International Journal of Economy, Management and Social Sciences, 3(1) January 2014, Pages: 28-32

TI Journals

International Journal of Economy, Management and Social Sciences

ISSN
2306-7276

www.tijournals.com

Information Technology (IT) and its Role in Accounting Practice

Shirzad Amiri *1, Nikzad Amiri 2
1,2

Eslamabad-E-Gharb branch, Islamic Azad University, Eslamabad-E-Gharb, Iran.

AR TIC LE INF O

AB STR AC T

Keywords:

Today, business world is changing rapidly. Frequent investments and rapid pace of changes in
information technology (IT) are reasons for globalization. Organizations are reacting to a wide
range of ITs through different practices and with varied proportions based on opportunities and
bottlenecks faced. Objectives of this paper are to focus on effects related to organizational changes
of IT on performance of management accounting and to help knowledge recognize to what extent
the spread of IT can influence empowerment of accounting practice and function. Relationships
between IT and accounting practices are examined qualitatively and, also, effects of IT on
accounting practice and functions are measured.

Accounting information systems

Information technology
Management information systems
Financial documents

2014 Int. j. econ. manag. soc. sci. All rights reserved for TI Journals.

1.

Introduction

Today, business world is changing rapidly. Frequent investments and rapid pace of changes in IT along with increased costs of research and
development (R&D) all are reasons for globalization [1]. During past decades, role of IT has changed in relation to how corporations
manage and control their resources [2]. Organizations are reacting to a wide range of ITs through different practices and with varied
proportions based on opportunities and bottlenecks faced [3]. Decisions on foundation of IT structure need to be linked to making decisions
on designing organization of IT within organizations. As a result, IT plays a vital role in new trade, especially with respect to accounting
performance [4]. IT alters the nature of practices of business and accounting basically [5]. The first advantage of relationships between
accounting and IT is that they will be accepted gradually; without IT, accounting is not accomplished easily, and it is assumed that IT is a
base for accounting data, allowing certain distortions on performance to be inquired [6]. Therefore, IT and accounting systems will
constitute main acknowledged part of accounting research. Although it has been that IT plays an important role in accounting field, few
studies have been performed on relationships between them.
Based on review of literature previous research and studies, it is concluded that very little is known about effectiveness of advancement of
the newest todays world technologies in accounting field. Although IT clearly plays an important role in accounting and management
control [7], this relationship has not been studied sufficiently. Present researches greatly focus on relationships between investment in IT
and performance of companies [8]. In particular, such studies have tried to measure the amounts of investment in IT and of companies
productivity [9] or even the material payoff of investment in IT [10].
But experimental studies test relationship between IT and performance reported from mixed findings. And conflicting results show that
there is no direct relationship between investment in IT and performance of companies [11]. So it seems that the relationship between IT
and companies performance is more complex that what was imagined before [12]. The aim of this paper is to focus on IT effectiveness
regarding organizational changes, especially performance of management accounting. We seek to prepare profession of management
accounting for challenges outlined by IT, and to help knowledge recognize to what extent IT influences empowerment of different
accounting functions. Thus, we will make efforts to measure effectiveness of IT application in fulfilling an accountant duties.

2.

Review of research literature

Effectiveness of new IT in companies is clear and obvious. Integrated system like enterprise resource planning systems as well as Internet
keep pace with the newest transitions in companies knowledge. Some of these technologies, especially Internet, with widespread usages
have changed companies accounting procedure and structure. Before the advent of this medium (Internet), organizations typically had made
use of IT in the form of application of particular computer systems such as payment and financial reporting systems which had employed
certain operational methods and or supported given managerial processes automatically. Usually, it is argued that accounting field was the
first to use information systems[13] in that IT often relates to companies main ledger and reporting systems [14]. But continuous growth
and changes in IT area had an important effect on executive roles at all organizational levels [15]. Today, research into management
accounting and information systems such as enterprise resource planning ones. In this sense, term Information management was coined as
the simplest and shortest name for management of IT usage in organizations.
* Corresponding author.
Email address: shirzadamiri@gmail.com

Information Technology (IT) and its Role in Accounting Practice

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Internati onal Jour nal of Economy, Mana ge ment and Social Sciences , 3(1) January 2014

New information and communication technologies (ICTs) represent a course of development and display an important part of formal
information systems via computer information. Possibility of sharing and exchanging information among complexities can result in
creation of an informal cognitive network such as electronic thought exchange forum and strengthen relationships with economic partners
(e.g. idea and knowledge exchange). However, it seems that electronic information is agonized by its own abstract and artificial features as
well as by more trust and often become dependent on the least inhuman connections [16]. It is unrealistic to think that an information
system can always provide decision-markers with relevant and timely information. Decision-markers must know what information they
need to move ahead. By definition, to solve complex problems is impossible when such predictions are not made [17]. However, IT
provides invaluable aid in processing information needed by decision-making process [18].
Presently, accountants are potentially able to create added values for economic units, changing the society. Most traditional accounting
functions in relation to record and process accounting interactions can be automated reliably. In this case, therefore, accountants provide
organization with low extra added values. Instead, currently, the value of an accountant is reflected at higher level of critical thinking skills
such as design of business processes, developing electronic business (e-business) models, and integrating strategic knowledge. Rapid
evolution of IT represents potential opportunities and risks to accountants. By avoiding potential risks, accountants can use new IT to
improve their intra organizational roles. Prior to 1960s, an accountant was perceived as a bookkeeper with main responsibility for ensuring
that papers and documents were kept accurately, investing his efforts against shortage of documents. During 1960s, an accountant was
perceived as a bookkeeper with main responsibility for ensuring that papers and documents were kept accurately, investing his efforts
against shortage of documents. During 1960s, accountants were no longer able to respond to management needs for reporting companies
activities. Computers represented a more efficient way to keep documents and books, leading to faster access of accountants to financial
information for reporting purposes. In next stage, 1970s brought about development of IT and increased demands of management for
information on companies. Management information systems (MISs) were developed to support new roles of accountants. However, new
MISs were generating whole information with no regard to its relevance so that accountants had to interpret all information, as a result of
which they faced the problem with high volume of additional information. So we face a paradox: There is a huge amount of information
available making access to useful and relevant information when necessary too difficult [19].
Traditionally, information systems (ISs) research has focused on study of information process about security of computer systems as well
as on developing new systems. To discard such traditional research is essential in order to study relationships between IT and accounting.
Even those studies such relationships in terms of some features did not arrive at a conclusion due to focusing on old tools. Therefore, if we
want to be enabled to understand emerging technologies and to predict their effects on accounting, we need to understand effects of the
most update technologies on accounting [20].

3.

Experimental study

Philosophically fundamental assumptions on the nature of reality, knowledge, and human behaviors are the basis for any research,
influencing conception of acceptable research methods [21]. In recent years, management accounting research has been done in domain of
verificational and functional paradigms, indicating increased recognition of need for quantitatively complementary methods with one more
or less quality element such as case study-based research [22]. Such a complementary approach requires that elements of qualitative case
studies to be combined with those of quantitative investigation methods by relying on tri-angulation technique [23]. In present study, a
mixed approach, use of which has been recommended for such studies generally, has been used [24]. Experimental studies are defined as
some research which uses qualitative and quantitative data as a basis to examine research questions [25]. In order to gather data, some
methods like experiments, investigations, and case studies were assessed [26]. On the basis of our study aims and of successfully
confronting challenges identified by literature review, it is necessary for researchers to do more coherent research in this study [27], this
study uses a combination of qualitative/ quantitative data, with research question being: Has development of IT changed the structure of
accountants' functions?
Multiple conditions are considered below. This phase of study consists of face-to-face interviews within six manufacturing companies
(table 1).
Table 1. Interviews
Interviews no./ Functional domains
Study case
Finance/Accounting

Sale/ Marketing

Manufacture

1
2
3
4
5
6

2
1
1
1
1
1

1
0
1
1
0
0

2
1
1
1
1
1

Manufacture Number
of Interviews
5
2
3
3
2
2

Total

17

Shirzad Amiri and Nikzad Amiri

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Int ernational Journal of Economy, Mana ge ment and Soci al Sci ences , 3(1) January 2014

Methodologically, we considered 6 eligible samples. Case research supports a valid research strategy in MISs, which is less advocated in
accounting field. However, case study research is more common in management accounting than in other accounting domains.
Typically, decision- making on whether case study approach be used or not is a strategic decision pertaining to the research scale and
domain [28]. Our research question relates to a comparative analysis on before and after new technologies conditions in order to describe
managers' attitudes toward their accessibility. And qualitative analysis focuses on case studies given that they need to be explained in a real
situation due to their application under conditions being intervened [29]. This problem is organized by using interview and direct
observation of activity methods which are considered main procedures to gather data for research. In order to achieve study objectives, we
tried to gather accounting documents and papers which are used in decision- making processes. Documents can be regarded as a data
source we used to interpret their contents by performing interviews. So the main sours of data was interviews, analysis of papers and
documents prepared via details and results of the project. We used papers and documents to prove and clarify data gathered through
interviews. A 34-hour set of interviews was performed during 3 months.

4.

Main results

During research literature review, accounting was criticized more: (a) overperfectionism on the part of some of accountants, which made
them face difficulties in having access to information timely; (b) to propose too much data, which was very difficult to understand; (c)
conceptual disagreement between accountants and managers, with the former paying too much attention to formal aspects; (d) paying low
attention to more dynamic accounting, which is more suitable for managers' needs; and (e) other managers' indifference to accounting
services, which were viewed as a merely financial and legal requirement. Given such criticisms, managers are willing to embark on the
formulation of accounting documentation themselves in order to understand data better and gain it faster even if it is vague.
In case studies, most accounting documents used by marketing and operational managers were prepared by accounting department (tables
2 and 3).
Table 2. Documents used by marking managers.
Documents

Form:

Were documents prepared by the same

department?

Study sample 1
List of main ledger
Activity reports- strategic business unit
Annual activity reports
Business programmes

Accounting information system

Financial manager
Financial manager
Financial manager

No
Yes
Yes
Yes

Study sample 3
Analysis of customers profitability

Accounting information system

No
No

Sale daybook
Fund out of company resources

Accounting information system

Outside the company

No
No

Internal fund

Management

Yes

Study sample 4
Analysis of domestic market sale
Domestic markets sale by sale group

Accounting department
Accounting department

No
No

Analysis of sale by markets and products

Analysis of sale/cost price-to fix selling price
Analysis of sale by markets

Accounting department
Accounting department
Accounting department

No
No
No

Costs of the lack of foreign markets

Sold product inventory management

No

However, for manufacturing unit, many of documents and papers were prepared by the same unit. Collected data indicated that most
documents and papers used on accounting information were prepared by respective units, being always supported with computers. In some
cases where managers were willing to perform documentation themselves, some differences were generated between documents prepared
by accounting departments. This is not a new situation and needs to be taken into account.
As for analysis of the aims of using documents and papers, it can be said that accounting documents and papers primarily help to make
predictions and to define corrective actions. Accounting documents and papers were used to understand companies status quo, to identify
problems, and, then, to solve problems. In addition, some of documents and paper found were detailed because feedback needed to be given
well in order for all coworkers to be able to apply self-control by comparing expectations with results [30]. However, detailed documents
and papers were not always complemented really for this purpose. Just as Bronz's study [31] showed, this study found that decentralization
of functions is centered on accounting department traditionally.

Information Technology (IT) and its Role in Accounting Practice

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Internati onal Jour nal of Economy, Mana ge ment and Social Sciences , 3(1) January 2014

Table 3. Documents used by operational managers.

5.

Documents

Form:

Were documents prepared

by the same department?

Study sample 1
Supplies daybook
Orders record
Line order valuation
Work sheet of line order price

Accounting department
Purchase manager
Financial manager
Financial manager

No
Yes
Yes
Yes

Customer account report

Study sample 1

Accounting department
Accounting information system

No
No

List of main ledger

Line order valuation

Accounting information system

Accounting information system

No
No

Salary and wage reports

Financial manager

Yes

Sale daybook
Internal report of activities

Accounting information system

Financial manager

No
Yes

Business programmes strategic business unit

Study sample 2
Profit-loss summary

Financial manager

Yes

Accounting department

No

Industry proportions
Sale forecasts
Study sample 4
Inventory status file
Line order valuation
Contracts audition

Quality manager
Forecast department

Yes
Yes

Sold product inventory management

Administrative unit
Administrative unit

Yes
No
No

Inventory statement
Study sample 5

Headquarters units

Yes

Line order valuation

Equipment application reports

Headquarters units
Headquarters units

Yes
Yes

Orders fund
Study sample 6
Balance sheet
Profit-loss list
Reports of production cost by manufacturing
Analysis of cost price activity volume/profits
Salary and wage reports
Report of deviation analysis

Headquarters units

Yes

Accounting department
Accounting department
Accounting department
Headquarters units
Headquarters units
Headquarters units

No
No
No
Yes
Yes
Yes

Gross profit and price allocation by manufacturing

unit

Accounting department

No

Conclusions

Study companies have invested in IT at a high level. Sale and marketing departments were using laptops more considerably than other
units were. It was because of the nature of their activities, especially more need for working outside companies.
Collected data indicated that most documents and papers used on accounting information were prepared by respective units, being almost
always Supported with comuters.as for analysis of aims of using documents and papers ,it can be said that accounting documents and
papers primarily help to make predictions and to define corrective actions. Accounting documents and papers were used to understand
companies status quo ,to identify problems , and , then, to solve problems. Ultimately, this paper found that decentralization of function is
centered on accounting department traditionally. Future research will need to future study relationships between it and accounting. Today,
accounting and it are inseparable. To make use of advanced management accounting techniques by accountants depends on the existence of
it obviously. Options of fabricated configuration are robust in implementation of it. Advantages of it based accounting will be revealed
only with non-specific methods and after a prolonged implementation.

Shirzad Amiri and Nikzad Amiri

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Int ernational Journal of Economy, Mana ge ment and Soci al Sci ences , 3(1) January 2014

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