Research
IMPACT OF BUDGET CONTROL ON FRAUD
CHAPTER ONE
INTRODUCTION
1.0 Background
In the business world today, organizations have developed a variety of processes and techniques designed to contribute to the planning and control functions. One of the most important and widely used of these processes is budgeting. Budgeting involves the establishment of predetermined goals, the reporting of actual performance results and evaluation of performance in terms of the predetermined goals. Budgetary control systems are universal and have been considered an essential tool for financial planning. The purpose of budgetary control is to provide a forecast of revenues and expenditures this is achieved through constructing a model of how our business might perform financially speaking if certain strategies, events and plans are carried out (Churchill, 2001).
Most firms use budget control as the primary means of corporate internal controls, it provides a comprehensive management platform for efficient and effective allocation of resources. Budgetary controls enable the management team to make plans for the future through implementing those plans and monitoring activities to see whether they conform to the plan, effective implementation of budgetary control is an important guarantee for the effective implementation of budget in the organization (Carr and Joseph, 2000).
Most organizations have adopted broad budgetary control that ensures that the entire budget system is a control system, which it is the formation of a prior, during and after the whole process of control system through the budget preparation, budget evaluation, reward and punishment by monitoring of budget execution. With a narrow budgetary control, an organization can prepare a good budget as a basis for performance management and standards on a regular basis in order to compare actual performance with the budget to analyze differences in the results and take corrective measures, which mainly involves the process of budget implementation, evaluation and control (Hokal and Shaw, 2002).
Budgetary control is the process of developing a spending plan and periodically comparing actual expenditures against that plan to determine if it or the spending patterns need adjustment to stay on track. This process is necessary to control spending and meet various financial goals. Organizations rely heavily on budgetary control to manage their spending activities, and this technique is also used by the public and the private sector as well as private individuals, such as heads of household who want to make sure they live within their means (Dunk, 2009).
Budgetary control is a system of management control in which the actual income and spending are compared with planned income and spending, so that the firm can make decisions if plans are being followed and if those plans need to be changed in order to make a profit. Budgetary control is the one of best technique of controlling, management and finance in which every department’s budget is made with estimated data. Then, the management conducts a comparative study of the estimated data with original data and fix the responsibility of employee if variance will not be favorable Organizations can use budgetary control in forecasting techniques in order to make plan and budget for the future (Epstein and McFarlan, 2011).
Although the UNBS strategic plan for 2010-2015 has put in place mechanisms for tracking and reporting procurement departmental work-plan activities whose key outputs are as a result of good service delivery through good contract management processes, service delivery is still not up to the UNBS stakeholder expectations and this is evident in the complaints of poor quality of products/services received, high cancellation of contracts, high priced goods/services, lack of delivery or partial delivery, delayed completion of contracts, missing contract management documents among others (Mubangizi, 2013).
1.2 Research Problem
Budgetary control is used by most organizations as a tool for proper management of resources in the organization and its activities. A firm with well formulated budgetary controls easily assigns its managers the responsibility for the use of designated financial resources to achieve their assigned operational objectives. Budget controls provides comparisons of actual results against budget plan. Departures from budget can then be investigated and the reasons for the differences can be divided into controllable and non-controllable factors, this is essential is reducing inefficiencies and poor budget practices leading to efficient allocation of scarce resources (Joshi and Abdulla, 1996).
Most NGO’s in Uganda have shifted focus to budgetary control as a way of enhancing effectiveness in their services. Recognizing the role of budget and budgetary control has gained attention which has led some organizations to establish departments for implementation. This has attributed budget monitoring and project implementation committees as an integral part of the administrations to most nongovernmental organizations in Uganda (NGO’s, 2013).
UNBS PDU annual report, (2012) indicates over 200 awarded procurement contracts in financial year 2011/2012 but the levels of service received/delivered on most of these procurements remain unknown. Mubangizi (2013) reported high complaints of poor quality products/services delivered with30% contracts cancelled, 5% of contracts either not delivered at all or received in part, 10% deliveries made over the stipulated delivery period and 60% of the contracts performed paid after 30days stipulated payment period, high priced goods/services and missing contract management documents among other issues, this study therefore intends to investigate into the Impact of budget control on fraud.
1.5 Purpose of the study
The purpose of study is to establish the impact of budget control on fraud
1.6 Specific objectives of the study
The study will be guided by the following objectives:
- To identify the Benefits of budget control.
- To identify causes of fraud.
1.7 Research questions
The following research questions will guide the development of this study:
- What are the challenges of fraud?
1.8 Scope of the study
The study scope will cover the following aspects;
1.8.1 Study scope
The study scope will cover the following aspects, the Benefits of budget control, the causes of fraud and the challenges of fraud.
1.8.2 Geographical scope
The study will be conducted at NSSF located at plot 95 Kampala road.
1.8.3 Time scope
The period of investigation will be from February to September 2017.
1.9 Significance of the study
The study will recommend service delivery improvements to UNBS management.
The study will inform policy makers the influence Contract management in service delivery
