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Information Technology roles in Accounting Tasks – A Multiple-case Study

Article  in  International Journal of Trade Economics and Finance · January 2010

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 International Journal of Trade, Economics and Finance, Vol. 1, No. 1, June, 2010
2010-023X

Information Technology roles in Accounting

Tasks – A Multiple-case Study
Maria do Céu Gaspar Alves

accounting, the relationship between IT and accounting has

Abstract—Nowadays the business world is changing at a been studied relatively little” (Granlund, 2007:3).
faster and faster pace. The reasons given for this is globalization, Based on a literature review of earlier research and
highs information technology (IT) investments and the rapid empirical studies we conclude that there is a very limited
pace of technological change. Organizations are responding in
different ways and at different rates to the wide range of IT
knowledge about the impact of the most recent IT
based opportunities and pressures. The purpose of this paper is developments in the accounting field (Granlund, 2007).
to focus on the effects of IT related organizational changes on Although IT clearly plays an important role in accounting
the management accounting function and to contribute to the (Efendi et al., 2006) and management control (Dechow et al.,
body of knowledge about to what extent IT affects the ability to 2007), this relationship has not been studied enough. Existing
solve accounting tasks. The relationship between IT and research has focused mostly on the relation between IT
accounting practices was investigated qualitatively using six
case studies and we will measure the impact of IT on
investment and company performance (Melville et al., 2004;
accountants’ tasks. The findings suggest a tendency for change Huang et al., 2006), notably in studies that attempt to
and the decentralization of accounting tasks. measure the level of IT investment and company productivity
(Dedrick et al., 2003) or even the financial return on IT
Index Terms—Accounting, Accounting Information Systems, investments (Dehning & Richardson, 2002). But, empirical
Financial Documents, Information Technology, Management studies examining the relationship between IT and
Information System. performance have reported mixed findings (Dedrick et al.,
2003; Melville et al., 2004). As well as conflicting results
suggest that there is no direct relationship between IT
I. INTRODUCTION
investments and firm performance (Yongmei et al., 2008). So,
Nowadays the business world is changing at a faster and the relationship between IT and firm performance seems to
faster pace. The reasons given for this is globalization, highs be more complex than previously theorized (Stoel &
IT investments and the rapid pace of technological change in Muhanna, 2009).
combination with escalating costs of research and The purpose of this paper is to focus specifically on the
development (Frishamar, 2002). The role of information effects of IT related organizational changes on the
technology (IT) has shifted over the last decades (Teng & management accounting function. We will seek to prepare
Calhoun, 1996) to become an important part of how the management accounting profession for the challenges
companies manage and control their resources. which IT will pose, and to contribute to the body of
Organizations are responding in different ways and at knowledge about to what extent IT affects the ability to solve
different rates to the wide range of IT based opportunities and different accounting tasks. Hence, we will try to measure the
pressures (Johnson et al., 1986). Decisions regarding the impact of IT usage on accountant tasks.
building of technical IT architecture should be closely linked
to decisions made in designing the IT organisation that
should be linked to the organisational design of the company II. LITERATURE REVIEW
itself. As a result, “Information technology plays a critical
The impact of modern information technologies in
role in modern business, especially regarding the accounting
companies is broad and manifested in the most varied ways.
function” (Efendi et al, 2006:117). IT have radically
Integrated systems, such as ERP systems, Internet, Intranet,
transformed the nature of business and accounting practice
and so on, walk hand in hand with the most recent
(Hunton, 2002). “The initial interest in the relationships
developments in company know-how. Some of these
between accounting and information technology was
technologies, with their widespread use, especially the
gradually taken for granted; accounting was simply not
Internet, have altered the way companies work and their
possible without information technology, and the assumption
accounting organization (Granlund, 2007). “Prior to the
appears to be that information technology is the platform for
emergence of this environment, the presence of IT in the
accounting data and it allow certain sophisticated queries to
organization has typically taken the form of specific
be performed” (Granlund & Mouritsen, 2003:78). Thus, IT
computer application systems, such as accounts payable and
and accounting systems would be a major component of
financial reporting systems, which either automate specific
accounting research. “While it is widely acknowledged that
operational procedures or support certain managerial
IT plays an important role (and increasingly so) in the field of
processes” (Teng & Calhoun, 1996:674). It is usually argued
that the first use of an information system was in relation to
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2010-023X

accounting (Rom & Rohde, 2007), because often IT was information about the business. Management information
about the firm’s financial ledgers and reporting systems systems were developed to support the new accountant’s role.
(Granlund & Mouritsen, 2003). But, “the constantly growing However, the new management information systems
and changing field of information technology has a generated all the information without regard to its relevance
significant impact on the roles of executives at all levels of and the accountant was forced to become the interpreter of
business organizations” (Crescenzi & Kocher, 1984:34). information (Crescenzi & Kocher, 1984), and to deal with the
Nowadays research within management accounting and problem of information overload. So we have a “paradoxical
information systems is coming alive with the advent of situation that, although there is an abundance of information
integrated information systems such as enterprise resource available, it is often difficult to obtain useful, relevant
planning (ERP) systems (Chien & Tsaur, 2007). In this information when it is needed” (Edmunds & Morris,
context,“information management has emerged as the most 2000:17).
common brief name for the management of the use of Traditionally, research in Information Systems has
information technology in an organization” (Frishamar, focused on the study of information processing, on computer
2002:149). systems security and on the development of new systems;
The new information and communication technologies leaving for study the relationship between IT and accounting.
represent a vector of development and an important Even those studies that have, in some way, covered this
component of the formal information system is represented relationship fall short due to their focus on outdated tools.
by computerised information. The possibilities for sharing Also research on management accounting and integrated
and exchanging information among those involved may lead information systems has evolved across a number of different
to informal cognitive networks, like electronic discussion lines of research. Some place heavier emphasis on the
boards, and can reinforce relationships with economic management accounting side, while others emphasise the
partners (idea and knowledge exchanges, for example). information systems side (Rom & Rohde, 2007:41).
However, electronic information seems to continue to suffer Nonetheless, to be able to understand emerging technologies
from its abstract and artificial character and from the greater and anticipate their effects on accounting, we must begin to
trust, often attributed to less impersonal communications understand the effects of the most up-to-date technologies
(McLeod et al., 1984). And, it is unrealistic to think that an (Hopwood, 1987).
information system, whatever it may be, can always supply
the decision maker with relevant and timely information. The
decision maker would have to know in advance which III. EMPIRICAL STUDY
information would be needed, when this type of prediction is, Fundamental philosophical assumptions about the nature
by definition, impossible within complex problem solving of reality, knowledge and human behaviour underlie any
(Simon, 1945). Nevertheless, IT represents a precious research and influence the researcher's notion of acceptable
assistance in the search for and treatment of information research methods (Chua 1986, Hopper & Powell 1985). “In
needed in the decision making process (Connor & recent years, management accounting research conducted
Martinsons, 2006). within the positivist and functionalist paradigms has shown
Currently, the manner in which accountants can potentially increasing recognition of the need to complement established
add value to economic entities and society is undergoing a quantitative methods with a greater or lesser element of
metamorphosis. Many traditional accounting tasks dealing qualitative, case study-based research” (Modell, 2005:232).
with recording and processing of accounting transactions can Calls for such a complementary approach, relying on method
be reliably automated. Thus, accountants add little triangulation, combining elements of qualitative case study
incremental value to organizations in this regard anymore. and quantitative survey methods, have been made (Shield,
Rather, an accountant's worth is now reflected in 1997; Ittner e Larcker, 2001). In this study, we used a mixed
higher-order critical-thinking skills, such as designing approach, which is generally advised in this research area
business processes, developing e-business models, providing (Sutton, 2000). The focus was on empirical research, defined
independent assurance, and integrating strategic knowledge as "research that uses qualitative or quantitative data as a
(Hunton, 2002). Accordingly to Crescenzi and Kocher (1984) basis for the investigation of research questions" (Benbasat &
the rapid evolution of IT represents both an opportunity and a Nault, 1990:211). For the collection of data, a number of
potential risk for the accountant. By avoiding the potential methods were evaluated, e.g. experiments, surveys and case
risk the accountants can use the new IT to enhance his role studies (Ryan et al., 2002). Based on the purpose of our study
within the organization. Prior to the 1960s the accountant and to successfully deal with the challenges indentified in the
was perceived as a bookkeeper whose primary responsibility literature review this study will require the researcher to
was ensuring that records were kept. The accountant fought a invest in and conduct more integrative research (Shields,
constant battle against the failure of record. During the 1960s 1997). Consequently this study will use a combination of
the accountant was able to respond to manager’s requests for qualitative and quantitative data to address the research
reports on the business activities. Computers provided a more question posed: - Will the development of IT have changed
efficient means of keeping the books, and they afforded the the organisation of accounting tasks?
accountant quick access to financial information for Following a multiple case design, this phase of our study
reporting purposes. Next, the 1970s brought both IT consisted of face-to-face interviews in six manufacturing
developments and manager’s increase demand for more firms (see table 1). In methodological terms, we considered

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2010-023X

six to be a sufficient number of case studies (Luoma, 1967; should be considered (Vilaine, 1970).
Yin, 2003; Hamilton & Asundi, 2008). Case research has Analysing the purpose of using these documents,
been advocated as a valid research strategy in management accounting documents served primarily to make projections
information systems (Benbasat et al., 1987) but less in the and to define corrective action and, similarly to what was
accounting field (Dul & Hak, 2008). However, case study found in Simon’s study (Simon et al., 1954), they are more
research in managerial accounting is more popular than in frequently used to “understand the current state of the
other accounting area (Cooper & Morgan, 2008). company” and to “identify problems” than to “solve
Usually, “the decision to use a case study approach is a problems”. Likewise, some documents were found to be
strategic decision that relates to the scale and scope of an elaborated because feedback should be well-established so
investigation…” (Denscombe, 2003:32). Our research that all the collaborators can exercise self-control by
question requires a comparative analysis between pre- and comparing expectations with results (Drucker, 1992).
post-“new technologies” to describe the manager’s attitude Nevertheless, documents elaborated for this purpose do not
towards their availability. And, qualitative analysis focused always fulfil their objective.
on case studies, given their application in situations in which Just as in Burns’ study (Burns et al., 1999) this study found
the intervention should be described in a real context (Yin, a decentralisation of tasks traditionally centralised in
2003; Cooper & Morgan, 2008). “This close involvement accounting, such as the creation of budgets.
with the organisation means that interviews and direct
observations of activities tend to be the primary means of
data collection in case research” (Doolin, 1996:23). To V. CONCLUSIONS
achieve our purpose during the interviews we try to collect The companies studied have high levels of investment in
the main accounting documents used in decision-making. information technology. The area of sales/marketing was
Due to “document can be treated as a source of data in their found to use laptops more significantly than the other areas
own right” (Denscombe, 2003:212), we used them to due to the nature of their activities, notably the greater need to
triangulate documents content with interviews. So our work beyond the confines of the company.
primary sources of data were interviews and analysis of The data gathered demonstrate that many of the documents
documents providing details of the project and its outcomes; with accounting information used in the areas studied are
we used the documents to corroborate, and clarify the data produced locally, almost always with computer support.
collected through interviews. A total of 34 hours of Analysing the purpose of the use of these documents, we
interviews was conducted on site during 3 months. All found that, regardless of their origin, the accounting
interviews were tape recorded and transcribed. documents used basically serve to make projections and to
define corrective actions and, similarly to what was found in
Simon’s study (Simon et al., 1954), they are more frequently
IV. MAIN RESULTS used to “understand the current state of the company” and to
In the literature, some criticism traditionally raised against “identify problems” than to “solve problems”. Lastly, this
accounting point to (1) the excessive perfectionism on the study found a decentralisation of tasks traditionally
part of accountants, which makes it difficult to obtain and centralised in accounting department.
understand information in a timely fashion; (2) excessive Future research needs to examine the IT / accounting
data schemes which make it difficult to understand; (3) relationship. Today accounting and IT are inseparable.
conceptual divergence between accountants and other Accountant’s uses of sophisticated management accounting
managers – accountants pay too much attention to formal techniques are clearly dependent of IT existence. The
aspects, neglecting a more dynamic accounting that would be configuration choices made in IT implementation are
more appropriate to the manager needs; (4) the lack of powerful in what enable. The benefits for accounting from IT
interest of other managers regarding accounting services materialise only in uncertain ways and only after long
which they see as a mere fiscal and legal condition. Given implementations.
these criticisms, managers tend to try to construct their own
accounting documentation, which they understand better and ACKNOWLEDGEMENTS
obtain more rapidly although it is more imprecise (Vilaine, The author would like to thank the financial support from
1970). Portuguese Foundation for Science and Technology (FCT –
In the case studies, a lot of accounting documents used by Programa de Financiamento Plurianual das Unidades de
marketing managers and operating managers are produced in I&D). Research Unit: NECE – Núcleo de Estudos em
the accounting department (see tables 2 and 3) However, in Ciências Empresariais, University of Beira Interior, Portugal.
production, most of these documents are produced locally. So,
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TABLE 1 – INTERVIEWS

Case Number of interviews / functional area Number of

Study Finance/Accounting Sales/Marketing Production Interviews
1 2 1 2 5
2 1 0 1 2
3 1 1 1 3
4 1 1 1 3
5 1 0 1 2
6 1 0 1 2
TOTAL 7 3 7 17

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2010-023X

TABLE 2 – ACCOUNTING DOCUMENTS USED BY MARKETING MANAGERS

Document From: Is this document produced locally?

CASE STUDY 1
Ledger list Accounting information System No
Activities report - Strategic Business Unit Controller Yes
Annual Activities report Controller Yes
Business Plan Controller Yes
CASE STUDY 3
Customer profitability analysis Accounting information System No
Revenue by selling group Accounting information System No
Sales journal Accounting information System No
Budgets from firms outsourced Outsourcing No
Internal Budget Manager Yes
CASE STUDY 4
Internal market Sales analysis Accounting department No
Internal market Sales- by selling group Accounting department No
Sales analysis by market and product Accounting department No
Sales/cost analysis/Definition of the selling price. Accounting department No
Sales analysis – by market Accounting department No
External Failure Costs Finished goods inventory manager No

TABLE 3 – ACCOUNTING DOCUMENTS USED BY OPERATING MANAGERS

Document From Is this document produced locally?

CASE STUDY 1
Suppliers’ Journal Accounting department No
Order entry Purchase manager Yes
Job Order Costing Controller Yes
Job Order Cost Sheet Controller Yes
Customer Budget Report Accounting department No
CASE STUDY 1
Ledger list Accounting information System No
Job Order Costing Accounting information System No
Payroll Report Controller Yes
Sales Journal Accounting information System No
Internal report of activities Controller Yes
Business Plan - Strategic Business Unit Controller Yes
CASE STUDY 2
Profit and Loss Statement Financial department No
Annual Budget Analysis Financial department No
Summary - Balance sheet and Income Statement Financial department No
Cost Control Variance Accounting department No
Production Costs Reports Controller Yes
Investment appraisal Controller Yes
CASE STUDY 3
Income Summary Accounting department No
Industry Ratios Quality manager Yes
Production forecasts Forecasting sector Yes
CASE STUDY 4
Inventory Status File Finished goods inventory manager Yes
Job order costing Commercial Department No
Contract Auditing Commercial Department No
Bill of Materials Department staff Yes
CASE STUDY 5
Job order costing Department staff Yes
Equipment usage reports Department staff Yes
Order Budget Department staff Yes
CASE STUDY 6
Balance Sheet Accounting department No
Income Statement Accounting department No
Production Cost report by product Accounting department No
CVP analysis Department staff Yes
Labor payroll Report Department staff Yes
Variance analysis Report Department staff Yes
Gross Margin and cost allocation by product Accounting department No

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