IT in managerial accounting

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Research Methodology

Introduction According to Ruiz (1991): Strictly speaking, the term “method” is used to define the route of the essential stages of a study, whereas the word “technique” refers to the various procedures or the use of different resources particular to each object of research within the various stages of the method.

Today, the practice of computing technology in managerial accounting is expanding. The advent of IT in accountability mainly financial and management accounting are indisputable. IT is a vast area to explore from personal computers to large computers, firewalls and internet. Consequently, this research emphasizes on the related expertise adjusted to managerial accounting such as multimedia technology and managerial accounting using internet surrounded by diverse associations. More importance is given to effects and suggestions of practice of IT in managerial accounting in companies.

Research Problem

Practice of computing technology in managerial accounting is to give some IT relevance in managerial accounting to upgrade the effectiveness of decision-makers and to ease the managerial accounting data precise and without any error. The IT based managerial accounting intends to present data and insight to management and shareholders, who are in charge to take decisions concerning the budgets, investments and long term planning with the aid of managerial accounting. Implementation of IT in managerial accounting focuses on individual organizations’ vision and proper system or technology obtained. If the requirement for strong and systematic technology is not installed, a company can misuse its assets speculations on technology. As such, implementation of IT in managerial accounting would affect in advantage to the company depending on the technology used. Fundamentally, the study’s issues are summed up as below:

1) Little awareness and comprehension of technology available and appropriate based on organization to be adapted in managerial accounting.

2) Little accessibility of internal know-how and counselor to propose, assess and execute IT in managerial accounting.

3) The consequence of IT in managerial accounting may not be appreciated in the improved profits because of unseen and indirect costs acquired.

4) The effect of application of IT in managerial accounting may not be obtained quickly because of diverse nature of business, chosen technology and management directions.

Objectives of the Research

The purpose of the investigation is to discover how usage of Information technologies in managerial accounting and also the prospective and downside of implementing Information technologies in managerial accounting in organizations. IT becomes obsolete very soon once it is launched and accounting criterion last for numerous years without any considerable amendment. IT and managerial accounting are vitally important to both small and large organizations. Accounting frameworks and institution have forthright accentuated the necessity for a change in accountants’ education by expanding the comprehension of information technologies and the knowledge of information technologies. This dissertation examines the connection between IT and managerial accounting. The former literature also points to us the prospective of IT in managerial accounting that will ease the computation procedure and better presentation options of the organization information for productive or efficacious decision in organizations. The literature conclusion also indicate that IT has important effect on the price of investment, as investing in IT will result in consequent expenditures such as on hardware, software and staff to operate those technologies or information systems. This study also display that IT can ameliorate different departments of accounting effectiveness and efficiencies and provide result effortlessly, timely and accurately.

The objectives of research are depicted as follows:

1) To differentiate and analyze the habitual managerial accounting approach and managerial accounting with IT.

2) To observe and evaluate the potentials of application of IT in managerial accounting.

3) To appraise the advantages of implementation of IT in managerial accounting to the organizations.

4) To evaluate the impact of application of IT in managerial accounting.

Research Design

According to Gil (1987), on the basis of overall objectives, research can be classified into three broad types:

  1. Exploratory research, aimed at providing greater familiarity with a problem and defining hypotheses;
  1. Descriptive research, which means to describe the characteristics of a given population and establish relationships among variables; and
  1. Explanatory research, which consists of identifying the factors that determine or contribute to the occurrence of the phenomena studied.

A research design can be considered as the plan for the study at hand, used as a guide in collecting and analyzing data. An exploratory research design will be used to help formulate the problem for precise investigation and for developing hypotheses. Collecting and processing information can be done in different ways, either by adopting a qualitative, quantitative, or triangulation (a combination of the two) method. ‘‘Multiple data sources or research methods (e.g., data analysis, interviews, and experiments), can be used to provide a consistent body of evidence that increase the reader’s confidence in the results’’ (Ittner & Larcker, 2001, p. 396). This study will use a combination of qualitative and quantitative data to address the research questions and also the research will be based more likely on primary data than secondary data.

Research Objectives

Research Questions

Finding out the relationship between management accounting in organizations and Use of IT

To what extent can management accounting in organization depend on the use of IT?

Assessing the influence of IT over management accounting

How can management accounting be improved in organizations through use of IT?

Examining the dimension of IT on management accounting

What is the relative impact of IT on management accounting?

Assessment of audience perception in organizations towards IT use in management accounting

Is there a historical proof to show the relative relationship between management accounting and IT

Formulating measures to improve management accounting through use of IT

To what extremity management accounting depend on IT?

‘‘The initial stage in the overall process is the identification of what might be termed the research question. Once identified, the next stage is usually the formulation of the research question as a single scientific hypothesis or set of hypotheses’’ (Ryan et al., 2002, p. 117). As pointed out by Boyd et al., (1996), hypotheses are usually drawn from ideas developed or glimpsed in previous research studies or are derived from theory. A hypothesis is therefore a statement that specifies how two or more measurable variables are related.

Ho: There is no significant relationship between management accounting and IT in different organizations.

H1: There is a significant relationship between management accounting and IT in different organizations.

Information types and sources The key basis of the given data was from internet and search engines such as Google, Bing and Mozilla Firefox was used massively to outline and pass on online data and news. There were numerous articles, journals, seller’s white papers, analyst information and diverse published materials assembled from the online web sites such as knowledge storm, computer world, business today, science direct, Jstor, Emerald-Library, Amazon, ACCA business and accounting and e-week. Journals and other printed stuffs such as Computer world, data System Controls, Internet Magazine, Computer, Info Security Magazine, Business Week and Times was utilized for additional suggestion.

Data collection Method

To successfully deal with the challenges identified in the literature review this study will require the researcher to invest in and conduct more integrative research (Shields, 1997). Method to be used to collect data will be distribution of questionnaire and it is considered as an effective data collection method. Both qualitative and quantitative data shall be used to collect data as some factors will be affecting use of IT on management accounting in organizations and these are measurable in terms both qualitative and quantitative terms. Quantitative data are primarily used when the aim of the research project is to answer questions like: Who, what, where, how often, how much, and how many (Yin, 2003). These sorts of data are often used when analyzing data from a large population. On the other hand, qualitative data are better suited for research projects that use data that cannot easily be quantified, and qualitative data are often suited for research projects that aim to understand or find a specific pattern within the investigated area (Ohlsson & Ollfors, 2000). Hence this study will use a combination of qualitative and quantitative data to address the research questions and most importantly the data collected will be based on the primary data as a whole we as looking for new raw information rather that secondary data to help us know about the role of IT in management accounting.

Questionnaire Design

The questionnaire is a formalized set of questions to generate information. The research questions at the start up are the basis of the questionnaire design. The purpose is to collect relevant and reliable data, to allow comparison of data. The questions will be mainly to measure the impact of IT on accounting management in organizations. The questionnaire will consist of a small introduction which will contain the purpose of the questionnaire and various sections. Information being gathered will be dealt with utmost confidentiality.

Target Population and Sample

A questionnaire was developed based on guidelines provided (Dillman, 2000), consulting interviews and instruments adapted from previous studies. An 11-point likert scale is adopted to capture a decrease change (-5 to -1), no change (0) and an increase change (+1 to +5). The target population of the research proposal consists of 100 respondents from different companies in Mauritius, using the non-probability sample whereby I will have better convenience, judgment and quota from a specific and qualified population. Convenience simply means that most accessible respondents are chosen, judgment will be helped by subjects selected on the basis their expertise in the area being investigated and finally quota will be selection from targeted groups based on some quota – minority groups. So my sample will be based on operational managers, tactical managers, and strategic managers and higher executives from different companies to fill the questionnaire. Thus, the sample is more appropriate. Moreover, the results obtained will be trustworthy leading to better analysis and interpretation.