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Ahmed Ali Mohammad
9
SBE, Vol.20, No.1, 2017
ISSN 1818-1228
©Copyright 2017/College of Business and Economics,
Qatar University
integrated with an accounting practices
embodies these three components to cope
with the implications of knowledge necessities
(Huang,
et al
., 2012). Expected trends in the
business practices and the necessary changes
of accounting model are reviewed in the light
of recent literature of knowledge management.
These trends suggest that compliance between
two areas of knowledge shall extend to include
knowledge management processes and the
identification of the accounting metrics that
support such processes. The problem of
accounting against the value perspective is
that accounting values are meaningful only if
they represent a true picture of economic and
legalistic reality. According to the information
perspective, accounting is an organizational
engine to provide information. Accounting is
not primarily a tool for measuring or estimating
value, but is a source of potential information.
The information content school views the
financial measures as measures of information
events, not of value (Christensen and
Demski, 2003). Researchers and practitioners
have proposed a wide variety of models to
support accounting for knowledge initiatives.
Understanding the contribution of these various
models may help integrate accounting in this
area of business. The literatures reviewed
indicate that there were three research questions
to discover the required compliance: what
nature of knowledge management processes
that are currently used? How much reliable the
accounting practices related to measurement
and reporting of knowledge assets? What
measures were currently used and those
are required to account against knowledge
management practices? Understanding the
contributionof various knowledgemanagement
practices to solving business problems may
help integrate accounting practices in this
area. The key elements of accounting against
knowledge management have to address the
flows of the organizational process nexus.
These processes are three inter-related building
blocks, broadly aligned with the different
stages of the knowledge management: the
development of new ideas (or invention of
new business practices); the implementation
and commercialization phase (or innovation
and marketing of those practices); and reaping
the benefits of new business practices through
changes in market share and profitability
(OECD, 2013). Understanding the above
unique organizational process provides
milestones for accounting against knowledge
management.
2.2
Accounting for knowledge management
Accounting has long been described as “the
language of business”, but unfortunately
knowledge is the business of today and
accounting cannot communicate such business.
The interdisciplinary nature of knowledge
management has turned the accounting model
to be inadequate. Nowadays, questioning the
validity of accounting rules, regulations, and
practices in terms of nature as well as engines
has grown considerably due to the emergence
of knowledge management. The shift has
altered the requirements of business and then
declared the demise of accounting. Knowledge
management research has been plagued by a
variety of the accounting problems that can
lead one to question the extent of validity of
accounting model (Mohammad
et al
., 2010).
2.2.1
The early era of accounting studies
(1950s-1970s)
The seeds of accounting for knowledge have
been planted in the fifties. This a new area
begun to take roots by the recognition of
accounting lacks. The initial awareness of
role of technology in business has drawn
a question mark about its existence in the
balance sheet. The early literatures have