Budget and Record keeping in an organization. A study of selected organizations in Nigeria


Budgeting is a crucial aspect of financial management in organizations, and empirical studies have shed light on various aspects of budgeting practices and their impact. Several studies have examined the relationship between organizational factors and the perceived usefulness of budgeting systems.

Chenhall and Morris (1986) investigated the impact of organizational structure, environmental uncertainty, and interdependence on the perceived usefulness of management accounting systems, including budgeting. The study found that budgeting was perceived as more useful in organizations with high interdependence and stable environments. This suggests that budgeting may be particularly beneficial in situations where coordination and interdependence among different units or departments are critical.

Another study by Lukka and Granlund (1996) focused on the influence of communication structure on budgeting practices. The findings highlighted the importance of effective communication for successful budgeting. A fragmented communication structure, characterized by difficulties in information sharing and coordination, was found to hinder effective budgeting within organizations. This underscores the significance of establishing clear communication channels to facilitate the budgeting process.

Merchant and Van der Stede’s book (2007) provides a comprehensive overview of budgeting and its role within management control systems. The book synthesizes research findings and offers insights into the design, implementation, and impact of budgeting systems. It discusses how budget-related factors can influence performance measurement and control in organizations. This resource serves as a valuable reference for understanding the broader context of budgeting practices and their integration within management control systems.

In addition to examining the organizational factors, empirical studies have explored the impact of budget participation and managerial performance on managerial attitudes towards budgeting. Cuganesan, Dunstan, and Palmer (2017) conducted a study that revealed a positive relationship between budget participation, managerial performance, and favorable managerial attitudes towards budgeting. This suggests that involving managers in the budgeting process and achieving better performance outcomes can positively influence their perceptions and attitudes towards budgeting. Such findings highlight the potential motivational effect of budget involvement and performance-based incentives.

Furthermore, a meta-analysis conducted by Leach-López, Li, Marquardt, and Rigsby (2020) synthesized multiple studies to explore the relationship between budgetary control systems, including budgeting, and organizational performance. The meta-analysis found a positive association between the use of budgetary control systems and performance outcomes. This suggests that effective budgeting practices, when integrated into broader control systems, can contribute to improved organizational performance.

Overall, these empirical studies provide valuable insights into budgeting practices in organizations. They highlight the significance of organizational factors, such as structure, communication, and participation, in shaping the effectiveness and perceived usefulness of budgeting systems. Additionally, the studies underscore the potential impact of budgeting on managerial attitudes and organizational performance. By considering the findings of these studies, organizations can enhance their budgeting practices, promote transparency and participation, and align their budgeting systems with overall organizational goals and objectives.