Assessment of government budgetary control procedures and

utilization (In case of Hawassa University)

 Table Of Contents

Contents Page

Table of Contents……………………………………………………..…………….I

Acronyms………………………………………………………………………….III

List of Tables……………………………………………………………………...IV

Chapter one…………………………………………………………………..

1. Introduction...........................................................................................................1

1.1. Background of the study..................................................................................2

1.2. Statement of the problem................................................................................3

1.3. Objective of the study...................................................................................3

1.3.1. General objective.................................................................................3

1.3.2. Specific objective................................................................................3

1.4. Research Question........................................................................................... 6

1.5. Significance of the study..................................................................................6

1.6. Scope of the study...........................................................................................7

1.7. Limitations......................................................................................................7

CHAPTER TWO………………………………………………………………….8

2. Literature Review..................................................................................................8

2.1. Definition of budget.........................................................................................8

2.1.1. Relation to strategic planning...............................................................9

2.1.2. Fixed vs. Flexible budget...................................................................10

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 2.2. Budget preparation process............................................................................10

2.3. Revenue estimation and expenditure planning.................................................10

2.3.1.Revenue estimation...............................................................................11
CHAPTER THREE……………………………………………………………...13

3. Research Methodology.........................................................................................13

3.1. Research design.............................................................................................13

3.2. Description of the study area..........................................................................13

3.3. Source of data................................................................................................14

3.4. Tools and methods of data collection..............................................................14

3.5. Sampling size and techniques.........................................................................14

3.6. Method of data analysis and interpretation......................................................15

4. Research plan and budget break down................................................................16

4.1. Research time table........................................................................................16

4.2. Research budget break down..........................................................................17

References.................................................................................................................IV

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 Chapter One

1. Introduction

1.1. Background of the Study

The proper development of budget or budgeting is the process of expressing a companies or

organization goals and objectives in quantitative terms. Budget is a crucial part of the planning
process. Business not only for profit organization and individual need budget to plan and control
for future resource uses and activities.

A business plan budget and control for future uses or to satisfy the need of its customers,
employees, supplies and others nonprofit organization, plan and control the budget for future
uses or to meet their goal in effective and efficient manner. The primary purposes of budgeting
to present and describe the financial ramification of plans for future and proper control of
financial resources, the budgeting process requires individuals to consider possible future courses
of action and resources needed to accomplished various activities. Budgeting process promoted
communication and coordination among division or department with in a company or
organizations. In order for the company to function effectively, managers and other employees
must understand the interaction among the department and how the action of one department
affects another. Then managers must communicate their plans to each other in order to
coordinate the activities of the organization as a whole.

1.2. Statement of the Problem

Budget is key element for proper utilization of public resources. The organizations over all
activities are depended on properly prepared budget proposal and its implementation well and on
appropriate budget control and utilization system is one of the basic assurances in achievement
of desired goals.

Budgets is a quantitative expression for set of time period and proposed future plan of action
by management and other concerned body. Thus budget preparation for the purpose of
controlling and utilization public resources need much consideration; especially via of its source
and implementation area. However there are problems related to the process of budgeting which
hinders its contribution in the achievement of desired goals. The concern of this study will be to
examine the assessment of government budgetary control and utilization in particular area of
Hawassa town finance and economic development bureau, which farce problem of UN proper
utilization of budget and budget control. The problem arises when the organization fail to utilize
its budget effectively and efficiently.

1.3. Objective of the Study

13.1. General Objective

The general objective of the study will be Assessment of government budgetary control
procedures and utilization in Hawassa University.

1.3.2. Specific Objective

In line with the above general objective the following will be the specific objective study.

1. To examine whether, the organization gives training concerning budget utilization and
controlling procedures to the concerned body.

2. To sort out the main problem that the organization gives training concerning budget
utilization and controlling procedures to the concerned body.

3. To create good awareness of budgeted usage during budgeting time by avoiding

improperly budgetary allocation to assess the budget allocation system.

4. To examine the time interval the organization prepare proper budget utilization report.

5. To assess the budget preparation and controlling to the organization.

1.4. Research Question

Based on the above clarification the researcher will raise the following basic questions that
should be answered in this course of study.

1. What are the main problem related to budget control and utilization in that specific area?
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 2. How to perform budget utilization in the organization?

3. How to create awareness in the responsible body, while they are developing budget
proposal?

4. At what time interval the organization proper budget utilization report?

5. What mechanism or system applied in budget preparation and controlling?

1.5 Significance of the Study

This paper will be conducted to organizing the information gather from the employees and
documents of the organization. Therefore the significance of this study is that, it will benefit the
organization with some possible situation and recommendations. In addition, the paper will
enable the organization.

 It might create budget utilization to have habit in and how to properly can be used to
provide a ground line information about budgetary procedure of the organization.

 It may create awareness to the organization about budget utilization and controlling.

 It may help for further study on the subject matter and take some connective actions or
measures.

 And also it might enable the writers to whole vivid pictures of how the theoretical
concept on applied in actual practices of the organization.

 Furthermore, the study may help improving the way to those who are interested to under
taken further research on the same stream in the future.

1.6 Scope of the Study

Due to financial and time constraints the scope of the study will mainly focused on factors
affecting budget control procedure and utilization in particular area of Hawassa University.
Because the organization will have many problems regarding to budget such as lack of proper
management, in efficient utilization of resource lack of feeling responsibility etc. therefore the
scope of study will be limited to the organization.

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1.7. Limitations of the Study
While conduction the research, the researcher will face some limitations. Among the main
limitation some of them are, absence of well documented secondary data about Utilization of
Budget or related information’s, willing of more respondent to give the required or right
response, financial and time shortage.
Despite of these limitations the researcher has taken an able effort to overcome limitation
using different techniques and system so as to collect relevant information and with this research
finding.

1.8. Organization of the Paper

The structure of this paper will have five chapters. The first chapter which will be an
introduction section of the study included, background of the study, statement of the problem,
objective of the study, significance of the study, scope of the study and limitation of the study.
The second chapter will deal with the related literatures review. The third chapter will deal with
research methodology, the forth chapter will deal with data analysis and presentation of the
finding. Finally, chapter five will deal about summary of findings, conclusion and
recommendations.

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 Chapter Two

. Literature Review

1.1. Definition of Budget

According to H.L. Bhotaic (2004: p 255” Budget is a quantitative expression for a set of time
period of the proposed future plan of action management. The word budget has been derived
from French word “bouquet,” which means small bag. It emphasizes a bag containing the
financial proposal.”

Budget is the quantitative expression of a plan of action and on aid to the coordination and
implementation of the plan. Budget is the sense of one year reliance of the strategic plan as
stated Robest Anthony (2002, p. 376)

Budget can be draw up for on entire organization. Any arrangements of the organization such
as a department sales territory or division for a significant activities such as production and sales
of a specific product described by mores and Roth “(1988 p. 387).

Budget is simply a plan, and specific management actions are needed to make it is a reality
a budget is a planning document created before anticipated transaction occurs. The primary
objectives of budget is to forecast future financial and non-financial transaction and events the
second objectives of budget is to develop information that as accurate and as meaningful to the
recipient as possible. To accomplish their objective budget should present information in an
ordinarily manner (Anderson page 225).

To get closer to solution and understand why budgetary control procedure and utilization
are assess on the organization. This study will attempt to give an inclusive answer that; the study
exhibits decisively the assessment of budgetary control and utilization in the organization. In

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other words the objective of the study is to assess government budgetary control procedure and
evaluate its utilization and implementation.

Finally availability of proper budgeting and control and its sustainable ways of utilization
servers as useful bench mark against which to evaluate and control performance. The evaluation
process consists to comparing actual performance results to the budget to determine what area
devoted from planned activates and whether to take corrective action.

Budgets are all important tool for effective short term planning and control or organization.
An operating budget usually covers one year and states the revenues and expenses planned for
that year. It has these characteristics.

 A budget estimates the profit potential of the business unit.

 It is stated in monetary terms although the momentary amount may be backed up non –
monetary amounts (e.g. unit sold or produced)

 In generally covers a period of one year.

 It is generally covers a period of one year.

 It is a management commitment; mangers agree to accept responsibility for attaining the

budget objectives.

 The budget proposal is reviewed and approved by and authority higher that the budget.

 Periodically, actual financial performance is compared to budget and variances are analyzed
and explained.

.1.1. Relation to Strategic Planning

The process preparing a budget should be distinguished from strategies planning is the process
is the process of deciding on the nature and the size of the several programs that are to be under
takes in implementing on organization strategies. Both strategic planning and budget preparation
involves planning, but the types of planning activities are different in processes. The budgeting

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process focuses on a signal year were as strategic planning focuses on activities that extend over
a period of several years

.1.2. Fixed Vs. Flexible Budget

Fixed Budgets: are those include appropriation are for fixed (specific) dollar amount and may not
be exceeded of change in demanded for organization goods or service on the to her hand,
expenditure authorized by flexible budget on fixed per unit or goods or services. Fixed budgets
are relatively single to prepared and administer rare more easily under stood then flexible budget.
Government fund budget are more realistic when changes in the quantities or goods or services
provided directly assets resources availability and expenditure requirement and when formal
budgetary control is not deemed essential funds. Lynn and Fireman (1981: P 54 – 58).

.2. Budget Preparation Process

Budget and budgeting process are used to identify the most efficient allocation of the
organizations recourses and to provide planning and control mechanism over fund flower the
organization modern use several types of budget in planning and executing the organization,
operation. The budgets department performance the following function Publisher procedures
and forms for the preparation of budget.

Make sure that information is properly communicated between interrelated organization units
Provides assistance to budget in preparation of their budget, Analyzed proposed budgets and
make recommendation first to the budget and subsequently to the senior management
Administers the process of making budget revision during the year.

.3. Revenue Estimation and Expenditure Planning

This is a necessary to any budget system to be effective in motivating budgets. Management

must follow up on budget results. If there is on top management feedback with respect to budget
results the budget results system will be effective in motivating the budget RN. Anthony (p. 372)

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 3.1. Revenue Estimation

Revenue is defined as increase in fund financial resources other than follows inter founds
transfer and debit issue proceeds. Estimating the expected available resources for the
governmental entity is the essential first step to budgeting.

.3.2. Expenditure planning should be considered a year round activity

The budget director and his budget examiner should be continuingly in the process of
Becoming acquainted with the agency with whose budget they with work analysis of agency
operation including both what the agency does and how it does essential if the budget office is
gives proper consideration to agency Requests the process of expenditure planning included the
following steps.

Budget instruction: is the instruction which the budget officer will send to the agency and should
include the budget calendar how to perform mechanism of filling out the budget estimates and
how the make decision regarding amount to be requested.

Identifying of organization, Budgetary and accounting units. This involves determine which
department will be responsible for providing estimates for each of the government functions.
The government unit to which the budget is gaining to be allocated should be clearly specified
and known the process of organizing the agency or departments of the governmental unit and the
activity of governments should be the controlling factor from the stand point of managerial
control through budgeting and accounting. It is advisable to have one activity for each
organizational unit.

Call for departmental estimates: after receiving instruction and forms budget officer
department prepare estimate. The department starts to accumulate and schedule on cases of
labor material equipment and others. Next to accumulation of information in work leads and unit
cases for the organizational unit such information converted in to estimate of total costs typically
the department heads collect estimates of expenditure needed to carry out required series from
the sub units of the department the head then services those estimates of expenditure needed to

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carry out required series from the sub units of the department the head then services those
estimates if necessary and combine them into departmental budget.

Estimating other changes: some expenditure is ordinary not allocated to any program or
actually of an organizational unit examples are center contribution to found (retirements) of
serial bonds and contribution to sinking funds.

Revision of departmental estimates: As soon as department heads have bulled out the budget
estimates forms and at any rate not latter as the date designated in the budget calendar they
transmit the forms together with work program and supporting data to the budget officer.

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 Chapter Three

3. Research Methodology

2.1. Research Design

To collect the necessary data the researcher will use both primary and secondary source of
data. The primary data will include questionnaire direct observation and interview.

The researcher will use primary source of data collection method through questionnaire and
by conducting interview. Hence in order to make respondents, free in giving their idea feeling
and suggestions pertaining to the factors that asset governmental budgetary control procedure
and utilization taking the case of Hawassa University fiancé and economic development bureau.
A questionnaire possessing a number of questions with close ended type of question that are
relevant and exhaustive as to the subject of the study has been designed in such a way that the
respondent. Feel easily, on the hand to get detail information about the factors affecting
budgetary process. Interview will be select for manager of the study area.

Finally the research has been used secondary source of data collection method which are
obtained through review & selected materials such a related reports and balanced transaction
budget expenditure manuals of the year (2004 – 2008) budget. But such materials are not
disclosed for any external body as reference.

.2 Description of the study area

Hawassa University (HU) was established at Hawassa in April 2000.Since 1976 the different
colleges of HU had been operational starting with the college of Agriculture. The University has
been formed by merging three colleges in Southern Ethiopia: Awassa College of Agriculture
(ACA), Wondogenet College of Forestry and Dilla College of Teacher Education and Health
Sciences. The historical background of the three colleges is briefly described below.

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Today, HU is a comprehensive university engaged in the provision of all-round education,
research, training, & community service through its diversified areas of academic units.

This study will be conduct on government budgetary control procedure and utilization in
Hawassa University Hawassa which is found in southern nation nationality and people of
Ethiopia at distance of 275 km away from the center Addis Ababa.

.3 Source of Data
There are two types of data that the researcher will use. Those are, primary source of data and
secondary source of data, the primary source of data will be collected from HU Finance office,
Managers and employees of the University by using questioner and Interview. Secondary source
of data will collect from different documents, book and manuals which are related with the topic
under consideration.

3.4 Tools and Methods of Data collection

Data and information in this research will be gather from two main sources such as primary
and secondary source of data. Primary data will be collect by using self-administered
questionnaires. Self-administered questionnaire will be select because it has advantageous of low
cost, saving in time. The self-administered questionnaire will have both open and close ended
questionnaires. Open-ended questions offer the advantage that the respondents will give their
own words. Close-ended questions are very convenient for collecting factual data and easy to
analysis, since, The Range of potential answer is limited. The secondary sources of data would
acquired from the existing document and publisher materials within the organization.

The procedures for administering the above tools of data collection were
systematically managed by researcher.

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 3.5Sampling size and Techniques

The sample selection carried out by a research so that it will be reliable as to the representation
of the total population who are believed to the workers of the organization. Taking this in to
account on factors it is found necessary to use personal judgment since it is difficult to determine
how large the population is so that sample size has been used from three departments based on
their quota 9 people has been selected from fiancé department, 6 people from economic
department and 4 people have been elected from budget planning department. So that the
researcher will select a sample of 19 on the basis of his own experience and assessment of the
situation rather than using statistical sampling.

.6 Method of Data Analysis and Interpretation

While conducting the study different types of data will be collected. So that the researcher
intended outcome will be obtained .To analyze and interpret the collected data. Tabulation and
percentage method has been used. Tabulation has been used to among data in a table or other
summary format to facilitate the process of comparison of various data analysis has been made
by the help descriptive data analysis.

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 Chapter Four

4 Work plan and Budget breakdown

NO Activity Jan Feb Mar April May June

1 First proposal submission

2 Last proposal submission

3 Prepare questioner and interview

4 Distribute the questioner 

5 Collect the data 

6 Further literature review 

7 Data processing and classification 

8 Data analysis and interpretation 

9 Typing analyzed data on the ordinal paper 

10 First paper submission

11 Last paper submission

12 Presentation the paper

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.1 Research Time Table

.2 Research Budget Break down

Price

No Description Unit cost

Total cost
Measure Quantity Birr Cn.t (Birr)

1 Stationery Material

Paper Pack 5 200 00 1000 00

Pen Number 15 5 00 75 00

Pencil Number 5 3 00 15 00

Flash disk 8 GB Number 1 160 00 160 00

CD drive Number 3 10 00 30 00

2 Computer Service

Proposal writing and printing Number 25 3 00 75 00

Printing of questionnaire Number 80 3 00 240 00

Final senior essay report Number 50 3 00 150 00

Photocopy of senior essay Number 50 3 00 150 00

report

Final senior essay report Number 50 5 00 250 00

writing

Binding Number 4 10 00 40 00

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 Transportation cost Number - 300 00 300 00

Telephone/ Mobile card Number 7 50 00 350 00

Miscellaneous expenses - - 1000 00 1000 00

Total 3,835.00

References

 Bhatai Public Finance 2002 24 revised edition.

 Robert Anthony, 2002 Management Controlling System.

 Anderson, Managerial Planning and Controlling 1975.

 Brigham T. Hornegre Cost Accounting, Introduction to Management

Accounting.

 Bingham Fundamental of Financial Management 3rd ed 1998.

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 Sims Jack Budgeting Basics and Boyon 2nd ed 1998.