Management Accountants’ Role in Accounting for Sustainable Development in Qatar
In the highly competitive business environment today, it is important for businesses to ensure sustainable development. This implies a level of development that continues to grow without affecting public interests negatively. It is the type of development that meets the current needs of a population while still considering the ability of future generations to meet their needs. Among the parties that are actively involved in ensuring this type of development include the management accountants as they have a role to play in defining and measuring sustainable development. The management accountants have a role to ensure that the reports on financial performance of an organization include factors that are unrelated to business, yet they influence its performance (Tampakoudis, Nikandrou & Fylantzopoulou, 2013).
The choice of the current topic is motivated by the need to learn more about the roles that different parties play in ensuring sustainable development. It is important to ensure that the business practices adopted in the modern days do not threaten the ability of future generations to meet their economic needs. Among the parties that have a great influence on the extent to which companies achieve sustainable development include the management accountants. Through the employees, firms are able to communicate to the interested parties about the financial state of the company. Businesses are responsible to provide information to the interested parties including the shareholders, employees, creditors and the government. Each of the parties has a special interest in the company’s success and their decisions influence the sustainability of the business. For example, the shareholders use the information obtained to decide the amount of capital they should invest in the company or whether they should consider withdrawing their funds. Their actions affect the ability of the business to expand to new markets and this affects its sustainability. The creditors also need the information about financial position of the business so as to determine the maximum credit limit to extend to the company (Abdulla Hossain & Momin, 2012). Again, this affects the ability of the company to access the capital needed to expand its operations and eventually influences sustainable development. The information used by these parties is prepared by the management accountants, making them influential in sustainable development. The accuracy of their measuring standards and reports influences the accuracy of decisions made by the parties. The quality of information is influenced by the non-financial and financial aspects they consider in their reports.
By identifying the roles played by management accountants in ensuring sustainable development, it is possible to develop approaches that can be adopted by the business sector to support the noble cause. This paper aims at identifying the roles that management accountants in Qatar have in ensuring sustainable development. Most of the available literature on sustainable development mainly deals with environmental issues, but the current study deals with the approaches that can enhance sustainable development from a business practice point of view (Weerakkody et. al., 2015). It will be helpful to the country’s management accountant’s body in helping them restructure their reporting standards to address the current and future development needs of the country. The paper will also help the accounting bodies in the country address the suitability of methods used to measure performance of businesses to include environmental and other social factors that may affect the sustainability.
In the current dynamic business world, the concept of sustainable development is widely discussed by companies and they are encouraged to invest in activities that ensure they are sustainable. The challenge is that majority of these companies are not committed to sustainable development as reflected by their activities. Most of the actions conducted by the organizations reflect ignorance on the need for sustainability in business operations (Abdulla Hossain & Momin, 2012). An example of activities that indicate failure to consider sustainability by these companies include the way they report their financial statements to the interested parties.
Most of these statements are useful in communicating the attractiveness of a business in terms of profitability and sustainability. However, most of these reports are mainly concerned with financial information, ignoring other factors within the business environment that may affect its future growth and development (Sunarni, 2013). This section defines sustainability within the business context and identifies the role that management accountants have in enhancing sustainable development, mainly through measuring and reporting standards. It also reviews the past literature on sustainable development with an aim of establishing the contribution of businesses to sustainable development. To make the analysis of the role of management accountants in sustainable development more accurate, the paper applies the stakeholder theory.
Sustainability in terms of business environment implies a situation where the current level of growth does not endanger the future success of the company. This is mainly achieved by ensuring that companies meet their financial obligations and that they are operating profitably. The financial performance of an institution is determined by various financial indictors including the balance sheet and income statements (Kamla, 2007). Although the financial reports indicate whether a company makes losses or profits, they may not be useful in indicating its sustainability.
To determine if the company’s performance can be sustained, companies may apply the Dow Jones sustainability index that shows the main variables that indicate whether the company’s financial performance is profitable (Homayoun, Al-Thani & Homayoun, 2016). Using this approach, a company’s sustainability is measured using financial figures such as the net profit, but the long-term impact of the economic, social and environmental aspects has to be considered. Among the financial indicators used in the indexes include statement of cash flow and shareholder values (Steurer et. al., 2005). The approach also applies profitability, leverage and liquidity ratios to generate information useful in determining whether the companies incur losses or profits.
Significance of sustainable development in businesses
The concept of sustainable development is familiar with most companies, but the commitment to implement it is low. Most of the company decisions that involve implementation of concepts and new business practices are influenced by the managerial team that includes company directors, marketing managers, management accountants and supervisors (Bendell & Kearins, 2005). The individuals have a primary role to play in ensuring that variables that influence sustainable development are fully implemented for the benefit of the business. The individuals have a great impact on the company’s ability to achieve sustainable development. However, most of these officials find the concept as a theoretical one that cannot be applied in real life. It is impossible to achieve sustainable development without integrating planning and measuring strategies that are focused on protecting the interests of the company.
Sustainable development helps a company meet its objectives as it focuses on the interests of all the parties involved. It entails adoption of business strategies that appeal to the employees, thus making them more productive. Such strategies include flexible remuneration packages that motivate employees to be more productive. The other strategy entails providing regular and accurate reports to the stakeholders so as to guide them in their decision making (Kamla, Gallhofer & Haslam, 2012). This may lead to increased capital by the business by attracting more investors. The reports also help the creditors to determine the level and type of loans that the business qualifies. When fully implemented, the concept of sustainable development has the potential to increase the business earnings, both in the present and in future.
The role of management accountants in enhancing sustainable development
In addition to financial and physical capital, sustainable development is greatly dependent on human capita. This implies the ability of employees to execute their duties efficiently. Management accountants are among the workers whose input has a significant influence on the ability of the company to achieve sustainable development. The concept of sustainable development is dependent on the ability of the current employees to put in place measures that enhance future performance of the company (Krongkaew-arreya & Setthasakko, 2013). The business practices implemented by the management accountants in measuring and communicating financial information to the users have the ability to influence sustainable development. For sustainable development to be attained all the players in the business sector have to be involved. The decisions taken by the employees, creditors, investors, shareholders and consumers influence the long-term success of a business. Therefore, it is important for all the stakeholders to be guided into making decisions that ensure that the current needs are satisfied without jeopardizing the ability to meet the needs of the future generations.
Management accountants play a crucial role in preparing and reporting the financial information of a given institution. The reports they prepare are crucial to ensuring that the stakeholders make informed decisions (Richer, 2014). The influence of management accountants’ reports is enhanced by their ability to use both financial and non-financial accounting information. While financial information indicates the profitability of the company over a given period, non-financial information determines how sustainable the profitability is (Dillard, Dujon, & King, 2008). The quality of decisions made by the stakeholders depends on these two types of information. Although management accountants are aware of their responsibility in guiding the stakeholders in making informed decisions, most of them only focus on the current performance of the company. Some even go to an extent of reporting only the positive impacts of the company’s activities and ignores the adverse impacts that may affect its sustainability.
Barriers to sustainable development
The effectiveness of the roles played by management accountants in enhancing sustainable development is hindered by a number of barriers. One of the barriers is organizations structures that do not support the implementation of sustainable practices. Bureaucratic company structures delay the implementation of sustainable practices and this affects the ability of the companies to adopt strategies that enhance sustainable development (Collins, Roper& Haar,2011). The other barrier to sustainable development is costing system adopted by a given organization. According to Parker (2000), the type of costing system adopted by an institution affects the extent to which management accountants are able to influence sustainable development (Mistry, Sharma & Low, 2014). The lack of coordination among the accounting bodies is also a barrier that affects the ability of management accountants to contribute to the sustainable development of an institution. Due to this challenge, businesses do not consider the changing interests of the investors in their accounting practices. Consequently, the investors end up making erroneous decisions that adversely affect the sustainability of the business.
Theoretical framework and hypothesis
The study is mainly based on the economic dimension of sustainable development as it relates to the impact of decisions made by stakeholders in the business environment. The accuracy of these decisions is determined by the ability of the management accountants to measure and report financial and non-financial variables accurately. Most of the studies ion economic dimension of sustainable development only focus on maximizing wealth for economic growth and ignores other important factors that are not related to economic success of a business, yet they influence its sustainability (Sherman & Gent, 2014). The study adopts a theoretical framework that defines sustainable development in terms of the functions it plays in the economy. Sustainability is defined by the ability to achieve long-term growth while development is achieved by meeting traditional objectives of a business. This implies that sustainable development aims at achieving business objectives for long-term. The study is based on the hypothesis that traditional objectives of the business are achieved when the businesses focus on long-term growth strategies.
The most suitable research design to be used in the study is the mixed method exploratory design. The design is useful in collecting and analyzing data on areas where there is limited study (Johnson & Onwuegbuzie, 2004). In the current study, most of the available literature is concerned with sustainable development with respect to environmental concerns. There is limited research on sustainable development related to economic dimension, especially linking management accountants to the sustainability. Further, the limited study on the role of management accountants in enhancing sustainable development is on countries such as Brazil, but the current study aims to conduct the study in Qatar. The adoption of the research design is also justified by the fact that it enhances accuracy of study findings. The fact that it combines both the qualitative and quantitative techniques makes it more accurate as the drawbacks of each method are neutralized by the strengths of the other technique. The nature of research design dictates the type of data collection instruments that will be used in the study and consequently, the nature of data analysis methods adopted.
The qualitative data will be collected using in-depth interviews which will be guided by open ended questions. To enhance the quality of responses provided, the study will only employ trained interviewers to conduct the exercise. The use of open-ended questions will be useful in allowing the respondents to exhaust the questions.Among the different methods of collecting qualitative data, in-depth interviews are the best in the current study. The data collection instrument enhances the quality of data collected because it provides a chance to explore the topic in details. The interviewer is able to clarify any unclear responses by the participants, thus leading to high quality information. The interviews also make the data more reliable because the interviewer has direct contact with the respondent thus they can determine the level of accuracy. The data collection instrument is also effective in the current study as it may provide new insights that prompt further research. The data collected using this method will be recorded and transcribed for easy analysis. The most suitable method of analyzing it will be coding, due to the high reliability. Similar responses will be identified and coded using the same color to show the pattern of responses and derive conclusions from the data.
The data collection instrument that will be used to collect quantitative data will be questionnaires. They will be based on close ended questions to make the data analysis simple. One of the reasons for using this type of data collection instrument is that it enables collection of large amount of data within a short period, thus saving on time and financial resources used in a study. In addition, the questionnaires are standardized thus it is unlikely to have respondents that do not understand the questions. The nature of data collected by the instruments is numerical, thus making it possible to use a fast and more accurate method of data analysis, SPSS.
Study population and sample size
The study is mainly concerned with how sustainable development can be achieved in Qatar through the implementation of suitable business practices by management accountants. The most suitable nature of study population for the study is Qatar employees who are involved in management accounting. The population will include employees from both the public and private sectors to enhance the accuracy of results. Employees that will be interviewed include general managers, accounts managers and management accountants. To save time and financial resources used in the study, data will be collected from one private and one public institution. The sample size for qualitative data will be 100 employees, half of them from the public and the rest from private sector. Quantitative date will be collected from the same institutions from 250 employees. Out of the respondents, 80% will be management accountants, 10% will be account managers while the rest will be general managers.
Ethical considerations in the study
The study involves collection of research information from human respondents thus it is vital to consider the ethical implications of the exercise. Prior to the data collection exercise, the researcher will obtain permit from the managing directors of the institutions that will participate. They will explain the importance of the study to the accounting profession as well as the national and global economy. The respondents will be assured of anonymity and confidentiality of the information provided.
Limitations of the study
Although the research design adopted enhances the quality of data collected, it has some limitations that affect its reliability and validity. For the qualitative data, the quality of responses provided will depend on the qualifications of the interviewer. Further, the method is time consuming as the researcher has to spend time interviewing all the participants alone. The other limitation is that the volume of data obtained using the data collection instrument may be too large thus affecting the accuracy of data analysis. For the quantitative data, the quality of data collected may be low because the respondents do not have time to clarify any questions that may be unclear.
The nature of stakeholders in businesses today differs from decades ago due to the impact of information technology. The stakeholders today make decisions based on the information gained from the various media sources. The evolution of information technology has contributed positively to the evolution of business, but the nature of the information provided threatens the success of organizations. The type of decisions made by the stakeholders has the ability to influence the level of sustainable development. It is therefore important for companies to ensure that the type of information provided to the stakeholders is important in making sound business decisions. The role of management accountants in implementing business strategies that enhance sustainable development is crucial. This is because they influence the quality of decisions made by the stakeholders through the financial and non-financial information provided.
However, there are barriers that hinder the management accountants from contributing to sustainable development. They include poor coordination among accounting bodies, company structures and the costing systems. By conducting the current study, it is expected that the research will provide a clear insight on the role of management accountants in enhancing sustainable development in Qatar. The research design used ensures collection of high quality data; therefore, it will be possible to generalize the research findings. The findings will not only be helpful to the business sector in Qatar, but also to other parts of the world. After obtaining the results it will be easier for the study to identify the major barriers that limit the contribution of management accountants to sustainable developments. It will also be possible to identify the most suitable strategies that can be implemented to promote sustainable development.
Abdulla AlNaimi, H., Hossain, M., & Ahmed Momin, M. (2012). Corporate social responsibility reporting in Qatar: a descriptive analysis. Social Responsibility Journal, 8(4), 511-526.
Bendell, J., & Kearins, K. (2005). The political bottom line: the emerging dimension to corporate responsibility for sustainable development. Business Strategy and the Environment, 14(6), 372-383.
Collins, E., Lawrence, S., Roper, J., & Haar, J. (2011). Sustainability and the Role of the Management Accountant. CIMA Research Executive Summary Series, 7, 14.
Dillard, J., Dujon, V., & King, M. C. (Eds.). (2008). Understanding the social dimension of sustainability. Routledge.
Homayoun, S., Al-Thani, F. F., & Homayoun, S. (2016). A Sustainability Accounting: Case Study on Exploration, Production and Midstream Activities at Maersk Oil. International Journal of Energy Economics and Policy, 6(1), 20-27.
Johnson, R. B., & Onwuegbuzie, A. J. (2004). Mixed methods research: A research paradigm whose time has come. Educational researcher, 33(7), 14-26.
Kamla, R. (2007). Critically Appreciating Social Accounting and Reporting in the Arab MiddleEast: A Postcolonial Perspective. Advances in International Accounting, 20, 105-177.
Kamla, R., Gallhofer, S., & Haslam, J. (2012). Understanding Syrian accountants’ perceptions of, and attitudes towards, social accounting.Accounting, Auditing & Accountability Journal, 25(7), 1170-1205.
Krongkaew-arreya, N., & Setthasakko, W. (2013). Influence Factors to Develop Sustainability Report: A Case Study of Thailand. In London: Proceedings of 8th Annual London Business Research Conference (pp. 1-11).
Mistry, V., Sharma, U., & Low, M. (2014). Management accountants’ perception of their role in accounting for sustainable development: An exploratory study. Pacific Accounting Review, 26(1/2), 112-133.
Richer, R. A. (2014). Sustainable development in Qatar: Challenges and opportunities. QScience Connect.
Sherman, J., & Gent, D. H. (2014). Concepts of sustainability, motivations for pest management approaches, and implications for communicating change. Plant Disease, 98(8), 1024-1035.
Steurer, R., Langer, M. E., Konrad, A., & Martinuzzi, A. (2005). Corporations, stakeholders and sustainable development I: A theoretical exploration of business–society relations. Journal of Business Ethics, 61(3), 263-281.
Sunarni, C. W. (2013). Management accounting practices and the role of management accountant: Evidence from manufacturing companies throughout Yogyakarta, Indonesia. Review of Integrative Business and Economics Research, 2(2), 616
Tampakoudis, I. A., Nikandrou, K. A., & Fylantzopoulou (2013), D. A. Sustainable Development Indicators: Examining their effect on Emerging, Frontier and Developed markets. ICIB 2013 proceedings, 232.
Weerakkody, V. J. P., Al-Esmail, R., Hindi, N., Osmani, M., & Irani, Z. (2015). Localising professional skills development strategies in the GCC: Research and policy considerations for Qatar.
Please select the most suitable response
- How old are you?
- Where do you work?
- Private sector
- Public sector
- What position do you hold in the company?
- Senior grade
- Middle grade
- Junior grade
- Do you think the company is committed to enhancing sustainable development?
- Do you think that management accountants have a role to play in ensuring sustainable development?
- Stakeholders’ decisions have an impact on sustainable development. To what extent so you agree with the above statement?
- Strongly agree
- Strongly disagree
Questions used in the in-depth interviews
Please fill in the suitable responses in the spaces provided
- What is your take on sustainable development?
- Do you think the business sector is committed to enhancing sustainable development? Support your response.
- What role do management accountants play in enhancing sustainable development?
- What are the barriers to sustainable development?
- What challenges do management accountants face in their work?