MANAGERIAL ACCOUNTING

Organizational Architecture related to Managerial Accounting

Organizational Architecture related to Managerial Accounting

Introduction

Research into knowledge management has explored various themes, including the nature and form of organizational knowledge in PSFs; the relationship between organizational knowledge and the strategy, economic, and organizational structures of PSFs; the practicalities of developing and utilizing formal knowledge management systems within PSFs; and the socialization processes through which individual professionals learn how to share knowledge with their colleagues, as well as the reasons why they resist such initiatives. Knowledge management represents a complex management challenge in PSFs because a professional's technical and client-related knowledge represents his or her primary source of value to the firm. Codifying and sharing this knowledge disseminates its value throughout the firm and potentially diminishes the power it confers upon the individual.

Discussion

Other studies do not take the value of knowledge as a given but instead emphasize the highly contested nature of knowledge within PSFs, particularly within professions such as consulting, which lack a codified knowledge base and formal examination. Such studies analyze the techniques by which professionals persuade clients to pay premium rate fees to gain access to the professional's knowledge base. These studies emphasize how a client's perception of the quality of a professional service is inextricably bound up with the image presented by the individual professional and the PSF as a whole.

The professional partnership (an organizational form typically associated with the management of professionals) has attracted considerable attention from organizational theorists and financial economists alike. Both streams of research focus on the distinctive challenges that the management of professionals present and demonstrate how partnership presents a solution to these challenges.

In order to deliver a customized service to clients, professionals must be free to exercise their independent judgment. Formalized managerial controls will be of limited effect in this context, particularly as management is unlikely to be directly involved in, or have specialist insight into, the more technical aspects of professional work. Therefore the potential for freeriding and shirking within PSFs is considerable.

Partnership as an organizational form represents a solution to this dilemma. In a partnership, ownership is confined to an elite group of professionals within the firm and partners share unlimited personal liability for the actions of their colleagues. These legal characteristics are associated with certain cultural, structural, and systemic characteristics. Partnerships emphasize informal practices of mutualand self-monitoring that, backed up by unlimited personal liability, serve to create an environment of ...