.0    Testing hypothesis one                                                                                      54

4.2.1    Testing hypothesis two                                                                                      55


5.0       Summary of findings, conclusions and recommendations                                               58

5.1       Summary of findings                                                                                                      58

5.2       Conclusions                                                                                                                  59

5.3       Recommendations                                                                                                        60


Bibliography                                                                                                                 63                                                                                                                   


a)      Questionnaire cover letter                                                                                       65


b)      Survey Questionnaire                                                                                              66                   



LIST OF TABLES                                                                                      PAGE

Table 2.1          Elements of a Control System                                                               14

Table 4.1          Questionnaire Distribution Statistics                                                       48

Table 4.2          Age distribution of Respondents                                                            48

Table 4.3          Educational Qualifications of Respondents                                             49

Table 4.4          Main Business of the Brewery                                                   50

Table 4.5          Vouching System in the Brewery                                                           50

Table 4.6          Controls in the Brewery                                                                        51

Table 4.7          Fraud and Manipulations controls                                                          51

Table 4.8          Elimination of Fraud incidences and Mismanagement                 52

Table 4.9          Staff Efficiency and Productivity                                                            53

Table 4.10a      Computation of Chi-square value                                                          54

Table 4.10b      Chi-square value for Finance Department                                              55

Table 4.10c      Chi-square value for Works Department                                               55

Table 4.10d      Computation of value for Chi-square                                                     56

Table 4.10e      Chi-square for Finance Department                                                       56

Table 4.10f       Chi-square for Works Department                                                        57
















1.0  Background of Study

The financial function has always been important in management irrespective of any difference in structure, ownership and size. Financial organization of any business enterprise should be capable of ensuring that various aspects of its financial activities including planning and controlling are carried out at the highest possible degree of efficiency.  The profitability and stability of a company depend on its accounting and cost control systems, the efficiency of its staff, management’s adherence to instituted internal control system as well as the general financial policy of the company. A Financial manager must take decisions on issues that impinge on capital generation, resources allocation, and resource utilization. In the last 50 years, financial management has metamorphosed from descriptive or definitional aspect to analytical and decision oriented approach. In its formative years, financial management addressed issues such as risk-return relationships and maximization of return for a given level of risk.

Most of the studies conducted in business finance have laid more emphasis on comparing financial results of public and private sectors undertakings vis-à-vis profitability.  The fiscal approach has often over-shadowed the fundamentals of internal financial management. It is equally obvious that factors in the financial market, social, economic, political and other external events significantly influence internal decisions. It is desirable that the researcher focus attention upon “means and not the result” alone.  Profitability is the result of the means and methods employed in planning and controlling various functions of the business.

Dynamic profit planning and control is a broad approach to accomplishing efficiency and effectiveness in management functions. Its development and usefulness have increased in recent years.  It is especially significant in that the functional areas of management are brought into focus; a broad mutual enrichment of function between management and accounting that is a vital feature in the successful life of progressive enterprises.  However, its full potential is frequently eclipsed in public enterprises by the gap between the mechanics of the system conceptual and pervasive attitude towards public undertakings; Nigeria Breweries in particular.


Financial mismanagement and weak control have been a problem of many public and private establishments.  The problem of financial management and poor financial control by an organization impedes its growth and development potentials.  The present trend of “get rich quick” has made many Nigeria Breweries’ workers in positions of trust to abuse their trust and misappropriate or embezzle the company’s funds.  This misappropriation of funds manifests itself in different forms such as falsification of receipts and invoices; carting away of stock materials without proper documentation, to mention but a few.   The problem of poor control had led to increased rate of loss on company’s resources-financial and otherwise. This has equally made the company to operate below the target with minimal profit margin and poor returns.


i.             To examine the existing financial control in Nigeria Breweries PLC.

ii.            To investigate the present system of cost control and material management of the company.

iii.           The study also strives to bring into light such weaknesses which in future are likely to threaten the growth and development of the company.

iv.          It also searches out the means which will enable the organization to achieve its socio- economic objectives with minimum cost.

v.            The study of this manner also will take into account the company’s polices; it recognizes the fact that the socio-economic changes that already exist and other changes that are under way will make the task of financial planning and control more important in future if these changes are not properly considered and evaluated.

vi.          To make recommendations that will help to eliminate waste and better the chances of achieving the organization’s goals.

1.3             RESEARCH QUESTIONS

The study will focus on the following relevant questions.

·        Has the present financial control system in Nigeria Breweries PLC helped in checking the incidence of fraud, resource wastages and staff inefficiencies?

·        How commensurate is the company’s financial policy with the envisaged financial abuse?

·        Is staff efficiency and productivity adequate to mitigate fraud incidences and tendencies in Nigeria Breweries Plc?



1.4            HYPOTHESES

The following Null (H0) and Alternative (H1) hypotheses will be examined in the course of this research work.

Number one hypothesis:

H0:     The present financial control system in Nigeria Breweries cannot eliminate the incidence of fraud and mismanagement.

H1:     The Present financial control system in Nigeria Breweries can eliminate the incidence of fraud.

Number two hypothesis:

H0: Staff efficiency and productivity do not mitigate fraud tendencies and incidences in Nigeria Breweries Plc.

H1:     Staff efficiency and productivity mitigate fraud tendencies and incidences in Nigeria Breweries Plc.

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