ABSTRACT
This study examines the effect of budgetary control on the performance of SMEs in Buea municipality. Budgetary control was looked at from the perspective of budget planning, budget monitoring and control, and budget evaluation whereas performance was focused on Profitability. The specific objectives included; to examine the effect of budget planning on the performance of SMEs, to evaluate the effect of budget monitoring and control on the performance of SMEs, and to examine the effect of budget evaluation on the performance of small and medium size enterprises in Buea. The research target population consisted of the accountants, store keepers, SMEs owners or managers, supervisors and operating employees of these businesses. Sixty staffs of in the enterprises were selected using random sampling technique. Questionnaires were used to collect primary data and data collected analyzed using correlation and presented through tables. The data was analyzed using both descriptive statistics (frequency tables, percentages, mean and standard deviation) and inferential statistics (correlation and regression analysis) with the help of statistical package for social sciences (SPSS). The hypothesis was tested through a correlation test, and it revealed that there is a moderate positive relationship between budgetary control dimensions (budget planning, budget monitoring and control, and budget evaluation) and performance (profitability) of small and medium size enterprises at Pearson correlation coefficient (r=0. 578**, p=0. 0025). This implies that budgetary control affects performance of SMEs by 57.8% and 42.2% by other factors. The study therefore recommends that Policy makers need to be sensitized employees on how budgetary controls enhance the performance of businesses. The study further recommends that organizations should develop more formal practice in the development of budgetary controls.

KEYWORDS: Budgetary Control, Planning, Monitoring and Control, Evaluation and Performance

CHAPTER ONE INTRODUCTION
1.1 Background of the Study
In the business world today, organizations have developed a variety of processes and techniques designed to contribute to the planning and control functions. One of the most important and widely used of these processes is budgeting. Budgeting involves the establishment of predetermined goals, the reporting of actual performance results and evaluation of performance in terms of the predetermined goals. Budgetary control systems are universal and have been considered an essential tool for financial planning. The purpose of budgetary control is to provide a forecast of revenues and expenditures this is achieved through constructing a model of how our business might perform financially speaking if certain strategies, events and plans are carried out (Churchill, 2001).
The whole idea of budgeting could be comprehended if we elicit information on the basic concepts underlying the establishment of companies, the reasons for employing resources available to the company and the reasons for making these corporate bodies stay afloat and achieve a perpetual life. The origin of budgeting was necessary to plan for the implementation of government policies based on the resources available (Brown and Howard (1982), However, budgeting generally is a part of the decision making process of an entity. The idea of budgeting is an offshoot of the necessity to plan to direct the resources of management to achieve maximum result in areas of interest. It is a financial plan for achieving set objectives of management.
Essentially, the first control purpose explains that a business whose budget shows potential expenditures of a particular amount for the year and who has a lesser amount for the financial resources is forewarned. The knowledge of this will enable the managers to find ways of adjusting/augmenting the resources orexpenses. On the second control purpose, there is no sign saying that organizational plans are carried out by people. Control is therefore exercised not over operations, revenue and costs but over the persons responsible for various business functions and the revenue and expenses results attained. To this end, budget provides a yardstick against which a manager‟s actual performance may be compared.
Organizations use budgets in setting priorities through assigning limited resources to those events and activities that are most crucial to the organization‟s operations, thus effective management of the firm‟s budget ensures effective allocation of resources (Goldstein, 2005). Among SMEs, budgeting is used as a planning tool (Flamholtz, 2014). There is a high rate of failing by small and medium firms soon after they are established. Poor budgeting process is given as one of the major reasons causing this phenomenon.
According to Uyar and Bilgin (2011), budgets are used to aid longer planning, co-ordinate the operation, control expenses, profitability, aid short-term planning, evaluate performance, motivate managers, motivate employees and communicate plans with employees. Organizations should have both recurrent and capital budgets in order to control and plan for both short term and long term cash flows.

1.2 Problem Statement
Budgetary control is used by most organizations as a tool for proper management of resources in the organization and its activities. A firm with well formulated budgetary controls easily assigns its managers the responsibility for the use of designated financial resources to achieve their assigned operational objectives. Budget controls provides comparisons of actual results against budget plan. Departures from budget can then be investigated and the reasons for the differences can be divided into controllable and non-controllable factors, this is essential is reducing inefficiencies and poor budget practices leading to efficient allocation of scarce resources (Joshi and Abdulla, 1996).
Most SME‟s in Buea have shifted focus to budgetary control as a way of enhancing effectiveness in their services. Recognizing the role of budget and budgetary control has gained attention which has led some organizations to establish departments for implementation. This has attributed budget monitoring and project implementation committees as an integral part of the administrations to most SME‟s in Buea.
Budgets are very essential to judiciously manage limited financial resources and equally serve as a medium of approval, regulation and assessment of expenditure. Income generating establishments; consider budgets and budgetary controls as significant components in their strategy development. Budget can therefore shape the direction of firms and thus make firms successful or fail. The failure or success of an organization hinges generally on budget preparation and powerful budgetary controls. The absence of or weak budgets and budgetary controls in most organisations characterized by managerial, financial, administrative and production constraints has led to failure of these organisations recently (Bradstreet, 2004)
Despite all the benefits of budgeting and budgetary control to small and medium scale industries in Buea, most organization has failed to achieve goals because management overlooked the budgeting techniques in decision making process. With sound budgeting system management is required to implement plan and accomplish organizational goals. Budgeting serves as an index for measuring the effectiveness, efficiency, productivity and profitability of small and medium scale industries in Buea. This means that the actual performance is compared with the budgeted performance to provide a feedback.
Studies have been done in relation to budgeting and budgetary control globally and locally: Carolyn, et al. (2007) examined the association between effects of budgetary control on performance using a sample of large US cities Financial Bonds and found that effective level of budgetary control is significantly and positively related to bond rating. Dunk (2007) carried out a study in Europe on budgetary participation and managerial performance in nonprofit making firms and concluded a positive correlation between budgetary participation and managerial performance in nonprofit making organizations.
Theoretically, budgeting prompts a chain of activities and attains multiple goals and objectives in a firm for instance planning, coordınating, communication control and evaluation (Yang, 2010). Wildavsky (1996) in his work on the incremental theory suggested that budgeting process should start with the projected amount of the current year so us to know the areas of improvement which enhance firm performance. Other scholars such as Maillard, Roncalli & Teiletche (2010) suggest for the inclusion of risk in the entire process for it to be effective and enable the firm to achieve the set objectives. This suggests that the firms budgeting process has a positive relationship in its performance although other scholars such as Hope & Fraser (2003) disagree with this suggestion.
The lack of proper budgeting in micro and small enterprises has been the cause of the reduced service delivery which has been demonstrated by increased low quality, customer dissatisfaction, low growth prospects and closure on some of the young and newly incorporated firms. While many local and international studies have concentrated on budgetary control techniques and how budgeting affects organizational performance both at the public and private sectors, the role of budgetary control in management of small and medium size enterprises has been neglected despite its importance thereby leaving this area of study grey. Therefore, from the review of past research most studies have concentrated on budgeting and budgetary control and how it affects organizational performance in both the public and private sectors. This study is determined to fill this gap by trying to establish whether there is any relationship between budgetary control and SME‟s performance in Buea. To achieve this objective this study attempted to answer the following research questions:
1.3 Research Questions
After considering the contradictions in views of previous authors in relation to the adoption of budgeting and budgetary control in small and medium size enterprises (SME‟s), it is therefore necessary for this study to provide answers to the following questions.
1.3.1 Main Research Question
What is the effect of budgetary control on the performance of small and medium size enterprises in Buea?

1.3.2 Specific Research Questions
1. What is the effect of budget planning on the performance of small and medium size enterprises in Buea? 2. What is the effect of budget monitoring and control on the performance of small and medium size enterprises in Buea? 3. What is the effect of budget evaluation on the performance of small and medium size enterprises in Buea?
1.4 Objectives of the Study
To provide answers to the research questions, we are guided by the research objectives.
1.4.1 Main Objective
The main objective of this study is to examine the effect of budgetary control on the performance of small and medium size enterprises in Buea.
1.4.2 Specific Objectives
 To examine the effect of budget planning on the performance of small and medium size enterprises in Buea.  To evaluate the effect of budget monitoring and control on the performance of small and medium size enterprises in Buea.  To examine the effect of budget evaluation on the performance of small and medium size enterprises in Buea.
1.5 Hypotheses of the Study
H01: Budget planning has no significant effect on the performance of small and medium size enterprises in Buea.

H02: Budget monitoring and control has no significant effect on the performance of small and medium size enterprises in Buea.
H03: Budget evaluation has no significant effect on the performance of small and medium size enterprises in Buea.