Account For Decision Makers


The phenomenon of converging the national and international financial standards has been gaining attention globally. This has resulted due to the increased number of MNC’s that started operating in countries other than their country of origin. This has posed a challenge of meeting the financial standards of the country in which they are operating as well as their home countries. This challenge can be dealt with the convergence that will end up in worldwide harmonised and streamlined standards. The first part of this essay includes the background of convergence along with the challenges and opportunities it brings.

The second part comprises of the budgeting technique to be used for performance management. Budgeting is an important technique to measure the performance of any organisation. It needs to be well planned, organised and well thought in order to get the maximum output. Moreover, it needs to be communicated and well discussed before implementation. The budget encourages its communication, coordination and responsibility decentralisation.


The convergence of the accounting standards around the world is not the new initiative. The worldwide activities by the FASB fall under internationalisation and harmonisation of the standards of accounting. Those activities today are considered to be the convergence activities. Whatever the term, the Board has long held the perspective that a solitary arrangement of amazing worldwide bookkeeping models is attractive in light of the fact that its utilisation will enhance universal equivalence of money related data; lessen expenses to monetary proclamation clients, preparers, examiners, and others; and, eventually, advance the productivity of the world's capital markets. The aim of this essay is to analyse the promised benefits of convergence. Moreover, this essay also sheds light on the issues which does not allow the global applicability of convergence.

Main Body

The FASB keeps on putting relevant and significant resources in convergence endeavours. The significant role FASB is playing in the global convergence of accounting standards has advanced. It has been changed from taking an interest to a dynamic member with the objectives of convergence that are incorporated into all of its procedures and practices. The convergence aims at reducing the differences between the international standards and US GAAP (Fanto and Karmel, 1997).

Previously, various perspectives of the role played by financial reporting made the convergence a cumbersome process. Presently, the consensus about high quality, comparable, and transparent financial information is growing that will serve investor’s needs. The accounting practices convergence has been increasing around the world over the past few years. This convergence has been resulted due to various factors. Firstly, the large multinational corporations have started applying their home country standards, which will result in dual approaches for one accounting issue. Secondly, there is a need for transparent, consistent and comparable standards worldwide. Finally the national accounting standards setters must set the standards in accordance with the standards of business combinations. If this convergence may lead to increased multinational companies that may enlist in the capital markets of the company. The country may get the benefit of not only the increased investment opportunities but also enjoying the greater foreign exchange by increased number of foreign listings. The US markets have enjoyed more benefits from the financial reporting as required by the US GAAP (NASB, 2010). The disparities in the practice of accounting is considered a significant reason by the companies for not listing in the US Exchange. The recognition of establishment of accounting standards that are generally acceptable by the congress helps in international financing activities. Under the US GAAP the shareholders and management has access to the improved quality of information. It is significant to mention that the convergence activities must not compromise the current benefits of high quality reporting by the US investors. They get benefits after making performance comparison between the companies irrespective of their country of Origin. The companies mention several reasons for not listing in the US exchange, the most important amongst them is reluctance to forgo US listings. Following international standards may encourage the cross-border offerings. In contrast some factors may lead to deter the access to the country stock exchange due to the litigation exposure. The companies may also face the domestic pressure for stock exchange listings in the home country (Lowenstein, 1996). The projects aiming to minimise the differences among the national and international standards are part of convergence efforts (Auditing Standards Board). The convergence aims at making international standards similar. This convergence aims at establishing the standards that may be used around the world. It aims at avoiding conflicts to promote transparency consistency and streamlining and avoiding future financial crises. Convergence is taking place in all big economies of the world.

For example, Canada has required all the elements to be recorded, while utilising the IFRS from January 2012, whereas Japan has started using the IFRS from 2010 for some multinational organisations (Adejola, 2011). Whereas Nigeria had to adopt the IFRS in 2012, but it is undergoing adoption training till now (David, 2013)

The convergence of standards also poses various challenges. These challenges are explained in detail with respect to various examples. For example, in Nigeria issues and prospects of the International Financial Reporting Standards, however, require a foundation information of IFRS, the hypothetical establishment or premise on which it is based, exact financial reporting studies, Nigeria's appropriation and ramifications of IFRS together with the advantages and difficulties of IFRS. As per Essien-Akpan (2011), as an aftereffect of expanding globalisation and along these lines rivalry, it gets to be basic that nations and organisations alike address issues that will make them more alluring of the capital of the financial specialist’s. Capital business sector exchanges have gone worldwide and an organisation can raise stores on a few stock trades far and wide. The objective of the financial reporting is to settle on data accessible for basic leadership. Assorted qualities in financial reporting across various countries emerges on account of the changes in legitimate frameworks, charge frameworks and business structures (Cairns, 1999). The IFRS is proposed to blend this assorted qualities by making data more practically identical and less demanding for investigation, advancing productive coordinated effort of asset and lessening in capital expense. Joining starting with one framework then onto the next is constantly connected with some hitches; in any case, with the procedure of harmonisation that IFRS is completing, these hitches appear to fail out bit by bit (Gannon, 1999).

Another important fact is that both FASB and IASB have been started from different places. While that is a "given" for any exertion whose objective is accomplishing shared trait in a range where shared characteristic does not presently exist, it is not to be trifled with. Convergence ought not to be accomplished only for the sake of convergence only. For independent Board individuals, adjusting the yearning for meeting with the objective of keeping up an astounding arrangement of financial standards is a consistent and troublesome activity.

Another challenge is the way that some shared characteristic exists in different parts of the worldwide reporting environment. There are social, institutional, and financial contrasts, and in addition contrasts in administrative and lawful frameworks. While those distinctions may not be difficult and are confronted by numerous working in today's worldwide business environment, those distinctions do posture challenges to the bookkeeping gauges, as well as the standard-setting process also (Ukpai, 2002).

As the FASB and the IASB work toward converging is the way that the points on their specialised plans are not alike. With their expressed objective of adjusting their future plans and undertaking more ventures mutually. For instance, the IASB is as of now is concerned about chipping away at protection of accounts and the FASB is as of now taking a shot at a liabilities and value venture. Both Boards have communicated a positive response for completing those tasks mutually, however it implies that bity boards need to speed up. The already portrayed convergence methodology needs help with the issues related with the logistics and processes. These issues will keep on arising until the motivation of both the boards are totally adjusted. 

Getting consensus from a larger part of the seven individuals in FASB is a big challenge by itself, yet then attaining a larger share of the fourteen individuals Board of IASB's to reach a consent to the same answer which further confounds the activity.

Another challenge faced by the FASB is that it listens to its constituents. A hefty portion of the expert clients, for example, worldwide value examiners and institutional speculators, numerous remote based multinationals, and some U.S.- based worldwide organisations are energetic for global union to end up a reality and don't comprehend why it is taking so long. Nonetheless, a number of the individuals who are in charge of setting up the money related articulations of U.S. organisations seem, by all accounts, to be less for the convergence

It is to highlight again that eliminating the differences between the national and international standards can create various promised benefits for the country. It makes financial consolidation easy for the public and private entities, improves consistency in reporting, increase access to the global financial markets, enhanced control of the management, national and international investors can easily compare the financial statements across different countries which will increase trade across the regional trade groups.  


The convergence of national and international financial standards is not a new phenomenon. The convergence of standards across various countries has been increasing. This has been majorly due to the fact that the multinationals have to follow the dual standards and it is difficult for them to follow both the standards side by side. The convergence itself has resulted in various benefits and challenges. Despite various challenges posed by convergence, the main goal the FASB is to set one high-quality financial reporting standards that can be used domestically as well as internationally. Accordingly, significant time as well as the resources have been devoted by the FASB in supporting of these efforts. The benefits that convergence offers outweighs the challenges it poses. Convergence is a cumbersome task because of the challenges and opportunities it poses but the stakes of U.S. investors, the international capital markets and to the continuous development of commerce and finance around the globe has been an important concern in this regard.




Auditing Standards Board. (n.d.). Elements of quality control of an audit firm's practice in Statement of Quality Control standard. American Institute of Certified Public Accountants'.

Cairns, D., 1999. Exceptions to the Rule. Accountancy International, (p. 84).

Fanto, J. A., and Karmel, R. S., 1997. A Report on the Attitudes of Foreign Companies Regarding a U.S. Listing. Stanford Journal of Law, Business and Finance, 3(1), 51-83.

Gannon, D. J., 1999. International Reporting Issues. 27th Annual National AICPA Conference on Current SEC Developments. Frankfurt.

Lowenstein, L., 1996. Financial Transparency and Corporate Governance: You Manage What You Measure. Columbia Law Review, 98(5), 1357.

Adejola, A.P., 2011. International Financial Reporting Standards (IFRS) Practical Implementation Guide for Preparation and Presentation of Financial Statements. 1st edition, White Knight Consulting Publications, Abuja, Nigeria.

Ajibade, M., 2011. Financial Reporting Council in Essien-Akpan (Ed), International Financial Reporting Standards (IFRS). The Role of Chartered Secretaries and Administrator. A Paper presented at the 35th Conference of Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN), Lagos Sheraton Hotels and Towers, October 26th and 27th

Alistair, A. 2011. IFRS. Historical Background. In Essien-Akpan (Ed), IFRS. The Role of Chartered Secretaries and Administrators 35th Annual Conference of ICSAN. Lagos Sheraton Hotels and Towers. October, 26th and 27th.

David, K.E., 2013. IFRS and The Tax Implications in Nigeria. 2nd Edition. Retrieved from

Okoye, P.V.C and Akenbar, C.O., 2013. Financial Reporting Framework In Nigeria and The Adoption of the International Financial Reporting Standards. Global Journal of Management and Business Research xiii(I), Version I.

Gambari, Y., 2010. Issues in the Implementation of IFRS; Accounting and Financial Reporting Issues; Toronto; CICA

Ukpai, N. A., 2002. The Snag in International Accounting Transactions, Journal of Accounting; 3(6), pp 214- 220

NASB, 2010. Adoption of International Financial Reporting Standards, Report of the Committee on Road map to the Adoption of IFRS, Abuja, Nigeria.








Part: B

Budget and Managing the Performance of an Organisation:




For the achievement of the goals and objectives of an organisation, the resources of an organisation should be clearly and effectively managed. There is a need by the organisation to achieve the goals an objectives at a minimum and reduced cost. Therefore there is a sheer need for the coordination and also the control of the necessary efforts which are needed for the achievement of the overall goal and objective of an organisation and this could be achieved with the help of budgeting. Budget is meant for facilitation by the coordination of the curse of action on which the management will take decision and perform actions (Yuen, 2004). This essay aims to analyse how this strategic accounting technique could be used as a performance management tool.

Main Body: 

The budgets are in other words explained as the monetised actions and the targets which are needed by the management for the achievement of the organisational objectives. These targets are set up based on the future of the organisation and also what the past trends are. The budget system enables the management to plan more effectively and to coordinate and control and also to make the evaluation of the activities of the organisation. Budget is a device which has been designed for the promotion of the effectiveness at a greater level and also to achieve higher level of the efficiency. A budget is therefore a quantitative statement which has been prepared for the defined period of time and the objective is the promotion of a given objective of an organisation (Nweze, 2004). The budget is defined as a quantified plan which has been prepared in monetary terms and this plan is approved prior to a defined period and the budget is related to a particular future period and shows the income and expenses of an organisation. The major aim of the budget is to estimate the financial profits of the business at the beginning of the year and the financial performance keeping the normal conditions as assumptions.

Budget of an organisation is a very important tool for the management of the organisation’s performance, provided that the budget is set up on realistic assumptions and based on facts which are actually in existence. There should be a proper thought out of the budget and the profit planning with in the budget. Operational plans are set up with in the budget with the financial implications of those plans as the long term plans and the short term plans which may deal with the specified period of times for which these have been set up. Budgetary control is development and the establishment of the periodic review or in other words it is the comparison of the results in actual with the result results in the budgeted performance or to serve as a remedial course of action. The budgetary controls should be set up in such a way that there should be a clear comparison of the budgetary performance with the actual performance and the correction is taken where ever it is needed. A budget systems also serve as the needs for the management in respect of the decisions and also the judgments which is used to make  and also to provide the basis and foundation for the management  function for the control and planning of an organisation. For planning an economic activity it is very critical to develop a budget. It is a very critical step to develop a budget in any economic activity. For the purpose of carrying out the plans, the business and government agencies etc. needs a budget for the purpose of carrying out the routine operations and for the purpose of planning there expense and income and also for the purpose of making financial decisions. Every organisation has a plan for the future simple because the success depends upon the plan level that has been put in to the organisation. From our discussion above, it has been cleared that budgeting has been used as a plan and a control device and has provided important impacts on the organisations performance. However, it may also be noted and give value that another crucial benefit of the process of budgeting, is the information sharing (Hopwood, 1976; Parker and Kyi, 2006).  The members of an organisations should be however, involved in and participate in the defining of the goals of the budgets and also whenever subsequent revisions are done (Chalos and Poon, 2000).  It may also be noted that whenever the revisions in the budgets are done there should be participation from the members of the organisation for the reason of the variance. Therefore, the budgetary participation (BP) is defined as the involvement of and participation by the managers with in the budgetary process and also their influence and impact over the setting up of the budgetary targets (Subramaniam and Ashkanasy, 2001). There have been a considerable amount of interest shown by the researchers for the budgetary participation. The budgetary participation is a linking channel between the bosses and the subordinates of an organisation. (Shields and Shields, 1998). Through the use of budgetary control and budgetary participation there is accomplishment of the information sharing. Poon (2001) states that the BP Budgetary participation provides a setting up where there is an exchange of the information and the ideas by the management for the purpose of making the budgetary planning more effective and efficient. The budgetary planning process of an organisation includes the plans for the production of the detailed operation plans for the different sectors and departments within the organisation (Otley  and Pollanen, 2000).  There is a sheer need of coordination with in the organisation for the provision of a common plan within the organisation and to make it effective and efficient for the organisation to work on (Ryan et al, 2002). For the purpose of keeping all the parts of the organisation informed and well organised, there is a sheer need by the different parts of the organisation to be properly communicated and well defined line of communication must be established by the organisation for the purpose of keeping the subordinates and the bosses well informed and well aware. The different management level should be well communicated with the policies of the budgets and the targets they need to achieve and also the constraints which are involved in and what are the resolutions to those constraints (Tolentino, 2000). It is an important tool for the purpose of motivating the staff of an organisation and to keep them working hard for the organisation, as the risks and the rewards are associated with the achievement of the targets with in the budgets (Reid and Smith, 2000). The budgets is also an important tool used by the management of an organisation for the purpose of controlling the activities of an organisation and to regulate their activities for which they are responsible in a proper way. The management is aware of the targets and any deviation from the targets is corrected at appropriate level of management, keeping in view the reasons of the variance from the budget and the actual positions and facts at the time of the performance of actual actions.  The evaluation of the performance of the individual and the organisation is very important and useful not only for the managers in order to know that they are performing well but also for the organisation itself in order to know that the goals and targets at the beginning of the year have been achieved. And if deviated than how much was the deviation from those targets and goals and what are the variations and what are the reasons for the deviation and who is responsible for the deviation and why(Tsui, 2001). The performance evaluation through the use of budgetary control clears the responsibility of the individual and the factors which have brought the deviation in the actual performance. (Van der Stede, 2000). The budget not only manages the performance and shows the performance variations, but also clarifies the authority and the responsibility for the purpose of making it important and necessary to show dedication towards the work (Van Veen and Wijn, 2002). The budget gives the managers a clear and described authority for the management of the own responsibility and also a clear and documented responsibility to control the role of the subordinate and to delicate the authority (Verbeen and Frank, 2006). The budget provides a mean to make sure that the investment kept in the business has been at reasonable level in accordance with the activities of the business (Wang, 2008). There is also a surety by the budget that the liquid resources of the business are available for the use at any point of time (Wang, 2004).. The budget is a provision of the benchmark and provides the basis for the evaluation of the subsequent performance of the business (Wooldridge et al, 2001)


The budget of an organisation is a very important device for the better management of the current operations if it is followed by the regular and systematic monitoring and reposting of the activities. The budget removes the inefficiencies if it is properly and well thought of. Budget encourages and promotes the decentralisation of the responsibilities and also promotes the communication and coordination with in the organisation. The budget needs to be properly planned and well thought for the successful achievement of the targets and goals.






Parker, R.J., and Kyi, L., 2006. Vertical Information Sharing in the Budgeting Process, Accounting, Organisation and Society, 31(1), pp. 27-45.

Chalos, P., and Poon, M., 2000. Participation and Performance in Capital Budgeting Teams”, Behavioral Research in Accounting, 12, pp. 199-229.

Subramaniam, N., and Ashkanasy, N.M., 2001. The Effect of Organisational Culture Perceptions on the Relationship between Budgetary Participation and Managerial Job-Related Outcomes. Australian Journal of Management, 26(1), pp.35- 54.

Poon, M., Pike, R., and Tjosvold, D., 2001. Budgetary Participation, Goal Interdependence and Controversy: A Study of a Chinese Public Utility, Management Accounting Research, 12(1), pp. 101-118.

Otley, D.T., and Pollanen, R.M.. 2000. Budgetary Criteria in Performance Evaluation: A Critical Appraisal Using New Evidence. Accounting, Organisation and Society, 25(4/5), pp.483-496.

Ryan, B. , Scapens, R.W., and Theobald, M., 2002. Research Method and Methodology in Finance and Accounting, Thomson, London, UK, 2nd ed.

Tolentino, A, 2000. Guidelines for the Analysis of Policies and Programmers for Small and Medium Enterprise Development, Enterprise and Management Development Working Paper-EMD/13/E.

Reid, G.C., and Smith, J.A., 2000. The Impact of Contingencies on Management Accounting System Development, Management Accounting Research, 11(4), pp. 427-450.

Tsui, J.L., 2001. The Impact of Culture on the Relationship between Budgetary Participation, Management Accounting Systems, and Managerial Performance: An Analysis of Chinese and Western Managers,  The International Journal of Accounting, 36(2), pp. 125-146.

Van der Stede, W.A., 2000. The Relationship between Two Consequences of Budgetary Control: Budgetary Slack Creation and Managerial Short-term Orientation, Accounting, Organisations and Society, 25 (6), pp. 609-622.

Van Veen-Dirks, P., and Wijn, M., 2002. Strategic control: meshing critical success factors with the balanced scorecard, Long Range Planning, 35(4), pp.402– 427.

Verbeeten, J., and Frank H.M., 2006. Do Organisations Adopt Sophisticated Capital Budgeting Practices to Deal with Uncertainty in the Investment Decision? A Research Note  Management Accounting Research, 17(1), pp.106-120.

Wang, H. 2008. China’s Automobile Industry Embracing the Energy and Environment Challenge in the 21st Century, 16th GERPISA Internal Colloquium.

Wang, Y.Z., 2004. Financing Difficulties and Structural Characteristics of SMEs in China”, in: China and World Economy, 12(2), pp. 34-49.

Wooldridge, S.C., Garvin, M.J., and Miller, J.B. 2001. Effects of Accounting and Budgeting on Capital Allocation for Infrastructure Projects, Journal of Management in Engineering, 17(2), pp. 86-94.

Yuen, D. C.Y., 2004. Goal Characteristics, Communication and Reward Systems, and Managerial Propensity to Create Budgetary Slack. Managerial Auditing Journal, 19(4), pp. 517-532.




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