Research Methods : Corrected Proposal.doc

RIFT VALLEY UNIVERSITY CHIRO CAMPUS
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
ASSESSMENT OF GOVERNMENT BUDGETARY UTILIZATION AND
CONTROL SYSTEM (IN CASE OF CHIRO TOWN FINANCE AND
ECONOMIC DEVELOPMENT OFFICE)
A RESEARCH PROPOSAL SUBMITTED IN PARTIAL FUILFILLMENT OF
THE REQUIREMENT FOR BACHELOR OF ART (BA) DEGREE IN
ACCOUNTING AND FINANCE
COMPILED BY: - MOHAMMED DAWID
ADVISOR- BADHASA HUNDE
DECEMBER, 2020
CHIRO, ETHIOPIA

Table of Contents Page
Table of Contents.................................................................................................................I
CHAPTER ONE..................................................................................................................1
1. INTRODUCTION...........................................................................................................1
1.1 Back ground of the study...............................................................................................1
1.2 Statements of the problem.............................................................................................4
1.3 .Research questions........................................................................................................5
1.4. Objectives of study.......................................................................................................5
1.4.1 General objective.................................................................................................5
1.4.2 Specific objectives...............................................................................................5
1.5. Significance of the study...........................................................................................5
1.6. Scope of the study.....................................................................................................6
1.6 organization of the paper............................................................................................6
CHAPTER TWO.................................................................................................................7
2 LITERATURE REVIEW.................................................................................................7
2.1 Origin of budget.........................................................................................................7
2.2 Definition of budget...................................................................................................7
2.2 Conceptual objectives of a government budget.........................................................8
2.3 Components of budget...............................................................................................8
2.3.1 Revenue budget...................................................................................................8
2.3.1.1 Ordinary revenue..............................................................................................8
2.3.1.2 External assistance...........................................................................................9
2.3.1.3 Capital revenue:................................................................................................9
2.3.2 Expenditure budget..............................................................................................9
2.4 Types of budget..........................................................................................................9
2.4.1 Surplus budget.....................................................................................................9
2.4.2 Balanced budget................................................................................................10
2.4.3 Deficit budget........................................................................................................10
2.5 Characteristics of the budget....................................................................................10
2.5.1 Measuring effectiveness and control.................................................................10
2.5.2 Expense budget..................................................................................................10

2.5.3 Budget planning................................................................................................11
2.7 Purpose of the budget...............................................................................................11
2.8 Capital Vs Current budget........................................................................................12
2.9 Fixed verses Flexible budget....................................................................................12
2.10 Advantage of budget..............................................................................................12
2.11 Budget preparation process....................................................................................13
2.12 Budget revision......................................................................................................13
CHAPTER THREE...........................................................................................................14
3 RESEARCH METHODOLOGY...................................................................................14
3.1 .Description of study....................................................................................................14
3.2 Research design and strategy...................................................................................14
3.3 Sources of data and type..........................................................................................14
3.4 Sampling size and target population........................................................................14
3.5 Method of data analysis...........................................................................................14
CHAPTER FOUR.............................................................................................................15
4. BUDGET AND TIME SCHEDULE.............................................................................15
Reference...........................................................................................................................17

CHAPTER ONE
1. INTRODUCTION
1.1 Back ground of the study
The Western hararge zone have 3 town and 15 districts. Chiro town one of the 3 towns
of the west zone is established in 1915 by Fitwerari G/hawariat.The town is the
placement and capital town of the zone and 326 KM far away to the east of
Addis Ababa the capital city of Ethiopia. Chiro town finance and economic
development is established in 1915.This is for distribution of economic and finance
of the chiro towm.
The historical back ground of the introduction of budgeting process rests in England.
Starting from that time organizations use the budget for planning as well as co-
coordinating their action. Budgeting is the process of determining what will be done in
the future. The budget is a quantitative expression of a plan of action and it is an aid for
coordination and implementation of a plan. It is also defined as financial statements
prepared and approved prior to a defined period of time for the purpose of attaining the
objectives. Budgeting has more socio-economic development for profit as well as non-
profit organization. It is also a common accounting tool for company’s use of
implementing different strategies. (Mohammed Woliye, 2014, p.1)
Budgeting is important tool for achieving efficient and effective management of
resources. Government, business organization and non-profit organization and the like
uses budget as means of planning, utilizing, and controlling their scarce resources so as to
attain their goals effectively and efficiently. Moreover, budget should serve to encourage
and develop communication among departments. A forward looking among staff also
tends to develop and as a result, potential problem are often identified on time. Budget
can function as a device not only for planning and co-ordination but also for control.
Budgetary control is the use of comprehensive system of budgeting to aid measurement
in carrying out its function of planning, co-ordination and control operations. Therefore a
budgetary control is one of the important tools of control.(Habtamu Getachew,2014,p.3)
Budget is a quantitative expression of a plan for a defined period of time. It may include
planned sales volumes, revenue resource quantity, costs and expenses, asset, liabilities
and cash.CIMA official terminology” (PDF).

Budget is an itemizing estimate of the operating results of enterprise for a future
time period. Budget is eventually summarize into the form of normal financial
statements.
Budget is predetermining statement of management policy during a given period
which provides a standard for comparison with results actually achieve.
1.2 Statements of the problem
Many organization of the world has its own budget which they use it as their time. Using
the budget is one of the way that enhance achievement of desired goals. It is crucial for
every budget organization.(Habtamu Getachew, 2014,p.3
. Budgetary control uses comprehensive system of budgeting to aid measurement in
carrying out its function of planning, coordination and control operation. Hence budget is
one of the important tools of control. Budget needs much consideration in utilization and
control of public resources; special in its sources and implementation area, because
problem which result from various conditions hinders the achievements of goals. (ibid,
2014, p.3)
The budget provides the details of the various sources through which the money flows to
the government and also the details of the various types of the expenses spent by the
government. Thus it needs much consideration; especially in the area of its utilization and
control process. However, there are a problems related to the process of budget utilization
and control process; which hinders the achievement of the desired goals.
The concern of the study is analysis of government budgetary utilization and control
system in a particular area of Chiro town finance and economic development bureau:
How know a problem of improper utilization of budget and budget control. Therefore, the
study is primarly concerned that organization. However there is no research done
regarding this issue. Therefore the researcher is motivated so as to conduct investigation
on this issue.
1.3 .Research questions
 What are the major factors that affect the budget utilization and control of the
organization?

 How organization performs budget utilization and control?
 What mechanisms or systems are applicable to the budget utilization and control
in the organization?
1.4. Objectives of study
1.4.1 General objective
The general objective of the study is to assess of government budgetary utilization and
control system in particular area of Chiro town finance and economic development
office.
1.4.2 Specific objectives
 To identify the major factors that affect budget utilization and control of the
organization.
 To investigate the procedures in which the budget is utilized and Controlled in
the organization.
 To examine the mechanism that applicable or used for the budget utilization
and control system in the organization.
1.5. Significance of the study
This study is conducted to analyze government budgetary utilization and control systems
in Chiro town finance and economic development office and to determine how the
organization performs its budget. Therefore the significance of the study will be enabling
the community and other bodies to become beneficiaries; particularly
It will show the direction to the organization to give more attention on budget
utilization and control areas.
It will be used as a source of reference and guide lines for other researcher who wants
to make further study in the area.
1.6. Scope of the study
It is possible to conduct the study in all finance and economic development bureau of
Oromia. But because of financial difficulties and shortage of time to be devoted on, the
study is delimited only to town finance and economic development bureau.

1.6 organization of the paper
This paper consists of five chapters the first chapter consists the introductory parts which
includes. Background of the study, statement of the problem, objective of the study,
significance of the study scope and limitation of the study, the second chapter consist
only the literature review.
The third chapter includes the term research design. Sources of data, data collection
techniques, method of data analysis and presentation, target population and sampling
methods. Chapter four of expects to provide analysis of data that gather from tax payers
and employees of the revenue bureau. The fifth and the end chapter try to deals with
summary, conclusion and recommendation that will be used to conduct this proposed
study.

CHAPTER TWO
2 LITERATURE REVIEW
2.1 Origin of budget
The word budget is derived from the old French”baguette” meaning a small bag in which
the chancellor carried to the parliament, the statement which is contained in the bag. The
practice of budget is also originated in 1217 in England as a means of asserting
parliamentary control over the crown. During this time, the parliament is aware of the
fact that the financial control will be under its own hands or control but not under the
crown. Hence forth parliament secured the power of controlling the financial matters of
the country. (Mohammed Woliye, 2014, p.5)
2.2 Definition of budget
The budget provides details of the various sources through which money flows to the
government, and also details of the various types of expenses on which money is spent by
the government. It is a useful tool to plan and control the fiscal affairs of the government.
I may say, a budget shows the details of the planned expenditures of the government
program and the expected revenues from tax and non-tax sources for a year. (Grade 11
economics student text book p.240)
Budget is the quantitative expression of a proposed plan of action by management for
specified period and aid to co-ordinate what needs to be done to implement the plan.
Budget generally includes financial and non- financial aspect of the plan .it serves as a
blue print for the company to follow up the coming period. (Habtamu Getachew, 2014).
Budget is a quantitative expression for a set of time period and proposed future plan of
action by management and other concerned body who responsible for utilization and
controlling of the public resources. (Niuman Mohammed, 2014, p.6).
Budget is a predetermined statement of the management policy during a given period,
which provides a standard for a comparison with results actually received. It is a formal
expression of the plan and objectives of management to the organization which covers all
phases of the operation for a specific period of time. It provides measures of financial
results that a company expect from its planned activities to accomplish its objectives.
(Habtamu Getachew, 2014, p.1).

2.2 Conceptual objectives of a government budget
The general objectives of the government budget are the following
Economic growth: to promote rapid economic growth so as to improve the
living standards of the people
Reduction of poverty and un employment: to eradicate mass poverty and un
employment by creating maximum employment opportunities and
providing maximum social benefits to the poor social welfare is the single
most important objectives the government.
Re allocation of resources: to re allocate resources in line with social and
economic objectives.
Reduction of inequalities: to reduce inequalities of income and wealth through
levying taxes and granting subsidies. Equitable distribution of wealth and
income is emphasized. Economic progress in itself is not a sufficient goal,
but the goal must be equitable progress.
(Source: grade 11 economics student text, p.241)
2.3 Components of budget
Usually budget is composed of revenue and expenditure budget. Now let us see it one by
one.
2.3.1 Revenue budget
This forecasts the total revenue collection of the government from tax and non-tax
sources. In our country, Ethiopia, it is classified in to three parts. These are:-ordinary
revenue, external assistance and capital revenue.
2.3.1.1 Ordinary revenue
The total ordinary revenue is made up by tax revenue and non-tax revenue (Grade 11
economics student text,p.242)

2.3.1.2 External assistance
Grants received in cash or some other form, from outside the country are known as
external assistance. These receipts form an important source of financing the deficit
budget of the government and play an active role in economic development of the
country. External assistance received from friendly countries is called bilateral assistance;
whereas assistance (grant) received from multilateral or international institutions are
called multi lateral assistance. (ibid, p.244)
2.3.1.3 Capital revenue:
Capital revenue is the third consistent of revenue budget. It comprises the money
received by government from the sales of government asset, collection of loans
counterpart fund and external loans. (ibid, p.244)
2.3.2 Expenditure budget.
Expenditure budget is a forecast of the total expenditures by the government, in a year. In
our country, Ethiopia it is classified into two as follows:-recurrent and capital
expenditures. (ibid, p.244)
2.4 Types of budget
As I know, a budget shows the receipts and expenditures of the government. It is not
necessary that the receipts and expenditures will be equal. Usually, it is not being so.
There may be a surplus or deficit in the budget. Accordingly, I has the following three
types of budget. (ibid, p.241).
2.4.1 Surplus budget
Surplus budget is the excess of revenue over expenditure of the
government.
If the receipts of the government is more than its expenditures, the governments say to
has a surplus budget. A surplus budget implies that the government is pumping out more
money from the economic system than what it is pumping back in. When the government
draws money from the economic system, it has a contractionary effect. The level of
economic activity falls. The economy will tend to move back ward.(ibid, p.241).

2.4.2 Balanced budget
If the receipts of the government equal its expenditures, the government will be said to
has a balanced budget. a balanced budget will has a neutral effect on the level of the
economic activity. This means, it will has neither expansionary effect nor a
contrcationary effect on the economy. (ibid .242).
2.4.3 Deficit budget
Budget deficit is the excess of expenditure over revenue of the government. If the
receipts of the government is less than its expenditure, the government is said to has a
deficit budget. A deficit budget implies that the government is pumping more money into
the economic system than it is pumping out.
When it puts in more money into the economy, the level of economic activity expands.
This will move further on the growth path. Usually the governments of developing
economies plan for a budget deficit. It is financed by domestic borrowing, external
borrowing, and the printing of new money. (ibid, p.242).
2.5 Characteristics of the budget
2.5.1 Measuring effectiveness and control
Most government organization provides services rather than tangible products. This
present both operation and measurement or control difficulties. In developing the budget,
the government organization often has a usual difficulty in budget revenue. This is
primarily because of the fact that much revenue do not result from the organization
rendering the services for an individual. (Habtamu Getachew, 2014, p.7).
2.5.2 Expense budget
The problems of estimated expenses are more manageable than budgeted revenue .it is
generally easier to record and classify when they are actually incurred. Many times
however, it is virtually impossible to match expense incurred in providing a program
service, or operating department to any specific revenue sources. In this case, budget will
serve as tool for controlling the program expenditures, but not for evaluating their
effectiveness in meeting needs of the member. (ibid, 2014, p.8)

2.5.3 Budget planning
Every government organization need to make plan about how will it allocate its
resources. The mechanism of market, however, tends to simplify these tasks for profit
oriented organization than government organizations. Government organization budget
often helps it to achieve its futures or predetermined goals. (ibid, 2014, p.8).
2.6 Characteristics of effective budget
Term Characteristics
Accountability
Detailed control will be established which have the goal insuring
that policy detective are carried out by manager of contracts and
all concerned parties.
Comprehensiveness Includes all uses of governments financial resources
Constraint Contains limitation on the amount of money that needs be
dominant.
Co-operation Budget will exist in harmony with the other decision process and
will not be dominant.
Honesty Contains unbiased projection
Judgment Encourage participant to seek the most effective at the least cost.
Legitimacy The budget process will reserve the important decision to legally
appropriate authorities.
Perception Budget will considers short and long term
Responsiveness The budget must adopt policies that match public preferences
Timelines A Budget will complete regular when expected
Transparency he budget and budget procedures will be understand by
participant outside stock holders
(Source: ibid, 2014, p.9)
2.7 Purpose of the budget
The objective of budgeting and budget is to control the organization approved project and
verify the annual budget to the extent of approval and to examine carefully the evaluation
and utilization of budget. A property prepared budget provides government and other
with several benefits. The primary purpose of the budget is to present and describe the
financial ramification of a plan for the future. The budget process requires individual to

consider future course of action and the resources needed to accomplish various
activities. It also promotes co-ordination and communication among divisions or
departments within government function effectively and efficiently.
There will be an interaction between the departments and has better clearly define how
each action affect the performance of the organization. Therefore, the manager must
communicate their plan to the departments in order to co-ordinate the activities of the
government as a whole.(ibid, 2014,p.11)
2.8 Capital Vs Current budget
Capital budget is a plan of proposed capital outlays which includes the proposed
expenditures for current operations and debt service as well as estimation of all financial
resources expected to be available during the current period. (Niuman Mohammed, 2014,
p.8)
2.9 Fixed verses Flexible budget
Fixed budget is a budget for a specified or fixed total amount that may not be exceeded
due to changes in the demand for goods and services. Being prepared for a particular
planned action, it is suitable for activities whose resource utilization does not materially
vary in due course. It is the most appropriate when changes in the amount of goods and
services obtainable directly affect availability of resources and expenditure needs.
(Mohammed Woliye, 2014)
2.10 Advantage of budget
Compares strategic planning and implementations of plan
Provides a frame work for judging performance
Motivate manager and employees
Fomalization of planning

2.11 Budget preparation process
Budget and budgeting process are used to identify the most efficient allocation of the
organization resources and to provide planning and control mechanism over fund flow.
The modern organizations use several types of budget in planning and executing the
organizations operation. The budget department performs the following functions.
Publish the procedures and forms for the preparation of the budget Make sure that
information is properly communicated between interrelated organization units.
Provide assistance to budget in preparation of their budget Analyzed proposed budget and
make recommendation first to the budget and subsequently to the senior management.
Administer the process of making budget revision during the year
Source :( Habtamu Getachew, 2014, p.12)
2.12 Budget revision
One of the principal consideration in budget administration is revision of a budget after
its preparation and been approved clearly. If it could be revised, there would be no point
in re visiting and approving the budget in the first instance. (ibid, 2014, p.13)

CHAPTER THREE
3 RESEARCH METHODOLOGY
3.1 .Description of study
Finance and economic development of Chiro town is located at eastern part of
Ethiopia, Oromia region western hararge zone which far away from Finefine the
capital city of Ethiopia. The finance and economic development have 15 districts
from this finance and economic development of chiro town has opened in 1915 in
chiro city. The study will be connected on government budgetary utilization and
control system in finance and economic development of chiro town.
3.2 Research design and strategy
Research design refers the study will plan and conduct the procedures and techniques
employee to answer the problems. This study will be carries out through descriptive
survey. Descriptive research will be appropriate for this study.
3.3 Sources of data and type
For this study, the researcher will use both primary and secondary data source. A primary
data source will be collected by using Interview and Distributing Questionnaires for the
employee of the finance and economic development office of Chiro town. Secondary data
source will be collected from the official documents and records to relate the case under
the study.
3.4 Sampling size and target population
The study will be conducted by considering simple random sampling techniques. Because
these techniques it is simple to use and less time consuming. The researcher selects 30
out of 52 employees of the organization. It constitutes 57.7% of the total employees.
Therefore it is a representative of the whole population since it constitutes greater than
half percent employees of Chiro town finance and economic development office.
3.5 Method of data analysis
After gathering all required qualitative and quantitative information data analysis will be
performed and presented through table, percentage and frequencies. Then the data will be
analyzed by using descriptive analysis method.

CHAPTER FOUR
4. BUDGET AND TIME SCHEDULE
Time plan or time budget is a time table explaining how the researcher expected to carry out his
project. It is a plan in terms of months and expected completion.
Dates, it is presented in the table form or charts in the following schedule.
N
o
Activates Time Periods/months Time Periods/months Time
Periods/months
May June July
1 Title Selection XX
2 Proposal writing XX
3 Proposal submission XX
4 Data Collection XX
5 Data processing and
analyzing
XX
4.1 TIME SCHEDULE

4.2 Cost Budget
Activities Unit Unit cost/Birr/ Total cost/Birr/
Transportation cost 3 30.00 90.00
Secretarial service for writing Proposal 250.00 250.00
Pays of researcher for:- food, tea and etc. 3 50.00 150.00
Pen 5 5.00 25.00
Pencil 2 5.00 10.00
Paper 25 1.00 25.00
Printing costs for getting related document, 19 pages 3.00 57.00
Floppy disk 1 12.00 12.00
Sub-total cost 625.00
Contingency (10%) 250
Total Cost 1494

Reference
 Habtamu, G. (2014).analysis of government budgetary utilization and control, Jimma
University, Ethiopia
 Niuman, M. (2014).Assessment of government budgetary control procedures and
utilization, Jimma University, Ethiopia
 Mohammed W.(2014),Budgetary performances and its impact , Jimma
university, Ethiopia
 .(ibid, 2014,p.11) budget utilization and control
 Grade 11 economics, (2012) budget, New Delhi, India
 www.definition of budget

APPENDIX
RIFT VALLEY UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
Dear Respondent
Questionnaires
Dear respondents
The one who provided you this questionnaire are the Rift Valley university student who
is conducting the research on government budgetary utilization and control system in
particular area of Chiro town; so as to solve the problem faced regarding to budget
utilization and its control system. Therefore, the researcher kindly requests any
respondent to fill and return the questionnaires back honestly. Encircle your answer and
write in the blank space as much as possible. Note that no need of writing your name.
Thank you
General characteristics of respondents
1/ Sex
A/ Male B/ Female
2/ Age
A/18-25 B/ 26-35 C/ 37-45 D/ above 45
3/ Educational status
Degree-- 12 complete-
Diploma 10 complete---
Above degree Elementary
1 Do you participate in budget utilization and control system?

Yes No
2 If your answer for the foregoing question is”yes”in which area?
Administrative
Supervision
Both
3 Which budget control system/mechanism is/are applicable in the organization?
Preventive
After process
In the process
4 Does the organization prepare budget utilization report?
Yes No
5 If your answer for the question No 5 is “yes “at what time interval?
Monthly quarterly
semi-annually annually
6 In the process of budget utilization is there over/under utilization of budget?
Yes No
7 If your answer above is underutilized, why? Is it due to?
Lack of skilled man power □ lack of job training □
Lack of proper control shortage of budget
Due to wrong staffing □ lack of feeling about their responsibility
Lack of proper management abuse of power All of the above
8 What do you think, should be done to solve these problems?
Training employee as possible
Compensating them as equal as their work
Giving awareness concerning their responsibility
Hiring new experienced employees
Strengthening the management and coordination among them
Using clear policies and procedures

All of the above
9 Budget utilization and control system is mostly performed by
Finance department
Budget committee
Both of them can perform
10 In what way the budget is utilizing currently?
By recording fund available and expense
By budget planned accordingly
11 What types of procedures you are using to utilize and control your budget?
Budget disbursement procedure □
Budget and payment procedures
Reporting procedures
Expenditure procedures
Auditing procedures
All of the above
12 If you have anything to add; please specify
it----------------------------------------------------------------------------------------------------
-------------------------------------------

Research Methods : Corrected Proposal.doc

More Related Content

Similar to Research Methods : Corrected Proposal.doc (20)

More from NesruSiraj2 (6)

Recently uploaded (20)

Research Methods : Corrected Proposal.doc