Reference no: EM13742005

Problem Statement:

The main objective of this study is to determine the role of budgeting and budgetary control in a business organization "The establishment of budgets relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results, either to secure by individual action the objective of that policy, or to provide a basis for its revision".

The objective of budgeting and budgetary control in a business organization includes;

Planning - Providing detailed operational plan for various divisions in business sectors Co-Ordination-To organize and communicate in a right manner and providing common rules for employees in different parts of the country

Communication- Uniformity is provided with proper mode of communications, ensuring that common rules needs to be practiced for employees in different parts of the country

Motivation- To motivate the managers and managerial staffs and guide them to work in line with the organizational vision plans.

Controlling- To provide guidance to managers and assist them in their respective roles they are engaged

Performance Evaluation- To evaluate performance measures for each staffs working under the control of managers under various departments all over the country

Clarification Of Authority And Responsibility- Clarifying the roles and responsibilities of each manager with their budget plan. The roles also include authorizing the budget plan by providing appropriate guidelines.

Theory, Assumptions, Background Literature:

According to Siyanbola (2013), budgeting is a useful tool that guides firms to evaluate whether their goals and objectives are actualised. In his study, he tried to evaluate the role of budget and budgetary control in a business organization and he selected a manufacturing company in Nigeria. The study mainly focussed on the role of budget plans and various other issues around the budget plan. The researcher used non parametric test to test, chi - square test for independence to test the claim and found that there is a significant role of budget as it guides the firm to reach their goals and objectives.

According to Babu Daniel (2011), his research study provides guidelines to managers and supervisors for the effective use of limited resources in the organization. The samples are collected with a self administered questionnaire and the questionnaire was sent to the employees in Ernest Chemist. The study focuses on the research concerning the budgeting practice in Ernest Chemist

Research Questions

The research question is to determine the role of budgeting and budgetary control in a business organization

The research hypotheses for this study is given below

H₀: Budgets cannot be considered as an effective tool for business development

H₁: Budgets can be considered as an effective tool for business development

H₀: Budgets cannot be used to control and manage organizational functions.

H₁: Budgets can be used to control and manage organizational functions

H₀: Budgets cannot be used for providing rewards in terms of goal attainment.

H₁: Budgets can be used for providing rewards in terms of goal attainment.