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Ahmed Ali Mohammad
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SBE, Vol.20, No.1, 2017
ISSN 1818-1228
©Copyright 2017/College of Business and Economics,
Qatar University
the equity of such model is no longer owned to
shareholders. It’s mostly founded in customer’s
and employee’s equities. These solid reasons of
change have provided the call for redesigning
the architecture of balance equation to be:
investments equal financings (See Table II).
The money invested in knowledge businesses
has to equal the money raised for it. In
consequence, the terms of assets definition
have become inadequate and no longer valid to
match the realities of accounting against
knowledge. All the previous reasons has acted
as a driving force to assess the feasibility of
creating ‘knowledge financial statements’ to
replace the accounting set. Table-II below
shows the accounting financial statements in
comparison with proposed knowledge financial
statements.
V. Conclusion
Knowledge management with its unique
and dynamic assumptions has become a
reality. It’s a multidisciplinary paradigm in
terms of technologies, practices, culture, and
driving forces. Unfortunately, the floods of
white water of knowledge management have
sunk the accounting ship. A review of the
extant literature highlighted the problem of
the intangible assets as the only obstacle of
accounting for knowledge initiatives. This
paper contributes to the accounting literature
by identifying how accounting against
knowledge management is totally different
from accounting for operations. Exploring the
serious notable lacks and shortcomings creates
space for understanding the sources of the
differences whether in the theoretical logic or
business practices. Portraying the realities and
paradoxes is critical in the way of constructing
a new theory for accounting against
knowledge. It is argued that the philosophical
theory, conceptual framework, and structural
formats are no longer adequate to match logic
of accounting for knowledge management. In
particular, recognition of assets, revenue power,
and technology setting need to be re-considered
to update accounting theory in knowledge era.
The implications of the conflicting paradoxes
are detailed in very comparative way to depict
the current situation of accounting theory and
practices. A creative destruction process is
needed to reframe a cognitive theory for the
knowledge accounting. Finally, it’s appropriate
to conclude that accounting has to move from
being data discipline to be information arena to
better matching knowledge necessities. Future
research might examine how a new accounting
theory for knowledge management should be
structured in terms of the logical philosophy,
conceptual building block, and reporting
practices.