An Assessment Of Budget And Budgetary Control In Nigeria Commercial Banks (a Case Study Of Union Bank Of Nigeria Plc, Kaduna)

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(A case study of Union Bank of Nigeria Plc, Kaduna)


The defectiveness of an organization depends on the effectiveness of the management body. An organization that wishes to develop and grow must be involved in budget preparation, so as to make long term plans. Whether or not the capacity of building made and prepared by management in their annual corners stone of this study. This project present some findings on the contributions of budgeting through interview, questionnaire and personal observation and analysis of the data shown in chapter four (4) despite that the budget system and budgetary control an effective towards decision making of management without forecasting, the business may suffer in future, deficiency of cash which may in turn resistant curtailment of their operation thereby forcing management to engage in borrowing at substantial interests rate with precise reference to the findings of the project work. The contribution of budgeting and budgetary control to management making budgeting and budgetary to other decision making techniques finally, a skillfully prepared budgeting program should be properly implemented to ensure effective budgeting via control.



Cover Page        -       -       -       -       -       -       -       -       -       -       i

Title page -        -       -       -       -       -       -       -       -       -       -       ii

Declaration page        -       -       -       -       -       -       -       -       iii     

Approval page    -       -       -       -       -       -       -       -       -       iv     

Dedication page -       -       -       -       -       -       -       -       -       v

Acknowledgement -    -       -       -       -       -       -       -       -       vi

Abstract     -      -       -       -       -       -       -       -       -       -       vii

Table of contents        -       -       -       -       -       -       -       -       -       viii


1.0Introduction -       -       -       -       -       -       -       -       -       1

 1.1 Background of the Study -    -       -       -       -       -       -       1

 1.2 Statements of the Problems --       -       -       -       -       -       3

 1.3 Objectives of the Study -       -       -       -       -       -       -       4

 1.4 Research Hypothesis/Questions -   -       -       -       -       -       4

 1.5 Significance of the Study -     -       -       -       -       -       -       5

 1.6 Scope of the Study -     -       -       -       -       -       -       -       5

 1.7 Historical Background of the Case Study -       -       -       -       -       6

 1.8 Definitions of Terms      -       -       -       -       -       -       -       8


Chapter two: Literature Review

2.0    Literature review-       -       -       -       --      -       -       -      

2.1 Concept of Budgetary --       -       -       -       -       -       -       10

2.2 Geographical spread of union Bank of Nigeria Plc Activities        -       11

2.3 Purpose of budgeting   -       -       -       -       -       -       -       18

2.4 Essential of budgetary--       -       -       -       -       -       -       19

2.5Capital secreting of Union bank of Nigeria -      -       -       -       21

2.6 Principle budget factor--       -       -       -       -       -       -       22

2.7 Usefulness of budgeting -      -       -       -       -       -       -       22    

2.8 Budget committee -      -       -       -       -       -       -       -       23

2.9   Budgetary control       -       -       -       -       -       -       -       -

2.10The concept of control in Budgetary      -       -       -       -       -      

2.11Usefulness of budgetary control   -       -       -       -       -       -


2.0Research Methodology --       -       -       -       -       -       -       27

3.1 Introductions -     -       -       -       -       -       -       -       -       27

3.2 Population and Sample Size   -       -       -       -       -       -       28

3.3 Sampling Techniques -  -       -       -       -       -       -       -       28

3.4 Sources and Method of Data Collection    -       -       -       -       29

3.5 Method of Data Analysis -              -       -       -       -       -       31

3.6 Justification for the Choice -   -       -       -       -       -       -       31


3.0Data Presentation, Analysis and Interpretation

4.1 Introductions -     -       -       -       -       -       -       -       -       32

4.2 Data Presentation  and analysis-    -       -       -       -       -       33

4.3 Data Analysis and interpretation-    -       -       -       -       -       39

4.4 Testing of Hypothesis/Question and Interpretation   -       -       41

4.5 Summary of Finding     -       -       -       -       -       -       -       47


5.0Summary, Conclusion and Recommendation

5.1 Summary    -       -       -       -       -       -       -       -       -       49

5.2 Conclusion   -       -       -       -       -       -       -       -       -       50

5.3 Limitations of the Study         -       -       -       -       -       -       -       51

5.4 Recommendations        -       -       -       -       -       -       -       -       51

References        -       -       -       -       -       -       -       -       -       -      

Appendix/appendices         -       -       -       -       -       -       -       53


1.0      Arrangement of the Study

This research work on the assessment of budget and budgetary control in Nigeria commercial banks with particular reference to Union bank of Nigeria Plc, Kaduna, the study is organized in five chapters, the first chapter deals on the arrangement of the study, Background of the study, statement of problem, purpose of the study, Research question, Research hypothesis, scope of the study, limitation of the study etc while related literature on the subject mater was reviewed in the second chapter. The third chapter of this project work deals on the research design and methodology, in this chapter data will be sourced through primary and secondary means. The data sourced was analyzed in chapter four and also the hypotheses formulated in chapter were also tested in this part of the research work. The findings, conclusion and recommendations were stated in chapter five.


1.1      Background of the study

The term budget refers to a plan quantified in monetary terms, prepared and approved by appropriate authorities prior to a defined period of time, usually showing planned income to be generated and or expenditure to be incurred during that period and the capital to be employed to attain a given objective.

Abogun (2012) defined a budget as a plan of dominant individuals in an organization expressed in monetary terms and subject to the constraints imposed by the participants and the environments, indicating how the available resource may be utilized to achieve whatever the dominant individuals agreed to be the organization priorities.

Pandey (2003) in his formal definition defines budget as “a qualitative statement for a defined period of time which may include planned revenue, expenses, asset, liabilities and cash flows”.

Institute of cost and management accountants (ICMA) (as cited by Eze 2001), defined budget as “ a financial and or qualitative statement prepared prior to a defined period of time, of policy to the pursued during that period for the purpose of attaining a given objective”.

Lucey (2003) in his recent definition of budget defines it as a qualitative expression of a plan of action prepared for the business as a whole for departments, for functions such as sales and production or for financial resource item such as cash, capital, expenditure, manpower purchase, e.t.c

Morgan (19970 opines that the budget had grown beyond a financial tool. It is above all managerial tool, in essence, it is the best tool for making sure that key resources, especially performance resources are assigned to priorities and to results. It is a tool that enables the manager to know when to review and revise plans, either because results are different from expectation or due to environment economics conditions, market conditions or technologies charge which no longer correspond to the assumption of the budget.

Welsh (2003) opines that budgeting is the only comprehensive approach to managing so far developed that, if utilized with sophistication and good judgment fully recognizes the dominant role of the manager and provide a framework for implementing side fundamental aspects of  scientific management.

Budgeting at both management level and operation level looks at the future and lays down what has to be achieved, control checks whether the plans are being realized and put into corrective measures, where deviation or shortfall is occurring. According to Egam (1997) emphasized that without effective controls, an enterprise will be at the mercy of internal and external forces that can disrupt its efficiency and be unaware, when a budgeting and control system is in use, budgets are established which set out in financial terms, the responsibility of the managers in relation to the requirement of the overall policy of the company.

Financial, a budget provides a focus for the organization, aids the coordination activities and facilities control where as control is flexible budgets.


1.2      Statement of problem

Budgetary control problems as a result of poor budget preparation. These arise such that; Problems in budgetary control may reflect a poorly formulated budget  for example lack of credibility/realism. And lack of a comprehensive budget may complicate implementation for example separate timetable and rules for capital budget, extra-budgetary funds. And, also, where spending ministries have not been fully involved in their budget formulation so that they understand and own their budget. Also implementation problems can be reflected in lack of correct prediction of economic, social and political scenario or circumstances and the outbreak of situations like war, famine, natural disaster etc can hamper budget implementation. In Nigeria, the emergence of the civil war in May, 1976 really hinders the effective implementation of that fiscal year budget.

Some of the problems includes:

Lack of civil society involvement in budgetary control process in Nigeria Preparation. Delayed publication of financial statements. Lack of transparency and accountability. Lack of expert inclusion in the budget preparation to effectively forecast economic variables. The importance of implementation underscore the basic functions of budgeting and implementation in Nigeria since, much time is spent by the Nigerian government (often with World Bank, IMF assistance or encouragement) preparing elaborate poverty reduction focused budgets. A budget guides the government on a developmental plan that most times needs to be consolidated to achieve a meaningful aim. Budgetary control is importance because it assesses government performance over time, that is, it measures government score card and effective comparison can be made. An effectively implemented budget improves and strengthens the various macro-economic various suck as poverty, unemployment, inflation, and the financial systems. In total, an efficient and implemented budget encourages fiscal discipline; Assurance that budget aggregates are sustainable over the medium-term and promote economic stability effective allocation; Assurance that public money is spent in accord with national priorities and on programs that are effective in achieving public objectives and effective distribution of wealth efficient public service; Assurance that public services are delivered in an efficient, fair and courteous manner, and are accessible to citizens.

1.1      Objective of the study

In this project, the researcher intends to identify and highlighting the effectiveness and some problem involved in the preparation and application of budgeting and budgetary control in the bank industry with special references to union bank of Nigeria plc. With a view to suggesting ways and means of improving the operations and effectiveness of the system.


There is strong belief that good operating of budgeting and budgetary control is of great value to money deposit bank planning and control are indispensible in the money deposit banking industry.


The objectives of the study are the following:

1.  To know the type of budgets and budgetary control in operation

2.  To ascertain the efficiency and effectiveness of the system of budgeting and budgetary control

3.  To determine whether the system of budgeting and budgetary control has led to improvement in money deposit banking system

4.  To determine it budget and budgetary control are worth while.

5.  To highlight the problem of budgeting and budgetary control and ways of improving on them.

1.3      Research Questions

2        What are the types of budgets and budgetary control in operation in the institution?

3        What is the efficiency and effectiveness of the system of budgeting and budgetary control?

4        Does the system of budgeting and budgetary control contributed to improvement in money deposit banking system.

1.5      Research hypothesis

In order to realistically assess the contribution of budgeting and budgetary control to managerial decision making, some hypothesis have been postulated

H0: budgeting and budgetary control are useful established better financial control

HI: budgeting and budgetary control are not useful established better financial control


1.6   Significant of the study

The significance of this study is to enhancing proper budgeting and budgetary control in money deposit bank system.


Many companies or organization have folded up because of incompetency of the management body and also poor implementation of the policies of the organization. This is usually due to the fact that most organization find it reluctant  to engage in proper budget planning this has led to lack of predictions and eventually unforeseen circumstance override the policies of the organization; this is why written up is provided.


When this write up is eventually complex. Many organization will realize that budgeting and budgetary control are priority for the successfully achievement of the organization objective.


1.7      Scope of the study

The union bank of Nigeria plc has been chosen as a case study for the purpose of this research.


A look at budgetary control shows that it encompasses the process of planning. The preparation of budgeting based on this plan, recording and comparing actual performance with that budgeting.

1.8 Limitation of the Study

In research of this nature, it is pertinent that one will be faced with certain slimming factors, thus, study the contribution of budgeting and budgetary control to management decision making which is restricted to a bank, union bank of Nigeria plc.


The first to mention is finance. Due to the present state of the economy, the researcher is faced with financial constraints. For travelling to some place like Kaduna which is the area office of the case study i.e. union bank of Nigeria plc to collect the data involve high transportation  cost due to fuel scarcity and also disturbance in Kaduna at the time the research was conducted.


Another factor that needs to be mentioned is the academic work pressure n the researcher due to the academic program which limits the extends of the research study. The semester system required a lot of hard work on the part of the researcher and hence has some adverse effect.


However, these factors not withstanding, the research was conducted diligently and affectively in accordance with the desired objective of the study.

1.9      Definition of Terms

Budget: A comprehensive and co-ordinated plan expressed in financial terms for the operation and resources of an enterprise for some specific period in the future expressed in quantitative and financial terms. This is to say that budgeting is a process of budget formulation.

Budgeting control: A system of controlling cost which includes the preparation of budgets co-ordinating the department and establishing, comparing actual performance and acting upon result to achieve maximum profitability.

Flexible budge: It is a budget, which recognized the difference between fixed and variable cost in relation to fluctuation in output or turnover. Its designed to charge appropriately with fluctuations.



This chapter is organized under nine different subheads which are arrangement of the study, Background of the study, statement of problem, purpose of the study, Research question, Research hypothesis, scope of the study, limitation of the study etc. in this chapter, some problems were raised, after which four objectives were formulated based on the objectives questions were asked and hypotheses were equally developed.


1.10Historical background of the case study

Union bank is a large money deposit bank, serving individuals, small and medium sized companies as well as large corporations and organizations. In July 2009, it was raked the 556th largest bank in the world and the 14th largest bank in African as of June 2012, the bank’s asses base was estimated  at US$6.784 billion (Nown 1.049 trillion): The shareholder equity at that time was estimated at U$$ 1.22 billion (NGN. 188.4 billion) the bank has several subsidiary companies and non-subsidiary affiliations.



-      Union Homes savings and loans plc

-      Union Trustees Limited

-      Union Assurance company limited

-      Banque international due Benin contonon

Affiliated company

-      Considerate discounts limited

-      HFC Bank Ghana Limited

-      Unique venture capital management company.

The history of union bank of Nigeria plc with the opening of the colonial bank official in Lagos, Jos and Port-harcourt in 1917. In 1925,  the bank acquired by backlogs bank and its name was change to Barclays bank DCO (Dominion colonial and overseas).

The bank developed and grew rapidly over the years by 1954 branches had been opened in almost all parts of the country. For instance, Kano, Zaria, Ibadan and Ebute meta branches were opened in 1918. Aba branch opened in 1926. Ijebu-odu in 1931 Bida in 1953, Katsina in 1955 Sepels or 1958.


As a result of the Nigeria enterprises promotion degrees of 1972 and 1947, the federal government of Nigeria acquired 52% the banks shares leaving 40% of Barclays bank international limited (new Barclays bank plc) while the remaining 8% was taken up by the Nigeria public.

Barclays bank plc sold 50% of its shares to Nigeria in 1979, thus reducing the quality holding to 20% following this development. The bank name was changed to union bank of Nigeria ltd. To replaced than new ownership structure i.e.

Federal government of Nigeria                          55%

Private Nigeria invest                                               28%

Barclay bank plc                                                      20%

With the new name the bank is now an indigenous bank and no longer or subsidiary of Barclays bank plc, although Barclays bank plc still continued to offer technical and correspondent services as in the past.

Today the bank has over 225 branches spread all over the country and a branch in the city of London and Johannesburg the bank also have a staff of over 11,300 employees out of which only five (5) are expatriate and in specialized field. The bank is indeed the largest employee of labour in the banking industry in Nigeria and with five training centre (7,000 in Lagos Yaba and Ijora one each in Jos, Zaira and Port-Harcourt. 


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