Assessment of Planning and Control of Capital Expenditure in a Business Organization

ABSTRACT

The research focuses on as assessment of planning and control of capital expenditure in a business organization, a case study of global soap and detergent company, ljebu- ode, Ogun- state. The major objective of the study is to determine the application of planning and control have any effect on capital expenditure in a business organization, to examine the relationship between planning and control being adopted on capital expenditure in a business organization.

Data were collected through primary source. The descriptive survey method was used and the research tool was questionnaire. Total of thirty five (35) respondents were obtained using random sampling technique and thirty (30) questionnaires were answered and return. Data analysis and presentation was done by the used of tables.

The major findings from the organization are: planning and control is the backbone for every organization and planning and control help the organization to invest on long terms asset in other to have more profitability for their business. Planning and control have no significant effect in every organization, because planning and control determine the profitability for business organization to invest on. On the basis of the above findings; the study concludes that planning and control on capital expenditure help the business organization to invest in long terms asset and also help business organization to growth. Poor planning and control on capital expenditure will prove disastrous for the continued survival of the firm. Unwanted or unprofitable expansion of assets will result in heavy operating control of the firm. Also, inadequate investment in asset would have it difficult for the firm to complete successfully and maintain its market share.

The following recommendations are the approving authority for various project should be weighed according to the sum involved. That is, instead of a situation where only the board that approve every projects, the head of each department and the management could be allowed to approves some projects when the amount are not too much. Each heads of departments should assist the accountant by providing the necessary data that will help to plan for the accountant to give he/she period reports on progress and cost of the company projects. The supervising accountant should be made to give periodic report on the on-going projects. This will allow proper assessment and assessment of situation. Every relevant department and personnel should be carried along inception of the company’s project. This will allow for easy monitoring and co-ordination.

 

Keywords: Audit, Budget, Control, Expenditure, Planning.

TABLE OF CONTENT

Title Page                                                                                                                    i

Certification                                                                                                                ii

Dedication                                                                                                                  iii

Acknowledgement                                                                                                      iv

Abstract                                                                                                                      v

Table of content                                                                                                          vi

CHAPTER ONE: INTRODUCTION

1.1       Background to the Study                                                                               1

1.2       Statement of the Problem                                                                               2

1.3       Objective of the Study                                                                                   3

1.4       Research Questions                                                                                         3

1.5       Research Hypothesis                                                                                       3

1.6       Significance of the Study                                                                               4

1.7       Scope of the Study                                                                                         4

1.8       Definition of Terms                                                                                        4

          CHAPTER TWO: LITERATURE REVIEW

            2.0       Introduction                                                                                                    6

2.1       Conceptual Clarification                                                                                 6

2.1.1    Planning on Capital Expenditure                                                                    6

2.1.2    Control on Capital Expenditure                                                                      6

2.1.3    Steps Involved in Planning                                                                             7

2.1.4    Controls and Coordination in Business Organization                                                7

2.1.5    Important of Effective Control Procedures                                                    8

2.1.6    Planning and Control over Capital Expenditure                                             8

2.1.7    Capital Expenditure                                                                                        9

2.1.8    Difference between Capital Budget and Operating Budget on Capital

            Expenditure                                                                                                    9

2.1.9    Capital Expenditure Project                                                                            10

2.1.10  Investment Authorization of Capital Expenditure                                         10

2.1.11  Post Investment Audit on Capital Expenditure                                             10

2.1.12  Post Completion Audit on Capital Expenditure                                             11

2.2       Theoretical Review                                                                                         11

2.2.1    Stakeholder Theory                                                                                         11

2.2.2    Stewardship Theory                                                                                        12

2.2.3    Utility Theory                                                                                                 14

2.2.4    Quantity Theory of Money                                                                             15

2.3       Literature of the Subject Matter                                                                     16

2.4       Gap in Literature                                                                                             19

CHAPTER THREE: METHODOLOGY

3.0       Introduction                                                                                                    20

3.1       Research Design                                                                                             20

3.2       Study Area                                                                                                      20

3.3       Population                                                                                                       20

            3.4       Sample and Sampling Technique                                                                    20

            3.5       Method of Data Collection                                                                             21

            3.5.1    Primary Data                                                                                                   21

            3.6       Method of Data Analysis                                                                               21

            3.7       Operationalization of Variable                                                                        21

            3.8       Model Specification                                                                                        22

            3.8.1    Regression Model                                                                                           22

            3.9       Limitation of the Study                                                                                  23

           

 

            CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION

4.0       Introduction                                                                                                    24

4.1       Data Presentation and Analysis                                                                      24

4.2       Test of Hypothesis                                                                                          31

4.3       Discussion of Findings                                                                                   35

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1       Summary                                                                                                         36

5.2       Conclusion                                                                                                      36

5.3       Recommendation                                                                                            38

                        References                                                                                                      39