Abstract

The commonest approach used in preparing budget in Nigerian tertiary institutions is incremental budgeting (IB).
This involves a method where the previous year budget figures will be reviewed, usually upward to accommodate
any expected increase in the following year’s budget. For this approach, the only source for preparing the budget is
the use of preceding year’s budget figures, with little or no consideration of other determining factors; not even with
the current or previous two years’ actual financial achievement/figures because hardly will they be available. Usually
the Nigerian tertiary institutions audited accounts will not be ready until after three to four years after the end of
the institutions’ financial years. Hence, the assumed justification for continuous use of IB budgeting system is
simplicity of obtaining the data, and less time in its preparation. This is because the users of IB are reluctant to make
any further inquiry into the efficiency of the system to know whether the method is good enough to achieve the
desired performance of the institutions. However, some scholars have strongly criticized IB, because the system is
rigid and the basis for preparing the budget could be misleading. This approach is further perceived to be weak and
may not be accepted if it should be sampled for opinion among the users of the budgeting system. This paper
discussed the problems of incremental budgeting system in Nigeria