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Family Name: Shreya Given Name: Rauniyar

Student Number: 11902007 Lecturer’s Name: Dr Evi Lanasier

Subject Name: Applied Business Research

Assignment Title: Literature Review

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INDIVIDUAL ASSIGNMENT COVER SHEET * AUSTRALIAN INSTITUTE OF BUSINESS AND MANAGEMENT PTY LTD PAGE 1 OF 1

13 JULY 2015 CRICOS 03171A ABN: 72 132 629 979

LITERATURE REVIEW

Impact of Organizational Culture on the Procedure and Technique of Accounting

Table of Content

Introduction……………………………………………………………………………3

Dimensions in a culture that distinguishes Cultures in the Organization………….4

· Uncertainty Avoidance…………………………………………………………4

· Individualism……………………………………………………………………4

· Achievement Orientation………………………………………………………4

· Power Distance…………………………………………………………………4

Culture and Accounting Procedures………………………………………………….6

Culture and Accounting Information System Plan…………………………………..7

Recommendations……………………………………………………………………….8

Summary and Conclusion……………………………………………………………..9

References……………………………………………………………………………..10

Introduction

Every business organization has cultural norms that majorly contribute to its performance across all sectors (Ax & Greve, 2017). An organization’s success relies on the type of culture that dictates the running of the operational sectors. A good business culture results in a better performance of the organization. It is common knowledge that an organization’s culture represents the organizational beliefs and concepts that aim to create a favorable environment that can be both social and psychological, making the running of the business smooth. It is the organizational culture that distinguishes one organization from the others (Jogaratnam, 2017). The organization’s culture has always been the key element that influences accounting activities and plans in every organization worldwide. The study aims to discuss some of the organizational cultures’ impacts on the accounting research plan’s procedures and techniques.

Dimensions in a culture that distinguishes cultures in the organization.

According to Ax & Greve (2017), four dimensions bring about the similarities and variations of organizational cultures from one organization to another. The dimensions include the following:

· Uncertainty avoidance – The concept here is how the individuals feel comfortable in society about the organization, putting in mind the uncertainty and ambiguity surrounding the business (Jogaratnam, 2017). The culture here will either bring confidence to the individuals during the plan knowing clearly how well the organization can deal with the uncertainties during the implementation, hence preventing doubts during planning. At the same time, unfavorable cultures may prevent certain individual activities, especially where an individual fails to understand how the organization may deal with the uncertainties (Di Vaio, & Varriale, 2018).

· Individualism – the dimension here refers to the preference of the society on an organization. An organization’s culture is particularly important in deriving society’s preference depending on how best the organization can recognize the society from which it operates. During accounting planning, the accountants must consider the organization’s society’s factors according to the organization’s laid down cultures (Ax & Greve, 2017).

· Achievement orientation – It refers to what the organization emphasizes in its core values and norms stated in the organizational culture. Performance and visible achievement records are essential in coming up with procedures and guidelines in the accounting plan. It dictates how resources are distributed from the previous records’ strengths and weaknesses (Ax & Greve, 2017).

· Power distance – the hierarchy and distribution of power are key dimensional elements in defining an organization’s culture. An organization that dictates a proper hierarchy in its leadership structure tends to succeed in its resource application operation. Accounting planning and budgeting will become the basic structure for productivity (Jogaratnam, 2017).

Looking at the organizational cultures from the accounting perspective, when an organization develops a highly conservative culture, the result will indicate a bigger improvement in its net income. A highly conservative organization is likely to have low individualism and achievement and high uncertainty avoidance, making the organization restrict the accounting information from falling into outsiders’ hands (Jogaratnam, 2017). The prevention is significant in influencing the flow of financial information within an organization.

The organizational culture is a key figure that influences the standards in the representation of the financial statements. Previous research found out that the organizational culture dictates the interpretation and application of account standards in every business organization (Felipe, Roldán, & Leal, 2017).

Culture and accounting procedures

Accounting procedures may vary from one organization to another, and the variation results from the differences in the organizational cultural norms (Felipe, Roldán, & Leal, 2017). The cultural differences may originate from the ethics and value system that an organization practice. The main sources of common fraud that we see in the organizations do occur due to manipulating accounting procedures, some from the window dressing of accounts (Ax & Greve, 2017). A well organizational culture may develop a work motive within the employees, which may easily prevent such frauds in the organization correcting the accounting errors that may, in the end, hinder the success of the business (Felipe, Roldán, & Leal, 2017).

Culture and accounting information system plan

The accounting information system component of an organization accumulates, classifies, processes analyses, and communicates relevant information about an organization’s finances, aiming to assist in proper decision-making (Jogaratnam, 2017). Organizational cultures are significant as they dictate how the organization’s people use the information acquired here and prepare proper information systems to ensure proper accounting research plan (Felipe, Roldán, & Leal, 2017). When an organization puts its culture at the base during coming up with an information system, it realizes that numerous factors are significant when coming up with information requirements and the proper information system from which the accounting plans originate (Ax & Greve, 2017).

During the implementation and development of the information system, some of the factors to investigate include identifying, understanding the meaning, and knowing the organization’s norms and power (Jogaratnam, 2017). In the financial sector, the organization needs to strengthen organizational culture values that affect the customer orientation, checking the flexibility and performance, considering the quality of services the organization intends to offer with the availability of the financial resources (Hoque, 2018).

Recommendations

When it comes to looking at the problems that exist during the procedure and techniques employed in the accounting plan. It would be proper if the multinational corporations and global audit firms strengthen the spread of awareness and training on the impacts of having an ethical organizational culture to make the accounting procedures relevant to the organization’s objectives and cultural norms. Jogaratnam (2017) states that the intensification of awareness will benefit the organizations and the audit teams in the following ways:

· It will enable them to be aware of the biases that may occur within the administrative staff and their colleagues in different organizations.

· The professionals, too, will recognize their own organization’s cultural tendencies, which will help in better understanding how the stated values affect how they interpret the accounts and make their judgments during the accounting planning (Felipe, Roldán, & Leal, 2017).

Another key area that requires serious consideration is the education structure and development of future professions in the accounting sector. The study suggests, will play a key role in ensuring that the organizational culture can conform to the accounting techniques necessary for the planning process in an organization (Ax & Greve, 2017). During accountants’ training, the emphasis should be on the convergent standards and proper applications to prevent future problems on the organizational culture usage in accounting planning (Jogaratnam, 2017). To prevent further challenges, the employers and the standards setters should ensure they play active roles in educating the current accountants in their respective organizations on the organization’s cultures and norms and how to apply them in the accounting decisions to handle the challenges that may arise in future. The objective can only be achieved when the intensity of the campaign becomes the organization’s fundamental activities (Tarba et al., 2019).

Summary and Conclusion

The findings above suggest that whenever there is a need for professional judgment, then organizational culture becomes a key factor, especially in how accountants interpret and make judgments on the accounting plans and procedures (Ax & Greve, 2017). Culture affects an organization’s environmental operations hence may lead to inconsistent interpretations of the accounting concepts, which may lead to poor judgment and improper decision-making during the planning and procedures of an organization’s accounting activities (Felipe, Roldán, & Leal, 2017). The variation in judgment may only cause a variation in the financial statements, which would impact the comparability of different organizations’ financial statements (Jogaratnam, 2017).

It is therefore important for an organization to come up with an ethical organizational culture that, when put into practice, would not result in improper judgment and poor decision making, which may hinder the developmental agenda of the organization. An organization’s progress relies on proper accountability and decision-making, which originates from the set organization cultures and norms (Felipe, Roldán, & Leal, 2017). The employers should acquire the necessary skills to develop a better business organizational culture that will contribute to its development (Zerella, Von & Albrecht, 2017).

References

Ax, C., & Greve, J. (2017). Adoption of management accounting innovations: Organizational culture compatibility and perceived outcomes. Management Accounting Research, 34, 59-74.

Di Vaio, A., & Varriale, L. (2018). Management innovation for environmental sustainability in seaports: Managerial accounting instruments and training for competitive green ports beyond the regulations. Sustainability, 10(3), 783.

Felipe, C. M., Roldán, J. L., & Leal-Rodríguez, A. L. (2017). Impact of organizational culture values on organizational agility. Sustainability, 9(12), 2354.

Hoque, A. S. M. M. (2018). The effect of entrepreneurial orientation on Bangladeshi SME performance: Role of organizational culture. International Journal of Data and Network Science, 2(1), 1-14.

Jogaratnam, G. (2017). How organizational culture influences market orientation and business performance in the restaurant industry. Journal of Hospitality and Tourism Management, 31, 211-219.

Tarba, S. Y., Ahammad, M. F., Junni, P., Stokes, P., & Morag, O. (2019). The impact of organizational culture differences, synergy potential, and autonomy granted to the acquired high-tech firms on the M&A performance. Group & Organization Management, 44(3), 483-520.

Zerella, S., Von Treuer, K., & Albrecht, S. L. (2017). The influence of office layout features on employee perception of organizational culture. Journal of Environmental Psychology, 54, 1-10.