According to Chenhall and Moers (2015), the role innovation on accounting is immense and it has positively created an impact on both the organisational, social and behavioural aspects of accounting and finance. The management accounting practices have evolved over time and it has transformed into a more complex and management control system, which includes formal and informal input along with processes and output controls required to accomplish the organisational goals and objectives with ease and effectiveness (Chenhall and Moers 2015).
The management accounting has been innovated, which has helped in using a single loop feedback and allow for comparing the actual outcomes with the budget, furthermore implement any changes and undertake corrective actions during the management of budgets. The management control system also enables managing the budget for the purpose of product planning and control, furthermore link the budget with the complimentary ways of managing control as well (Otley and Emmanuel 2013). This includes systems for capital investments, operational controls, and management of financial and non-financial data along with the evaluation of incentive systems integrated with the objective, subjective measures and informal personal control too.
Eilifsen, A. and Messier Jr, W.F., 2014. Materiality guidance of the major public accounting firms. Auditing: A Journal of Practice & Theory, 34(2), pp.3-26.
According to Eilifsen and Messier Jr (2014), the materiality theory or concept is an important aspect of innovation in accounting that not only maintained high consistency level, but also has favoured the providing of guidance for group audits along with creation of scopes for future research, development and education. There are various evidences, which showed that the materiality theory or concept enabled guiding the public accounting firms by providing information to the researchers too for determining the materiality issues, furthermore helped in managing the quantitative benchmarks with much ease and efficiency such as the income generated prior to tax, total number of assets and totally equity as well (Eilifsen and Messier Jr 2014).
Visnjic, I., Wiengarten, F. and Neely, A., 2016. Only the brave: Product innovation, service business model innovation, and their impact on performance. Journal of Product Innovation Management, 33(1), pp.36-52.
As stated by Visnjic, Wiengarten and Neely (2016), there are multiple value drivers that are associated with the strengthening of product and service innovation and ensure value creation all throughout. The technological change has strengthened the product and service innovation, which has resulted in value creation as well as filled the missing gaps that were found earlier.
The business model innovation enabled changes in the activity system design, which has also increased the level of engagement of suppliers, partners, customers and other stakeholders involved in the value creation process (Visnjic, Wiengarten and Neely 2016). The business model innovation has also evolved the entire concept of accounting and finance and ensured that more research and development activities are carried along with technological innovation achieved through cloud computing, automated marketing solutions, etc.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–2014. Management accounting research, 31, pp.45-62.
Otley (2016) argued that the contingency theory of management accounting has brought innovation and mainly focused on the mechanistic approach required to form effective mechanisms that can predict the future aspects as well as manage proper design of the optimal control system. The changes in accounting standards and financing aspects have changed over time and this has facilitated the need for bringing some innovation with the designing of control system packages and aimed at coordination of various components for getting a proper view of contingency based on the responses to various questions that are replaced with a traditional approach to accounting within the financial institutions (Otley 2016).
Common themes
From the summary of the four articles presented, it could be clearly understood that the common theme is the impact of innovation on accounting concept and also how it has influenced the business performance positively. Based on the first article, it is seen that the innovation is associated with the use of management control system for managing the budget and meet the purpose of product planning and control, furthermore link the budget with the complimentary ways of managing control as well (Madon and Krishna 2018). This includes systems for capital investments, operational controls, and management of financial and no-financial data along with the evaluation of incentive systems integrated with the objective, subjective measures and informal personal control too.
The second article also stated about something new in the accounting system by enabling a materiality theory and guide the accounting companies through information acquisition and set quantitative benchmarks properly too. This has also helped in managing the income generation properly, furthermore ensure that there are sufficient amount of assets and a good amount of equity is stored as well (Taipaleenmäki and Ikäheimo 2013). The innovation aspect has been facilitated with the use of value drivers and this has further been underpinned with the use of a business model innovation that transformed the entire activity system design for the accounting system at firms.
There are various theories and innovation concepts that are acknowledged through the assessment of these articles and all of these focused on the impact of innovation on accounting and business performance. Because of these articles, the innovation perspectives have been shed light on to maintain higher data security for the accounting records, better automation and higher reliability (Lawson et al. 2013). This is very much essential for enhancing the business performance and allow the accounting firms to achieve growth and significant changes through transformation of business processes positively and ensured value creation too.
Different themes
The articles contain different information and thus the themes are somewhat different though with a similar aim of innovating the accounting perspective to improve business performance. As stated by Chenhall and Moers (2015), the innovation role has enabled transformation of management accounting and integrated the approaches with the management control for managing a single loop feedback (Chenhall and Moers 2015). This is essential for ensuring that the budget is kept under control furthermore improve the level of capital investments and manage better operational controls to evaluate the effectiveness of incentive systems too. On the contrary, Eilifsen and Messier Jr (2014), the focus has been on the materiality concept that managed group audits and even guided the accounting firms towards transition and asset management too (Eilifsen and Messier Jr 2014).
This has also improved the business model innovation and allowed for technological innovation too such as automated marketing solutions, cloud computing, etc. too. According to Visnjic, Wiengarten and Neely (2016), the value drivers enabled innovation and it has been facilitated with the use of an effective business model innovation that not only evolved the financing and accounting concepts, but also engaged the suppliers, various stakeholders and partners to facilitate changes in the activity system design (Visnjic, Wiengarten and Neely 2016).
This helped in considering various factors such as structure, strategy and environment along with the resources and capabilities for managing the best source of complementarity and improve the level of skills, knowledge and experience within the accounting firms. On the other hand, the contingency theory was stated by Otley (2016), which facilitated the formation of a mechanistic approach, furthermore improved the design mechanisms for the control system. It also transformed the accounting and financing approaches and gain insight into the needs of customers, furthermore relate the benefits of new product innovation with the existing products through acquisition knowledge and ideas and improve services effectively too (Otley 2016).
Managerial implications
The managerial implications include the various aspects that have been learned from the four articles and it has also impacted the managers to undertake various approaches to facilitate accounting perspectives’ innovation. The various aspects of accounting and innovation have not only benefited the managers by improving their skills, knowledge and expertise, but has also improved the business performance to accomplish the business goals and achieve competitive advantage in business as well (Schniederjans and Yadav 2013).
The managers would be able to learn about the contingency theory and business model innovation, which could allow the managers of the accounting firms also to facilitate changes and meet the needs of clients. The customer oriented business model created an impact on the market performance as well as created scopes for research and development to strengthen the relationship between servitization and product innovation (Cleary and Quinn 2016). The managers have gained extensive knowledge on the cloud computing, automated marketing solutions aspects, which should further assist in enhancing the performance of accounting firms easily too.
Study limitations and future research direction
Few of the limitations include the lack of validity of research and even sometimes the articles that were found had not been authentic, which further created complexities in maintaining the valid9ty and reliability of the research. There were few times when the managers of the accounting firms and financial institutions were not present, all the same time and place, which also created limitations to draw the most effective information and data in the form of responses from them (Hall 2015).
Another major limitation was the lack of authenticity of data and information that were searched from the websites, because of which the research might have hindered. The most relevant and reliable articles have been assessed to make sure that the data and information are true to the fact and the aim of innovation to create a positive impact on the accounting is achieved properly (Lavia López and Hiebl 2014). This would also create more scopes and opportunities for facilitating the innovation process in the accounting field in the future as well.
References
Chenhall, R.H. and Moers, F., 2015. The role of innovation in the evolution of management accounting and its integration into management control. Accounting, Organizations and Society, 47, pp.1-13.
Cleary, P. and Quinn, M., 2016. Intellectual capital and business performance: An exploratory study of the impact of cloud-based accounting and finance infrastructure. Journal of Intellectual Capital, 17(2), pp.255-278.
Eilifsen, A. and Messier Jr, W.F., 2014. Materiality guidance of the major public accounting firms. Auditing: A Journal of Practice & Theory, 34(2), pp.3-26.
Hall, J.A., 2015. Information technology auditing. Cengage Learning.
Lavia López, O. and Hiebl, M.R., 2014. Management accounting in small and medium-sized enterprises: current knowledge and avenues for further research. Journal of Management Accounting Research, 27(1), pp.81-119.
Lawson, R.A., Blocher, E.J., Brewer, P.C., Cokins, G., Sorensen, J.E., Stout, D.E., Sundem, G.L., Wolcott, S.K. and Wouters, M.J., 2013. Focusing accounting curricula on students’ long-run careers: Recommendations for an integrated competency-based framework for accounting education. Issues in Accounting Education, 29(2), pp.295-317.
Madon, S. and Krishna, S., 2018. The Digital Challenge: Information Technology in the Development Context: Information Technology in the Development Context. Routledge.
Otley, D. and Emmanuel, K.M.C., 2013. Readings in accounting for management control. Springer.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–2014. Management accounting research, 31, pp.45-62.
Schniederjans, D. and Yadav, S., 2013. Successful ERP implementation: an integrative model. Business Process Management Journal, 19(2), pp.364-398.
Taipaleenmäki, J. and Ikäheimo, S., 2013. On the convergence of management accounting and financial accounting–the role of information technology in accounting change. International Journal of Accounting Information Systems, 14(4), pp.321-348.
Visnjic, I., Wiengarten, F. and Neely, A., 2016. Only the brave: Product innovation, service business model innovation, and their impact on performance. Journal of Product Innovation Management, 33(1), pp.36-52.
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