BUS707 - Applied Business Research: Literature Review on Accounting

This literature review examines the impact of accounting information and auditing on organizational design and the behavior of individuals and groups. It synthesizes findings from four academic articles published from 2010 onwards, focusing on the common theme of accounting information systems and their role in decision-making. The review identifies different themes, such as the use of accounting information in predicting macroeconomic indicators, managers' interpretation of financial information, the relationship between accounting information systems and profitability, and the relevance of accounting information to debt holders. Managerial implications are discussed, highlighting the need for effective training and accurate financial recording. The review also addresses study limitations and proposes future research directions, including the evaluation of microeconomic indicators and the consideration of other stakeholders affected by accounting information. The ultimate conclusion emphasizes the significant influence of accounting information and auditing on organizational design and behavior.

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Contents
Introduction......................................................................................................................................2
Brief summary of the theory............................................................................................................3
Common themes/findings in four articles........................................................................................4
Different themes/findings in four articles........................................................................................5
Managerial implication of four articles...........................................................................................6
Study limitations and future research direction proposed in four articles.......................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
The aim of the report is to determine relevant sources for research and undertake the review that
is based on the theoretical concepts. The topic on which the opinions of different authors have
been taken is effect of the accounting information and auditing on the design of organisation and
on ensuring the behaviour of the groups and individuals.

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Brief summary of the theory
According to Collier (2015), history of accounting is intertwined with the development of the
trade between the tribes and records related to tokens. The accounting information system is a
structure that an organisation make use to gather, store, direct, process and report its financial
data. Moreover, this has been said by the author that the accounting majorly focus on meeting the
needs of the managers. The information accounting increasingly becomes decentred from the
accounting departments within the organisation and this makes the line managers of the company
to prepare budgets in all the areas of business (Collier, 2015). Thus, the authors show that
managers behaviour gets affected due to the accounting information and auditing. Further, the
managers in the company make use of the accounting information in marketing, operations and
human resource departments for the effective decision making.
Agreeing to this, Patel, 2015, accounting information system is a part of the company’s
information systems that assist in facilitating the decision making in organisation that can effect
in modifying the environment, structure and requirements of the task. Thus, the author says that
the design of the organisation can affect the profitability of the company. This is clear with the
relationship between the Accounting information system that is used by the enterprises and
profitability.
Contrasting this Givoly, Hayn and Katz, 2017, the change in the time has brought the
information at ease of the accounting number to shareholders. The information accounting
system not only creates the impact on the design of the organisation but it also affects the groups
of debt holders. The rise in the changes in information system brings the changes in relation to
the credit risk and to reporting factors that can affect the debt holder’s behaviours.

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Contrasting this, Nallareddy and Ogneva, 2016 exhibits that accounting information system is
used with the motive to predict or determine the restatements in indicating the macroeconomic
factors. These factors include the unemployment change, labour reallocation, aggregate output
and others. Thus, the determination of the accurate details requires the use of the accounting
information system. Thus, it provides the benefits to the group for which the calculation related
to macroeconomic elements.
Common themes/findings in four articles
The common theme that has been focused by the author in the four articles is the usage of the
accounting information system. The accounting information systems are the sub system within
an organisation as it accumulates the information from the entity’s different subsystems and
communicates it to the company information processing subsystem (Collier, 2015). The use of
accounting information can be done by the groups and individuals such as shareholders, debt
holders, managers and others within the organisation.
In entire four articles, the accounting information system focus in taking the effective decision
making that supports the design of organisation. Thus, this has been found that accounting
information and auditing has effect on the design of organisation which is formed once decision
has been taken by the company (Patel, 2015). Moreover, this has been found that the structure of
the organisation affects the business profitability which is evident in all the articles. The use and
role of accounting information system for making the decisions is discussed. According to the
Givoly, Hayn and Katz, 2017, these decisions vary from individuals to group. Further, all these
decisions contribute in taking the steps for planning and controlling the operations with the

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support of financial statement. Moreover, the predications related to the macroeconomic
elements also include the decision making theme.
Different themes/findings in four articles
The different themes that are presented in the four articles are covered in this section of the
literature review: -
The article presented by Nallareddy and Ogneva, 2016, depicts the use of the accounting
information in predicting restatements in Macroeconomic Indicators which majorly include
earnings growth dispersion. The calculation of the growth depression includes the trends related
to the allocation of labour, unemployment change and aggregate output. This type of use of the
accounting information is not specified in the other articles.
On the hand, agreeing to this Collier (2015), said that the paper presented by him is clear with
the name that is Accounting for Managers: Interpreting Accounting Information for Decision
Making. Thus, this shows that the book focus on accounting to fulfil the needs of the managers
for making the effective decision related to the operations of the company. The managers of the
company are supposed to interpret and analyse the accounting information so managers can
understand the financial consequences of the decisions taken by the manager. Thus, the paper
includes the use of the accounting information by the managers in organisation. Thus, the theme
which is different from the other articles includes the manager’s interpretation of financial
information. This article also presents the effect of the accounting information system and
auditing on the design of the organisation.

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Further, Patel, 2015 reflects the relationship between accounting information system and
auditing with profitability of the company. Thus, Profitability is different in this article then the
remaining articles. The paper written by the author evaluate the effectiveness of the accounting
information systems in the decision making for the different aspects like better decision making
by managers, enhancement and improvement of the financial reports quality, effective internal
control systems and it helps in extension of profitability of organisation. This has been found by
the author that accounting information system and auditing influence the decision making which
affect the profitability.
Further, Givoly, Hayn and Katz, 2017 exhibits that the article includes the different theme that
shows the association between the number and valuation of bonds. This has been found that
information content to the debt holders has improved with the time. The findings of the article
include the usage of the accounting information by the debt holders that can be a group or
individuals whose behaviour can change because of the financial reporting that meets the unique
needs.
Managerial implication of four articles
The managerial implications include the results that mean in terms of the actions. In simple
words, the managerial implication compares the results to the action and indicates what all
actions should be taken in response. In all the four articles, this has been found that use of
accounting information and auditing influence organisation design and can affect behaviour of
individuals and group.
According to Collier (2015), this has been found that accounting information and auditing
influence the decisions taken by the manager strongly. The correct interpretation is required for

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the managers for which the effective training should be provided to them which helps them in
analysing the information in the effective manner so that they can make accurate decisions.
The article presented by Nallareddy and Ogneva, 2016, strongly reflects that use of information
accounting system for analysing the trends of macroeconomic factors. This has been found that it
influence the behaviour strongly for which there is need of the accuracy in calculating the same.
Thus, an effective tool should be used in financial recording which leads to accuracy.
Further, Patel, 2015 has been found that the accounting information and auditing affects the
decision making which include the structure of company as well as impact the profitability. To
improve the decisions and profitability, the company should analyse the consequences of the
decision and at the time of decision making they should consult the same with the experts who
can guide them effectively.
The author found that debt holders majorly depends on the accounting information which shows
that it can influence the individual and groups (Givoly, Hayn and Katz, 2017). There should be
concern team that can help the debt holders in analysing the risk related to the credit and
opportunity to meet their needs.
Study limitations and future research direction proposed in four articles
 The limitation that is presented by the paper of Collier, 2015, is that they include the
managers of the company who are from the non-accounting field to address the
accounting information that can hleps in contributing and implementing the strategy of
business and communicate with the accountants effectively. The future research direction

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proposed is to research on training programs for non-accounting managers for
interpretation of information.
 The biggest limitation of the study conducted by the Nallareddy and Ogneva, 2016 is that
it only talks about the macroeconomic indicators as it doesn’t include microeconomic
indicators. Thus, the future research proposal will be the use of the accounting
information system for evaluating the microeconomic indicators.
 The limitation of the paper of Patel, 2015 is that it includes the relationship with the
profitability only which is not the only factor which is required to be considered by the
company. Thus, the future research study will include the different element that gets
influence with the use of the accounting information and auditing.
 The limitation of the Givoly, Hayn and Katz, 2017, study is to the changing relevance of
accounting information to debt holders over time as there is need to include other
determinants like creditors and many others. Further, for the future research the author
should consider the other important members of the company who can get affected by
accounting information such as investors.

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Conclusion
In the end this can be concluded that there is strong effect of the accounting information and
auditing on the design of organisation and on ensuring the behaviour of the groups and
individuals.

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References
Collier, P.M. (2015) Accounting for managers: Interpreting accounting information for decision
making. John Wiley & Sons.
Givoly, D., Hayn, C. and Katz, S. (2017) The changing relevance of accounting information to
debt holders over time. Review of Accounting Studies, 22(1), pp.64-108.
Nallareddy, S. and Ogneva, M. (2016) Predicting restatements in macroeconomic indicators
using accounting information. The Accounting Review, 92(2), pp.151-182.
Patel, B. P. (2015) Effects of accounting information system on Organizational Profitability.
International Journal of Research and Analytical Reviews, 2(1), pp. 72-76.

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