News Letter

TOWARDS AMETA THEORY OFACCOUNTING FOR KNOWLEDGE MANAGEMENT: REVIEW THE

REALITIES TO STAGE THE CRITICAL THINKING OF KNOWLEDGE BUSINESS MODEL

SBE, Vol.20, No.1, 2017

ISSN 1818-1228

Qatar University

receivables by accelerating the collection

process (Reynolds, 2001). In consequence of a

new technology applications, working capital

has been shifted. The replacement philosophy

reflects huge investment in discovery and

learning as a driver for creating virtual assets.

These and other applications have initiated a

new approach of the technological analysis of

financial statements and decision making

(Atkeson and Kehoe, 2005). As has been

mentioned previously, this approach does not

care about owing assets because knowledge

management strip off balance sheet of non-

current assets (Holsapple, 2003). The business

literature addresses this approach under the

technology management of business. Reducing

the size of accounting assets and transforming

the balance sheet to be a business liability are

two assumptions of a new approach (Keen and

Balance, 1997). The most important contribution

among the several is reporting business value

creation to provide relevant and timely

information about knowledge initiatives

(Haskel, 2007). In spite of transactions of value

creation may take years to be materialized

(Lindsey, 2001). The virtual process of

knowledge management enabled the value

creation through collaboration among all the

stakeholders community. This in turn has

affected the mechanism of how value creation

transactions are happened and managed. The

accounting model does not have an agile

dynamic to follow these transactions and as a

result, virtual assets are ruled out from being

recognized as assets (Pandian, 2011). The

virtual paradox also detracts from the quality

of financial information provided in the balance

sheet. Ignorance of virtual assets provides an

example of the virtual paradox of accounting

model. The literatures of knowledge

management have called to redesign the

accounting revenue power as a cornerstone to

deal with the impacts of such paradox. For

example,

capitalizing

research

and

development, in-house built software is

associated with subsequent changes in earnings

and then improving relevant of financial

information (Hall and Mairesse, 2006). The

replacement of accounting assets by virtual

assets has put an end to the role of the

accounting model in managing business assets.

In the move towards accounting for knowledge

management, the accountant’s community

must also consider the virtual assets to sustain

the new architecture of revenue power. In front

of such situation, business managers need to

know how much cash will be produced over

what needed to manage the knowledge process.

The accounting cash-flows calculated in Table-

II will not be enough to match needs of

knowledge management. The real concern of

knowledge companies are producing cash and

creating value. These jobs are function of

continuity of knowledge companies. To match

these goals, knowledge management needs to

know free cash flows which need different

assumptions. Accounting for knowledge

revenues or accounting for relationships is less

about individual or collective sales and costs

within each relationship. It’s more about

investment and returns. The problem is no

straightforward relationship links between

investment in knowledge initiatives and

business performance. Instead there is a

complex relationship (Carlucci and Schiuma,

2006).

This

has been considered a turning point

towards initiating knowledge and technological

approach in building financial statements

(Keen and Balance, 1997; Shaw, 2003). The

essence of such approach is based on re-

innovating recognition rules and redesigning

financial statements to match knowledge

assumptions. Figure-3 in below shows the new

architecture of knowledge revenue power.