CHAPTER-ONE

1. INTRODUCTION

1.1 BACKGROUOND OF THE STUDY

Budgeting in Ethiopia during the imperial period, the government initiated the budget cycle each
years on the first day of tikimit (October 11) by issuing a “collator budget proposals”.
Supposedly the various ministries and agencies adhered to dead hones in completing the
budgetary process. These organizations submitted current and capital budget proposal to the
ministry of finance. The council of ministries readied all requests. The ultimate power for
approval Addis Ababa issued annual budget “calls” in July or August with preliminary
information and guidance. The new guide lines required ministries and agencies to complete
their proposals by January, when budget hearing will begin (Michael, 1976).

Budget as a plan farm acquiring and using financial and other resources over specific time
period. As common accounting tool office use for implementing strategy in planning and
controlling the action office`s must undertake to satisfy their customer and succeed in the market
place. The must use fill when it is a n integral part of office strategy analysis specific law on
organization matches its own capabilities, with the opportunities in the market place.

Budget provides measures of the financial results a company expects from its planned activities
to accomplin objective. (Horngren, 2009).

Budgetary control is applied to a system of management and accounting control by which all a
operations and output are forecasted as for a head as possible and actual results as the
establishment of the budget relating to the responsibilities of executives to the requirement of the
policy and the continuous comparison of actual with budgeted, (Gray J. 1985).

The fiscal year actual revenues from each source can be compared with estimated revenues from
that source. Material difference between estimated and actual revenue should be investigated by
administrators to determine whether, estimates were made on the basis of assumption that may
have appeared realistic when the budget was prepared but are no longer realistic ( in that event,
the budget needs to be recuised so that administrators and legislators have better knowledge of
revenues to be realized during the remainder of the fiscal year.

Budgetary expenditures when enacted in low, an appropriation is an authorization for

administrators to expand financial resources on behalf of the government not to expected the
amounts specified in the appropriation ordinance or statute. For the purposes set for thin that
ordinance or statute during the period of time specified un appropriation is considered expended
when the authorized liabilities have been incurred.

Expenditure for any purpose not covered by an appropriation or after the authority to do so has
expired the expenditure can be changed when goods or services are received, if the review
indicates that avoid appropriation exists and it has an available balance sufficient to cover the
amount of the purchase order or contact being reviewed, the purchase order or contact legally
may be issued.

When purchase order or contract has been issued, it is important to reorder the fact that the
appropriation has been encumbered in the amount of the purchase order or contract. The word a
numbered is used, rather than the word expended, because the amount is only an estimate of the
liability that will be incurred when the purchase order is filled or the contract excuted
(JohnJ.wild, 2005).

Budgetary expenditures includes all the expenditure which are expected to produce benefits to
the firm over more than one year end encompasses both tangible and intangible assets. Large
expenditures and items such as research and development advertisement which tend to create
valuable intangible assets (pandy Im. 2005).

1.2 Statement of the problem

Budgeting is the implementation of financial resources setting at standard to undertake the actual
implementation of an organization. It is the key element for the proper utilization of public
resources. Therefore, using the right budget implementation, budgetary expenditure and control
is one of the instruments in which organizations predetermined goals achieved, form work with
specific reference wukro finance and economic development office.
1.3 Research questions

 What is the way of analyze the budget planning process and procedure
 What is the way of budget approve
 How the budget is allocate to different entities of the town
 How the budget investigate is control
 What is the budget is evaluation
1.4 Objective of the study
1.4.1 General objective

The general objective of the study is to assess the budget implementation, budgetary expenditure
and control in Wukro finance and economic development office.

1.4.2 Specific objective

 To analyze the budget planning process and procedure.

 To study how budget is approved
 To assess how budget is allocated to different entities of the town
 To investigate how budget is control
 To assess how budget is evaluate

1.5 Significance of the study

To achieve the prêt ermined goal, an organization should utilize its resources effective in
accordance with the priority goals, hence, it is hoped that this paper will help managers to
investigate and solve the problems farther on plan on budget preparation and its implementation
as well as control. The conclusion and recommendation exacted. Farm this study may also
improve the identification of battle necks on the implementation of budgeting system of wukro
finance and economic development office. The study will believe to be significant for various
parties it will be have a wield picture of how the theoretical concepts are applicable in actual
practice of the organization.

1.6 Scope of the study

This paper is limited to assess the budget implementation, expenditure and control in finance and
economic development office of wukro town which covers the time period form 2000-2002 E.C.
The focus is to analyze how recurrent and capital budget are amparnetnted, expended and
controlled to assess the problems face during these periods and give conclusion and
recommendation based on finds.

1.7 limitation of the study

There may are lot of problems that the researcher faced while doing the research these are such
as financial constraints, shortage of time. It is very difficult to obtain budget preparation,
allocation and its implementation in Wukro.

1.8 Methodology of the study

1.8.1 Study design

The researches would be employing a case study design to conduct this study. Case study was be
used to make in depth study about budgeting process and monetary in wukro town.

1.8.2 Method of the data collection

The researcher used both primary and secondary data source. The primary data would be
collected through interview with budget head, finance head and account of the office and
secondary data collected from the budget centers and witter document of the organization such
as, reports, manuals and others.

1.8.3 Sampling technique and design

The researcher was employed non probability purposive sampling technique and select
respondents for interview. Finance head, budget export and accountant of the organization were
selected pure passively, because these individuals would have better knowledge about the issue
than other employees.

1.8.4Method of data analysis and presentation

The collected data would be analyze using explanation description and narration of the
summarize. Data and it was presented using tables, percentages.

1.9 Organization of the Paper

This research paper would be consist four chapters.

The first chapter was state the introduction part which includes background of the study,
methodology, study of design sampling techniques and design.

The second chapter was discussed the related literature review. The third chapter is also data
analysis, discussion and presentation. The fourth chapter was comprised to conclusions and
recommendations part.
CHAPTER TWO

2. LITERATURE REVIEW

2.1 Definition of budget

A budget is a plan expressed in quantitative and monetary terms. And in the language of business
a budget is a formal expression of the expected incomes and expenses for definite future period.
A budget can function as a device not only for planning and coordination but also for control.

According to ICMA London, a budget is “a financial and /or quantitative statement, prepared and
approved prior to a definite period of time, of the policy to be pursued during that period for the
purpose of attaining a given objective. (Bamer Jee B. 2006)

A budget is a formal listing of the expenditure and reviews of a governmental unit. It is a

financial plan for the future. The budget are legally binding up on administrators has led to the
incorporation of the budget and budgetary accounts of very small governmental units of
government and the US government on the other hand is quite complex. In the general fund and
in special revenue fund and all other funds required by state lows to adopt a budget and the
budget document records the decisions that have been made through the political interaction of
citizens, legislators, bureaucrats and public executives, budgets per form several functions help
us control the government and also improves the accountability, management and planning of
public sector activities.

The budget also a planning tool and it forces people to compare the benefits of various projects
with the cost of such project and may there for put such people in a better position to make wise
decisions. Modern budget procedures contain projections of expenditure and revenues. (Wilson.
RK. 2010)

Budget is a detailed plan, expressed in quantitative terms, that specifies how an organization will
acquire and use resources during a particular period of time. A budgeting system comprises the
procedures used to develop a budget. Budgeting system have five primary purposes. Planning,
facilitating communication and coordination, allocating resources, managing financial and
operational performance, and evaluating per formance and providing in centives and the most
obvious purpose of a budget is to quantity a plan of action. The budgeting process forces the
individuals who constitute an organization to plan ahead. The development of a quarterly budget
for a wasting Hotel. For example, forces that hotel manager, the reservation manager and the
food and beverage manager to plan for the staffing. Budgets are developed for specific time
periods. Short rang budgets cover a year, a quarter, or a month, where as long range budgets
cover periods longer than a year. Rolling (or revolving or continuous) budgets are continually up
dated by periodically adding a new incremental time period, such as a quarter and dropping the
period just completed. (Hilton. M,S, 2006).

A budget is more than a forecast. A forecast is a prediction of what may happen and sometimes
contains prescriptions for dealing with future events. A budget, on the other hand, involves a
commitment to a forecast to make an agreed on outcome happen.

2.2 Concept budget

Budget is base on the idea of plan. It is a plan relating to a period expressed. In monetary and
quantitative terms, a budget is a financial expression of policy. It is a comprehensive and
coordinated plan, expressed financial terms for the operations and resources of the institute for
specific period in the future and the budget is government and government agencies. However,
tend to use budgets only as a means of limiting spending. In contrast, most business organization
use budgets to focus attention on company operation and finance not just to limit spending
budget can be used as a bench mark that a news managers to compare actual performance with
estimated or desired performance. Budgets are on important tool for effective short term
planning and control in organization. An operating budget usually covers one year and states the
revenues and expenditures planned for that year(Hor, 2005).

2.3 Types of Budget

A. Sale budget

Sale budget is one of the important functional budgets. Sales is perhaps the most difficult
forecast and the success of this budget depends up on the accuracy of the entire budget system. It
is concerned with forecasting of what company can expect to sell during the budget period. A
sales budget shows what products will be sold in what quantities and at what prices. It is usually
the responsibility of the sales manager to prepare the budget through proper market research with
his team. The expected sales are normally expressed in quantities terms in physical units and in
monetary value.

The sales manager has to keep in mind various factors which influence the preparation of sales
budget. Those factors could be market demand, production capacity, past sales, market research,
pricing policy, seasonal variation, sales promotion techniques, reports, of sales personnel, market
conditions. Taking in to account the above factors, the sales manager has to prepare a sale
budget. (BARFIELD).RA. 1997)

B. Production budget

Production budget will be prepared after the preparation of sales budget and desired inventory
levels. Production budget shows a number of units that must be produced during the budget
period to meet the market demand. Production budget follows from the sales budget and uses
information regarding the type, quantity, and timing of units to be sold. Sales information is used
in conjunction with beginning and ending inventory information so that managers can schedule
necessary production. (BARFIELD).RA. 1997)

C. Purchase budget

A purchase budget is prepared to determine the different in puts required to carry out the
production activates. Sometimes it includes the purchase of raw material while other times it
may be purchase of direct and indirect material, fixed asset. The objective of preparing a
purchase budget is to formulate a plan which will allow all necessary material and other items to
be purchased at a minimum cost. A purchase manager has to take in to account the factors such
as inventory levels, economic order quantity, expected changes in price of raw material storage
facilities availability of raw material. While preparing a purchase budget. Purchase budget is first
stated in whole units of finished products and then converted to direct material component
requirement and dollar amounts. (BARFIELD).RA. 1997)

D. Labor cost budget

It is an estimate of labor requirement to meet the demands of the company during the budget
period. While preparing labor cost budget, factors like increase in wages, types of labor required
training are to be considered. If enables the personal department to plan will for the requirement
of all the department concerned. (USRK, HM.1988)

E. Cash budget

Every business prepares a cash budget. This budget shows expected cash receipts as a result of
selling goods or services and planned cash disbursements to pay the bills incurred by the firm or
a cash budget represents the amount of cash receipts and payment and the balance during the
budgeted period. It is prepared after the preparation of all functional budgets. It is prepared to
know estimated cash receipts and estimated cash disbursements of the company over the budget
period and to know the cash position. It is advice for coordinating and controlling the financial
side of the business to ensure the solvency and financing required to cover up any deficiency in
cash.USRY, H.M.1988)

F. Fixed budget

A fixed budget is prepared for a particular activity to present the cost details. This types of
budget is not of much help to the management as no adjustment is made to the cost for the
difference in the level of activity. (M.N.) ARORA, 2003).

G. Flexible budget

A Flexible budget is one, which is designed to change in accordance with the level of activities
actually attained. The flexible budget is more elastic, useful and practical. They are based on a
clear distinction between fixed and variable cost. It can be said that in order to avoid wide
discrepancies, which may arise when comparisons of actual results are made with fixed budget,
the use of flexible budget is to be recommended.

Flexible budget has been developed with the objective of changing the budget figures to
correspond with the actual output achieved. Flexible budget are prepared in those companies
where it is extremely difficult to forecast output and sales. The figures in flexible budgets are
adaptable to any given set of operating conditions. It is therefore, more realistic than a fixed
budget which is true only in one set of operating conditions. Flexible budget are also useful form
control point of view.(MN.ARORA, 2003)

H. Master budget

Master budget is an overall plan of future operations. It is a comprehensive frame works for the
coming year. It is prepared in two parts namely forecast income where principal items of revenue
expenses, loss and profits are shown and forecast balance sheet where the items like fixed assets,
current asset, total capital employed and liabilities are shown. It is an outlay showing the
proposed activity and anticipated financial results and approval. After its approval, various
functional budgets are sent to the concerned departments to plan their working according to their
budgets. (MN. ARORA, 2003).

2.4 Budgetary control

Budgetary control is a use of comprehensive system of budgeting to aid management in carrying

out its functions of planning, coordinating, and controlling operations. A budgetary control is one
of the important tools of control. The institute defines budgetary control as “the establishment of
budgets relating to the responsibilities of executives to the requirements of a policy, and the
continuous comparison of actual with budgeted results, either to secure by individual action the
objectives of that policy or to provide a firm basis for its revision.” Budgetary control of revenue
to establish accountability for revenue and permit budgetary control, actual revenues should be
recognized in the general ledger accounts of governmental funds credits to the revenue account
(offset by debits to receivable accounts for revenues that are accrued or y debits to cash for
revenue recognized when received in cahs). The general ledger revenues accounts is a control
account supported by revenues subsidiary ledger accounts kept in exactly the same detail as kept
for the estimated revenues subsidiary ledger accounts. (MA.PAShA. 2007).

2.4.1 Objectives of budgetary control

1. Planning

A budget is a plan of action which provides a detailed plan over a definite period of time. By
planning in advance a business can anticipate many problems much before they arise and
solutions can be sought through a careful study. in other wards it compels the management to
think a head to anticipate and prepare for the future possibilities. Thus most business
emergencies can be avoided by planning. In brief, budgeting forces management to think a head
to anticipate and prepare for the anticipated conditions. (MA.PAshA,2007)

2. Coordination

Coordination is the process whereby different divisions of a concern work in harmony to achieve
the objectives of a business. a comprehensive budgetary control requires that these plans be
formally laid down in the budget and copies to be circulated among the different departments for
proper information and functioning. Therefore should be coordination with the budget of
production. Similarly, production budget should be prepared in coordination with the purchase
budget and so on.(MA.PAshA,2007).

3. Control

Control is necessary to ensure that plans and objectives as laid down in the budgets are being
achieved. Control, as applied to budgeting is a systematized effort to keep management informed
of whether planned performance is being achieved or not. For this purpose a comparison is made
between plans and actual performance. The difference between the two is reported to
management for taking corrective action (MA.PAshA,2007).

4. Communication

A budget is a communication device. The approved budget copies are distributed to all
management personnel which provides not only adequate understanding and knowledge of the
programmers and policies to be followed but also gives knowledge’s about the restrictions to be
adhered to. It is not the budget itself that facilitates communication, but the vital information is
communicated in the act of preparing budgets and participation of all responsible individuals in
this act. (MA.PAshA,2007).

5. Motivation
A budget is useful device for motivating managers to perform in line with the company
objectives. If individuals have actively participated in the preparation of budgets, it acts as a
strong motivating force to achieve the targets. (MA.PAshA,2007).

6. Performance evaluation

A budget provides a useful means of informing managers how well they are performing in
meeting targets they have previously helped to set. In many companies there is a practice of
rewarding employees on the basis of their achieving the budget targets or promotion of a manger
may be linked to his budget achievement record. (MA.PAshA,2007)

2.5 Budgetary control of Encumbrances and expenditures

When enacted in to law, an appropriation is an authorization for administrators to expend

financial resources on behalf of the government not to exceed the amounts specified in the
appropriation ordinance or statute, for the purposes set forth in that ordinance or statute, during
the period of time specified.

Expenditures and the liability account must both record at the actual amount the government
agrees to pay the vendors who have filled the purchase orders. The fact that estimated and actual
amounts differ causes no accounting difficulties as long as goods or service are received in the
same fiscal period as ordered. The encumbrance procedure is not necessary for every types of
expenditure transactions.

The administrators of governments need accounting systems designed to provide at any given ate
during a fiscal year comparisons for each item in the legal appropriations budget of the amount
appropriated, the amount of outstanding encumbrances, and the cumulative amount of
expenditures to this date. The net of the three items is accurately described as un encumbered un
expended appropriations but can be labeled more simply as available appropriations or available
balance. In order to provide needed comparisons, classifications of expenditures and
encumbrances must agree with the classification of appropriations mandated by low. In most
cases, budgetary control over expenditures follows the logical flow depicted below:

Appropriation Encumbrance Expenditure Disbursements

At intervals during the fiscal year, a schedule of budgeted and actual expenditures and
encumbrances should be prepared to inform administrators and members of the legislative
branch of the data contained in the subsidiary ledger records. (Wilson Rk,2010)

2.5 Budget process in Ethiopia

The allocation of scarce resources through the medium of budget is believed to have began to
conceptualized in Ethiopia in 1944.(Shimelise, 2002)

In the Ethiopian budgetary process, there are two competing process, political and
administrative, with corresponding actors there in, each process in based on a different
perspective of the use of the budget. Politicians and citizens perceive the budget as a reflection of
alliances among competing interest. To these participants in the budgetary process the final
document shows who won and who lost, who was able to form appropriate coalitions and work
out satisfactory compromises, and who was not able to accomplish these political feats.
According to this perception of the budget, it is a political tool that shows which policies are
currently in ascender, with much less attention given to the process by which policies are
achieved or administered.

The managerial tool, the budget as a, which has one of its major functions the presentation of a
plan for government actions. These participants in the budgetary process are primarily interested
in developing a document that presents a meaningful plan showing both ends and means so that
it can also be used as a control device. (Mellese, 2003).

2.7 The Ethiopia budget cycle

The Ethiopia fiscal (budget) year and hence the budget cycle runs from July of at one year to
July 6 of the following year. The stage in the cycle to be discussed here under are the budget call,
budget preparation, budget hearing, budget approval and budget allocation, budget
execution(Implementation) and budgetary reporting and control (mellese, 2003)

A. Budget call

Every year, at least three months before the end of the fiscal year the ministry of finance and
Economic development issues annual call letter for recurrent and capital budgets to different
institutions. And the existing economic conditions of the country and the priority areas, tentative
budget calling and the prescribed formats to be used are stated and/or enclosed with the call
letter.(mellese, 2003).

B. Budget preparation.

The budget preparation is done by different sections of the organizations.

The administration and finance department prepares the recurrent budget while the department
for plan and project prepares the capital budget. After the proposed budget is compared and
evaluated in accordance with the budget ceiling and the reason for the increase. If any is verified
the draft budget of the institutions is discussed and reviewed by senior officials (top
management) of the respective organization.

The budget proposal that won the support of the officials is prepared being broken down in to
programs, in to sub programs and expenditure items and also that is revised and accepted by the
senior officials is depending on the level at which it is prepared, sent to the respective finance
bureau of ministry of finance and economic development. This budget proposal must be
substantiated and supported by relevant documents. If the budget proposal shows variations form
budget ceiling for the years, the explanation for the variation need to be given.(mellese, 2003).

C. Budget Hearing

The proposal shall be presented to budget hearing committee where they will be subjected to
discussions and negotiations in the presence of officials of the budget proposing body. The
officials then defend their budget before the committee. (Mellese, 2003)

D. Budget Approval

The council of ministers will forward the budget document to the council of peoples.
Representatives for approval at regional level, the budget estimates for recurrent and capital
expenditures should be presented to the regions council by the region`s finance Bureau. Once the
region`s council approves the budget, it will be submitted to the council of ministers for review
and recommendation.
The council of ministers having discussed the proposal makes recommendation, if any and shall
submit it to the council of peoples representatives which shall approve it by July bandnotify all
public bodies by July. If the council of peoples representative has not approved the annual
budget by the beginning of the fiscal years, the previous year budget will be implemented on a
monthly basis until the annual budget for the current fiscal year is approved. Then budget of the
country will be proclaimed and published, and notification shall be made on the approved
estimates to the concerned institutions. (mellese, 2003)

E. Budget allocation

The budget is published in the public body gets the budget allocated under each sub heading
form the concerned finance bureau, if allocates the budget under sub headings and branches at
different level. This may involve the revision of plans of action accordingly, for proper execution
of the budget. (mellese, 2003)

F. Budget Execution

Budget is a monetary estimate for activates to be carried out in the future, discrepancies may
arise up on execution there may be budget shortage for one sub program or another may be in
excess both necessitating the transfer budget and budget transfer requests are done at different
levels. Transfer are allowed form the recurrent budget to the capital budget and form one sub
heading to another within the recurrent budget and from personnel service to non personnel
services subject to regulations issued by the council of ministers. But no transfers are allowed
form the capital budget to the recurrent budget. (mellese 2003).

G. Budgetary reporting and control

Subject to the directives of the ministry of finance and economic development, the heads of
public bodies shall maintain a register of appropriations, authorized transfers and allotments for
each budgetary heading and sub heading and for each capital project. Each institution local or
central should prepare and submit monthly statement of cash receipt and expenditure. At this
stage, institutional compliance to the budget economic and effective application can formity with
the government accounting system will be verified. The verification could be made by respective
finance bureau or the internal unit or external auditors. (mellese, 2003).
Each government institution is supposed to form an internal audit team or unit in their structure.
While the federal auditor of the pertinent government bodies.(mellese, 2003).
Chapter - Three
3. DATA ANALYSIS, DISCUSSTION AND PRESENTATION

3.1 Introduction
Documents of the organization were also reviewed for collecting secondary data. The researcher
has conducted an interview with more important and more expertise persons who have agreat
knowledge of the sector mainly the administrative office (the manager) and with the technical
skill employees of the office. Based on the general response and information provided by
respondents on the secondary data, the discussion and analysis of the findings on con conducted
as follows.

Table 3.1 personal information

1. Sex No of respondents Percentage (%)

Male 9 40%
Female 6 60%
Total 15 100%
Source: on Survey

The above table 3.1 shows that the sex of respondents, from the respondents 60% of them are
male and the remain 40% are females. 50 it is advantages for the institution, because males are
more responsible than females in terms of nature, social and performance the existing
information.

Table 3.2 personal information

2. Age No of respondents Percentage (%)

1. Age >23 1 6.7%
24-32 8 53.3%
33-41 4 26.7%
41 and above 2 13.3%
Total 15 100%
Source: on Survey

Table 3.2 indicates that the age of respondents 53.3% of the sex of respondents are young as and
the remains 6.7% are less than 23, 26.7% 33 – 41 age and 13.3 are above 41, 50 the institution is
advantages, since 53.3 of the respondents a be being youngest means that they are familiar with
existing condition which are related with information technology and modernization.
Table 3.3 personal information

3. Educational level No of respondents Percentage (%)

10 – 12
Certificate 2 13.3%
Diploma 2 13.3%
Degree 6 40%
5 33.4%
Total 15 100%
Source: on Survey

Table 3.3show that the education level of the respondents most of the respondents are diploma
and degree since there percentage is 40% and 33.4% respectively. So the institution is advantage
since most of respondents are diploma and degree. This indicates that they can analysis and
interpreted the rules and regulations follow in assessment of budget implementation, budgetary
expenditure and controls.

3.2Analysis of Budget planning process and Procedure ( In wukro Finance

and economics Development)
Based on the response at the interviewees, the budget preparation has budget call as noticed by
the finance and economic development bureau to spend for public bodies. As a result service of
finance for coming fiscal year. Budget call begins around March up to April 30.

Budget preparation and request the process is the stage when public bodies’preparation prepares
their budget call. In this the economic development bureau determines how much expenditure
would needs for the coming fiscal year. Therefore, budget calls and budget preparation and
request are the two dominant and common steps to be following in the budget preparation. This
implies that the office serials procedures for budget preparation. All employees and the manager
work according to the steps.

3.5 Evaluation of budget approval (In wukro Finance and economics

Development)
The interviewee’s replied that after budget preparation and request under taken by finance and
economic development office.

Therefore, the legitimized body concerned with the approval of budget is town council. This
shows that approval at budget is only exercised by the town council which is the legitimized
body concerned with the approval of budget.
 3.3.1 Criteria for Distribution of budget
Based on the data collected from the interviewees, the researcher has got some information about
budgetary processing.

The budget allocation considers some criteria’s and requirements while distributing to sector.
These criteria’s and requirements are demand of sub sector. Expenditure report tram the previous
years the long term needs of public bodies also the fore planning for the coming year. The future
plan for agricultural and industrial development and previous year achievements. This implies
that any hoofbudget whether the achievement of the sector in the previous takes in to
consideration the achievement of the sect in previous year meaning whether the sector achieves
its desired and planned goal in the previous year.

3.3.2 Factors that affect Government Expenditures budget change

According to the interviewees’ response; there are several factors that push the government to
increase its expenditure when the interest of the society increase and the savory of the employees
increase. When the structure are institution is change the new sector is opened of the infrastrureis
expanded are expanded (need to expand) and there is an economic crisis on market. The
government should not increase its expenditure trends except. If the societies interest to some
infrastructure increase, the structure of the institution is << must>> to increase, when new
sectors is a <<must>> to open and there is an economic crises like inflection. If inflation is
increase from time to time the government spends more money to control that economic crisis.
All the interviewees (respondents) have replied that the how of budget has been changing from
year to year. Because increase the interest of the citizens especially on capital projectbudget
(needs of development) expansion of the project budget with the growth of the population of the
town. The expansion of rural road construction of increasing public expenditure. Generally, the
budget may be changed from year to year to improve the living standards, of the, standards of the
society by giving same social services, service, healthservices, opening colleges and high school.

3.3.3 Types of Accounting System Its Problems

According to the respondents response the organization uses accounting system. This implies
that the organization introduces new accounting system that is need to save time. Human power
and reject unnecessary mistakes are errors. Based on the respondents response the problem
fogged while using accounting system the turn adverse system and training. When the light
switch off the operation immediately stepthe scarcity of the skilled man power.

3.3.4 Source of Income for the town

The interviews replied that both recurrent budget and capital budget are the source of income the
foreign aid is there source for capital budget also called foreign assistance the business
enterprises of the town and barrowing. Therefore, the government of the town gets fund from
internal and external source thecaver capital budget are income tax is money collected
fromindividual salary and wage the corporate tax is the used from the properties business
enterprises which earnprivately owned properties rent house, land and others. Therefore, since
the administrative office of the town is the most significant institution increasing employment
opportunities. If get huge amount of many from enterprises of different sectors. Medium
enterprise and large industries are also greater contributors for the government recurrent budget.
From this can gasp knowledge can understand that the government to the town creates favorable
environment condition for the development of the town. Because the development of the town is
completely dependent on the tax and non tax source of the town for the existence of the
government recurrent budget is an evitable.

3.3.5 Problem in Implementation of Budget

The interviewee’s replied that the main problem faced for the organization while in
implementing the budget the office turnover of employee, skill gap or lack of skill man power,
scarce of resources, and incompatibility between the Expected budget by the sub sector and the
budget of the organization.

Generally, the organization has faced with the above problems when if implements the budget.

3.4Assess of budget allocate to different entities the town ( In wukro

Finance and economics Development)

Both the manager and the employees replied a question was reused about procedures for budget
all action the respondents responded the budget as there are different formats that to be allocated
the budget approbation is an authorization to be expenditure. If refers to an administrator request
for authorization to incur liabilities for goods and services and facilities purpose related to each
year revenue.

According to the manager of the office, this procedure help for the organization the same extent
the budget distribute from federal and regional state to, woreda and other subsector is delivered
on time. Also may help the manager to control and direct the organization effectively and used
adhere the goal and objectives of the organization effectively and efficiently.

This indicates that after the budget is approved by the town council the manager and the
employees of the organization allocate the size of the sector and its activates.
 3.5Mechanism and Significance of budget control ( In wukro Finance and
economics Development)

All the respondents replied that the mechanism used to control budget after it is allocated by
monitoring and through evaluation monthly, quarter, semi – annually and annually. Auditing
each and every sector to their expenditures.The ask of every sector to write are port to the office
about their justification for their expenditure.

Generally, monitoring, Evaluation even sadden auditing are the mechanisms used by the office to
control budget after it is allocated. This system of controlling is effective to control.The budget
and easily to know whether the budget is properly used on the target of the the organization or
not. The significance of budget control according to the organization or not. The significance of
budget control according to the respondents response is use of budget properly, the allocated
budget is properly used or not and punish if there are improper utilizes of sector for the
allocation budget. This implies that the organizations well award about the significance of budget
control and uses different mechanisms to know whether the allocated budget is property utilized
and makes its target.

3.6Asses of budget Evaluate (In wukro Finance and economics

Development)
All the interviewee’s replied evaluate the budget in every month. The organization possesses
different phases like preparation town council enactment administration that checks the approved
budget, reporting and post auditing in the budgeting process.

3.6.1 Criteria’s For Allocation at budget

According to the respondent’s response, the feasibility of the project is the main criteria to
allocate capital budget and recurrent budget. In addition to this, of the sector needs more
recurrent expenditure and less capital expenditure and less recurrent expenditures the office
allocates more capital expenditure. According to the document of the organization enactment of
budget is a single out that the budgeting process is continuous. The budgeting process of the
organization is preparation deciding how much to spend for what purpose and estimating hoe
much income and from what source it will come, the town council enactment approval of the
budget by the responsible authority administration checks to see that approved budget is being
adhered to the reporting letting the responsible authority to know the results of the budget and
post Audit Examination of Transactions and events which have already accrued andwhich the
reports is based. Types of budgetary expenditures the office functional are broad area of
expenditures. These are three function clarifications of expenditures in the office
The administration and general this cavers expenditure for the following services executive
(administration) town council, judicial, financial and fiscal affairs.The economic expenditure this
cavers expenditures that directly economic services. Like agricultural and industrial and
industrial development of the town. The social expenditure this functional covers expenditure
that social services are given for the society like sub sectors education, culture, sports are given
for the society like sub sector education, culture, sports etc.

Table 3.4Capital and recurrent budget from 2009 – 2011

Recurrent budget Capitalbudget Total

Budget Expenditure Budget Expendit Budget Expenditure
ure
2009 32,194,164.46 32,185, 081.46 44,326,50.84 43, 826, 36,626,815.3 36,567,732.3
50. 84
2010 38,663,059.16 70.092.76.185 65,035,376.3 48,821,65 103,698,435. 55,830,932.96
6.77 5
2011 41.422, 558.5 41,025,294.99 76.161,021.1 70,872,14 117,583,579. 11,897,439.8
4.85 6
Source: - budget report for 2009, 2010, and 2011
 3.1. Graphical Representation of capital and recurrent budget from 2009 –
20011

(Million)

80

70

60

50

40 Budget
Expenditure
30

20

10

0
2009 2010 2011

Years
 3.2. Graphical Representation of Capital expenditure

(Million)

80

70

60

50

40
Budget
30 Expenditure

20

10

0
2009 2010 2011

Years
(Graphical Representation of Capital expenditure)

The above table3.4 indicates that recurrent expenditure and capital expenditure increasing from
year. For example, the recurrent expenditure is increasing 19.7% from year 2009 – 2011 and
therefore, recurrent increasing by the 92.9% from year 2009 – 2011 therefore, recurrent
expenditure and capital expenditure are increase as the need for population increase. According
to the budget report of the organization the reason for the above increment of the recurrent
expenditure are expansions of administrative activities of the town. The reason for the increment
of capital expenditure the expansion of physical infrastructure, transportation, expansion social
infrastructure. In comparison to the recurrent budget of the town. In 2009 recurrent budget was
greater than capital budget and there reason was that the government of the town was more
concerned on the non development expenditure. In 2009 – 2011 capital expenditure and the
reason was the government of the town was more concerned on the Expansion of physical and
social infrastructures.
C H A P TER F O U R
4.3 Recommendations

Based on the collected and analyzed data in chapter three, the research for warded the following
recommendations to alleviate the existing problems related to the budget implementation,
budgetery expenditure and control.

The organization should give more emphasizes to prevent the turnover of employees and to
cover shortage of computers.

The organization should give more emphasis and setting the budget to balance the gap between
the expected budget by the subsector and the budget of the organization.

The office should create from to trained different sectors to know how their budget will be
allocated to their sectors. Most of the employees have full information about the about the
procedures and remaining employees also should also have full information about the procedures
and sequential steps to prepare and allocate budget. To take different problems of the office,
while preparing and allocating the budget.