Thesis (MBA)--University of Stellenbosch, 2010. / ENGLISH ABSTRACT:
The purpose of this study was to determine the impact possible revisions to the international
accounting standard (IAS) for intangible assets, under international financial reporting standards
(IFRS), could have on the perception of value of information technology. Furthermore, the study
discusses the fact that value of IT is still a debate and asks the question why. The use of the term
information technology capability in IT research is used in many different contexts. The study also
tested a framework that could possibly be used to view IT capability as, and used this framework to
ascertain how accounting treatment of IT capability is happening in practice.
The study is exploratory in nature since the impact of the possible revisions on IT capability is a
current event. The revisions are in a second round of discussion and as such this study could
provide insight to the discussion regarding the possible influence on IT capability. The revisions
primarily focus on the recognition and measurement of internally generated intangible assets. It is
currently being proposed that internally generated intangible assets be recognised as it would
during a business combination at any point and also that fair value be considered as an alternative
to the cost basis during initial recognition. While those are the most significant revisions, the
discussion paper makes minor proposals regarding the identification of intangible assets and
makes no suggestions regarding disclosure. A number of CIO’s and CFO’s or their direct delegates
were interviewed to determine from a practitioner perspective what the impact of the revisions
could be from both a financial perspective and IT management perspective. The participants were
engaged through a semi-structured interview and the collective responses analysed for common
themes. The study found that while the debate around IT value still exists, from the participant’s
perspective, it centres on the fact that in the absence of appropriate performance measurement of
businesses, it is difficult at best to reflect how IT contributes value to the organisation.
The participants do not see the currently proposed revisions as being able to improve the
perception of value of IT. This is primarily due to the fact that the financial reports are not for
consumption of internal business stakeholders to whom CIO’s need to communicate the value
contribution. Secondly, the cost focus of the financial reports is acknowledged and as well as the
fact that increasing the uncertainty of values in financial reports due to subjective valuation of IT
capability, will detract from the integrity of the financial accounting and reporting. Lastly,
participants also recognised that it would be a significant revision if internally generated assets are
recognised in the same way as during business combinations and that the use of fair value during
initial recognition is allowed. As such the participants felt that it would be a long time before the
revisions move onto the next stage.
This pragmatic response indicated that the focus should rather be on ensuring business
performance is measured and IT capability measured through business measures. The study is
limited by focusing on organisations that do not create IT capability for resale. Also, the focus is on
internally generated IT capability, and excludes the process of acquiring IT capability through
merger and acquisition activity. Lastly, the focus has been limited to the impact of the revision on
IT value perception. Practically, given the fact that the revisions are not seen to create an
opportunity for IT value to be reported, practitioners are advised to focus on using benchmarking to
report IT value for the business-as-usual IT capability, in business terms. Furthermore, in terms of
ensuring the value of investment in IT capability is articulated, the upfront business case and
investment decision process must articulate the business benefits clearly and thereafter ensure
benefits tracking is done to measure the performance and value of the constituent parts that deliver
the benefits can be measured. This study has value since these particular concepts have not been
analysed in this way before. Previous studies have focused on certain elements of IT capability, or
organisations that create IT capability for resale, not internal use, amongst others. The originality
stems from linking accounting treatment to the definition of IT capability and investigating the
impact it has on how the value of IT is perceived. / AFRIKAANSE OPSOMMING:
Die doel van hierdie studie was om vas te stel wat die impak van moontlike hersienings van die
internasionale boekhoudingstandaard (IAS) vir ontasbare bates, volgens internasionale finansiële
verslagdoeningstandaarde (IFRS), sal wees op die persepsie van inligtingstegnologie (IT) se
waarde. Voorts bespreek die studie die feit dat die waarde van IT steeds 'n voortgaande debat is
en vra waarom dit die geval is. Die term inligtingstegnologievermoë in IT-navorsing word in
verskillende kontekste gebruik. Die studie het ook 'n raamwerk getoets wat moontlik gebruik kan
word om IT-vermoë holisties te bekyk.
Die studie is verkennend van aard aangesien die impak van moontlike hersienings op IT-vermoë
'n gebeurtenis is wat tans plaasvind. Die hersienings is tans in die tweede ronde van bespreking
en die studie sou insig kon verskaf oor die moontlike invloed van die bespreking op IT-vermoë.
Die hersienings fokus primêr op die erkenning en meting van intern gegenereerde ontasbare
bates. Tans word voorgestel dat intern gegenereerde ontasbare bates erken moet word soos dit in
'n besigheidskombinasie op enige punt erken sou word, en ook dat billike waarde oorweeg moet
word as 'n alternatief tot die kostebasis gedurende aanvanklike of inisiële erkenning. Terwyl
hierdie die mees belangrike hersienings is, sluit die besprekingsdokument kleiner voorstelle in oor
die identifisering van ontasbare bates, maar verskaf geen voorstelle oor die bekendmaking van
ontasbare bates nie. 'n Aantal hoof inligtingsbeamptes en hoof finansiële beamptes of hulle
direkte gedelegeerdes, is ondervra om vas te stel, vanuit 'n praktisyn se oogpunt, wat die impak
van die hersienings sou kon wees – gesien uit beide 'n finansiële en 'n IT-bestuursperspektief. Die
deelnemers is betrek deur 'n semi-gestruktureerde onderhoud en die kollektiewe response is
geanaliseer vir gemeenskaplike temas. Die studie het bevind dat, hoewel die debat rondom ITvermoë
steeds bestaan, vanuit die deelnemers se perspektief, die debat sentreer rondom die feit
dat in die afwesigheid van toepaslike prestasiemeting van besighede, dit op sy beste moeilik is om
te besin oor hoe IT waarde bydra tot die organisasie.
Die deelnemers sien nie in dat die voorgestelde hersienings by magte sal wees om die persepsie
oor die waarde van IT te verbeter nie. Dit is primêr as gevolg van die feit dat die finansiële verslae
nie beskikbaar is vir interne besigheidsbelanghebbers nie aan wie hoof inligtingsbeamptes die
waardebydrae moet kommunikeer. Tweedens word die kostefokus van finansiële verslae erken,
asook die feit dat om die onsekerheid van waardes in finansiële verslae te verhoog weens die
subjektiewe waardasie van IT-vermoë, die integriteit van die finansiële boekhouding en
verslagdoening sal benadeel. Laastens het deelnemers ook erken dat dit 'n belangrike hersiening
sal wees indien intern gegeneerde bates op dieselfde manier erken word as gedurende
besigheidskombinasies en dat die gebruik van billike waarde gedurende aanvanklike erkenning
toegelaat word. As sodanig was die deelnemers van mening dat dit nog lang sal duur voordat die
hersienings na die volgende fase sal beweeg.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/8441 |
| Date | 12 1900 |
| Creators | Van Rooyen, Nathan |
| Contributors | Butler, Martin, University of Stellenbosch. Faculty of Economic and Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : University of Stellenbosch |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Rights | University of Stellenbosch |
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