Full Project-BUDGET AND BUDGETARY CONTROL AS A TOOL FOR EFFECTIVE DECISION ANDPLANNING IN MINISTRIES AND PARASTATALS (A CASE STUDY OF MINISTRIES AND PARASTATALS IN IMO STATE)

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CHAPTER ONE
INTRODUCTION
1.1  BACKGROUND OF THE STUDY
Budgeting is essentially concerned with planning and can be broadly illustrated by comparing with the routine a ship captain follows on each voyage. Before the voyage, he will plan his route, taking into account such factors as shipping harzards, tides and possible adverse weather forecast. During the voyage he will check on his plans and record and unusual conditions. If necessary, he may even have to leviater from his plan if prevailing circumstances require it. On completion of the voyage he will compare the conditions he encountered with those he expected and use the experience gained in planning similar voyages in the future. Budgets and budgeting control are two accounting techniques, which top management adopts to achieve its tasks of planning, coordinating, directing and control in an organsiation. Planning is mainly concerned with the establishment of objectives the formulation, evaluation and selection of the policies, strategies factics and actions required to achieve these objectives planning was previously based on historical cost conventions. This process increased the emergency decision which top management had to make because historical cost conventions are not future oriented; they do not aid planning. In order to reduce to management emergency decision making processes and thus aid planning, variable budgets were introduced. This is so because managers want to know more than they have done currently in relation to last period performance, they also want to know how they have done currently in relation to their current target performance. Control on the order hand follows closely after action has been taken. If is a process where by actual performance is compared with targeted budgeted performance any deviations from this target are investigated for an in-depth or positive explanations to be given. Budgetary control is the technique used for this purpose and when it is combined with budget, it becomes part of responsibility accounting the aim of budgetary control is to provide a format basis for monitoring the progress of the organization as whole and of its components parts, towards the achievement of the objectives specified in the planning budgets.

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