REVIEW OF RELATED LITERATURE
The literature reviewed in the study concerned the silent issues regarding the budgeting process, budget performance and the variables used in the study.
Budgeting is concerned with the implementation of the approved programme within the long-rang plan the purpose of budget system is to serve the need of management in respect of the judgement and decisions it is required to make and to provide a basis for management functions of planning control.
Chief executive officers like the warm feeling they get when they see the year-end profit forecast. But they are mighty be anxious about the reliability of assumption and the firm's ability to respect to the range: like the way they are able traced operating managers to target performance contracts (fixed target ran forced by incentives). But they also know that the process takes too long and add too little value.
Operating manager like knowing where they stand but they are also concerned about importantly the fixed performance contracts lead to decisions paralysis and cosmetics accounting rather than decision action and ethical reporting (Hope et al, 1995).
A budget is a detailed plan, which sets out, in money terms, the plan for income and expenditure in respect of the future period of time. It is prepared in advance of the time period and based on the agreed objective for that period of time together with the stratages planned to achieve those objective (Weetman et al, 1996).
To implement the stratages decision, budget committee be formed comprising the senior managers who are responsible for designing the stratage.
The budget committee receives the initials budget from each functional manager. If the initial budget is based on unrealistic target, then the functional manager will be asked to modify the budget within the organizational overall target.
Rapid industrialization and development are only possible where there is a sound budgeting process and budgetary control. Budgeting is a management's tool that facilities goads achievement.
2.1 BUDGET AND BUDGETING DISTINGUISHED
Ugwe (2003) defines budget as " a financial statement of the Government's proposed expenditure and expected revenue during a particular period of time, usually a year". Such budgets are usually employed to attain the objects of full employment in the economy, price stability, rising growth in national output, balance of payment Equilibrium and equity in income distribution.
Furthermore, in the word of Ibe (2002). The budget is a financial estimate of expected Government's hope to incur in a given financial year"
Adams (2006) defines budget" as a financial and a qualitative statement prepared and approved prior to a define period of time of the polices to be pursued by the organization in other to achieve organizational goals and objective".
While, budgeting is closing related to budget Budgeting is the act of embarking on budgeting.
2.2 GOVERNMENT BUDGEMENT
A constitution requirement the national budget is a constitutional requirements. This is to give focus and direction to government operations. Section 8 (1) of the 1999 constitution of the federal Republic of Nigeria state that " The president of the federal Republic of Nigeria, shall cause to prepare and laid before each houses of the National Assembly at any time in each financial year, estimates of the revenue and expenditure of the federation for the next financial year"
This affirmation as quoted above gives credibility and credence to the act of budgeting in the public sector.
2.3 BUDGETS IMPROVEMENT TECHNIQUES
There are so many steps to improve the budgeting in the public sector Budgeting and planning.
Lay the foundation for continuous improvement of an organization's fiscal health. Nailing down the future state early on drives efficiency, improves planning and beaten a shared vision for success. It is a critical component to transforming any finance organization, making the best use of critical data to inform key decisions and stratages.
Remember how you told yourself to set aside time after last year's cycle to fix the process and streamline activities so it would be better the next time around? Most organizations did not. Don't make the same mistake again, or you will be reading this article next year as you pore over spread subjects at (day table. While many organizations missed the boat on making wholesale improvements to their budgeting processes ahead of this year's cycle, there still steps. That can be this year to make a difference.
2.4 ISSUES THAT CAN IMPROVE BUDGETING TECHNIQUES
i. Automate: Are you getting the most out of your current tools? What are your current tools? In most organization they are spreadsheets, and the majority of excels users take advantage of Less than 5% of the package's teatimes; it is worthwhile to set down with an "Excel Wizard to walk through your budgeting and fore casting Spreadsheets. Small change can make a big difference in unability, accordance and speed.
ii. Focus on material items: Sure, it's fun to count paper clips, laptops and data plan cost at the employee level, but in the ground scheme of the enterprise budget, counting those item as a waste of time and unlikely to drive great improvement in business results. Instead utilize drive- based metrics wherever you in these areas (e.g, budget Laptop based on employee court rather than calculating them separately). Drive- based metrics wherever you can in these areas and faster, more consistent and easier, plus they allow you to focus on areas where insight can truly improve business performance. That is the point of budgeting, after all.
iii. Be honest: Many organizations budget at the department and line items levels, rolling up forecast into summary report and presenting them to management, only to be told that budget have ready been set and plans needs to "certain contributions, regardless of the bottoms up analysis. This is not to say that department heads should consider or "occupy budget sheets" in protest. But rather that both groups should consider the product and the need for outs and tailor the approach and workload to the reality that exists. Communication around expectation and end product will sure time and effect and result in happier budgeters all around.
iv. Make time to do it right: Budgeting and setting plans and most important, thinking about budget decision and future direction it incredibly valuable if it is done right. If you on the hook to budget for your department, sector, or business units, block your calendar, close your door and think about what you accomplish in fits and spurts.
v. Iterate: Budgets are often thrown together in the eleventh hour to meet artificial deadlines. No one like this approach and it does not achieve much in the end. An ideal budgeting process narrows broad goals into specific business plans and matrix through iterative group decision, but only after initials metrics and numbers are generated by group responsible for each area. In transforms organization, continually rolling for update with actual as the business are proceeds against plan, In many successful organizations, initials budget are viewed during retreats or other gathering, promoting dialogue and thinking, and providing a narrative to so why not talk about it.
vi. Review and improve: set the meeting now to scrutinize this year's process and think through improvements for next year while the current pain points are fresh in your mind. Include review of both the process and enabling technology long term, consider upgrading to an enterprise grade system with alternated work flow and built in controls.
2.5 TYPES OF BUDGETING
i. PERFORMANCE BUDGETING
The performance management concepts for budget management practices produced a performance budgeting. According to the ministry of finance budget division of the definition of performance budgeting performance budgeting is a goal- oriented budget, it is based on the achievement of the government's public sector objectives and it is in budget preparation, control and evaluation of a budget management model (Rober Grandfield, 2000).
In contrast with the traditional budget management, performance budget, focus the effectives of fiscal spending in the stresses, at the same time it advocate to give manger sufficient autonomy in budget management and reporting system through the public sector, public sector reporting system in the traditional budget system to inject a kinds of incentive and restraint mechanisms to effectively, contribute the organizational goals.
In the performance budget management, budget expenditure performance evaluation as core content in performance budget management. The so called budget expenditure performance evaluation refers to the use of certain assessment methods, quantitative indicators and appraisal criteria and functions of the department to achieve its performance goals established by the realization of the extent, as well as to achieve this goals; the implementation of the budget was carried out by the resulted of a comprehensive assessment and evaluation.
The aim of the department of performance objectives is rational allocations of resources, optimizing effectives and efficiency of the use of budgetary control or budgetary funds through a comprehensive evaluation. Performance evaluation of scientific conclusion of the performance of expenditure is the key to the successful implementation of a performance management. This relates to how to organize the implementations, how to choose the scope of evaluation, how to determine the performance objectives, performance indicators and evaluation methods and so on; In order to obtain one scientific conclusion question on public expenditure in the" economic", "efficiency" and " effectiveness" of the three.
From the definition of performance budgeting, performance budget has two core elements one is performance evaluation to solve how to set up performance evaluation system of science to arrive at a performance of scientific information and budget integration to solve performance information (PI) how to combine of management and budget issues, which is how to combine the performance. Information and budget preparation, executive and reporting system in order to achieve the efficient budget management and the promotion of organizational performance improvement (Jack Diamond, 2003). Both of these two aspect are interlinked and mutually distinction, which constitute a complete performance of the budget system.
i. PLANNING PROGRAMME
Budgeting system (PPBS) refers to the analysis of the output of a given programme. The idea here is that, just as business provide goods to consumers, so does Government department provides services. It could also be described as the analysis of alternative to find the most effective means of reading basic programme objectives. See the associated point of the planning programme:-
i. Approaches to budgeting
ii. Leading definitions and
iii. Leading theorist.
Planning programme can also describe a management tool to provide a better analytical basis for decision making and for putting such decision in operation. A planning programme budgeting (PPB) is a constitute, basically, of five element.
1. A programme structure - a classification for attaining its objective.
2. An approved programme document that include precise, quantitative data on needs, resources input, and programme outputs extending a number of years into the future.
3. A decision making process that established the functions, rules and timetables for the actions required by the planning programme budgeting.
4. An analysis process for measuring effectives and for weighing alternatives.
5. An information system that suppliers data required to implement the system.
iii. ROLLING BUDGET OR CONTINUOUS BUDGET
Continuous or rolling budget can be defined as the continuous updating of short-term budget by adding, say further month or quarter so that the budget can reflect current conditions.
Thus, a rolling budget is a device which attempts to help an organization overcome the problem rebuffing from frequent unexpected or under cable changes in activities and on future.
iv. ZERO BASED BUDGETING
Zero based budgeting implies starting from a zero situation and justifying each segment of the budget rather than merely adding to historical budget or actual. Each activity is thought of a mission, it is challenged as to its needs, than as the required level of activity.
2.6 FUNCTION AND OBJECTIVE OF GOVERNMENT BUDGET
Every budget be it in the public or private sector of the economy has focus or directions it has goals it intends of a typical budget as capture by Ugwe (2003) is as follow:
i. The Allocation function: One function of the budget may be seen in its allocation of resources. Because both Government expenditure and taxation, polices influences the allocation of resources in both the private and public sectors. The budget decision-making process must take account of allocation consequences.
ii. Distribution function: In Nigeria as well as many other countries the Government accepts responsible for the degree of inequality in wealth and income distribution. It therefore uses its budgetary polices from time to time to narrow the garments the society.
iii. Stabilization function variation in Government expenditure and taxation inherent pin budget decisions from time to time are some3time used in stabling the economy. Inflation and unemployment are typical economy problems, which the Government might try to control through the use of budgetary decisions.
iv. The control and management function: The budget many also be used as a tool to manage and control government expenditure. This deals with accountability as well as efficient use of resources by Government ministries, parastatals agencies etc.
v. Protection for Local Industries: A budget through its provisions may also be in protecting Local Industries.
2.7 COMPOSITIONOF A TYPICAL GOVERNMENT BUDGET
Although there could be minor variation from time to time, a typical Government's annual budget's composition as expatiates by Ugwu (2003: 45) is as shown below.
2.8 THE BUDGET PROCESS IN NIGERIA
In a pure democratic state as it currently practiced in the Nigeria; the constitution is and remain the Government as it carries out its operation. This help to eliminate, minimize friction in and among the tiers of Government.
Accordingly the budget process in Nigeria is as follows:-
(a) President Budgetary Policy Directives: The president after taking into consideration the micro-economics environment, articulate the broad budget strategy for next, fiscal year on the basis of the policies of his administration and issues a directive through the minister responsible for budget and National Planning to the action plan for implementing the strategy.
(b) Ministerial Call Circulation: The central budget office/Bureu interprets and further amplifies the president budget policy guild lines in a call circular to the federal ministries, extra ministerial department and parastatals, requesting them to forward to his offices copies of the proposed estimates / budget for the forth coming fiscal year.
(c) Advance proposal and ministerial budget Hearing:
The ministries extra- ministerial departments call circular, turn - in their advance proposals to the central budget which examines them and where necessary invites the respondents to ministerial budget hearing towards effectives desirable adjustments and corrections.
(d) Draft Estimate Consolidation: The central budget office aggregates the advance proposals into a consolidated draft estimate of revenue and expenditure and routes it through the minister in charge of budget and national planning to the president.
(e) Federal Expenditure Council Review of Draft Estimate: The consolidated draft estimate is presented by the president before the Federal Executive Council Comprising the Ministers.
(f) Federal Executive Council Approval of Draft Estimate: The consolidated draft Estimate is examined by the federal Executive Council, which will examine it critically make its impact on and approve it for the president's presentation to the National Assembly.
(g) President's Presentation of draft Estimated for national Assembly's Examination: The 1999 constitution charges the president to prepare and present before each house of the National Assembly at any time in each financial year, estimate of the revenues and expenditure of the federation for the next following financial year. The draft estimate is included in the bill known as an appropriation bill.
(h) Ministerial Defense of Draft Estimate before National Assembly: Every ministry of the government of the federation is invited to appear before each house of the National Assembly to explain to the house the conduct, of the ministry and in the same context, to defend justify the ministry budget proposals.
The National Assembly will therefore examine and debates upon as specified in Section 67 (2) of the 1999 Constitution.
(i) Approval Estimate is passed as Appropriation Bill: The Appropriation bill is passed by the National Assembly (having critically scrutinized the estimates) and subject to all correction and necessary amendment. Therefore transforming the draft estimate into an approved Estimate.
The approved estimated is again lectured or sent to the president to sign the bill into law as an appropriation act.
(j) Approved Estimate Assembly by the President: As soon as the president assents to the appropriation bill passed by National Assembly, by signing it into law, it becomes an appropriation act and gives a legal force to the approve Estimate. This has to be transmitted to the minister responsible for budget and National planning or any other finance oriented ministry as the case may be to issue expenditure warrants as appropriate.
(k) Approval Estimate Implementing Warrants: Budget minister assigned with the responsibility by the president (most likely, the minister of budget and National planning) issues warrants as may be necessary to the ministries, extra-ministerial department and parastatals for the purpose of implementing the approved budget.
2.9 Preparation of Government Annual Estimate: