Budget Preparation and Implementation (Case study Dire Dawa city municipality)

                                DIRE DAWA UNIVERSITY

                        School of business and economics

                         Department of Accounting

A Research Paper Submitted to Department of Accounting in Partial Fulfillment of the Requirements for Bachelor of Arts (BA) Degree in Accounting

                             Budget Preparation and Implementation

(Case study Dire Dawa city municipality)

                                                    Prepared by:-Getu Tola

                                                 Advisor:-Mekonnen A.

                                                                                             

                                                                                                         June, 2012

                                                                                                          Dire Dawa, Ethiopia

Acknowledgments

I would like to express my deep appreciation and gratitude to my advisor Mr.Mekonnen A. who assisted me in writing this paper through his valuable suggestion and guidance.

I went to express my heart full thanks to Dire Dawa City Municipality, Finance Department who has provided me information and valuable material for the study.

I also indebted to my friends, parents for their moral and financial support during my study.

Last but not the least my sincerely thanks to the following individuals for their multi directional support.

MISS. Kukit X.  Business center.

                             Abstract

This study aimed at evaluating the practice of budget preparation and implementation in Dire Dawa city municipality. The organization prepare budget annually following the procedures and the department need.

Primary data were gathered from the head of the finance departments, the section of the person is based on the basis of the responsibility and deep knowledge and accumulated practical experience it has. Questionnaire is distributed to resource persons in the organization whose activity is directly related finance department.

The data from the resource person were gathered through a scheduled interview developed by the researcher himself. The gathered data were analyzed quantitevely.

The study shows the organizations effective implementations of its budget due to collaborated working of the employees and the management. Finally the study has demonstrated that the organization suffering from lack of experience, not surely determined need of the departments.

Based on the identified limitations and problems possible solution were forwarded.

CHAPTER ONE

1. Introduction

1.1Background of the study

The word budget means the financial plan of business enterprise for the period of a year. Predicting financial results and non-manufacturing companies. Budget is a quantity of plan of action and aid to the coordination and implementation of plan. A budget system builds on historical or actual performance. Moreover, budget is the most widely used method to control resources of profit making and nonprofit making entity.

Preparation of annual budget is mandatory most of the entities because of its unique feature in controlling financial resources of any entities because of its unique feature in controlling financial resources of any entity. It is one of the most of important financial reports produces by the entities.

Budgeting is concerned with implementation of the approved program within long range of plan. The budget translates the long range plan in to annual operating plan. The annual budgeting process lead to the refinement of those plans. Since managers must produce detailed plans for implementation of the long range plan.

Generally nowadays most or every organizations are requiring budgeting it should be available to management tools, but its goes for beyond that.

The budget express qualitatively and in detail, what the organization or the business plans to do next year and what result it expects. It states how available resources will be needed. It communicates where emphasis and priority would be placed and the performance sought. It supplies this information not in the abstract but in the specific people sales profit.

1.2  Background of the organization

Dire Dawa city municipality is the biggest and knows organization institution in Dire Dawa city. Which services the society in the area of different sectors by allocating implementing the budget? Among those sector or health is the known sector which needs many budgets than other sectors like peace keeping sectors, educational sectors and the like.

This Dire Dawa city municipality was established in 1908. Nowadays if it have 38 employees which is permanent and contract. Initially this dire Dawa city municipality was established with total budget of 25,355.75 grouping its sector with the amount of budget they need. By its sector Dire Dawa city municipality has great role in order to keep societies.

Expanding schools from primary school and also played great role by keeping the societies peace. Though its police and peace keeping workers, environmental keeping sector all this sectors have done role in order to keep societies or provided service to the society regarding the budget allocated to them by Dire Dawa city municipality.

1.3 Statement of the problem

Many organizations prepare budget before they utilize the resource they have either they are profit oriented or Non-profit oriented organization they would prepare budgets. Though the motives behind the two is different.

The budget of profit oriented organizations focuses on maximizing their wealth the industry they have been engaged and also increasing their shares in the industry but fall apart. The focuses of non-profit organization is the provision of quality server or products within each amount of budgets they have been provided. Many mangers claim that budget is empirical because their organization experiences so many uncertainties. Certainly it should be emphasized that budgets reflects plan and that planning should have taken place before budget are prepared.

If budgets are not prepared in the organization some difficulties face the organization in coordinating the activities of the various parts of the organization and ensuring that the parts are in harmony with each other, in communicating plan to the various organizational goals in controlling and in evaluating the performance of management.

Since the budget is the most widely used method for controlling, planning and also for addressing objectives, goals, problems of budgeting is not only preparing but also on implementation from this point the researcher wants to assess what procedures the organization as organization follow to prepare budget:

ü  Does the organization prepare a budget?

ü  Does the organization have budget manuals?

ü  What problems encountered on the budget process?

ü  What types of budget system the organization use and how it prepares?

ü  When compared actual results with budget established does variance observed?

1.4 Objective of the study

1.4.1       General objectives

The general objectives of this study it to assess the budget preparation and implementation in Dire Dawa city municipality.

1.4.2 Specific objectives

Being subparts of general objectives the specific objectives of the study:

-        To assess the budget preparation process or system adopted by the organization

-        To identify those problems encountered on the budgeting process of the organization

-        To help improving budget formulation review a decision making at all levels of management.

-        To look in to variance of the budgeted amount and actual performance of the company or organization.

-        To help better understanding and better review of budget by the manger.

1.5 Significance of the study

It is likely certain that some benefit would be derived from this study. Even if the Dire Dawa city municipality is the oldest organization, No sufficient study has been done regarding on this research. So that the budgeting system assessment this research will be made to serve different purpose.

ü  Contains or provide information most useful to management

ü  It helps the organization officials by giving a recommendation to some existing problems which need some improvement regarding budget preparation and budget implementation.

ü  To improve budget review and decision at all level of management in the company.

1.6. Scope and limitation of the study

                  1.6.1Scope of the study

This study is focused on the budget preparation and implementation of Dire Dawa city municipality even though the budget preparation is different in every type of organization.

                1.6.2 Limitation of the study

In conducting this study the main problem which faced the study is in case of time and cost to conduct the research (considering all case or conditions cost is needed for the purpose of preparing interview transportation and questionnaires and for other expenses. The capacity of the researcher is not sufficient enough.

              1.7 Methodology of the study

In organizing the study to come up with empherical results, the data is collected from the organization and it is believed to be representative of the organization. The study used descriptive analysis and therefore descriptive statistical tools like table is used to analyze the data. The feasible technique of achieving the goal of the study is to obtain relevant information. Accordingly this research used both primary and secondary source of data to substantiate the conceptual frame work by empirical analysis.

The primary data has been collected from interview with Dire Dawa city municipality finance department head. Secondary source for data including books, Internet and Microsoft Corporation needed for the accomplishment of the study were substantially used.

1.8 Method of Data Analysis

After the data was collected, its accuracy and analytical validity were checked. Next to data arranged so as to make it easy for further processing. The analysis part is concerned with the conversion of raw data in to information that was used for conclusion and recommendation. Here tabulation and percentages were used to make the analysis purpose easier.

After the data was analyzed it converted into understandable form. There is also reasonable explanation for the raw data obtained; finally the task of presentation will be accomplished on the arranged time.

           1.9Method of sampling

This involves elements of the study sampling techniques and sample size was finance department head .The sampling techniques, which is used for uncertain the research, was non-probability type of sampling, that is purpose or judgment sampling was used in the research. The reason for using this type of sampling techniques is that is less costly and less time consuming, more representative and simple to draw samples this techniques helps to include units who are knowledgeable about the topic under the study and then to obtain the intended information. The officials and also employees and observation of organization documents are conducted. Secondary data was also being gathered from different text books, organizations document research results, financial report of the organization and others.

In conducting the study data was gathered through interviews. A different 13 interviews were prepared by using purposive sample method to the finance department head in the organization.  To supplement the study appropriate secondary materials i.e. accessible books and internet source were used.

 1.10 Source of data and method of data collection

    1.10.1Primary source of data

These types of source of data involves:- interview, Questionnaire and observation. Interview questions was the most widely used source of data (means of gathering the information).

1.10.2    Secondary source of data

This is a source of data gathered from different documents, dictionary and written materials and internet.

CHAPTER TWO

                            2. LITERATURE REVIEW

This chapter mainly given much attention to what has been said by different authors about the matter discussed under this study there are some points investigated from different sources regarding the preparation for budget and implementation in order to give theoretical background.

Budgeting is the most widely used accounting tool for planning and controlling organizations. Budgeting system turn mangers are able to anticipate and correct potential problems before they else. Managers can then focus on exploiting opportunities instead of fighting fires. As one observes said for business plan to fail but many of those that flop failed to plan budgets can financially reflect many of the evolving cost accounting and management themes for example budgets can quantity the plans financial effects of activities aimed at continuous improvements and cost production (Horn green 10^th edition, 2005, p 17)

Almost everyone makes plan shortly after waking up each morning most people think a head about what they will to during the day. These thinking a head are a form of planning. Likewise, most business managers naturally think ahead about how they will conduct their business. Unfortunately the planning is frequently as informal as making is lacks the capacity for effective communication. The business manger knows what she/he superiors and subordinates have no knowledge for these objective. If a mangers plans are in consistent with her/his superiors plans considerable amounts of time and effort will likely be wanted before the disagreement is discovered. Similarly, subordinates must what until the managers tells them what to do they have no why to exercise self initiative because they do not know what is expected of them. Budgeting attempt to solve these problems by acting as a communicates objectives to both superiors and subordinates (Managerial accounting 10^thedition, 2006 p.320)

 A budget is a detail plan expressed in quantitative terms, that specifies how an organization will a quires 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 purpose; planning, facilitating, communications and coordination’s allocating resource, evaluating performance and providing incentives (cost management 3^rd,2000 p.597)

2.1 Budget and Budgeting cycle

A budget is the quantitative expression of proposal plan of action by managers or management for future time period and is an aid to the coordination and implementation of the plan.

A budget can cover both financial and non-financial aspects as a blue print out the organization to follow in the upcoming period. Budget covering financial aspect quantity management expectations regarding future income, cash flow and financial position, just as individual financial statement are prepared covering part periods. So they can be prepared covering future periods for example a budget income statement a budget statement of cash flow, a budget balance sheet.

Uncertainly these financial budgets can be non-financial budgets for, say units manufactured sold head counts and number of new products being introduced to the market. (H.Garison cost accounting 11^th edition 2005)

2.2 Classification of budget

Budgets are usually classified according to their nature. The following are tops of budgets. For each part of the organization aggregation in to an overall budget for the entire organization.

A.   Classification of budget on the basis of functions

I.                Operating budgets: - there related to the various activities or operations of firm. The number of such budgets depends on the size and nature of the organizations. Commonly used operating budget are:-sales budget, production budget, purchase budget, labor budget etc.

II.              Financial budgets:- are concerned with cash receipts and disbursement working capital, capital expenditure, financial position and result of organization operations.

The commonly used financial budgets are:- capital budgets working capital budgets and etc financial budget focuses on the effect that the operating budget and other plans will have on cash.

III.            Master budgets:- master budgets is the summary of various functional budgets a master budget are a primary budget in corporation functional budget master budget is prepared by the budget officer and it remains with the top level management. Master budget is the product that consists of all individual budgets. Well managed organizations usually have the following budgeting cycle.

1.     Planning the performance of the organization as while as well as its submits. The management team agrees as to what is expected

2.     Providing a frame of reference a set of specific expectations against which actual results can be compared.

3.     Investigating variations from plans. If necessary, corrective action follows investigation.

4.     Planning again, considering feedback and changed conditions.

B .Classification based on time.                                                                                                                                                                           

1.     Long term budget: - these are prepared to depict long-term planning of organization. The period of long term budget varies between five to ten years. Long term budget are prepared for some sectors such as capital expenditures, research and development, long term finances etc.

2.     Short-term budget:- these are generally for one or two year and the form of monitory terms. Consumes Goods industries, such as sugar, cotton textile etc.. Use short term budget etc.

3.     Current budget: - this period of current budget is generally of month and weeks.

C. Classification on the basis of flexibility

Based on their flexibility budget are classified in to fixed and flexible:-

1.     Fixed budget:- Fixed budget also know as static budget is a budget which is designed to remain unchanged in irrespective of the level of activity actually attained .Fixed budget are prepared for a given level of activity.

The budget is prepared before the beginning of the fiscal years, the financial year starts in January then the budget will be prepared a month or two ear lies.

The changes in expenditure arising of out of anticipated change will not adjust in the budget there is a difference of twelve month in the budget and annual figures.

2.     Flexible budget: flexible, budget also knows as dynamic budget or variable budget is defined as a budget by which recognizing the difference between fixed, semi fixed and variable. Cost which is designed to change in relation to the level of activity. A flexible budget costs of a series of budget for different level of activity. Therefore, it varies with the level of activity attained. A flexible budget is prepared often taking in to consideration for seen changes in the conditions of the business.( H. Garrison cost accounting 11^th edition 2005)

2.3 Strategy and plans

Budgeting is most useful when done as an integral part of an organization strategy analysis strategy describes how an organization matches its own capabilities with the opportunity in the market plan to accomplish its overall objectives. It includes of such questions.

1.     What are the cereal objectives of the organization?

2.     Is the market for its service local, regional, National or global? What tend effect its market?

3.     What form of organization and financial structures serve the organization best?

  4. What are the risks of alternative strategies and what are the organization contingency plans if its proffered plans fail

2.4 Components of master budget

Two main components of master budget are separating and financial budget

1.     Operating budget includes:

A.   Sales budget

B.     Purchase budget

C.    Cost of goods sold budget

D.   Operating expense budget

        2. Financial budget include

A.   Capital budget

B.     Cash budget

C.    Budgeted balance sheet

D.   Budgeted statements of cash flows.

2.4.1 Preparation of the master budgets

Sales budget

A master budget is a work consisting of many separate but independent budget this work is illustrated as the following.

Purchase budget

Ending inventor budget

 

 

(Alpha University College, cost accounting, 2007)

                           CHAPTER THREE

 3. Data Analysis and interpretation

 Analysis and presentation of data collected was presented in this subsection of the chapter. This analysis is to asses’ budget preparation and implementation in Dire Dawa city municipality by the finance department. To make this analysis, the researcher has conducted interview questions with the finance department head in the organization.

The researcher tried to come up with the objectives and methodologies prescribed in introduction of this research first chapter.

3.1 Analysis of interviews

In this section the researcher has tried to put all respondents’ answer which collected by using interviews were analyzed and interpreted in this section of the study. The respondent was the finance head department of Dire Dawa city municipality. The researcher collected information by using interviews therefore, the analysis and interpretation focused on the interviews sources.

3.2 Preparation of Budget in the organization

As it is known that budget is the vehicle for addressing objectives, strategies and problems in the most intelligent way. It is the vehicle which gives reality to the organization objectives and strategies and should reflect the organization considered decision strategy. The organization of Dire Dawa city municipality has its own budget that prepared in their organization. Also the organization have manual budget. As interview response, indicated that the finance department manager, the organization has been preparing a budget since it was established. Based on the respondent responses for the question was budget prepared for one year /annual and recurrent budget type is the known budget.

3.3 Budget responsibility

Based on the respondent response for the question, which department of your organization is responsible to prepare budget?  The head replied/answered that the finance department is responsible for the preparation of budget in the organization.

Furthermore, the research tries to identify whether the departments or sector in the organization prepare their own budget in the interview question with the department head. Accounting department is responsible, till now the sectors, prepares their own budget.

 3.4 Outline of procedural steps and approach

The following procedural step and approaches are out lined by the controlling authority to be followed by the organization.

              

  3.4.1 Budget procedure and timing

There are two steps of budget procedures and timing

1.     Developing an out of the budgets procedures if not already on file from previous budget.

2.     Preparing and distributing a time table for budget component preparation input.

                         3.4.2 Preliminary budget

The following points are procedural steps used to prepare preliminary budgets

-        Reviewing previous budget file to identify existing information which is usable and the organization which are normally updated by each division.

-        Collecting need assessment of each faculty for the next budget year or obtaining a forecasting of external constraints affecting the next fiscal year.

-        Dividing the budget preparation in to division based on functional units such as faculties, finance administration etc. discussing with division heads and with organization managers about the performance expectations for the next fiscal year like percentage growth new initiatives, major changes expansion for facilities by including new programs and their effects.

-        Preparing detailed budget worksheet for each major component.

-        Carefully defining and recording the assumptions used in preparing the work sheet and subsequent budgets.

-        Preparing and summarizing an operations and financial for casting for the current fiscal year with preliminary interpretive components.

-        Distributing the worksheets along with current year’s results and preliminary comments to divisional heads for review and comments.

 3.5 Types of budget of the organization

Budgets in most companies span of a period was one year or less but in case the activities they conduct may researcher wants to know the span of the budget prepared by the organization. To get answer for this question the researcher made interview with the organization finance department head. He replied that the budget prepared by the organization runs for a year. According to the question what type of budget does your organization use? the response acquired from finance department head shows that the organization use both real recurrent and capital budget type that is based on treasury/ government and internal revenue such as from  value added tax (VAT) and etc. government result was the basic source of finance for the organization since it’s a public service rendering organization. The internal revenue is the supplementary source of finance for the organization.

3.6 Factors affecting the organization budget preparation

While they prepared budget they may face different kinds of problems. Here also while Dire Dawa city municipality Finance department personnel’s prepares budget faces problems. The response to interviews shows the following problems;

ü  Some sector may not know or don’t have full knowledge of the exact amount for their department need.

ü  Due to this, the budget designated for that sectors may be lower or higher their need. If the budget is lower than the need, it will create budget transfers, which will again create or other problem budget shortage.

ü  Lack of experience, according to the interview response from the department head reasons out that, even if the organization was the oldest, did not enable the employees to have enough experience.

ü  Unexpected circumstances like breakage of machineries, cars equipments. Natural disasters and like may require the organization on the budget.  But since the costs of such unforeseen circumstances may not exactly known. Due to this the organization faces problems.

3.7 Performance Reports

Performance reports are not effective unless there is a continuous flow up of the report by authorized bodies. These reports should be prepared at regular intervals/say each on quarterly; semiannually and annually to show comparison of actual with that of budgeted.

Such report showing favorable/ fair/ or unfavorable/ unfair/variance from budget figures from this points does the organization prepared performance reports with in a years?

This question enabled the researcher to know for how many times the organization does prepare a performance report every monthly, the performance report is prepared every month through daily and weekly reports prepared by each sectors.

The performance of the organization is evaluated by the management and authorized bodies there is a great variance between actual and budget the organization adjusts the variance periodically by using different budget adjusting system.

3.8 Performance analysis or evaluation

Performance reports for internal management constitute an essential part of comprehensive service planning and that should be observed in establishing a system of performance reports.

The performance reporting phase of comprehensive budget program may determine the extent to which the planned goals and objectives are attained. To indicate the extensive reporting requirements an organization most fulfill and  focus on performance reporting the following broad financial reports on prepared by the organization.

v External report: - these are reports to government of agency or government regulatory bodies and to other external to the active management frequently those reports are guide extensive and comprise a significant portion of the overall reporting activities of the organization.

v Internal report: - these are report, prepared within the organization for internal use only. They may be considered confidential reports and they do not meet the needs of external groups, but rather the test of internal management needs for purchase of explanation this category of report is subdivided in to three distantly different sub classifications.

1.     Statistical report

2.     Special report

3.     Performance r

Yearly report: - recurrent expenditure

Reporting unit:-Dire Dawa city municipality

Year:-1999-2004 E.C

Budget type- Recurrent budget

Year	Plan of budget determined				Budget performance
	Salary	Recurrent budget	Capital	Total	Salary	Recurrent budget	Capital	Total
1999	12302584	889617	1944979	15137180	1230254	889617	1944979	15137180
2000	14492876	1226284	5448367	21167527	1449876	1393681	4133564	20020121
2001	16516420	2157059	22146118	40819597	16516420	1916417	22613204	41046041
2002	20424399	2082370	2035177	24541946	19740117	2346739	2386793	24473649
2003	22050863	2643840	1547117	26241280	21941524	2698640	1648180	26288344
2004	24105814	2816713	1517394	28439921

(Source, organizational material records)

As it is inferred from the above table, the budget implementation performance of the organization as a total or general starting from 1999-2004 recent years was so good. This indirectly implies that most of the activities planned to the conduced have been done with due attention and responsibility this also implies the strength of the internal control and management in leading, coordinating and controlling the organization. According to the interview response from the finance department head, the result is due to the closely working of the employees and effective control from the management of the organization.

From the above table we can understand that the budget prepared from recurrent expenditure from 1999- 2004 E.C year to dire Dawa city municipality has been performed accordingly though it is not discussed to me due to confident of the document the finance department head informed we while interview the general budget 1999-2004 E.C effective implementation in average 85% thus we can observe that this year implementation has shown increase 5% than the previous.

3.9 Variance analysis

Control of actual results with planned or budget goals has been emphasized as an integral part of the control procession Dire Dawa city municipality. A basic feature of performance reports is the reporting of variance between actual rights and planned or budget goals in different organization get and in effective implementation of the budget. To distinguish the researcher prepared interview question to the finance department head of the organization does the organization effectively implemented its budget? Here the researcher can observe from the response, that the organization effectively implement the budget prepared. Which may be due to uncontrollable/ unforeseen circumstances?

Related with this the researcher would like to know whether variance appeared when they compared the actual results with the budgeted or not appeared in the organization.  The respondent disclosed that variance was observed in the organization. More over they identified that the observed variance is not of the time favorable, but variances are observed. The example for this can easily be understood from the recurrent expenditures budget and actual expenditure.

Associated with this the researcher wants to know the reasons why variance was observed in the organization. The interview conducted with finance department head pointed out the reason for occurrence of variance:-

Ø  Unforeseen circumstances

Ø  Increase in general administration expenses

Ø  Increase in price of goal inflation / in unusual way.

The researcher more over wants to measure the organization takes to control variance by providing the interview question. What kind of action or measure does the organization use in order to control variance the respondent provided the following techniques:-

Ø  Budget supplement

Ø  Transfer

                     CHAPTER FOUR

4.     CONCLUSION AND RECOMMENDATION

     4.1 Conclusion

To conclude this chapter, the data which are collected have been analyzed and interpreted within the boundary of its constraints. So that the issues addressed in this study are shortly concludes in the following paragraph.

ü  Many organization managers/ business and non-business / believe that is neither necessary nor practical to use budget in a service organization or companies from this idea. However, the researcher can conclude from the study the organization used budget.

ü  When budget was prepared many problems were encountered

ü  Since the organization is a service rendering organization to the public it is controlled by the government. The organization used procedural steps and approaches out lined by the controlling authority while preparing budget. That includes budget preparation timing; preliminary budget division of budget to sections finished the process.

ü  Budget can also prepared for a span of one year.

ü  The use of clear and simple and standardized work sheet could enable the organization to collect and assemble the information needed and to confirm the prepared budget in each subsection (division).

ü  According to the information obtained from the organization no sub division or sectors in the organization has prepared its own budget, rather some subdivision is not adequately disclosed their need certainly or the exact amount of their needs that directly or the exact amount of their needs that directly influence the preparation and implementation.

ü  Since budget is the financial plan of an organization for the period of year and it enable for predicting operation results. Therefore effective implementations of the budget enable to achieve the desired objectives. According to the respondent effective implementation of budget to collaborated functioning of the employees. From this the researcher conclude that the organization effectively implement its budget. But also the respondent suspects the effective implementation of the budget due to unforeseen circumstances.

ü  Performance report can be effective especially if it is presented continually to the authoritative organ. However the organization presents its performance report every month.

ü  The performance evaluation phase of comprehensive budget program determines the extent to which the planned goals and objectives of the organization are attained.

ü  Even if the organization effectively implemented its budget, variance were observed when compared actual results with budgeted and the reason for the occurrence of variance was:-

v Unforeseen circumstances

v Increases in general administration expenses

v Increase in price of goods in an usual way/inflation

ü  The organization used different methods or techniques to control the variance, based on the interview response the organization tool different measures to control variance.

ü  When compared the overall budget year 1999 E.C to 2004 budget year, budget implementation administration as well as in all activity respects.

4.2 Recommendation

In studying the general aspects of preparation of budget and implementation in Dire Dawa city municipality; Based up on the data, finding and conclusions made the researcher suggests the following recommendations.

As it is mentioned the responsibility to prepare budget is rested on finance department, thus this section/ department prepares budgets following the procedures and more specifically by assessing the needs for all sector in the organization at general level. But it is advisable to the organization to enable the subdivision to prepare their own budget. Subdivision or department or the finance sector prepares their own budget for the purpose of verification or for the sake of approval. This strengthens the communication in the organization and more over simply the process of budget preparation in the organization.

v According to the information obtained from the interview respondent the major obstacle while preparing budget in the organization is lack of enough experience. This caused due to no training or workshop is provided to the employees. The organization recommended providing continues training workshop, and experiencing sharing to its employees by qualified persons and well known trainers. This increase the quality of the budget in all aspects.

v Since the organization is an organization that perform various and complex activities to prepare budget for all this activities is difficult and take more time. It’s advisable for the organization to use computerized budgeting system. This enables the organization to save its time and resource while preparing budget.

v Though the organization effectively implements its budget but, since effective implementation of budget is not a simple tax. It is recommended for the organization to exist clear and open communication among managers, employees and as well as sector for better performance and sufficient service provision by organization.

                                 References

1. Charles T. Horn gren, cost accounting 10^th edition (2005)

2.   Edmonds and tsay, managerial accounting concepts 10^th edition, (2006)

3.   H.Garrison, cost accounting 11^th edition, (2005)

4.  Ronald.W.Hilton Michael W.Maher and Frank H.Selto cost management 3^rd edition, (2000)

 5.   Alpha University College, cost accounting (2007)

                                                                                                                                     

                                     APPENDIX

                       Research Interviews

The interview is prepared on the budget preparation and implementation (in case of Dire Dawa city municipality)

The result of this study is intended to serve for academic purpose and benefit of your organization as well as the research is conducted based on the accuracy of the information you provide.

.1. Does the budget prepared in your organization?     

2. Does your organization have budget manual?

 3. For how long your organization has been preparing a budget?

4. What types of budget is prepared in your organization?

5. Who is responsible in preparing budget in your organizations?

 6. How variance is difference between actual and budgeted? Immediately or at the end of the year?

7. Who evaluate your organization implementation of budget? How their implementation?

8. How implementation report is prepared in your organization?

9. How your organization implement in recent period?

10. Does performance is evaluated in your organization?

11.  Are there many factors that hinder the implementation of budget?      .

12. Does the sector in your organization prepare their own budget?   

13. What kind of action or measure does the organization use in order to control                                                                                           variance?