Financial Planning, Budgeting And Expert Systems Technology

Description

ABSTRACT

Financial planning has been an important part of corporate culture in many business organizations. The success of any business organization largely depends on realizing an optional method of resource allocation and anticipatory decision making to effect the prosperous direction of the entire organization.

This research therefore, aimed at developing an expert system for financial planning and budgeting model, which will help direct and position an organization for growth and survival.

The International Glass Industry (IGI) Plc has been adopted as a case study. In the course of the development of this new system, the current system was analytically and critically studied or assessed and this they identified strengths and weaknesses were highlighted and a new system was designed for the weakness.

The present system was analyzed using a standard procedure recognized worldwide for such purpose and this is called Structured System Analysis and Design Methodology (SSADM)

TABLE OF CONTENTS

COVER PAGE

TITLE PAGE

APPROVAL PAGE

DEDICATION

ACKNOWELDGEMENT

ABSTRACT

CHAPTER ONE
INTRODUCTION

• BACKGROUND OF THE STUDY
• STATEMENT OF THE PROBLEM
• OBJECTIVES OF THE STUDY
• LIMITATIONS OF THE STUDY
• SIGNIFICANCE OF THE STUDY
• GENERAL OVERVIEW

CHAPTER TWO

2.0      LITERATURE REVIEW

2.1      INTRODUCTION

2.2      COMPUTER APPLICATION IN FINANCIAL AND BUDGETING

2.3      CONCEPTS OF EXPERT SYSTEMS

2.4      HISTORICAL DEVELOPMENT OF EXPERT SYSTEM

2.5      BENEFITS OF USING EXPERTS SYSTEM

2.6      LIMITATIONS OF EXPERT SYSTEM

• APPLICATION OF EXPERT SYSTEM
• THE FUNCTIONS OF EXPERT SYSTEM
• THE STRUCTURE OF AN EXPERT SYSTEM

CHAPTER THREE

3.0      SYSTEM ANALYSIS AND DESIGN

• INTRODUCTION
• BRIEF HISTORY OF THE COMPANY STUDIED
• ORGANIZATIONAL STRUCTURE
• FINANCIAL PLANNING AND BUDGETING AT THE INTERNATIONAL GLASS INDUSTRY PLC
• PROBLEMS OF THE EXISTING SYSTEM
• HIGH LEVEL MODEL (HLM)
• MODULAR SPECIFICATION OF THE NEW SYSTEM

CHAPTER FOUR

4.0      SYSTEM IMPLEMENTATION

• INTRODUCTION
• SYSTEMS DESIGN-OBJECTIVES/SCOPE
• DATA DESCRIPTION
• SYSTEMS DESIGN-OBJECTIVES/SCOPE
• PROPOSED SYSTEM PROCESSES DESCRIPTION
• BOSTON CONSULTING GROUP (ZAKON 1976)
• LINEAR GAMBLER’S RUIN SCORE
• THE RE: INVESTMENT CASH FLOW RATIO (RCF)
• PROCESS DESCRIPTION FOR PROFITABILITY MEASURE

4.9.1  PROCESS DESCRIPTION FOR Z-SCORE METHOD

4.10   DESCRIPTION OF DATA STORAGE DESIGN

• DATA FLOW DIAGRAMS (DFD)
• PROPOSED DATABASE
• INPUT AND OUTPUT DESIGN
• THE PROGRAM SPECIFICATION AND IMPLEMENTATION
• PROGRAM DESIGN
• SPECIFICATION OF THE PROGRAM MODULES
• MODULAR SPECIFICATION OF THE NEW SYSTEM
• PROGRAM MODULE FLOW CHART
• PROGRAM CODING PLATFORM
• PROGRAM TESTING
• SYSTEM REQUIREMENT
• PROGRAM DOCUMENTATION

CHAPTER FIVE

• SUMMARY, CONCLUSION AND RECOMMENDATION
• SUMMARY
• CONCLUSION
• RECOMMENDATION
• REFERENCES

CHAPTER ONE

INTRODUCTION

• Background of the study

The Financial health of any functioning organization is greatly susceptible to planning. This means that lack of adequate financial planning can jeopardize the success of any given organization. However, adequate financial planning, which involves budgeting reveals the operational status of a firm within a range of budgeted period.

The idea to automate the function of planning, and budgeting by means of computer application software can be very helpful towards organizational survival.

Financial planning and budgeting is one systematic approach for attaining effective performance in organizational management and this basically focuses at the following tips.

• Ensuring that cash is available for investment requirements during a given period of time (usually three to five years), and
• That any proposed operations of a company results to a reasonable profit level through adequate cash flow plan.

The design and development of an automatic competent budgeting system through computer applications helps in facilitating a firm’s control and effort in expert objectives. This takes care of every professional decision involving individual or group utilization and provides effective coordination in advance.

The development of such computerized design gives a clear indication of the high level or growth attained by the organization. This also facilitates the projection of profit and loss issues with case.

In order for any organization such as The International Glass Industry (IGI) Plc, to Survive Critical Conditions and remain functional. It must out of necessity engage in financial planning and budgeting. This implies being fully aware of every changes currently taking place in a dynamic environment and being adequately prepared to either aggressively apply a method of ensuring that it is not submerged by the contemporary changes.

With the advances of computer technology, it is now possible to incorporate intelligent and flexible techniques into financial planning systems to help the palled cope with the complexity of rendering such functions on a daily basis.

1.2  Statement of the Problem

The issues that this project research seeks to address can be presented in a concise manner. I understand that presently the art of financial planning and budgeting in the International Glass Industries Plc are being carried out manually an due to this, they encounter various difficulties including the following:

• The manual method of keeping records of sales and products makes the job so complex and tedious to handle effectively.
• There are always problems in balancing the annual financial statements or reports due to errors that occur in calculations of sales, cost, debts, equity etc to the company.
• Most often inadequate application of the mathematical formulas used in computing the ratios and other parameters, introduces a lot of errors on the balance sheet.
• Manual method in the art of financial planning and budgeting could pose a challenge over a long-term planning due to the dynamic nature of our society.

Evidently, it has become imperative that an expert system should be developed to manipulate the financial records and used for effective and more flexible planning and budgeting that minimizes all these difficulties mentioned above. The expert system is mainly concerned with translating most of the planning processes into automated operations including sensitive analysis.

International Glass Industries Plc, as a company is yet to apply a formal automated financial planning and budgeting model based on an expert system.

In today’s dynamic and highly competitive business environment, occasioned by application of high technology network, this model is very necessary as it tends to address the following issues:

• Provides awareness for investment opportunities, expansion and profitability.
• Assists, equips and directs managers, planners, planners and directors to arrive at a sound financial policies and economic decisions.

1.3  Objectives of the Study

The initiative and effort behind this project research is to achieve the following major objectives:

• To study develop and design an expert system for financial planning and budgeting.
• To introduce the expert system set of domain for independ planning and budgeting techniques.
• To classify some of the important research themes in automatic system of planning and describes their development trend.

It is possible that the company could be spending a whole lot time to examine the scenario that provides the basis for its financial planning.  Therefore it seems reasonable to elucidate on what the planning process will accomplish.

This however, narrows into stating the main objective of the project work, which is to design and develop for implementation computer software package that enhance and address the following issue in the organization.

• Enhance financial planning and budgeting in International Glass Industries Plc, Aba. In view of such objectives as presented herein, this project is to provide as specific an opportunity for the firm to develop, analyze and compare many different scenarios in consistent way. This will aid in identifying that may happen to the company in the future as certain events take shape by specifically addressing what actions the firm will take if things go seriously wrong or more generally if assumptions made are seriously in error. The software will ensure that the objectives and strategic stipulated with proper regard to certain functions of the company are substantially feasible with internally consistent conflicting goals indefinitely eliminated.
• Provide timely warning or signals on the dangers of liquidity and performance using the models provided by the software package to generate report and information that are suitable for the management.

This research, benevolently aims at providing the International Glass Industries Plc with an articulated financial planning and budgeting system that will help the firm to operate a decent and transparent long-term economic platform with improved level of profitability. This will definitely enhance business forecasting as a comparative advantage in optimizing resources.

Apparently, the management and staffs of International Glass Industries (IGI) Plc is already conversant with the use of computers for daily transaction in the office especially at the finance department. This research therefore, is limited to the application of automated systems in computerized financial planning and budgeting.

This need will be quite useful to all its officers dealing (directly or indirectly) with financial matters on a daily basis in International Glass Industries (IGI) Plc, Aba plant.

1.5  Limitations of the Study

The initiative, desire and readiness to incorporate this package Expert Systems into its financial planning and budgeting functions relies solely at the discretion of the company’s management board as its usage or application cannot be unduly enforced.

Indeed, it is a fact that every human expert has recognized his/her limitations; however, there is a general tendency to over-diagnose in order to provide an adequate solution.

In this regard, the expert systems may not perform very well at certain platforms, sometimes there could be distressing issues about it and in view of these limitations I strongly recommend that they are most sensibly used as tools to assist rather than to replace.

1.6  Significance of the Study

Negligence of the board of management over effective accounting information they need in order to run the company effectively. This is so because, they are ignorant of these information. In other words, a firm has to put into consideration the available resources before taking up a project so as to know if the applied resources will yield an output that is favourable to the company or not. Therefore, the significance of the design and development of an expert system for financial planning and budgeting in IGI Plc lies in its ability to:

• Analyze financial statement to suggest profit and loss account.
• Review the performance of each product in detailed manner against major substitutes from competition.
• Plan for subsequent years production output.
• Create and contribute to economic environment culminating in national industrial growth and development.

1.7  General Overview

Financial planning is a process aimed at achieving financial goals and benefits in the future. Such plans for the future are drawn to make better decisions today. Financial plans and statements are prepared to put the institution in a balanced per-emptive position against the forthcoming fund and capital market condition.

Financial planning deals with the question of a company’s long-term growth and profitability with respect to investment, financial expenditure programs and debt-equit mix, and a computerized are automated expert system approach will put the company on a sound footing to handle such matters.

The term “Budge or Budgeting” can be viewed as the pain of the dominant individuals in an organization expressed in monetary terms and subject to the constraints imposed by other participants and the environment indicating how the available resources may be utilized to achieve whatever he dominant individual agrees to be the organizational priorities.

The Expert System finds useful computer applications through managerial potential tasks of meeting the various purposes of budgeting.

Expert system is an off-shoot of the field of artificial intelligence and is used primarily for classification or interpretation of tasks. It refers to a system that uses computer technology to store and interpret the knowledge and experience of human experts to solve problems in a specific area of interest.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter deals with a review of related literature on financial planning, budgeting and expert systems technology. It considers the general concept of financial planning and budgeting and how an expert system can be applied to facilitate the planning and budgeting processes.

Financial planning usually takes place annually on an institution wide scale and more frequently within departments. Planning has been described by some experts as a continuous process of making present interpersonal decisions with the best possible knowledge of their futurity, organizing the efforts needed to carry out the decisions and measuring the results against expected systematic feedback.

As we change our opinion about future conditions and encounter organizational road blocks, we need to revise the financial plan in terms of modern computer applications.

Financial planning involves analyzing the financial flows of the company, forecasting the consequences of various investments, financial and dividend decisions and weighing the efforts of various alternatives. The idea is to determine where the firm has been, where it is now and where it is going. Not only the most likely cause of events, but deviation from the most likely outcome. If things become unfavorable the company should have a back up plan so that it is not caught flat footed, without financial alternatives thus, he need to apply an expert system by designing a computer based program for easy storage and retrieval of required information, data or fact