Page 70 - CITN 2017 Journal

1. INTRODUCTION
A company's competitiveness depends on preserving and enhancing the different types of
capital in order to deliver the best of goods and services, while concurrently minimizing
the amount of negative externalities generated in the process. This is attainable when the
mechanisms to improve long-term financial performance are put in place. Again the level
of improvement in long-term financial performance is dependent on how critical each
form of capital is for in a particular company and the need for accurate reporting of the
information. According to the American Accounting Association (AAA 2001) it is
important for corporate organizations to compare financial information from period to
period, provide useful information to investors, creditors, and other users of the financial
statements. Therefore, if an item is usually material, but occasionally immaterial, then
comparability should override the materiality concept and the immaterial item should be
consistently reported for comparability purposes.

In the current economic and financial crisis, the need to identify the factors that generate
success and; the ways in which it can be measured is of utmost importance in every
organization. Performance indicators are designed to provide information on the quality of
processes performed within an organization offering support to achieve the objectives on
time and within a predetermined budget. However in other to fulfill this role it is necessary
to understand their full and proper use. No business scenario can guarantee economic
stability, and the ability to control organizational performance during a financial crisis
becomes more difficult. An organization in difficulty must be able to identify those
measures that enable it to respond effectively to new problems and adapt as quickly as
possible to changes in the business sector.

People working together in groups to achieve set goals must have some roles to play. Thus,
these roles have to be defined and structured by someone or group of people who want to
make sure that people contribute in a specific way to group effort. Controlling, for
example, budget for expense, is the measuring and correcting of activities of subordinates
to ensure that events conform to plans. It measures performance against goals and plans,
shows where negative deviations exist, and, by putting in motion actions to correct
deviations helps to ensure accomplishment of plans. Although planning must precede
controlling, plans are not self-achieving. Plans act as guide to managers in the use of
resources towards accomplishing specific goals while activities are checked to determine
whether they conform tothe plans. The compelling of events to conform to plans means
locating the person(s)who are responsible for results that differ from planned action and
then taking the necessary steps to improve performance.

Thus, for organizations to improve they should be able to measure their performance,
which implies that they should be able to quantify their activities. It is clear that
improvement in performance can result from measuring it. Thus, measurement is the first
step in improvement. However, while measuring is the process of quantification, its effect
is to stimulate positive action. Managers should be aware that almost all measures have
negative consequences if they are used incorrectly or in the wrong situation. Managers
have to study the environmental conditions and analyze the potential negative
consequences before adopting performance measures. The processing of attainment of this
goal and how it is used by the managers as decision-makers, are seen to be a key element of
organizational effectiveness and the success of business objectives. Although the
conventional performance measurement systems generally do not communicate or explain
the factors that drive performance rather, once the drivers of performance can be identified
performance achievement would be easier (Healy, Serafeim & Lane ;2011).
63