Digital Transformation and Managerial Accounting: Enhancing Accuracy and Efficiency
In the current period; the use of digital transformation has been widely accepted in other industries because of its ability to improve its performance and operational efficiency. In this case; the research observes its application within the management accounting techniques and its ability to improve data accuracy and also simplify its decision making process. The main of the study is to assess and evaluate the impact of digital transformation on the management accounting techniques present in the data accuracy and the scope for simplifying the decision making process regarding accountants. A quantitative research methodology has been applied in this study to ensure only objective inferences are obtained from the study and is able to address the studys objectives and questions. The findings suggest that there is a weak to moderate level association and relationship between the variables. The research also describes the policy, theoretical, and the managerial implications derived from the studys findings.
In the modern era; the advent of technology has made it easier for the businesses to improve its performance and streamline its operations to facilitate its customers. Technology is also being used to remain competitive within the industry and to offer substantial goods and services without any issue (Appelbaum et al., 2017). With the advancement in technology; it is also observed that the business accounting principles have also improved since the technology replaces conventional technology and also provide a substantial ease to the business and also helps the business accountants in taking key decisions pertaining to their organisation (Munfaredi et al., 2022).
This includes optimising their low value added tasks and also present necessary changes in its accounting techniques. The change is particularly observed in management accounting techniques and its effect on the organisational operations. Such a change is observed to improve both the responsibility and the accountability of business operations. But, critiques such as Oesterreich and Teuteberg, (2019) in its study states that management accountings current competencies are not relevant within the current digital business environment.
This position is also challenged by Frank and Hiebl, (2023) study where it is stated that using specialized technologies such as ICT are crucial for improving management accounting techniques. Specialized techniques are used to develop novel technologies and can be applied on existing management accounting principles. The resulting benefit is that the business is able to develop a sound technical expertise and can be reflected in their work as well.
The key purpose of the current research is to evaluate and assess the impact of digitalization on management accounting techniques and the effects on the accountants decision making process. This is to be assessed within the data securitys context and to ensure that there is a substantial evidence to support the argument about digitalization in improving management accounting techniques. The problem identified in this study that the managerial accounting competencies are not being subject to such vigorous studies and tests to assess its relevance within the accounting industry. There is a substantial amount of organisational process and the technology driven initiatives that have been assessed such as in the study of (Knudsen, 2020; Omol et al., 2024).
Kndusen, (2020) also identifies that there is a limited literature regarding technology driven shifts within the organisational process and also a fundamental shift is observed within decision making. This is attributed to the discretion provided to the study in this case due to technology use and improvements in the management accounting techniques.
Considering the researchs background; following are the objectives formulated to be addressed through results and discussion:
Similarly, following are the questions that are to be answered by the research:
Digital technology has been occupying significant interest amongst business professionals citing its ability to improve the business performance. This is because of the potential incrementing improvements in financial reporting and to conduct its analysis in the long run. the digital technology has been successful in improving its financial reportings techniques such as the processing time and to increase its accounting efficiency (Skaletsky et al., 2016). This is regarded to be a strong and improved alternative to the business since the organisation is now able to increase its data storage, retrieve data, and also organise its datasets.
This is done to be able to identify trends and take informed decisions so that there is an accurate and standardised financial reporting. Management accounting techniques have been benefitted as well since it has improved its budgeting and costing techniques as well. But, studies such as Jie Wei et al. (2023) study where it is observed that digitalization is observed to challenge accounting techniques and concepts since it requires substantial amount of infrastructure and also its training expenditures. The modern accounting concepts and techniques are not compatible as such with the digitalization techniques as it is in a continuous change phase. The use of technology and its sources are considered to be an important element within the accounting structure and thus digitalization helps in offering substantial help to businesses in improving its financial reporting (Miaoquan et al., 2023). In this case; the digital transformation is found to have an impact on the accounting techniques, particularly management accounting. This is also observed to be a hindrance since training and data integration are at times difficult because of multiple sources used.
Hypotheses 1: Management accounting in the digital era is benefited from digital technologies
In the modern era; it is observed that management accounting has witnessed a series of transformation within the business environment. This is evidenced by the change in financial informations analysis, data collection, and also process the key financial information. This has led to an improved decision making process and enables the organization to realign its corporate objectives. One of the major changes observed in this case is that the digital technology has been successful in changing manual processes used for data entry and is able to relay accurate information. The use of technology has been significant in nature since it is able to streamline the management accountings operations and techniques. This is further elaborated in Miaoquan et al. (2024) study where the business is able to use disruptive technologies such as machine learning and artificial intelligence to accommodate its management techniques. This has led to an improved organizational performance because the business are now in a position to better understand the financial metrics. This is an important aspect to observe since management accountings key role has been to track and record the companys costs and budget. With the advent of technology; this has also improved where management accounting is considered to be effective in improving this feature as well. Resource allocation has also observed to benefit from the digitalization since the organization can use data driven decisions to use its management accounting techniques and allow for a better financial reporting. Potential benefits in this case includes better communication with its customers along with understanding the market conditions with relative accuracy. The management accounting techniques are also allowing the business to allocate its expenditures with much more accuracy and as a result are in a position to facilitate cost management.
Hypotheses 2: Technology adoption improves decision making and management accounting techniques
The technology adoption and implementing within the business is considered to be a crucial element since it helps in increasing the organisational success and also helps directing the organisations strategic decision making. The use of technology is considered to be an integral element within the organisation irrespective of it being either in the public or the private sector since technology adoption has made it possible for businesses to improve their performance. In this case; the management accounting techniques are also improved since technology has made it strategically imperative for the organisation to commit to an overhaul in its accounting techniques and procedures.
The main benefit observed from the technology adoption is evident in improved operational efficiency, better financial reporting, and also improving its risk management with relative ease (Aldabbas et al., 2023). Technology adoption has also served the purpose of increasing accountability and transparency within the business since an improve management accounting technique has led to better budgeting and cost management. In committing to integrate technology with the existing management accounting techniques; there is a better chance for the business to accommodate large data and compute its results with effective ease.
Technology adoption however, is found to host a series of issues of itself as well because it is deemed complex and requires additional structural infrastructure requirement within the business. Besides the complexity; there is also a lack of awareness regarding technology use and its necessity within the management accounting techniques. As a result; its application is hindered in the management accounting techniques and thus it creates a substantial amount of issue for the business to improve its performance and reporting.
Reiterating on the technology adoption; it is observed that the management accounting systems are important and crucial for the organisation to enhance the business efficiencies. According to Ratmono et al. (2023) study; it is important for businesses to align its operations and accounting techniques with technologies so that they are in a position to create value added services to the people. The use of technology is imperative for improving management accounting techniques are required sine it is able to improve decision making and also enable businesses to assess their current predicament. The changes in the management accounting is also considered imperative because it helps in creating better decisions and also allow the organisation to assess its current performance. This is also considered effective in assessing its control systems and to implement innovative techniques to be able to assess its uncertainties in the business environment. The technology acceptance in this case is important because it improves the management accounting techniques such as activity based costing, target costing, and lifecycle costing is improved with the technology model.
Fig. 1: Conceptual Framework.
The methodology selected in this study includes a quantitative methodology since it is able to quantify results as per the researchs requirements. A quantitative methodology is used for observing and assessing the results between the variables and to assess their relationship and strength (Tomaszewski et al., 2020). The association shared between the variables are considered and evaluated in the discussion and to observe whether the studys objectives and questions are addressed or not. Any other research design would not be deemed feasible for the current research because it yields a subjective inference in the study and it is also not compatible with addressing the studys requirements. Adding on; the use of a qualitative research design is not feasible because it involves the researcher in the studys findings by seeking and incorporating its opinion (Castell et al., 2022). This increases chances of incorporating personal opinions and inferences that is not complying with the studys requirements and thus fails to address the objectives and questions. For this study; a primary source of data collection is required for the study since it is involving participants for the data collection. The preference of a secondary source over primary is required since the former is considered to provide relevant and more importantly information from current trends. This helps in providing a series of factual information and also aids in quantifying the results with as much as accuracy and relevance. Using any other data collection methods such as secondary is not feasible in the current research since it does not provide any current information along with not being time feasible. This is because the secondary sources are not always available on public domains and might require subscription to avail its information.
Primary source is considered to be an important assessment since it allows the current research to use its discretion in designing the questions so that the desired responses can be obtained. This is regarded to be effective in this case since the current research seeks to understand the influence and impact of technology on the management accounting techniques and the benefit that the business seeks to obtain.
Having stated about the sources of data collection; it is now imperative to mention and discuss about the sample size and its profile. Considering the topics nature and requirements; a large sample size is considered since it is able to provide a series of information and contribute to the studys findings. The impetus to use a large sample size is to reduce the risk for a false negative reporting and to ensure that there is no researchers bias as well. Therefore, the current research is understood to use a total of 400 participants as its sample size so that a varied amount of opinions are obtained. In this case; the use of a large sample size is found to be effective since it helps in reducing the participant bias and also helps in improving the responses in this case. The use of a large sample size is considered to be an important undertaking in the current studys context since obtaining relevant response raises the possibility of improving arguments regarding the topic and helps in crystallising an argument for the subsequent discussions. In this case; there is also a strong possibility of gaining an in depth insight regarding the use of technology in improving management accounting techniques and also its decision making. After establishing justification regarding the use of sample size and the data collection method, the study is understood to use SMART PLS as the data analysis technique.
Data analysis
Table 1: Construct reliability and validity.
The validity tests are used to demonstrate the studys instruments ability to interpret the data and to assess whether they are in a position to measure the constructs. This is also used for assessing and establishing the convergence and also the discriminant validity. The Cronbach alpha in this case is observed to be stable for all the variables except technology adoption. The Cronbach alpha for technology adoption is 0.507, which is lower than the standard of 0.7 (Table 1). This can be interpreted that the data for technology adoption requires a larger sample size since the margin is quite low than expected. This is also attributed to the models complexity that is a contributing factor in reducing the variables internal rate of consistency.
Table 2: Bivariate correlation.
The relationship between data security and decision making is considered to be positive and significant but the association between them is weak in nature. With a Pearson correlation value of 0.204; there is a weak relationship established between the constructs. The main inference observed from the relationship is that an increase in data security also improve decision making but does not carry any significant influence. Moving along; the relationship between data security and management accounting techniques is also positive and significant in nature and the association is moderately strong between them. The Pearson correlation value of 0.507 shows that an increase in data security is bound to have a moderate level increase in management accounting techniques (Table 2). The relationship between management accounting techniques and the digitalisation is observed to be statistically significant in nature and is considered to be moderate in nature owing to its Pearson correlation value of 0.421. It indicates that an increase in digitalisation is found to increase management accounting techniques in businesses. But, in the case of management accounting techniques and decision making; the relationship is found to share a weak association i.e. 0.131 that shows there is a very weak influence of management accounting technique on the organisations decision making (Table 3).
Table 3: R square.
The r square value in this case is observed to be 42% for data security, 8% for decision making, and 34% for the management accounting techniques respectively. R square value shows the amount of variability and variance present on the dependent variable and in this case; low variability and influence is observed by the independent variables.
As per the results obtained; it is observed that there is an increase management accounting and techniques due to the data security and digitalisation. This is because of the increase in financial objectives present within the business and it is able to provide support to its investors. Elaborating further; the use of management accounting techniques are observed during the stock movement and is able to assess the business operations as a whole. In other words, the management accounting techniques are improved to a point where the process approach is considered and is able to allow the business to make a transition from conventional to a modern approach.
This finding is found consistent with Möller et al. (2020) study that stated about digitalization and its potential to assess the management accounting domain. The findings suggested that the digitalization aspect helps in improving the associated business model used in the organization and is also observed to improve the use of management accounting techniques in the organization. This is observed to improve the business operation and also helps in better understanding of the digitalization concepts within the businesss aspect. According to the current studys findings; it is observed that the use of management accounting technique has a weak relationship with the decision making aspect.
This is however, critiqued in other studies such as Nyamwanza et al. (2020)s study where the use of digitalization has been shown to improve and enhance the management accounting techniques within the Zimbabwean manufacturing sector. The study is implemented on a case study basis and observed that the business within the manufacturing sector is improved due to the use of management accounting techniques. The inference obtained from this finding is that the organization is able to track its costs incurred on each activity and enables the organization from making substantial decisions.
The decisions accuracy and its importance within the organization is deemed important and is also regarded to be important for the organizations profitability since it is able to drive innovation and growth through its entity. The current studys findings are also deemed important for the wider business context since it is considered to be important and relevant in nature because it helps the business in improving its performance. The weak to moderate relationship observed within the business is considered to be important and effective in nature as it helps in understanding the role and influence of digitalization on the management accounting techniques and its effect on the business performance. On similar parameters; Adu-Gyamfi and Chipwere, (2020) study shows that there is a positive impact of management accounting techniques on the business performance within the Ghanaian context. The use of digitalization has been muted in the study i.e. was not discussed in detail but observed that there is a role in improving the management accounting techniques. The findings also provide inferences regarding the use of management accounting techniques and the role that the digitalization has on its implementation. A moderate relationship is observed between the variables and this is pertaining to the fact digitalization is still perceived to be a novel concept for some firms and is not able to implement it in its operations. This is also affecting the management accounting techniques and principles that needs to be modernized so that it is able to address the current requirements and demands of the business environment. Similar findings are also observed in Alabdullah, (2022) study that discussed about the management accounting role in improving business performance. Performed within the risk managements context; the study observed that the management accounting techniques are improved and is able to drive better results through digitalization.
In this case; the study observed a weak association between decision making and the management accounting techniques. From the results, the main inferences derived is that the businesses are still not relying on the management accounting principles and thus also affects digitalizations impact and influence on the organization., Elaborating further; it is also mentioned that the use of management accounting techniques is an essential element within the business since it optimize and maximize its operations with relative ease. But this is regarded to be a significant issue for businesses since the result observed there is a weak association between the variables. This implies that the organisations are not incorporating findings from the management accounting in its decision making. A weak association implies that there is a substantial amount of gap present within the business understanding regarding its costing and budgeting techniques. This is further elaborated in Asiaei et al. (2022) study that discussed management accounting techniques from sustainabilitys perspective. It was observed that there is a substantial amount of scope and usage for the management accounting techniques since it is primarily used for resource allocation and also tracking its raw materials. The endeavor benefits the business from incurring additional expenditures and ensures that the organizations inventory management is at optimum levels. The findings is also observed to be parallel within the current studys context since management accounting techniques are not being observed as much it is required. In this case; decision making does not have a strong foundation amongst businesses due to lack of awareness and its importance.
The discussion also relates to the moderate relationship observed between technology adoption and management accounting techniques, which highlights that the global businesses are still not prepared to assess technological implications for improving management accounting. Similar results were also observed in Hadid and Sayed, (2021) study that observed that the organizational culture is not conducive for the business to adopt management accounting techniques as per its requirement. The observation relates to the fact that the technology adoption is then not implemented in other operational areas of the organization as well. According to Bhimani, (2020) study; digital data and the corresponding management accounting techniques are deemed compatible and are also considered important for the organization to improve its operational performance. The relationship is deemed compatible in other studies that suggests other parameters are considered within the organization to derive a strong and a meaningful relationship between technology and management accounting. In the studys context; it can be stated that the use of management accounting techniques is still lacking in application as much it is required. The current study also observes a medium range relationship between the two variables, suggesting that there is still lacking and it is yet to be applied within the business context. The adoption is not deferred in such organisations but citing the moderate association, it is interpreted that organizations have a lack of understanding regarding technology adoption for improving management accounting.
Contrasting with the current studys finding; Thottoli and Ahmed, (2022) states about e-accounting policies applied within the business to improve upon its determinants and also assessing its progress in the long run. Within the studys context; the main reason identified for a moderate level association between the management accounting and the technology adoption is because of low technology adoption and the impact is minimal on such techniques. This is considered to be an important element within the organization since it is considered to have an impact on the organizations management accounting techniques. This is an imperative stance that the organization needs to improve its operating performance to such an extent that it creates a substantial amount of synergy for the organization and to ensure that there is a substantial amount of benefits obtained from such techniques.
In conclusion; it can be stated that the digital transformation has a moderate level association and impact on the management accounting techniques. The reason a moderate relationship is observed is due to the lack of awareness regarding management accountings application within businesses.
Theoretical Implications
The theoretical implications identified in the research includes better decision making models through digitalisation. Organisations can invest in technologies to support data driven decision making and ensure that it receives accurate data for its operations. It is observed to streamline operations and is also able to provide businesses with better operational efficiency. Further studies can be conducted for assessing the scope for incorporating digitalisation within the management accounting techniques and to ensure that there is a better application of such practices and policies within the business.
The theoretical application also relate to the issues present within the business related to management accounting and it can be applied on other branches of accounting such as behavioural accounting. This is considered in Endenich and Trapp, (2020) study where management accounting technique is being implemented along with behavioral accounting to assess its impact on the organizations performance. Theoretical implications also lie in assessing the role of data management and its security for processing information in this regard and it is considered to be an important element within the organization since it helps in improving its efficiency with substantial ease.
Having stated from the digitalizations context; the theoretical implication also extends to specifically management accounting techniques as well. This includes the techniques and the methods used by management accounting such as activity based costing. According to Petera and Šoljaková, (2020) study; within the Czech Republics case; the use of management accounting in businesses are observed to improve the organizations operational efficiencies and enabled the business to meet its transparency and accountability demand without any issue. The implication is also from a performance measurements perspective since digitalization offers a significant medium in providing time based data and is able to cater to a series of perspectives such as financial, customer related concerns, the business operations, and subsequently contributing to its respective growth.
Managerial Implications
From the inferences observed from the researchs findings; the managerial implications includes increased focus upon efficiency in business since digitalisation is observed to optimise tasks and its efficiency. This is an important aspect to consider within the managerial context since it helps in improving the businesss ability to track costs and align its budgeting techniques. Another aspect to consider in this case is the analytical capabilities that businesses can achieve through digitalisation and also enhancing management accounting techniques. The interrelationship between digitalisation and management accounting techniques are considered important since it helps in considering the major issue present within management accounting and to ensure that the techniques help in reducing the complexities present within the business operations.
The managerial implications in this case besides enhanced analytical capacities includes risk management policies as well such as using management accounting techniques for compliance and also fraud detection. Such a perspective is observed in Kaur et al. (2023) study that focused on integrating both the forensic and management accounting principles to prevent fraudulent practices within the organisation. The managerial implications in this case suggests that the business is able to improve its performance and is able to increase its accountability and transparency and further studies can be conducted on this aspect.
Policy Implications
Based on the findings that observed a weak association between decision making and management accounting principles; the policy implications is to improve the relationship and association shared between them. The policy implications suggest that the use of data security and its impact on management accounting principles is to improve its application without any barrier. In this case; the policy implications include improving skills and expertise present within the current business structure and to accommodate training facilities. The policy implications require changes within the business so that a positive perception is created within the organisation to improve management accounting techniques. Business performance can also improve and also increase its ability to create value for the organisations stakeholders through such incremental changes.
In this regard; the organisation also requires to comply and adapt to professional standards so that the use of management accounting is necessitated and is deemed mandatory for the organisation to improve its performance. Regarding the policy changes; the organisation can improve its data accuracy and is also able to use management accounting techniques to improve its decision making. This is also considered effective in improving the relationship between the management accounting techniques and decision making since the latter can rely on such techniques and enable the organisation in enhancing its operational performance.
Data availability statement
Data is available within the manuscript and will be provided at the editors request.
The authors have contributed to writing, designing, compiling, and editing the final manuscript and the corresponding author acknowledging the efforts of the co-authors.
The authors do not have any conflicts of interest.
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Academic Editor
Dr. Doaa Wafik Nada, Associate Professor, School of Business and Economics, Badr University in Cairo (BUC), Cairo, Egypt
Yamen Academy, Jordan
Abu-Matar WSH. (2025). Digital transformation and managerial accounting: enhancing accuracy and efficiency, Int. J. Manag. Account., 7(2), 140-149. https://doi.org/10.34104/ijma.025.01400149
