Legitimacy Theory in Accounting

Legitimacy Theory in Accounting

Legitimacy Theory

The legitimacy theory in accounting is the social economic variables of sustainability accounting legality into the fields of business that rules the accuracy of professionalism, duties responsibility of accountants with integrity truthfulness and fairness in the world of enterprises corporate governance. New policies and interpretations of accounting standards and framework that regulates the accounting practice can be subject to violation that could lead to comprehensive case of termination from job field if found in position of extortion that threatens to expel or widens risk of criminal offense invasion of tax as one of the key indicators of breach of law or legitimacy.

The rules and laws set up by legal commissioning authorities to regulate the accounting firms and business enterprises through apply corporate social responsibility that monitors the legitimate activities of the financiers and managers of a company. The social corporate responsibility is to communicate about the social economic agendas of a business position to the internal and external environment to enhance the business delegacy and transparency of accounting principles adapted by the company in compliance to accounting standards.

There are some measures that need to be followed by the governing executives or role of management:

  • The conduct of professionalism into hierarchy of business
  • The code of conduct of accounts and management
  • The internal and external auditory regulative instruments
  • The process of assigning bills of exchange
  • Certification of documents ,concealments and approval of managers
  • Integrated decision making unified collaboration
  • Chain of command of all accountant social economic interactions
  • Both financial and non-financial variables responsibility to accountability

So, the legitimacy theory in accounting is the theory of legalization of accounting practical in the corporate world.

Adoption of Information Technology through Legitimacy Theory in Accounting

Accounting has been significantly influenced by information technology. It has facilitated the development and implementation of electrical components for the storage and recording of payment information. Accounting Information Technology is becoming a tremendous professional profession due to technological developments and the increased need for accountants. Data innovation accounting combines traditional financial statements with programming and digital structures to provide a unified area for storing a material’s financial statements (Souza, Silva, et al., 2017). This digitalization also simplifies analyzing so any data, allowing one to spot and correct errors or inefficient elements of their monetary institutions.

In the accounting field, technology and communication technologies play an essential role and represent the industry’s progress. Accounting records and company activity management are more agile when accounting and ICT are integrated. Information technology is currently one of the most important instruments for improving accounting data analysis.

The notion of organizational legitimacy is at the heart of this conceptual shift. The fact that institutional theory complements strategic management and legitimacy theory in comprehending how companies recognize and adapt to external cultural and organizational stresses and aspirations is one of the main reasons it is essential to research consensual accounting information techniques. It connects management culture to the ideals of the community in which a company operates and the necessity to preserve organizational legitimacy, among other things.

It’s more of a “cultural emblem,” a type of created speech that assists in transmitting and implementing ideas both within and outside the organization. Accounting may project an air of objectivity and neutrality by transforming fundamental theoretical principles into concrete forms and rendering them “accessible in money perspective”.

Evaluation of Proposition regarding the Adoption of Information Technology through Legitimacy Theory in Accounting

The corporate environment is dynamic, and it changes with time, maybe due to technological advancements. Accounting methods have become more globally standardized as a result of globalization. Accounting has become more productive and trustworthy as a result of the advent of new technology.

Proposition 1: Accounting technology has improved the accountant’s capacity to evaluate information rapidly and efficiently. People can now easily comprehend corporate communication, and as a result, the accountant has now become a company’s top significant trading counsel. Organizational changes effected of technology adoption, as well as changing views of what is legitimate through period, as well as factors of competitiveness and financial reliance, compel businesses to embrace technology-related accounting adjustments. So proposition 1 is agreeable.

Proposition 2: Accounting systems are shifting from their conventional impact of information monitoring to one of system functions. Its operational validity determines the extent to which technology may be introduced into the business community. In businesses, legitimacy assures availability management expenditures that assist in commencing and promoting the adoption process whenever an emerging technology adoption begins with effectiveness uncertainties. So proposition 2 is agreeable.

Proposition 3: It is expected that such actual research would give timely, relevant, and trustworthy data to assist management make educated management and enhance long-term operational efficiency. Technology can bring forward progress and generate possibilities for all businesses, which can play a crucial role in boosting economic growth. In the sector, a supporting framework regarding expertise and knowledge gives a chance for both large and small businesses. So proposition 3 is agreeable.

Proposition 4:  Computerized accounting is an instance of technological development in which accountants use fewer papers and depend heavily on spreadsheets and software programs to do their tasks. It contributes to enhanced performance, precision, processing speed, and risk management. Technology has provided the accounting sector with new opportunities to investigate, new goods and services to offer, and new opportunities for its practitioners to develop skills and experience new things. So proposition 4 is agreeable.

Legitimacy Theory in Accounting

Strengths and Weakness regarding the Adoption of Information Technology through Legitimacy Theory in Accounting

Technology’s influence on accounting has become so significant that it has broadened an accountant’s work scope. Because key time-consuming activities can now be completed with the flick of a switch, auditors can now examine and evaluate the research to inform their customers to improve operational efficiency and strategic goals. Because everyone can now access and analyze data virtually, market research is now a simple procedure. Accounting design and software advancements have specialized accountants’ jobs. The strength and weaknesses of the articles are given below:

Strengths

  • It alluded to the mythical concept of reason as a way of explaining, reasoning, and legitimizing choices that benefit other people and the greater good
  • According to the legitimacy theory, legitimacy is a common perception regarding an object’s activities as beneficial or suitable within the bounds of culturally accepted norms.
  • It consists of an accounting platform that is constructed to be fully precise down to the smallest detail. Even if people’s arithmetic abilities are perfect, it’s always better to let a machine handle the computations for them.

Weaknesses

  • The authors of the article did not indicate the expense. When utilizing accounting software, customers should purchase the program and any extra permits required for administrator access or computers. For new functionality, some software needs them to pay revisions or upgrades.
  • They did not refer to network security. Accounting software information needs additional degrees of protection.
  • Users may modify data more efficiently with software, which makes it much simpler to cheat the system.

Written by

Md. Shadequr Rahaman

Email: [email protected]

Legitimacy Theory in Accounting

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