News Letter

Ahmed Ali Mohammad

SBE, Vol.20, No.1, 2017

ISSN 1818-1228

Qatar University

only the contractual intangible that match the

accounting terms of definition. That’s mean

each set of standards doesn’t recognize and

report business intangibles such as knowledge

assets. According to such fact, these standards

rules out knowledge assets from being

recognized in the balance sheet. These standards

and the underlying treatments detract from the

quality of information provided in the financial

statements. This because the theoretical logic of

the accounting has been established in isolation

of technology. However, this logic match more

the requirements of machine technology rather

than knowledge (Lev, 2001). Table-I presents

comprehensive comparative for accounting of

operations in contrast to accounting against

knowledge. The differences are significant and

relates to dynamic nature, recognition rules,

reporting power, and theoretical objectives.

Knowledge management represents an

opportunity to derive accounting model

to be intangible assets based with future

orientation. The current accounting model is

deficient and full of shortcomings in relate to

knowledge. The key assumption of knowledge

management is the migration of competitive

advantages from tangibles to intangible assets.

The physical assets are not providing a source

of significant differentiation. The company’s

viability depends directly on the competitive

quality of its knowledge assets, and the

successful application of these assets in all

its business activities (Holsapple, 2003). The

competitive advantage of knowledge assets

flows from the nature, creation, ownership,

protection, and use of difficult ideas to imitate

these assets. To be competitive, proactive, and

dynamic, business companies must manage

knowledge assets systematically. Two key

characterizes has outlined the development of

accounting against knowledge throughout this

era. The first is that “accounting and its models

has boiled to its bones and the theoretical

bases of accounting are outmoded” (Stewart,

2001). The second is that “Accounting model

has become something of an anachronism in

knowledge management era. It is a legacy

of the industrial age, and as a result, if the

current situation of accounting is going to be

continuing, prestige of accounting will be lost”

(Drucker, 1999).

2.2.3

The third era of accounting studies

(2000s-Present)

This era can be described as the move to find

the hidden gold. It is vital to understand that

throughout this era, the terms of intangibles,

knowledge, and intellectual capital are usually

used interchangeably in spite of the difference

in the contextual content of these concepts.

The terms of intangibles has been used in the

accounting literature to define “an identifiable,

non-monetary

asset

without

physical

substance” such as patents, trademarks, fishing

licensees, and computer software. The term of

identifiable means the contractual according

to the accounting definition. The problem is

not all the intangibles are identifiable such

as internally generated good will. The term

of knowledge assets has been addressed by

economists to define the accumulated process

resources as drivers of business success on a

specific area of practice. Knowledge assets

are less tangible and more depend on human

cognitive and awareness (Nonaka, 1991). The

term “knowledge assets” was first introduced

in the Baldrige Glossary in 2003.The popular

examples of knowledge assets includes

process documents, guidelines, and templates.

Finally, the intellectual capital has been used

in the management and legal literature to refer

essentially to the same thing: a non-physical

claim of future benefits. The examples of

intellectual assets include human resources and

new organizational structures (OECD, 2008).

The nature of knowledge assets is especially

sensitive for number of reasons: first it’s does