THE CAMBRIDGE ASSOCIATION OF MANAGERS

GRADUTE DIPLOMA IN ACCOUNTING AND BUSSINESS FINANCE

INTERNATIONAL ACCOUNTING

IMPORTANCE OF HARMONIZATION OF INTERNATINAL ACCOUNTING ON

MULTI-NATIONAL COMPANIES
[A case study of Kenya Seed Company]
Done by; KEVIN KIBET KAPOI

Candidate No; W-160-08-047

Purpose; Fulfillment of CAM Graduate Diploma in Accounting and

Business Finance

Date; September, 2008

Presented to; Cambridge Association of Management examinations

Cambridge UK

SUPERVISOR___________________________________DATE_______________

MODERATOR________________________________DATE_________________

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DECLARATION
I declare that this project is my original work and has not been exhibited or published in
any way and has never been presented for any awards in any institution.

Name KEVIN KIBET KAPOI Signed: ………………… Date: …………….

This project has been submitted for examination with my approval as the Supervisor.

Mr. ROBERT MINDILA Signed: ………………… Date: …………….

This project has fulfilled the quality Assurance policy requirements.

Name……………………………………. Signed: ………………… Date: …………….

Head of Quality Assurance

This Project has been submitted for examinations with my approval as the moderator
Name …………………… signature ……………………. Date …………………
Project assessment coordinator.

This project has been submitted for examinations with my approval.

Dr. Humphrey Oborah Signature ………………. Date …………………

Head of Missions and Curriculum Manager,

Digital Advisory and Learning Centre.

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ACKNOWLEDGEMENT
I would like to acknowledge my case study center Kenya Seed Company for giving me
that rare opportunity to do this research in their institution.

My friends and fellow students gave me the moral support that helped me during the
study.

My sincere thanks go to ROBERT MINDILA who was my lecturer a source of

inspiration and counsel all through the time of writing this project.
My special thanks go to Dr. Humphrey Oborah, Head of Missions and Curriculum
Manager in DALC Education Centre for making sure that the program is adopted in East
and Central Africa.
Above all l thank God who gave me divine enablement.

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EXECUTIVE SUMMRY

CHAPTER 1 INTRODUCTION
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1.1 Historical Background 

Kenya Seed Company is a state Corporation that produces and markets top a quality seed

for the country’s farming community with an overall objective of adding value to the

farming   business   and   contributing   to   food   sufficiency   in   Kenya   and   beyond.   The

company  has  made   substantial  contribution   through  the   development,  production  and

provision   of   high   quality   seeds   for   various   agro­ecological   zones.

The Company was incorporated in Kenya in July 1956 to promote the use of improved

strains of pasture seed, developed by the National Agricultural Research Station at Kitale.

Two years later, the company started an enterprise to produce commercial sunflower for

the European bird feed market to sustain its financial needs that had by then expanded. In

1963 the company introduced hybrid seed maize production following the release of the

first hybrids by the government Research centre in Kitale. Seed wheat was added to the

seed program in 1971 to provide certified seed to farmers who previously depended on
low quality farm saved seeds.

Later  in   1979  the  company  acquired  Simpson  and   White   law,  a  company  trading  in

horticultural  seeds, and introduced  the brand name “Simlaw  Seeds”, which has since

distinguished   itself   as   a   leading   brand   in   the   market.   In   2002   Simlaw   Seeds   was

registered as a limited liability company and a subsidiary of Kenya Seed Company Ltd.

Its core business is selling and marketing of high quality horticultural seeds in Kenya and

eastern   Africa.   It   also   sells   other   farm   inputs   e.g.   Pesticides   and   Fertilizers.

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In   the   same   year   Kenya   seed   incorporated   Kibo   and   Mt   Elgon   seed   Companies   in

Tanzania   and   Uganda   respectively   as   an   expansion   strategy   into   the   Eastern   Africa

market. 

Our Mission
To avail Top Quality Certified Seed competitively through focused research, development
and value addition

Vision

To be a certified seed supplier of choice in East Africa and beyond. 

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 1.2 Organization Structure Managing Director

Deputy Managing Director

Human Resource Manager Company Secretary Personnel Manager

General Manager Simlaw General Manager Mt Elgon Public Relations

Chief Accountant
Manager
Seed

Production QualityAassuara Marketing Elgon Downs Research PasturesBranch

andIT
Manager nce Manager Manager Manager Manager Sunflower
Manager
Manager
Manager
Nakuru

Field Distribution IT
Officers Manager Consultant
Procurement
Manager
Senior Accountant
Store (5)
Supervisor
Assistant
SeniorAssistant
Accountant
Accountant

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. CHAPTER 2 LITERATURE REVIEW

We now have a global economy and it has affected the entire business world. For
instance, today's global corporation may have more than one headquarters, and its
production and distribution facilities are probably scattered throughout the world.
Commodity prices, interest rates and currency exchange values have become
internationally linked -- with the result that governments around the world are
increasingly supporting harmonization of accounting practices and national policies.
(Walters) (Cited in: Bisgay and Jayson 1989) Harmonization is necessary because
standard national financial statements are virtually useless; financial markets in more
regulated countries are threatened with a loss of market share; and multinational
corporations must prepare multiple reports for different nations they do business in.
(Nobes and Parker 1991) (Cited in: http://ecocomm.anu.edu.au) There is a need for
harmonization for accounting standards in order to help the foreign investor to understand
the financial statements of the foreign companies who's shares they might want to buy.
(Iqbal, Melcher and Elmallah 1997) Financial information is a form of a language. And if
the language of financial information is to be put to use, so that investment and credit
decisions can more readily be taken, it should not only be intelligible, it should also be
comparable.

(Belkaoui 1994) These new environmental factors of the global economy, the
international monetary system, the Multinational Corporation and foreign direct
investment create an environment in which business transactions, their conduct,
measurement and disclosure, takes new and distinctive form that call for a specific
accounting sub discipline or the harmonization of accounting practices.

Advantages of Harmonization

(Turner 1983) The greatest benefit that would flow from harmonization would be the

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comparability of international financial information. Such comparability would eliminate
the current misunderstandings about the reliability of foreign financial statements and
would remove one of the most important impediments to the flow of international
investment. (Choi, Frost and Meek 1999) Harmonization would save time and money that
is currently spent to consolidate divergent financial information when more than one set
of reports is required to comply with the different national laws or practice. It will also
improve the tendency for accounting standards throughout the world to be raised to the
highest possible level and to be consistent with local economic, legal and social
conditions.

(Nobes and parker 2002) It would be beneficial to those countries which still do not have
adequate codified standards of accounting and auditing and to international accountancy
firms with clients of firms which have at least one foreign subsidiary. It would also help
in raising foreign capital as investors, financial analysts and foreign lenders will be able
to understand the financial statements of foreign companies (Samuels and Piper 1985)
(Cited in: Blake and Hossain 1996) that they would be able to compare the investment
opportunities which will help them to make the right investment decision. The benefit
International accounting firms will have with the harmonization of accounting practices
will be the movement of staff across national boundaries will become easier and it will be
less expensive to provide training to their staff.

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2.2 EMPIRICAL REVIEW

The company has its franchises in eat Africa as its motto is to become a leading seeds
producer in east Africa and beyond. They follow all the required accounting standards as
required by the accounting fraternity. The issue of international accounting has been a bit
doggy but the organization has tried to address that as well. They have put mechanisms in
place in order to be in line with the internationally accepted accounting standards.
Accounting policy processes are different in each country however, making it difficult to
reach a consensus on such standards. International standards allow the gains from the
global economy to be fully realized, it is argued that accounting policy should be
standardized among nations. This "harmonization" of accounting standards helps the
company in the following ways: by facilitating international transactions and minimizing
exchange costs by providing increasingly "perfect" information; by standardizing
information to world-wide economic policy-makers; by improving financial markets
information; and by improving government accountability. International investment
decisions and financial-based management decisions are then made with less risk.

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CRITICAL REVIEW
The Kenya seed company implementation of harmonization of international accounting is
efficient but lacks some key elements like;
1. The company is not up-to-date with the FRS statements issued by the IASB
regularly.
2. The proposed international accounting directions are not implemented to the
required extent.
3. the present junior accountants don’t understand how harmonization international
accounting benefits the organization and how it should be done should be done as
they are not fully trained
4. The company uses the government imposed accounting system as opposed to the
international accounting standards.

MISSING GAPS
The company should harmonize its accounting practices with the internationally accepted
standard in order for the company to smoothen its financial relations with other
multinational companies and franchises. Harmonization of there accounts will encourage
international investors to invest in the company as they will be able to understand the
financial reports from the international view.

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 CHAPTER 3
3.1 PROBLEM SPECIFICATION
Following International accounting involves harmonization of the proposed standards, it
involves “a process by which all participants agree to follow the same or very similar
Accounting Practices. The end result is a state of uniformity” (Roberts et al., 1998). This
state of uniformity is a condition in which everything is regular, homogenous or at least
unvarying. It is this subject that this project tries to deal with. The main problem the
Kenya seed company faces is that the company is not up-to-date with the FRS statements
issued by the IASB regularly, the proposed international accounting directions are not
implemented to the required extent and the present junior accountants don’t understand
how harmonization international accounting should be done as they are not fully trained
The company also uses the government imposed accounting system as opposed to the
international accounting standards.

3.2 Proposed solutions

The Kenya seed company should follow certain procedure in order to make it efficient
enough for international accounting. The following are therefore proposed;
1. the company should follow the IASB closely in order to follow all the directives
and the FRS’s it issues from time to time
2. the company should take heed and make sure that the directives issued by the
IASB
3. A further training of the junior accounting staff should be done. So as to make
them understand the need to implement the requirements of the IASB.
4. The organization should make an effort of advising the government on the
benefits and advantages of international accounting.
5. Seminars and workshops be held in order to encourage the use of international
accounting standards.

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3.3 BROAD OBJECTIVES
The projects broad objectives was to establish the way the management of Kenya seed
company addresses international accounting in their organization. the project would also
assist the company in implementation of key issues/practices regarding international
accounting methods and regulations requirements.

3.4 SPECIFIC AIMS

1. to find out if the organization follows or/is up to date with the FRS’s issued by the
IASB regularly.
2. to establish the implementation of the directions issued by the IASB.
3. to find out if the company’s accountants understand the need and the meaning of
harmonization of international accounting standards.
4. to find out the accounting standards regulatory body being used by the company.

CHAPTER 4: RESEARCH DESIGN AND METHODOLOGY

4.3 SAMPLE SIZE

Out of the 100 employees 50 employees were chosen who consisted of 11 from the top
management, 21 from the departmental heads and 18 members from the subordinate staff.
4.4 SAMPLING TECHNIQUE

The researcher used the sampling technique of simple random. It selects a sample without
bias from the target or accessible population. It was used to select sample. This was used

1
because it ensures each member of the target population has an equal and independent
chance of being included in the sample.

4.5 DATA COLLECTION METHODS/ INSTRUMENTS

Observation
The researcher used observation method to collect data. This is the use of all senses to
perceive and understand the experiences of interest to the researcher. Observation method
was used to allow the researcher to see for himself what people actually do rather than
what they say they do. It was also used to bridge the gap between what people say they
do and what they actually do. This is so because it allows the researcher to gain firsthand
experience without informants, record information as it occurs, explores topics that may
be uncomfortable to informants and notice usual aspects.
Interviews
Interviews were also used. This is person to person verbal communication in which one
person asks the other questions intended to elicit information or opinions. They were used
to collect information that cannot be directly observed or are difficult to put down in
writing. It was also used because it captures the meanings beyond words. It allows a
researcher to obtain information that cannot be directly observed, historical information,
or to gain information over the line of questioning.
Questionnaires
This is a collection of items to which a respondent is expected to react in writing. They
are used to collect a lot of information over a short period of time. Questionnaires are
suitable where the population is literate, larger and time is limited, and when information
needed can be easily described in writing.

4.6 DATA PRESENTATION AND ANALYSIS

In the data presentation and analysis the researcher used bar graphs and tables to present
the data and analyzed the data in percentages as follows:

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Table showing the gender of respondents
gender number
Male 35
female 15

The Pie chart below shows the percentages showing sex of the respondents

The table below shows the ages of respondents

Age number
18-25 10
26-30 8
26-30 15
30-35 8
36-40 4
40 and above 5

Below is a chart showing the respondent’s ages

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The table below shows data collected from the field on how well the company
understands harmonization of international accounting standards.

Staff department clerks Junior Senior management

accountants accountants 
number   of   those 5 3 4 3

who   understand

the   meaning   of

harmonization   of

international

accounting  
number   of   those 10 7 2 8

who   don’t

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Staff department clerks Junior Senior management
accountants accountants 
understand   the

meaning   of

harmonization   of

international

accounting  
those not  sure 1 1 0 0
total 16 11 6 11

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The chart below shows the data above in a bar graph

1
The table below shows how the efficiency in implementation of the FRS’s statements is
achieved in the organization.
staff clerk Senior managemen
departmen s Junior accountant t
t accountant s
s
very 3 5 4 2
efficient

not 12 10 2 5
efficient
Fair 1 1 0 0

total 16 16 6 7

Below is a graph showing the above information

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The table below shows the opinions of the correspondents on the frequency with
which the company is up to date with international accounting standards board.
staff clerk Senior managemen
departmen s Junior accountant t
t accountant s
s
very often 5 5 2 2

not   very 7 8 4 3
often
not at all 0 1 0 2

total 12 14 6 7

Below is a bar graph showing the information above

1
The information table below shows the respondents views on which regulatory body
the company subscribes most for.
staff clerk Senior managemen
departmen s Junior accountant t
t accountant s
s
Kenya govt 10 5 4 3

I.C.P.A.K 2 3 1 2

IASB 1 2 1 2
total 13 10 6 7

Below is a bar graph showing the above information

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The information table below shows representation of the data collected on the approval
for change/implementation of this project by the respondents.
staff clerk Senior managemen
departmen s Junior accountant t
t accountant s
s
YES 14 7 4 5
NO 1 2 1 1
NOT 2 1 1 1
SURE
total 17 10 6 7

Below is a bar graph showing the information above

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CHAPTER 5: RESULTS AND FINDINGS
5.1 FINDINGS AND INTERPRETATIONS

a. The company is not up-to-date with the FRS statements issued by the IASB
regularly.
b. The proposed international accounting directions are not implemented to the
required extent.
c. the present junior accountants don’t understand how harmonization international
accounting benefits the organization and how it should be done should be done as
they are not fully trained
d. The company uses the government imposed accounting system as opposed to the
international accounting standards.
e. The company is willing to embrace the recommendations of this study
5.2 Conclusions
The organization has not seriously adopt the requirements of the international accounting
standards and therefore has not therefore realized harmonization of its accounts
internationally the company is also not up-to-date with the FRS statements issued by the
IASB regularly, the proposed international accounting directions are not implemented to
the required extent and the present junior accountants don’t understand how
harmonization of international accounting should be done as they are not fully trained
The company also uses the government imposed accounting system as opposed to the
international accounting standards.

5.3 Limitations
The researcher faced several challenging issues as he wrote the project as some of the
documents needed for the research were not easily accessible and required a lot of steps.
There was also the issue of financial restraints.

5.4 RECOMMENDATIONS

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The Kenya seed company should follow certain procedure in order to make it efficient
enough for international accounting. the following are therefore proposed; the company
should follow the IASB closely in order to follow all the directives and the FRS’s it
issues from time to time the company should take heed and make sure that the directives
issued by the IASB are fully implemented .A further training of the junior accounting
staff should be done. So as to make them understand the need to have implement the
requirements of the IASB. the organization should make an effort of advising the
government on the benefits and advantages of international accounting. seminars and
workshops be held in order to encourage the use of international accounting standards.

IAS Standard
IAS 1 Presentation of Financial Statements
IAS 2 Inventories
IAS 7 Cash Flow Statements
IAS 8 Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting
IAS 10 Events After the Balance Sheet Date
IAS 11 Construction Contracts
IAS 12 Income Taxes
IAS 14 Segment Reporting
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 21 The Effects of Changes in Foreign Exchange Rates
IAS 22 Business Combinations
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosure
IAS 26 Accounting and Reporting by Retirement Benefit Plans
IAS 27 Consolidated Financial Statements
IAS 28 Investments in Associates

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IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 30 Disclosure in the Financial Statements of Banks
IAS 31 Financial Reporting of Interests in Joint Ventures
IAS 32 Financial Instruments: Disclosure and Presentation
IAS 33 Earnings per Share
IAS 34 Interim Financial Reporting
IAS 35 Discontinuing Operations
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture

Harmonisation process throughout the years

Pre-stage of the harmonisation process

1959 Kraayenhof, father of the movement, releases his paper in which he was not
advocating rigid uniformity but argued for some degree of international uniformity on
accounting
principles. (Samuels and Piper, 1985)

1961 The Groupe d`Etudeswas founded in order to support the European Union
authorities in
Accounting questions. (Choi et al., 2002).
1966 Accountants’ International Study Group was formed in order to analyze and to
vanquish differences in Accounting between Canada, U.S. and U.K. (Kleekämper et al.,
2002).
Harmonization process 1973-1987
1973 Foundation of the IASC

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1976 The Organization for Economic Co-operation and Development issued a
declaration on
investment in MNE´s implying guidelines on disclosure of information (Choi et al.,
2002).
1977 An experts group nominated by the United Nations published a report on
international
standards of Accounting and Reporting for transitional corporations (Choi et al., 2002).
1978 The Council of Ministers issued the fourth directive, which applies directly to all
individual companies and deals with all aspects of the annual accounts.
1981 The IASC began a consultation with organizations, which are not members of the
IASC in
order to widen the input to international standard setting.
1983 The Seventh Directive was issued in 1983 and addresses the issue of consolidation.
(Roberts et al., 1998)
1984 The London Stock Exchange professes that listed companies not incorporated in
the U.K.
or Ireland have to comply accounts in accordance with international Accounting
Standards. (Choi et al., 2002)

Harmonization process between 1987-1993

1989 The IASC published Exposure Draft 32.
Harmonization process between 1993-1998
1995 Agreement between the International Organization of Securities Commissions and
IASC; the European Commission proposed to support the IASB initiative and work to
bring the EU accounting requirements in link with IAS.
1996 The SEC manifested that it “supports the IASC´s objective to develop, as
expeditiously as possible, Accounting Standards that could be used for preparing
financial statements that could be used in cross-border offerings.” (Choi et al., 2002:296)
Harmonization
process 1998 and onwards

2
1998; The IOSCO publicized a report ”International Disclosure Standards for Cross
Border Offerings and Initial Listings by Foreign Issuers”. (Choi et al., 2002:296); the
IASC undertook initiatives to find a new strategic alignment and organisation structure in
1998. March 2000 During a meeting in Lisbon the European Commission took a further
step in the harmonization process and proposed a regulation, which requires that all
enterprises listed on a regulated market in the European Union would have to prepare
their consolidated accounts in accordance with IAS by 2005.
2000 The IOSCO recommended its members to accept the IAS.
March 2001 EFRAC was founded in order to support the EU in his new Accounting
strategy.
2002 In 2002 the Canadian Securities Administrators proposed that certain foreign listed
companies in Canada are able to use the IASB´s Standards without reconciliation to

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APPENDICES

Appendix 1
BIBLIOGRAPHY/REFFERENCES
Achleitner, A. (2000): International-Accounting-Standards: Ein Lehrbuch zur
Arbnor, I.; Bjerke, B. (1997): Methodology for Creating Business Knowledge, Sage 2nd
edition.
Publications, Thousands Oaks, 2
Ghauri, P.; Gronhaug, K. (2002): Research Methods in Business Studies, Prentice Hall,
London.

Choi, F.; Frost C.; Gary, K. (2002): International Accounting, Prentice Hall, New Jersey,
4th edition.

WEB SITES
FASB a:
http://www.fasb.org/facts/
2009-09-26.

FASB b:
http://www.fasb.org/news/nr102902.shtml

APPENDIX 2

QUESTINNARE

2
My name is Kevin Kibet a student at DALC education KITALE CAMPUS currently 

pursuing graduate diploma in accounting and business finance, am doing a research study

relating to the module international accounting.

INSTRUCTIONS;

Kindly fill in the questions below. It may not be necessary for you to give your name. 

The information given here will be treated with confidentiality and will not be used to 

victimize you whatsoever.

The information is meant to improve the institution for the betterment of the concerned.

Please tick in the box where appropriate.

GENDER                 MALE 

                             FEMALE  

AGE                     18­25  

                              26­30  

                              30­35   

                              36­40                    

                    40 and above      

1. Harmonization of international accounting requires understanding the concept of

international accounting. In your position, how well do you understand the
meaning of international accounting?
VERY GOOD
GOOD
NOT AT ALL

2
2. International accounting plays a pivotal role in financial reporting of in any
multinational company, this involves following the developments of the IASB
closely and knowing the FRS’s that is being issued. How frequent does your
company get updated?

Very
frequently
Frequently
Not at all

3. The proposals/directions made by the IASB should be taken into account, how
well are this FRS’s being implemented?

4. There are several accounting standards regulatory boards, which one of the
following does your company subscribe most for?

Kenya govt
I.C.P.A.K
I.A.S.B

Very efficient
fair
Appendix 3 Not efficient

2
Introduction letter

Kevin Kibet

DALC education

KITALE CAMPUS

15th sept 2008

Human resource Manager

Kenya Seed Company

P.O.BOX 551

KITALE

Dear Sir/Madam

RE; RESEARCH PROJECT AT THE KENYA SEED COMPANY

I am a student at Digital Advisory Learning Center (DALC education) currently pursuing

Graduate  Diploma in Accounting and Business Finance. I would like to request for an 

opportunity to carry out a research in your organization based on the need for 

harmonization of international accounting standards in the finance department. This is in 

fulfillment of achieving of Cambridge Curriculum 

I assure you that all information acquired from and about your organization will be 

handled confidentially and solely for the purpose of this research,  attached is a 

recommendation letter from center manager.

I await a positive response from you

Yours faithfully

3
Kevin Kibet kapoi

Appendix 4

Response to introduction letter

Human Resource Manager

Kenya Seed Company

P.O.BOX 551

KITALE

18th sept 2008

Kevin Kibet

DALC Education

P.O.BOX 368

KITALE.

RE; RESEARCH PROJECT AT THE KENYA SEED COMPANY 

 Wish to inform you that you have been granted permission to carry out research project 

in the Kenya Seed company in the department of your request.

We however request you to handle all information you will acquire from the company 

3
with strict confidentiality, and keep me updated on all your findings you will receive.

I wish you all the best in all your endeavors

Yours faithfully

Human resource manager