This paper conducts a cost/benefit analysis by applying a knowledge management system that incorporates accounting's conceptual framework, codification initiative and financial statement presentation proposal into a complete ontology. The need for a systematic organization is heightened in the convergence of Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) standards which increases the costs (e.g., from complexity and volume) to the accounting body of knowledge. A knowledge management framework can help accounting professionals/academics address accounting issues in such a manner where the benefits exceed the costs in an organized system.

The objective of this study is to introduce Knowledge Management (KM) as a means of organizing Generally Accepted Accounting Principles (GAAP), its conceptual framework, and the eXtensible Business Reporting Language (XBRL) supporting system into one framework. In the process, this research seeks to develop ontology's advantages to accounting. What would KM and ontology do for accounting? Ontology, as a scientific method, renders an unstructured situation into a structured one and in this context the ontology provides preparer and user financial statement perspectives/issues that may not be readily apparent otherwise. KM provides efficiency for accounting to reflect firm information for decision-making by accounting users.

There are three major motivations for this study. First, ontology provides a means of creating rigor (which critics say is lacking) in accounting theory. This study places three major aspects of accounting theory into one KM framework. The three body of knowledge accounting components are: (1) the conceptual framework; (2) the GAAP codification project; and (3) the 2010 proposed financial statement presentation standard. The theoretical contribution to KM is a functional presentation of an accounting conceptual relation of accounting principles, measurement and ultimately disclosure. This approach has the potential for forward/backward relation analysis within the context of an ontology. As such, the study also introduces a theoretical linkage idea to connect KM aspects of ontology.

Knowledge Management Journal, International Accounting Standards Board, Financial Accounting Standards Board, Generally Accepted Accounting Principles, GAAP, EXtensible Business Reporting Language, XBRL, Knowledge Accounting Components, Accounting System, GAAP Codification, Business Transactions, Public Administration Processes, Ontological Methods, Manufacturing Sectors, Financial Statements, Knowledge Acquisition, Information Systems.