AN EXAMINATION OF INTEGRATED PERSONNEL AND PAYROLL INFORMATION SYSTEM IN THE NIGERIAN CIVIL SERVICE

ABSTRACT.
This research work tends to examine the Integrated Personnel and Payroll Information System (IPPIS) in the Nigerian civil service. This is a program introduced by the Federal Government supported by the World Bank as one of the measures of Public Service Reform. Prior to the introduction of this scheme Ministries, Departments and Agencies (MDAs) do receive their recurrent costs on monthly basis as subvention. The above arrangement gave room for the MDA’s to disburse money sent to them whenever and however it pleases them. This therefore according to records led to financial misconduct in the Nigerian civil service. The huge amount spent on recurrent expenditure, if not monitored and cut down through appropriate government policy and reform program, Nigeria  may wake up one day to see that Government revenue is spent just in paying salaries at the detriment of  competing needs.
There is need for Nigerian Government to provide accurate and correct number of civil servants under her care and to an extent minimize budget estimate.
The researcher tried to answer some questions on the reason why Government set up the IPPIS scheme. The research is also poised to determining the extent to which the Government is prepared towards actualizing of the IPPIS objectives. The research tried to examine how safe and reliable the civil servants Personnel records are with IPPIS program and the extent to which the program will help Government in planning and budgeting.
In this research survey method was used, in this case the researcher sourced data from both primary and secondary sources. Questionnaire and  Interview methods were  used extensively.
It was found out from the research that Integrated Personnel and Payroll System (IPPIS) is generally one of the offshoots of the civil service reform program to ensure transparency and accountability in the Nigerian civil service. However, Government is not fully technologically prepared for the program and there are some other challenges that are facing the program, they are both human and material.
IPPIS if implemented properly and honestly will minimize, if not eliminate fraud in the civil service of Nigeria, and provide other benefits.
This research work is poised to examine IPPIS program in Nigeria, finding out the possible challenges that are likely to be encountered in the course of implementation of the program also give some suggestions
CHAPTER   ONE.
                    
INTRODUCTION.
 

• BACKGROUN OF THE STUDY

 
In Nigeria all the Ministries, Departments and Agencies (MDA’s) draw their personnel cost from the Consolidated Revenue Fund (CRF). The exert number of Personnel being paid in the Nation cannot be easily ascertained due to non-availability of required and necessary information. As a result of none availability of the exert number of Public servants in the country, it has become difficult for government to have an accurate wage data for planning and budgeting purpose. The Integrated Personnel and Payroll Information System (IPPIS) project seeks to resolve this and also reduce the Federal Government expenditure on Overheads. In 2007, the Federal Government of Nigeria and the World Bank initiated Integrated Personnel and Payroll Information System.
The Goals set by the Federal Government include the following:

• Implement an Integrated Solution
• Improve human management effectiveness
• Increase confidence in Govt. Payroll cost and expenditure management.
• Significantly improve overall management reporting and planning.

 
Amongst the objectives of the reforms of Government is to entrench transparency and accountability in the public service Human Resources (HR) records and payroll administration. Successive Government has observed gross inadequacies in the payroll and personnel records in the public service. Several efforts have been made to reduce these challenges, but it tends to worsen with time, resulting to greater difference in accessing reliable data for human resources planning and management, chaotic state of pension administration; ‘ghost worker’ syndrome and various forms of payroll and credential fraud.
Manual computation of salary and documentation of personnel information has been compounding the problem of transparency and accountability. This also affects accuracy in computation of salary hence overpayment or underpayment of salaries, omission of staff name in payment, wrong calculation of promotion and pension that is due to staff and Ex-staff as the case may be. With the introduction of the Integrated Personnel and Payroll Information System scheme, if properly implemented and managed, will go a long way in eradicating or at least bring the above mentioned problems to the barest minimum.
 
 
1.2           STATEMENT OF PROBLEM
 
Record showed that the Government of Nigeria spends almost 50 to 60% of its revenue on Personnel management every year at the detriment of other sectors of the Economy.  According to the  Honourable minister of Finance, Mr Olusegun Aganga in his address at the flag off of Integrated Personnel and Payroll Information System Phase II workshop held at the Sharaton Hotels Abuja, he said that in 2011 Federal Government Budget was projected at #4,226.19 billion, comprising #196.12 billion(4%) for statutory transfers; #542.38 billion (13%) for Debt servicing; #2,481.71 billion (59%) for Recurrent (Non-debt) expenditure and #1,005.99 billion (24%) for Capital expenditure. This huge bill it is said if not monitored and cut down through (appropriate government policy and reform program, we may wake up one day to see that all Govt. revenue is spent in paying salaries at the detriment of competing needs.
 
 
Ghost worker syndrome is not a new thing in Nigerian Public service, where a non-existing employee is being paid monthly. There are multiple payments of emoluments to a single employee and credentials are falsified. People have access to their age of retirement.
It is a big challenge, that at this age when almost every aspect of the world economy is computerized, Nigeria is still depending on manual records for her personnel and payroll information. Workers data are kept in paper files, their salaries are calculated manually and as such mistakes and fraud in form of    overpayment, underpayment and payment of ghost workers always occur.
Government of Nigeria does not have the accurate number of civil servants and her budget is always an estimate. This has created some loop holes, whereby some ministries budget more than they require and use the excess for some other things other than payment of salary and allowances. Sometimes some will get personnel allocation that is quite less than what they need and for that reason they place some workers especially the new ones on allowances for many months thereby subjecting them to unnecessary hardship.
 
 
 
 
 

• PURPOSE OF THE STUDY

• To determine the extent to which proper implementation of Integrated Personnel and Payroll System program will eliminate payroll fraud in the Nigerian civil service.
• To determine the possible effect of Integrated Personnel and Payroll System on Recurrent Expenditure of the Government.
• To ascertain how Integrated Personnel and Payroll System will ensure the safety of civil servants Personnel information.
• To determine the extent to which the Nigerian civil servants personnel records can be relied upon.
• To find out how prepared the Government and other stakeholders are towards actualization of the Integrated Personnel and Payroll System objective.
• To determine the extent to which the Integrated Personnel and Payroll System program will help the Government in Planning and Budgeting.

 
1.4                                 RESEARCH   QUESTIONS
 
(1)  How can proper implementation of Integrated Personnel and Payroll Information System program eliminate payroll fraud in the Nigerian civil service?
(2) What are the possibilities of Integrated Personnel and Payroll Information System positively affecting the recurrent expenditure of the Nigerian Government?
(3) Can the Integrated Personnel and Payroll Information System ensure the safety of the civil servants personnel information?
(4)  To what extent can the Nigerian civil servants personnel records be relied upon?
(5)  How prepared are the Nigerian government and the IPPIS stakeholder towards actualization of the IPPIS objectives?
(6)  To what extent can the Integrated Personnel and Payroll Information System program help the government in Planning and Budgeting?
 
1.5                          RESEARCH   HYPOTHESIS
(1)     Ho : Integrated Personnel and Payroll Information System will not properly ensure       civil servants Personnel information safety and integrity
     (2)      Ho: Proper implementation of Integrated Personnel and Payroll Information
System will not significantly eliminate payroll fraud and will have no prominent
effect on recurrent expenditure.
(3)     Ho:  Integrated Personnel and Payroll Information System will not significantly help the
Government in planning and budgeting.
 
1.6       SCOPE OF THE STUDY
 
This work overviewed Integrated Personnel and Payroll Information System (IPPIS) as an Information and Computer Technology (ICT) system for the reformation of the public service in Nigeria, its implementation and possible hindrances. The old system of personnel records, administration of monthly payroll with the new IPPIS system were thoroughly studied and discussed. Reason/s for Government reverting to the new system was discussed.  The researcher used just small percentage of four Federal Government Ministries in Enugu that are among the ones already captured in the first phase of the program for the purpose of the research.
 
1.7                SIGNIFICANCE OF THE STUDY
 
(1)The study will enable the Government to put more effort in ensuring a successful implementation of the program in order to achieve their objective and to guard against failures, lapses, sabotages and other likely challenges.
(2) It will help workers to plan their income accordingly, prepare and be ready for their retirement.
(3) This study will establish the fact that IPPIS program has come to improve and perfect the duties of Personnel and Payroll staff and not to displace them.
(4) This research stands as an aid and basis for future researchers in this area of study.
 
 
 
 
 
 
 
 
 
 
 
1.8       DEFINITION OF TERMS
 
There is need for us to have a clear understanding of some of the key words and terms that will be used in the course of this study.

1. PAYROLL: – Payroll is the sum of all Financial records of Salaries for an employee, wages, bonuses and deductions. In accounting, payroll refers to the amount paid to employees for services they provided during a certain period of time.
2. PERSONNEL: – Personnel simply defined according to the Oxford dictionary is staff; persons employed in any work, especially public undertakings and the armed forces.

• BIOMETRIC DATA: – Biometric data is combination of words and will be defined separately before summarizing it. According to the Longman Contemporary English Dictionary –Bio is a form of Life and living thing. Metric- concerns the system of measurement based on the meter and kilogram. Data is just fact or information.

For the purpose of this research biometric data is simply Fingerprints and passports photographs captured during enrollment process.
(iv)   STAKEHOLDER: – This can be seen as a person or one who has interest (stake) in a system or is affected by or who can influence but not directly involved with the system. Stakeholders in the IPPIS project include the following; Custodian of the system, Civil servants, civil servants, operators, Personnel and Financial Information managers in the MDAs, control agencies and third party agencies e.g. FIRS, BOIR, etc .
(v) CADRE MANAGEMENT: – Cadre is inner group of highly trained and active people in  an organization or establishment as the case may be.
(vi) PROCUREMENT REFORM– Is to obtain especially by effort or careful attention. In this case, as it is established by the Federal Government Legislative.
(vii) DATABASE–   The Librarian’s Glossary compiled by L.M. Harrod defined Data to be a general term for information, used to distinguish input and output information from instructions, and also to indicate the absence, or presence, of a certain condition, such as magnetic field. Base of cause is a centre or point from which a start is made in an activity, often where supplies are kept and planes are made.

APPRAISAL OF VALUE ADDED TAX LAW AND ADMINISTRATION IN NIGERIA

 
CHAPTER ONE
INTRODUCTION

• Background of the Study

A country seeking to improve its revenue generation would opt for a concept enabling it to best realize its objectives with due regards to its peculiar socio-economic make up (Olaoye, 2009). Okaura, (2012) stated that government need money. Modern government needs lots of money. How they get and whom they take it from are the two of the most difficult political issues faced in any modern political economy.One of the ways of getting this money is by taxation. There are quite a number of definitions of tax or taxation depending on the qualities it possesses. In that vein, taxation is the process or machinery by which communities or group of persons are made to contribute in some agreed quantum and method for the purpose of the administration and development of the society (Igbonyi, 2008). It is also defined as a means by which, a Government appropriate part of the private sector’s income (Olaoye, 2012). Tabansi (2001) defines Taxation as a levy imposed by the Government against the income, profit or wealth of the individual, partnership and corporation. Reid (2003) defines taxation as the process whereby charges are imposed on individuals or property by the legislative branch of the federal government and by many state governments to raise funds for public purposes. While The National Tax Policy defines tax as a financial charge or levy imposed upon an individual or legal entity by a state or a legal entity of the state; it is a pecuniary burden laid upon individual or property to support government expenditure (Okauru, 2012). The accumulated revenue is used in meeting recurrent expenditure. Tax occupies a unique position, because it is an important part of government policies. The ability of a government to generate revenue from this sector affects services offered by such a government. A means of improving internally generated revenue is through Value Added Tax (Olaoye, 2009).
 
Tax system in Nigeria has therefore undergone several reforms geared at enhancing tax collection and administration with minimal enforcement cost. The recent reforms include the introduction of unique Taxpayer’s Identification Number (TIN) which became effective  since February 2000, Automated Tax system that facilitates tracking of tax positions and issues by individual tax payer, E-payment system which enhances smooth payment procedure and reduces  the incidence of tax touts, enforcement scheme (Special Purpose Tax officers), this is a special tax officers scheme in collaboration with other security agencies to ensure strict compliance in payment of taxes. The integrated tax offices and authority now have autonomy to assess, collect and record tax (Asuquo, 2012). This enabling environment which came into being on the basis of (Section 8(q) of Federal Inland Revenue Services (FIRS) Establishment (Act 2007) has led to an improvement in the tax administration in the country (Asuquo, 2012).
 
Further still, the Nigerian Tax System has undergone significant changes in recent times. The Tax Laws are consistently being reviewed with the aim of repealing obsolete provisions and simplifying the main ones. Under current Nigerian law, taxation is enforced by the 3 tiers of Government, that is Federal, State, and Local Government with each having its sphere clearly spelt out in the Taxes and Levies (See approved list for collection on pages 27) Decree, 1998 (Owolabi and Okwu, 2011; Is-haq, 2010 and Asuquo, 2012).
 
Despite this improvement, there are still a number of contentious issues that require urgent attention and among them is the issue of appropriate tax authority to administer several taxes. The recent crisis between Lagos State and Federal Government on the tax jurisdiction of VAT in the state is still a contentious issue in the court. Other states like Ogun, Oyo and Benue have joined Lagos state, while states like Abia and others have gone against this.
 
Each country has different reasons for adopting Value Added Tax (VAT) but the principal motive is the same: a properly designed VAT system raises more revenue with less administrative and economiccost than any other more broadly based tax. The Value Added Tax (VAT) was introduced in Nigeria in 1993 by the then Military administration which implementation commenced in 1994. Before then, Sales tax was under the jurisdiction of the States and generally poorly administered with marginal contribution in terms of revenue (Abiola, 2011). The idea of introducing VAT was recommended by the Study Group set up by the Federal Government in 1991 to review the tax system of the Federation as a replacement of Sales Tax. After extensive deliberation and consultation, VAT was introduced on 24th August 1993 as a federal tax by the Value Added Tax Decree.
Nevertheless, VAT has become a major source of revenue in many developing countries.
In sub- Saharan Africa. For example, VAT has been introduced in Benin Republic, Cote d’Ivore, Guinea, Kenya, Madagascar, Mauritius, Niger Republic, Senegal, Togo and Nigeria (Owolabi and Okwu, 2011).
 
 

 
Evidence suggests that in these countries, VAT has become an important contributor to total government tax revenue (Owolabi and Okwu, 2011; Is-haq, 2010; Ajakaiye, 2000). Shalizi and Squire (2008) found out that VAT accounted for about 30% of total tax revenue in Cote d’Ivoire, Kenya and Senegal in 1982. The oil producing countries are not excluded from the list of countries introducing this tax hurdle.
 
Tait (1989) shows that VAT has been in existence in Ecuador and Mexico since 1973 and by 1983 accounted for 12.35% and 19.71% of total government revenuerespectively.Indonesia introduced VAT in 1983 and by 1988; the ratio of VAT revenue to GDP had risen to 4.5% (Bogetic and Hassan, 1993). This impressive performance of VAT in virtually all countries where it has been introduced, according to Adereti, Sanni, and Adesina, (2011) clearly influenced the decision to introduce VAT in Nigeria in January 1994. Consequently, Sanni, (2012) affirms that the Value Added Tax (VAT) was introduced in Nigeria in 1993 by the then Military Government. Since then, the Value Added Tax Decree, had been amended more than half a dozen times, the latest being the Value Added Tax (Amendment) Act of 2007. Some of the amendments have introduced significant changes which are yet to be reflected in the body of existing literature.
 
1.2       Statement of Problem
Every knowledge creation activity is an inquiry into a problem (Akpa, 2011). The attitude of Nigerians towards taxation is worrisome as many prefer not to pay tax if given the opportunity. The economy continues to lose huge amount of revenue through the unwholesome practice of tax avoidance and tax evasion. This problem has been lingering for so long which urgent attention and solution is overdue. The cost of collecting tax in Nigeria (both social and economic cost) is too high to the extent that, if left unchecked, the cost may soon outweigh the benefit or value derived from such operation and that will not be appropriate for the system. Government spends more to realize a miserable pittance (Okoye and Gbegi, 2013).
 
Since the introduction of VAT in 1993 by the then military government which implementation commenced in 1994, the laws relating to VAT have regularly been amended by government to strengthen its administration. However, the VAT law still have some loopholes such as exempted goods /services and others which need to be addressed. A gap which the researcher seeks to fill by researching on the topic: Appraisal of Value Added Tax Law and Administration in Nigeria to ascertain if the VAT laws are adequate for efficient administration of VAT in Nigeria. Effort is being made by government to encourage voluntary payment of VAT yet government is still battling with the issue of non-payment of VAT by some organisations.
 
Nigeria is depending so much on oil revenue which is fast depleting. The question is, are there no other sources of revenue that can burst the revenue generation of the nation? Can Nigerian government source for other sources of revenue to enhance her Gross Domestic Product? Can Nigerian government improve on her VAT collections to increase her revenue generation substantially? Can Nigerian government look inwards on the administration of VAT to find out if these factors like inadequate trained personnel, access to remote areas, low level of literacy as well as poor social or political climate affects VAT administration. Many of such questions needs to be answered, which the researcher intends to address.
 
The rate of corruption on the part of tax officials is alarming as most of them connive and collude with supposed-tax- payer to evade and avoid tax. Sometimes, the tax officials are not properly trained on the modern ways of tax administration. The inadequate social infrastructure in Nigeria call for attention as to how tax revenue generation is to be expanded and accounted for, especially where those in authority continue to spend these hard-earned resources with reckless abandon.This study therefore attempts to address the issues of Value Added Tax (VAT) law and its administration in Nigeria with the view to enhance revenue generation.
 
1.3       Objectives of the Study
The primary aim of this study is to appraiseValue Added Tax Law and administration in Nigeria. Other specific objectives include to:

1. ascertain whether the VATable items stipulated in the VAT laws are sufficient to substantially increase the revenue base of government.
2. ascertain the challenges inherent in the law relating to assessment and administration of VAT in Nigeria.

• ascertain the effect of VAT on Total Tax Revenue.

1. determine the effect of VAT on GDP.
2. compare VAT performance in Nigeria with what is obtainable in other African countries.

1.4       Research Questions
To conduct a successful research, some questions were asked based on the statement of the problem. This aspect of the study has form the basis for making enquiries into the subject-matter by asking the following questions:

1. To what extent are the VATable items in the VAT law sufficient to substantially boost the revenue base of government?
2. What are the challenges inherent in the law relating to assessment and administration of VAT in Nigeria?

• What are the effects of VAT on Nigerian Total Tax Revenue?

1. What are the effects of VAT on GDP in Nigerian economy?
2. What is the performance of VAT to Nigerian Economy when compared to selected African Country like South Africa?

 
 1.5      Statement of Research Hypotheses
The following propositions were used as working hypotheses for the research study.
Hypothesis One
                The VATable items in the VAT law are insufficient to substantially increase the revenue base of government.
Hypothesis Two
There are no significant challenges inherent in the law relating to assessment and administration of VAT in Nigeria
Hypothesis Three
Revenue generated through VAT has no significant effect    on the overall tax revenue in Nigeria.
 
Hypothesis Four
Revenue generated through VAT has no significant effect on Nigerian GDP
Hypothesis Five
The contribution of VAT to Nigerian economy is significantly inadequate when compared to selected African countries.
 
1.6       Significance of the Study.
The study will assist the government in policy formulation as it relates to Value Added Tax and monetary policies. The findings from this study will help government to adjust her VAT policies to meet the present economic realities. It will help to strengthen the operation of the relevant government agencies such as Federal Board of Inland Revenue, Central Bank of Nigeria, Joint Tax Board and others. Findings on administration of VAT will help FIRS to take decisions that will strengthen her administration. Other stake holders like CBN and Joint Tax Board will equally benefit from the findings of this study. It will also acquaint readers of this work with VAT Laws and its administration in Nigeria. Another benefit that can be derived from this research work will be the light thrown on improved methods of administering VAT. This will improve the efficiency of Staff of FIRS. It will also be a source of literature review to other future researchers or fact-finders.
1.7       Scope of the Study
The study was restricted to Value Added Tax for the period 2003-2012. The choice for this period is toknow the recent happenings in VAT administration. The study is centred on Federal Board of Inland Revenue Services which is the relevance tax authority saddled with the responsibility of Value Added Tax administration. Issues of VAT law, administration and implementation in Nigeria were discussedwith the aid of publications of the Federal Inland Revenue Services,Bureau of Statistics and Central Bank of Nigeria.
 

• Limitation of the Study.

There are a lot of impediments against the conduct of research in Nigeria just as in any developing country. Accessibility to certain information required for this study was not easily arrived at because of the uncooperative attitude of the respondents. Such records are that of the FIRS and CBN which were regarded as strict confidential.Inadequate access to information and communication technology facilities is another limitation to this study. Despite the challenges, the researcher was able to laisse with one of the staff who is my postgraduate students to obtain the necessary data needed for the study.
 
 
1.9       Operational Definition of Terms
The purpose of the following terms is to facilitate an explanation so that the reader can fully understand the context in which such words have been operationally used in the study:
VAT: This is a consumption tax levied at each stage of the consumption chain and borne by the final consumer of the product or service. It can also be called the Goods and Services Tax (GST) which is levied on the value added that results from each exchange.
Consumption: is simply defined as the total demand for all consumer goods and services. Anyanwu (1995) defined consumption as the spending by households on goods and services such as clothing, food items, entertainment, health services and acquisition of assets among others.
Output VAT: This is simply the VAT due on VATable supplies. It is obtained by multiplying the value of the aggregate supply by tax rate.
Input VAT: The input VAT is what is charged on business purchases and expenses. These include goods and services supplied in Nigeria or imported. In this connection, it is to be emphasized that only input taxes paid on raw materials meant for production of goods meant for resale will qualify for set-off. For avoidance of doubt, input VAT incurred on capital items or other items not directly related to the goods and services meant for sale, will not qualify for set-off.
VAT Liability: Liability of VAT arises when the output VAT is more than the input VAT. The net VAT in a tax period is the amount to be remitted to the Local VAT Office.
VAT Account: The VAT account is the summary of the output and input tax in a normal ledger account form. That is, VAT on purchases, VAT on services, bad debt relief etc. are debited to the account while VAT charged on sales for the month or VAT charged on services etc. are credited.
VATable Person: This is one who trades in VATable goods and services for a consideration. Every VATable person has an obligation to register for VAT operation. The registration is to cover all the business activities of the VATable person. The person can be a sole proprietor (e.g. a trader); a professional (e.g. a lawyer); a partnership (e.g. Zayol & Co.); a Limited Liability Company (e.g. Zayol and Zayol Ltd or Zayol Z. Plc); a Club or Association or a Charity.
Tax Compliance Behaviour: Tax compliance is operationally considered as complying with tax laws in the act of true reporting of the tax base, correct computation of the tax liabilities, timely filing of tax returns and timely payment of the amount due as tax.
Taxpayer’s Risk Preference: Taxpayer’s risk preference is a moderating variable and it is operationally defined as risk-laden opportunities which a taxpayer considers are more desirable than other possible available choices.
Financial Condition: Personal financial condition is a moderating variable and it is defined as the extent to which the taxpayer is satisfied with his/her financial condition and that of his/her household.
Tax heaven: a place where taxes are low and where people choose to live or officially register their companies because taxes are higher in their own countries.

ASSESSMENT OF FINANCIAL PLANNING ON FIRM’S PROFITABILITY
ABSTRACT
The study assessed the application of financial planning and its influence on the profitability of Nigerian Breweries Plc, Ama, Enugu State.  The overall objective of the study was to assess whether the application of financial planning has helped to boost the profitability of the company.  Financial planning was evaluated based on the application of short-term and medium term financial planning.  Two objectives and two hypotheses were formulated and tested in the study.  The researcher adopted the survey design and structured questionnaire was administered to selected respondents in the company. Because of the large size of the population, a multi-stage sampling technique was employed. The first stage involves the random selection of all the accountants and management staff in the company who are involved in financial planning policy and procedures. The second stage was the random selection of 10 management staff and 11 accountants. Altogether, 21 respondents were selected as sample for the study.  Descriptive and inferential statistics were used to present the data while the Chi-Square statistical technique was used to analyze the hypotheses. Findings from the study showed that short-term financial plans do not influence the profitability of Nigeria Breweries, Ama, Enugu.  This result was supported by the test statistic (X²<t_0.025, 5.4<t* = 5.9, p=0.000<0.05). Medium-term financial plans influence the profitability of Nigeria Breweries, Ama, Enugu.  This result was also supported by the test statistic (X²>t_0.025, 9.95>t* = 5.9, p=0.000<0.05).  Based on the findings of the study, the researcher recommended as follows: that the management of Nigerian Breweries Plc, Ama, Enugu State should adopt a medium to long term financial planning and place less emphasis on short-term financial planning as it has been shown that short-term financial planning has no influence on the profitability of the company. The management of the Nigerian Breweries Plc, Ama, Enugu State should also ensure that those who are involved in financial planning are well trained and are up-to-date with financial and econometric modeling required for medium to long-term financial planning.
 
CHAPTER ONE
INTRODUCTION
1.1Background to the Study
Financial planning involves analyzing financial flows of a firm as a whole, forecasting the consequences of various investments, financing and dividend decisions and weighting the effects of various alternatives. Financial planning is the core of financial management. The complex nature of business demands that management should place greater emphasis upon financial planning to secure and employ capital resources in the amount and proportion necessary to increase the efficiency of remaining factors of production. Financial planning is needed both in dynamic and perfect economic conditions. It helps management to avoid waste by furnishing policies and procedures which make possible a closer co-ordination between the various functions of business (Oye, 2006).
Financial planning must however be complemented by control in order to achieve the basic aim of planning. The actual results must be measured concurrently against projections. Control is the financial management function which must be exercised by executive personnel of the business enterprise to achieve the goals established by the planning function. It deals with testing the degree of management performance in the attainment of the set objectives. It is also a check to deviations from the planning function, and once the causes for the difference between the actual and expected performance have been identified, a corrective action should be initiated. Financial planning can be defined as the process which assures that financial resources are obtained economically and used efficiently and effectively in the accomplishment of desired goals. It covers the entire process of monitoring actions emanating from the decisions. Seen as an integral part of financial management, it also forms part of budgeting, accounting, reporting and review. The budget is then put in practice and results expected. Budgetary control system forms a good basis of controlling plans. Definitely, actual activities are monitored and their results measured and then compared with plan. Then significant deviations from plan are identified and reported upon. The last step is to investigate the deviations accordingly and take corrective measures (Samuel, 1980).
The success of any business depends on the manner the production and distribution functions are coordinated. An important function of financial planning is the coordination of the various decisions taken within a company so that they are mutually consistent, having regard for financial aims and constraints. The exercise of this function is perhaps most clearly seen in formulating financial plans which involves merging of estimates of each department into a budget for the whole firm. In this process the financial manager holds a strategic position. Without coordination, individuals and departments would lose sight of their roles within the organization. They would begin to pursue their own specialized interests, often at the expense of the large organizational goals. Also, the point to be emphasized is that the activities of all departments must mesh. It is through budgeting that the activities of various departments are coordinated and unnecessary wastage of resources and efforts is stopped. Budgeting requires each manager to establish a proper rapport between the activities of his department and that of other departments. Any imbalance in the relationship between the departmental activities should be identified and corrective measure taken (Brockington, 1987).
1.2       Statement of the Problem
Financial planning is a guide to a particular set of financial goals or attainment and it is obvious that without a guide to a particular set of goals it will be very difficult to achieve that particular set of goals economically.
However, many organizations today do not make good financial plans about the operations of their organizations and where they do; they do not control their performances alongside their financial plan very well to control the controllable factors in their plans to enable them to achieve their financial goals.
Financial planning, which is one of the tools that could be used by business organizations to achieve their profit plan, unfortunately is not being used properly by many business organizations. In essence, many business organizations have failed in their profit plan due to lack of financial planning in their organization.
In other words, if a study like this is not carried out or this study not taken seriously by organizations, then the inevitable problems that will occur is that organizations will not be able to minimize expenditure or cost and also will not be able to maximize productivity, in other words, not maximizing profitability.

• Objectives of the Study

The main purpose of this study is to evaluate the application of financial planning to firm’s profitability with emphasis on Nigerian Breweries, Ama, Enugu. Specific objectives of the study are as follows:

1. To assess the influence of short-term financial plans on the profitability of Nigerian Breweries, Ama, Enugu.
2. To evaluate the influence of medium-term planning on the profitability of Nigerian Breweries, Ama Enugu.

1.4    Research Questions
The following questions were formulated for the study:

1. To what extent does short-term financial plan influence the profitability of Nigerian Breweries, Ama, Enugu?

ii      To what extent doesmedium-term financial plan influence the profitability of Nigerian Breweries, Ama, Enugu?
1.5  Research Hypothesis
The following hypotheses were formulated and tested in the study.
H_o1:      Short term financial plans do not influence the profitability of Nigerian Breweries, Ama, Enugu
H_A1:     Short term financial plans influence the profitability of Nigerian Breweries, Ama, Enugu.
H_o2:      Medium term financial plans do not influence the profitability of Nigerian Breweries, Ama, Enugu
H_A2:     Medium term financial plans influence the profitability of Nigerian Breweries, Ama, Enugu.
1.6       Significance of the Study
The study is very essential as well as beneficial to individuals and organizations. First and foremost, this study will serve as important financial objective reference to top executives of organizations who want to achieve efficiency and effectiveness in production, and as well maximize profit.
Secondly, it will also be significant to students who want to carry out further research on this area of study.
Finally, the findings of this study will be useful to the organization and other similar organizations, as well as the general public in this field as it depicts the nature of problem associated with financial planning in this part of the country.
1.7        Scope of the Study
The study focuses on the application of financial planning as an effective tool for increasing profitability in Nigerian Breweries-Ama Enugu State, from 2003-2013. The study narrows its focus down to the influence of medium-term and short-term financial plans on the profitability of Nigerian Breweries-Ama Plc.
1.8       Limitations of the Study
Like any other research project, this study is not without limitations. Some of the difficulties encountered in carrying the study included:

1. Inability of the researcher to obtain adequate and relevant data from the organization, especially on sensitive economic issues that organizations are secretive about.
2. Financial constraint is another limitation. Inadequacy of finance helped to restrict the study to only Nigerian Breweries whereas the researcher would have loved to go beyond that.
3. The uncompromising nature of most respondents especially to questionnaires and verbal questions was another difficulty encountered bythe researcher.
4. Lack of time to carryout out the personal observations of the enterprise operations properly, as well as attend to other academic activities was a major hindrance.

1.9       Definition of Terms

• Financial plan: A financial plan is also called capital plan. It is an estimate of the total capital requirements of the company. Financial plan gives a total picture of the future financial activities of the company.
• Short-term financial plan: This plan is prepared for maximum period of one (1) year. This plan looks after the working capital needs of the company.
• Medium-term financial plan: This plan is prepared for a period of one (1) to five (5) years. This plan looks after replacements and maintenance of assets, research and development, etc.
• Long-term financial plan: This is prepared for a period of more than five (5) years. This plan looks after the long-term financial objectives of the company, its capital structure, expansion activities, etc.
• Financial planning: This means to prepare a financial plan. It is the mathematical sum of the following parameters (functions). Financial Resources (FR) + Financial Techniques (FT) = Financial Planning (FP).
• Planning: Planning can be defined as the establishment of activities and the formulation, evaluation and election of the policies strategies, tactics and action required to achieve these objectives.
• Strategic Planning: The formulation, evaluation and selection of strategies for the purpose of preparing a long term plan to attain objectives.
• Tactical Planning: Is the process of preparing detailed short term (usually one year) plans for the functions, activities and department of the organization thus converting the long term corporation plan into action.
• Control: Control is concern with the different use of resources to achieve a previously, determine objective or set of objective within a plan productivity (total factor basis).
• Profitability: Profitability is the ability of a business to earn a profit. A profit is what is left of the revenue a business generates after it pays all expenses directly related to the generation of the revenue such as producing a product, and other expenses related to the conduct of the business activities.
• Programme Planning and Budgeting System (PPBS): Is a radical approach to budgeting based programmes which are group of activities with common objectives.