When budget preparation and implementation, the organization may get challenges.

This study provide

insight in to hospitality budgetary system and tried to indicate the gap between the corporation’s
practice and what expected to be done in principle.

1. Statement of the problem

Preparation and implementation of budgets properly is necessary for on organization to achieve their
goals and objectives. However, several problems are observed with regard to budget preparation and
implementation in governmental organizations. Those problems may affect the organization goals. The
aim of this study is to identity those problems in hospitality.

2. Objectives of the study

a. General objectives

The general objectives of the study will be to identity the problem of the budget preparation and
implementation, to determine the effects of those problems on performance of the organization, and to
recommending that how to prepare and implement the organization

b. Specific objectives

- To assess the organization have an appropriate budget preparation and implementation. - To make
comparative analysis of the implementation of budget with actual expenditure. To identify the problems
for budget preparation and implementation. - To assess internal control system on budgeting. -To
recommend that measures taken by management on variance between the actual performance and the
budgeted.

3. Research Question

Based on the paper address the following selective questionnaire. 1. Who is responsible for budget
preparation? 2. What are the main factors that affect budget preparation and implementation? 3. What
types of methods are taken to prepare and implement budget? 4. What are the major types of budget?
5. What are the main source of funds?

4. Significance of the study

This research is beneficial to the organization that prepares and implement budget. It helps the
investigator to understand and know about how budget is prepared and implement. It will serve for
organization’s employees us reference material in making any budget preparation and implementation.
It will be the beginning point for these investigators who wish to or more detail in these areas. - From
this study, governmental organizations may be beneficiary in their budget preparation and
implementation. - In doing so it can also show the gap between literature and what actually is practiced.

4. Scope of the study

There are many governmental organizations, those, they apply government budget is one of those
organizations which use government budget. the researcher will be specified on budget preparation and
implementation of this organization.

5. Limitation of the study

The research needs adequate and appropriate data to be better. However problems are limiting the
research. These are due to time constraints, lack of adequate data, budget, sampling error, experience
and level of my knowledge.

6. The Research design and Methodology

a. Research design

In order to achieve the research objectives, both qualitative and quantitative (mixed approach) is
adopted. It helps the researcher to gather data that could not be obtained by a one approach only.

b. Data and Data source

The researcher will be use primary and secondary data. Primary data will be taken from questionnaires
and interview. The questionnaires are collected of both open ended and close ended. - Interviews will
be collected by conducting structured and unstructured interview with budget department officer who
are responsible for budget preparation. The secondary data will be taken from the organization previous
year data (3 years data; 2002, 2008 2009), books, Internet, and different lecturer notes. - From the total
population of 28 finance department employees of the organization, the researcher will select 15
respondents.

c. Sample size

The researcher will select 15 from the targeted population 28.

d. Sampling techniques

The researcher will use a non-probability sampling method. There will be 28 employees for fiancé
department and from these employees 15 employees are respondents of the researcher.

7. Organization of the paper

The paper will contains four chapters. - The first chapter contains an introduction part that tries to
give overall picture about the study. Which are backgrounds of the study, statement of the
problem, objectives of the study, research question, significance of the study, scope of the study,
limitation of the study, methodology of the study, organization of the paperand time budget. - The
second chapter deals with the literature review. This chapter shows, the review of budget and
budgeting concepts from various books and lectures. - The third chapter contains data analysis. It
shows how data is presented, analyzed and it provide the background and its, analysis of budget
system of the organizations. - Chapter four will present summary, conclusion and recommendation
parts of the study based on the findings.

a. Data and Data source The researcher will be use primary and secondary data. Primary data
will be taken from questionnaires and interview. The questionnaires are collected of both
open ended and close ended. - Interviews will be collected by conducting structured and
unstructured interview with budget department officer who are responsible for budget
preparation. The secondary data will be taken from the organization previous year data (3
years data; 2002, 2008 2009), books, Internet, and different lecturer notes. - From the total
population of 28 finance department employees of the organization, the researcher will
select 15 respondents.
 b. Sample size
The researcher will select 15 from the targeted population 28.
c. Sampling techniques
The researcher will use a non-probability sampling method. There will be 28 employees for
fiancé departmessnt and from these employees 15 employees are respondents of the
researcher
8. Organization of the paper
The paper will contains four chapters. - The first chapter contains an introduction part that tries
to give overall picture about the study. Which are backgrounds of the study, statement of the
problem, objectives of the study, research question, significance of the study, scope of the
study, limitation of the study, methodology of the study, organization of the paper and time
budget. - The second chapter deals with the literature review. This chapter shows, the review of
budget and budgeting concepts from various books and lectures. - The third chapter contains
data analysis. It shows how data is presented, analyzed and it provide the background and its,
analysis of budget system of the organizations. Chapter four will present summary, conclusion
and recommendation parts of the study based on the findings. Budget to the council of
ministers by May 23. Stage 9- Recommended budget reviewed by council of Ministers The
council of ministers receives the draft recommended budget from MofED, and carries out its
own review of that draft recommended budget. The council of ministers will carry out its review
from the 3rd week of May to the first week of June (15 days). The council of ministers may ask
MoFED to Make adjustment or revisions to the draft recommended budget before the council
recommends’ it to the house of peoples. Representatives. MofED will make these changes using
the computerized budget system, and then provide the council of ministers with the
recommended budget. The recommended budget must be submitted by the council of
ministers to the House of people’s representatives no later than June 7. The recommended
budget is now ready for review, approval and appropriation by the House of people’s
representative
9. Stage 10- legislative approval and appropriation of the budget The recommended budget will
be presented in a budget speech by the minister of finance, to the House of people’s
representatives (HPR), on a designated date. After consideration, APR (PBC) for further scrutiny,
one approved by the HPR the recommended budget becomes the approved budget however,
the expenditures proposed in the approve, budget cannot be implemented until an
appropriation law is also proclaimed by HPR. It is important to distinguish between the
approved budget and the annual appropriations. The budget that is approved by the HPR is a
detailed budget.
10. However the appropriations are at a more aggregate or global level. An appropriation is a legal
mandate to spend money out of the consolidated fund. The House of peoples representative is
required to rate on the annual appropriations for the approved budget no later than July 7. The
appropriation proclamation will specify the following; first for government as a whole; 1. Total
revenue source; both domestic and external 2. Total federal recurrent expenditure 3. Total
federal capital expenditure 4. Total of all subsidies to regional governments and administrative
councils; and 5. The total subsidy for each regional government and administrative councils.
11. Then for each public body 1. Total budget for each public body 2. Total budget for each program
3. Total budget for each output; and 4. Source of funding for each output. The approved budget
 includes the appropriation proclamation, as well as more detailed schedules of the budgeted
allocations to and each public body. The approved budget and the annual appropriations can
now be referred to as the proclaimed budget and is published in the Negarit Gazeta for
implementation. Copies are distributed to all public bodies and made available of the MoFED
website (Dereje T. lecturer note)
12. Budget Modifications
Budget in governmental entities are knows by its rigidity the rigidity is a requirement of budget
organization control, which demands ensuring that only authorized expenditures should be
included since the budget is an estimate. However, situations inevitability will arise when it will
be necessary to amend the budget. Thus the degree of flexibility will required to deal with
changes in circumstances or un expected event. Most time the modification or Adjustment are
made through – Transfer - Virement and, - Supplementaries Transfer: - these are the transfer of
funds between public bodies. Which increase one public body’s budget and decrease another
public body’s budget. It also includes transfer of budget between capital and recurrent items of
the same public body. The transfer can be done in two different ways. The first type is
reallocation between the capital and recurrent budgets within the same public body
(organization). Under this type surplus funds. from recurrent budget can be transferred to the
capital budget with the approval of council of ministers. However, transfer from capital budget
to recurrent budget is strongly prohibited. The second type of reallocation is between public
bodies within the same type of budget (capital or recurrent)
13. This reallocation also requires the approval of council of ministers.
a. Virement:-this is the reallocation of funds within organizations budget between items of
expenditures. This occurs when the amount of resources allocated to a particular activity is
relatively higher than the one allocated to another activity. It is made within public bodies
to transfer within a project between items of expenditure or transfer within a project
between items of expenditure or transfer between projects. For this type of re-allocation
the MoFED has to approve transfers in the recurrent budget and the capital budget. If
allocation involves funding of new projects, parliamentary approval would be required even
if the appropriated budget ceiling was not exceeded. Suplementaries:- these are additional
funds to a public body which increases the total government budget. They require
additional resources and additional appropriation. Supplementary appropriations are made
after checking for the possibility of both transfer and virement. - Mid-year changes: - as the
year progresses, the budget office conducts reviews of agency operations. One problem
that often emerges is that resources in some organizations are insufficient to meet the
demand for services. In this case, one alternative for the budget office is to approve
supplemental appropriations by making request to the legislative branch. - End-of-year
spending: - as the fiscal year approach its end, organizations will attempt to exhaust their
budgets; an organization having un expended funds at the end of the fiscal year may be
considered a prime candidate for cuts in the up coming budget. (Endalkachew lecturer
notes, public finance and taxation 2009 E.C)
b. Budgetary control
Internal control is an essential function for every organization to ensure effective and
efficient use of budget resources. The budgetary control examines records, facilities,
system, and other evidence to discover or verify information. Control can be exercised by
 external bodies or by employees of an organization. Internal Audits, control are those
performed by professionals employed by the organization being audited. External
audits/controls are performed by outside professionals who are independent from the
organization being audited. In budgetary systems classification of audits in to pre-Audit and
post-Audit received greater acceptance. Pre-Audit:- is an advance verification of legality of
transactions before resources are committed on their completion. It occurs before the
government commits itself to a purchase and is used to verify whether an organization has
sufficient funds to purchase a given equipment and that organization is authorized to have
that equipments. Post-Audit:- is an examination of records and activities after they have
already been completed. In governmental budgeting, a post-audit is performed after
appropriations are spent on various programs and projects. A post-audit includes
verification of legality of transactions and accuracy of accounts. It is usually undertaken by
an organization independent of the administration.
c. Control system
To meet the government policy of implementing the accounts and budget reforms
nationwide and use the new information communications technology (ICT) infrastructure,
the government specified that the budget information system (BIS/budget Disbursement
and accounts (BDA) systems will be upgraded in to the integrated budget expenditure
(IBEX) system. Since 1998 E.C (2006 G.C) IBEX (Integrated Budget expenditure system) has
began operation. IBEX- it is software that helps to facilitate the control of budget
preparation and implementation. It provides the framework for core public financial
management function. It combines what were two previously separate application called
budget information system (BIS) and budget disbursement and accounts (BDA). It is an
upgraded of BIS/BDA. IBEX has designed to control the process of very core transactions
and generation of reports in a manner, of which will not expose the govnemrent to
unnecessary risk like - Disbursement over budget - Controlling accounts (payables and
receivable check equality with their own respective subsidiary ledgers. - Cash flow forecast
over budget. This system is very important to control the budget of an organization.
However, it has challenges like, to slow in processing it might stack through processing