The role of the innovation in accounting is huge as it gives a company an effective framework regarding governing symbol which facilitates to achieve success in business. The framework of accounting keeps huge importance in the business that lead organization in the long term growth that helps in attaining the process of innovation. According to Oncioiu and Stanciu, (2017), the main focus of the innovation is on the financial aspects like the reaction of the customer regarding the products and the reaction of the media. It considers that reaction as a tool in order to create their product in more qualitative way with the help of business model of accounting. The use of management accounting prefer by many businesses in the context of planning and budgeting the business. It shows the importance of the management accounting that facilitate in providing new business model and the way to make decision making process to the entrepreneurs. It has been analyzed that the majority of small business is tending to fail due to lack of planning, marketing knowledge as well as absence in managerial skills. There is another issue that small businesses use the external accountants in the form of the sources of professional advisory services in order to ready the reports of financial but at the same times the manager of the organization do not understand the figure from the report. Along with that the manager is also not aware of the importance of accounting along with the financial reporting needs for decision making purposes. It is the major reason behind to not carry out the accounting functions internally due to lack of knowledge.
As per Haiza Muhammad Zawawi & Hoque, (2010), the concept of activity based costing are vital for the purpose of acquiring trademarks that facilitates in using rapid sell them in various ways to new groups. Activity based accounting helps business to generate new products and things which can be calculated by this process in an efficient manner in which all the labor cost, raw material cost and other indirect costs included. The research will evaluate the topic of innovation in accounting business and its impact on the productivity of the business. Research problem will be elaborated in an effective way in order to define the concern of accounting firm due to innovation and what issues are going on due to lack of innovation. The role of the activity based costing will be analyzed because it helps in reducing the expenses so that business person can sell the product with reasonable prices. The problem statement will describe the issue which is facing by many accounting organizations due to lack of knowledge. Along with that the objectives will be made in order to continue the research with firm aim. The literature review section will be helpful in describing the topic in the view of other authors. At last, research methodology will be considered in which the process of data collection will be reflected.
The main interest feature in the enlargement of management accounting practices is that they appear to meet within the industrialised areas of the world. It is necessary for the management accounting to bring new ideas and it is the concepts like ABC are not applicable in Anglo American phenomenon, but are extensively utilized in Germany and Japan. It has been found that the major issue with the accounting management is that the management accounting is a mix between finance, accounting and management and lack of knowledge about one of them any lead business in to adverse situation.
It has been analyzed with the help of the Abouzeedan, (2011), that the concept of activity based costing (ABC) is integral in the management accounting as it facilitates in calculating the success of the new innovation products and things. All unnecessary expenses can be deducted with the help of this accounting system by which a person can sell the products in a reasonable price which can be the major cause of attracting customer towards the innovative product. Likewise, the use of cash flow analysis, financial ratio analysis and other benchmark analysis aid to analyze the difference between various kinds of products. The role of the innovation in the accounting determines the procedure of evaluation that helps to elaborate the progress of innovation like customer confinement and its features that is why it is considered as the vital tool to control over the management. it has apparent that effective use of accounting data has the ability to give better impact on business in order to make better planning in terms of cash and sales by research.
The objective of the research is to draw attention of people towards the importance of accosting based system and required innovation in the system. By considering the topic of the research, the objectives of this research is mentioned below:
There is an innovation for bringing change in the management that is fiscal bookkeeping system that facilitates in keeping record and maintains the transactions of the business in the term of accounting standards. It has been analyzed that the role of the accounting system is huge in every business as it helps in running the operation smoothly. That is why it is required for the business to have the knowledge regarding techniques in order to increase maximum profits along with that, this technique can be developed from accounting techniques. Similar, the statement of the income, cash flow and balance sheet can facilitate in showing the situation of position of the business to show the loss and profit. According to Oncioiu and Stanciu, (2017), the role of the entities is entirely different with the resources of the belongings but it can be elaborated as the ecosystems. Technology has handled to rebuild as well as split in a huge manner so that the business can earn more in today’s business.
According to Adir and Tiago 2017, the utilization of bookkeeping advancements could be simple approach to figure the aggregate cost of the business inside a brief span period. So with the assistance of an action based costing framework, we can without much of a stretch compute the aggregate cost of the business and in addition income discovers the aggregate money inflows and outpourings inside the specific day and age (Cassar, Ittner and Cavalluzzo, 2015). In this way the article discusses the way toward utilizing new bookkeeping advancements in business and its impacts on business. It has been analyzed that the main focus of this article is on the raw variables of the related analysis that compare with various variable to recognize the good business model. According to Dagiliene and Dagiliene, (2014), the use of advance technologies help in bringing the automation of the accounting firm services which aim is to determine their results in phrase of the services that are provided in a sophisticated manner.
Accounting is a service activity. It is critical as it gives quantitative data of money related nature to different partners which are expected to be utilized in settling on monetary choice. These partners incorporate speculators, administration, government, providers, lenders, controllers and so forth. The role of the business accounting is huge in giving a huge contribution in short term and long term business decisions. According to Haiza Muhammad Zawawi & Hoque, (2010), the major functions of the management is to attain the final set objective of the company through managing the number of activities of various kinds of departments. It has been analyzed that the role of the accounting is huge in accounting in different kind of activities as it helps in management as well to adjust the purchase with sales and expenditure with income. The main function of the modern management are controlling as well as planning that is why the role of the controlling is integral in order to complete the activities as per the plan. Accounting has a significant role in managing and controlling various activities within the business that is why it is required for the management of the company to bring innovation in the accounting (Ionica & Alina, 2017).
Mid 2000 saw a progression of accounting frauds in United States including significant organizations like WorldCom, Enron and some different substances and evaluating firm Arthur Andersen. In these cases, autonomous reviewer neglected to report illegal accounting practices. Such accounting fraud and scandals brought about fall of Arthur Andersen. Post such embarrassment Sarbanes and Oxley Act was presented in United States of America. This demonstration needs top administration of an undertaking to affirm the accuracy of financial statements, auditor’s independence and formation of Public Company Accounting Oversight Board (PCAOB) among other things (Parker, 2012).
By taking consideration of above example, it has been found that there is another example of sam kind of accounting fraud in India in 2008 when Satyam Computer MD publicly acknowledged that he along with top administration and self-determining auditors had exaggerated books of accounts of the company over several years (Songini and Gnan, 2015).
Khan, Aboud and Faisal, (2018), supported the topic and stated that the role of the accounting play an integral role in small business as it facilitates in providing the performance of the business. Appropriate business accounting guarantees appropriate account our liabilities which should be paid inside the authorized course of events. This entails Income tax pension fund, sales tax, VAT. Convenient instalment of liabilities causes undertakings to be statutory consistent. It has been found that the small businesses are facing huge number of issues in managing accounting system (Yadav, 2016). These challenges are entailed limited capacity for knowledge acquisition, low productivity, intensified global competition, limited access to finance and capital, competition from other producers and technology management. It has been evaluated that there are major four general challenges which are faced by small organization that is management development in the context of the leadership, business development in the context of the strategy and organizational development in the context of the infrastructure. It shall be noted that small business need to operate in four stages of development before reaching the stage at the time of competing globally (Christian and Trond,2005). These stages are covered start up stage in which the business model will be applied; fast growth stage is the second stage in which the business is developing for survival. Sustainable stage is another stage where productivity can be supported and last stage is the global enterprise where the business persists looking for different chances to support growth.
It has been analyzed by taking consideration if the article of Celia,Maria,and Raul,( 2016), that the introduction of the new technologies has ended to generate structural changes in organization and these impact the cost of the institutions and the reorganization of their processes related to the productive which is liable to make them more competitive. It has been found that it is not necessary that the point of view of all researchers is same towards technological innovation in accounting; some of them consider the impacts neutral. According to Abouzeedan, (2011), the role of the technology in the accounting is huge as it certainly change the face of accounting over the years, but it would not be easy for the management to recognize its impacts in the form of negative and positive (Accounting.com, 2018). Moreover, according to that author, it has been analyzed that the some impacts has not feature of negative and positive, but there are some alterations that increase the demand for the profession. It has been observed by Dodgson, (2018) that only affirmative bonding between the level of technology and the extent of technology and the amount of information has been produced by information system management. It has been evaluated that the technology put huge impacts over the organization, mainly in the reliability and agility of the information systems which is utilized in accounting organizations. Hill, (2017), stated that the clear benefit of technology is the utilization of various tools that allow accountants to implement their functions in a huge way. This global factor of technology contributes in the competitiveness of the accounting, as technological advances show more efficiency and speed for accounting services (Giaoutzi, Storey and Nijkamp, 2016).
According to Oncioiu and Stanciu,(2017), taxes are unavoidable and it is entirely dependent on the nature of the business. Wrong interpretation can lead the business into adverse situation as submission of wrong documentation can get the company into trouble position which can be extremely costly related to the penalties and fees. It shows that the importance of the accounting in the business is huge as it helps in preparing the needed tax documentation along with that it can give business vital information regarding the health of the business (Qian and Haynes, 2014). It has been found that the competitive environment needs accounting companies to be efficient of developing value for the customers and of dividing themselves from their competitors, by the formulation of a well-structured business strategy (Adir and Tiago Wickstrom, 2014). It has been found that this business strategy would be helpful in supporting the various factors such as organizational designs and effective technologies that give reliable as well as useful information.
It is the section in which the detailed understanding regarding the methods, tools and techniques to carry out the research study in organized ways. The role of the research methodology is significant in collecting the information regarding the topic.
The type of the research entails three kinds that helps researcher to find out the design of a research project. Descriptive, exploratory and causal are three kinds of research designs that facilitates to make the research in an efficient way. The initial research is represented by the exploratory research in which researcher get knowledge regarding the research issues by taking help of the developed hypothesis. The role of the descriptive research design helps researcher to gain depth understanding and knowledge regarding the research issue through elaborating the phenomena. On the other hand the main focus of the casual research on the reason and effect bonding between variables.
The use of both exploratory as well as descriptive research designs will be considered in order to bring the information regarding the research. The use of exploratory research design will be considered to collect in-depth data regarding the importance of accounting innovation in small business. On the other hand, descriptive design has significant role in having knowledge regarding the characteristics of individuals. The role of the research design is helped in gathering the perception and views of participants for the purpose to meet the aims and response the research questions. The role of the casual research design is not taken into consideration due to not required information to develop cause-and-effect relationship between different variables.
The role of the research approach is vital in justifying the selected research methods and design. With the help of this, researcher would be able to reflect the data in more systematic manner. Inductive and deductive are two major approaches that help researcher to rationalize the use of the specific data collection and analysis method for research paper. That is why; it is required for the researcher to have an effective knowledge regarding these methods in a research. In the context of the inductive approach, the use of interpretivism philosophy will be considered while the use of positivism philosophy will be considered in the deductive approach. It is required for the researcher to consider the various kinds of data as well as information either accept or reject the hypothesis. The role of the inductive approach is used in this research over the deductive approach as this research helps the researcher to attain an effective knowledge on the research issue. The conclusion will be drawn with an effective manner by taking help of this research as it will increase the validity and reliability of research outcomes. On the other hand, the deductive approach is not suitable due to any development of hypothesis to answer the research questions.
Data collection is an effective technique to the collection of data in systematic way from various sources in order to meet the objectives. The use of primary and secondary sources is considered for this research to enhance the knowledge of the researcher regarding the research issue, which would be effective in drawing conclusion for the research. The primary data has the feature of fresh data which is collected by the researcher in very first time (Quinlan, Babin, Carr and Griffin, 2019). Researcher will use survey, interview, group discussion, question are and case study to gather the information in the form of the primary data.
Secondary data is gathered by different researchers or agencies to meet the objectives of the companies. It has been found that the secondary data is considered as the published data in most of the times which can access by the researcher for the purpose of meeting the objectives (Çöltekin, 2015). Secondary data can be collected with the help of the journals, books, newspaper, magazines and articles.
The researcher will select both method for this research study in which the use of the primary data collection will effective to create the direct interaction with the employee for the purpose of knowing their views regarding the research issue. detail information regarding research issue will be generated with the help of the secondary sources in which the researcher will be enable to gather the data from various kind of resources like journals, articles and books in order to develop reliability of research results. In the context of the primary data, face to face interview and survey through questionnaire will be considered to accumulate the accurate information. This method facilitated the researcher to gather the perception of the participants regarding to the innovation in accounting in small business (Silverman, 2018).
Sampling strategy considered as the process in which the selection of suitable participants for the research study for the purpose to give response of the research questions in order to complete the research. It has been found that there are two kinds of sampling strategy such as probability and non-probability sampling strategy which facilitates researcher to opt precise observation from distinct population. In the context of the probability sampling strategy, it is the strategy which will be used in the research in the form of the random selection of the participants. It is the sampling methods in which the random sampling technique will be chosen for this research. For this research, 70 employees will be selected from accounting firm for the survey questionnaire. Face to face interview will be conducted with them so that researcher will interact with employee and understand the face expression and real experience of an individual in the accounting firms. It would be helpful for the researcher to understand the perception of selected employee about the importance of accounting and innovation in the same.
Data analysis is a process to evaluate the collected data and information for the purpose to generate the valid and reliable outcomes regarding research concerns. It has been analyzed that there are various kinds of data analysis methods such as statistical analysis, thematic analysis and conversational analysis (Liophanich, 2014). Statistical analysis method will be used for this research by which the researcher will be able to present the descriptive statistics of the data involving cross tabulation, graphs and also interpret the meaning behind the responses of the participants. MS-Excel and SPSS software will be used for this research to improve an effective understanding about the responses and findings regarding the importance of accounting and innovation in small business.
The meaning of ethic is associated with finishing of each task in ethical way by taking consideration of the compliance associated with the research. This kind of activity helps researcher to adopt an appropriate behaviour for the aim to accomplish the research in a systematic way. However, this research can face the ethical issue in the context of the plagiarism and copyright act’s violation related to the secondary data collection. These issues can be eliminated by providing entire credit to the researchers in which they will be liable to insert in-text citation with genuine references. Proper appointment will be taken by the researcher to gather the collecting primary data regarding the research issue. With the help of this, the researcher will be enable to gather data and information from the participants in depth way. Along with that the researcher will inform about the policies to the participants in which researcher will make sure that the personal information of the participants will not be revealed during and after the research.
Conclusion
In the limelight of above discussion, it can be concluded that the role of the accounting in small business keeps huge importance as it helps in increasing the productivity of the business as well as employees. the role of the accounting based activities are elaborated in which it defines that the Activity based accounting helps business to generate new products and things which can be calculated by this process in an efficient manner in which all the labour cost, raw material cost and other indirect costs included. Research methodology and design has been elaborated under this research in order to increase the understanding about from where data has been collected to accomplish the task.
References
Abouzeedan, A., 2011. SME performance and its relationship to innovation (Doctoral dissertation, Linköping University Electronic Press). Available [online]: https://liu.diva-portal.org/smash/get/diva2:447516/FULLTEXT01.pdf. Accessed on 18th Sept 2018.
Accounting.com, 2018. The Importance of Accounting for Small Businesses. Available [online] https://www.accounting.com/resources/accounting-basics-small-business/. Accessed on 18th Sept 2018.
Adir and Tiago Wickstrom, Z.A, 2014. The impacts of Technological innovations on accounting firms in Rio Grande Do Sal: factor analysis’, journal of education and research in accounting, Vol.8, P.39-53.
Cassar, G., Ittner, C.D. and Cavalluzzo, K.S., 2015. Alternative information sources and information asymmetry reduction: Evidence from small business debt. Journal of Accounting and Economics, 59(2-3), pp.242-263.
Celia,Maria,and Raul,2016. Innovation in Accounting Tasks: Empirical study in two professional groups,Business theory and practice,Vol 17(3),p.270-279.qssq4
Christian and Trond,2005. Building and Diffusion ofmanagement accounting innovations’,Journal of management accounting research,Vol.16,p.1-20.
Çöltekin, A., 2015. Mix well before use: Understanding the key ingredients of user studies. In ICC2015 Workshop on “Envisioning the Future of Cartographic Research.
Dagiliene, R., and Dagiliene, L. 2014. Accounting-based valuation of innovation: challenges and perspectives. Procedia-Social and Behavioral Sciences, 156, 589-593.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and internationalization in innovation. Routledge.
Giaoutzi, M., Storey, D.J. and Nijkamp, P., 2016. Small and medium size enterprises and regional development. Routledge.
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Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function. Macmillan International Higher Education.
Ionica, O., and Alina, S. 2017. The Impact of Management Accounting Innovations on Millennials Business. Ovidius University Annals, Economic Sciences Series, 17(1), 568-572.
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Liophanich, C., 2014. An Investigation of Knowledge Management Implementation: Multiple Case Study in Mobile Telecommunication Industry. Journal of Industrial and Intelligent Information Vol, 2(2).
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Parker, L.D., 2012. Qualitative management accounting research: Assessing deliverables and relevance. Critical perspectives on accounting, 23(1), pp.54-70.
Qian, H. and Haynes, K.E., 2014. Beyond innovation: the Small Business Innovation Research program as entrepreneurship policy. The Journal of Technology Transfer, 39(4), pp.524-543.
Quinlan, C., Babin, B., Carr, J. and Griffin, M., 2019. Business research methods. South Western Cengage.
Silverman, B.W., 2018. Density estimation for statistics and data analysis. Routledge.
Songini, L. and Gnan, L., 2015. Family involvement and agency cost control mechanisms in family small and medium?sized enterprises. Journal of Small Business Management, 53(3), pp.748-779.
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