Abstract

This study was set to examine the Impact of Accounting Information System on the Performance of Small and Medium Enterprises in Buea municipality. The study made use of quantitative research design for collection of data from 100 respondents or participants from the population in Buea Municipality through self-administered questionnaire which were established using Likert scale of five points.

Data was analysed using Statistical Package for Social Sciences (SPSS version 29.0.) for analysis using descriptive statistics like frequency distributions, percentages and averages. Inferential statistics such as regression analysis was performed, while standard deviation was computed to test for consistency and the 100 variability of responses across the study. The significance level was set at 5% for every statistical set.

The findings revealed that most SMEs in Buea are limited in their use of AISs because of myriad problems some of which are financial constraints which limit the institutions ability to implement effective accounting information system and inadequate expertise for training of this systems.

Also, the findings revealed that there is a significance of 0.05 which therefore rejects the Null hypothesis and concludes that problems related to the usage of AIS has a significant impact on the performances of SMEs. It was therefore recommended that based on the above findings, an effort should be made by SMEs on regular basis through in-house training schemes to provide a forum for accountants to acquaint themselves to the available AISs and Standards and to train the accountants and other staffs to understand the accounting system in operation in SMEs.

Also, the researcher wishes to recommend that, SMEs should amalgamate and create particular AIS that are peculiar only to them. These systems should be computerized accounting systems packages which are mandatory to SMEs operating with certain number of employees and with a particular capital range. This will help to bring in stability into the system and also enable them to account properly on their day to day  transactions.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Accounting Information System (AIS) are tools and systems put together, designed for the collection and display of accounting information necessary for decision making process. In recent years, accounting information system received a lot of attention that facilitates managers to take appropriate actions related to issues in the organisation, if AIS is not accurate, management will take wrong decisions.

There seems to be no uniformity in the definitions of Small and Medium scale Enterprises (SMEs) as the terms are relative, they differ from business to business and from one nation to another (PricewaterhouseCoopers, 2009). ILO, (1997) also confirmed this assertion as they posited that no single definition can capture all the dimensions of “micro”, “small”, “medium” or “large”. Nor can it expect to reflect the differences between firms, sectors or countries at different levels of development. This assertion was also supported by Holt (2009).

According to IFRS, Small and Medium Enterprises are entities without public accountability, as they are neither compelled to publish general purpose financial statements nor follow generally accepted accounting principles (GAAP). The fact that financial statements prepared by these entities are normally laced with personal judgement of the owners, make the entities to be vulnerable to non-compliance with a set of guidelines as opposed to those prepared based on formalized conceptual framework.

According to Olatunji, T. E (2013), small and medium size enterprises are  a majority of business found in the variety of primary and intermediate production of the economy. These establishment have tremendous on the state and wellbeing of the nation in employment generation, as source of national output and revenue, providing feedstock for large companies. Moreover, it is considered a competitive advantage for organisation with well-designed accounting information system.

Majed, Adel and Alsharayri (2011). However, several of these enterprises demise without the    fulfilling the expectations which is often attributed to poor internal administration policies arises from weak designed of accounting information system. Fagbemi and Oloaye (2016). It has been discovered that lots of SMEs shut down before they achieve their goals as a result of poor accounting information system. Olatunji (2013).

Due to rapid change in technology, many small businesses prefer to track monetary transactions with computerised software than keep track of all financial activity manually through the use of physical ledgers Dindi (2013). The advancement in information technology (IT) has eventually led to the introduction of Accounting Systems (AS) among small and medium sized enterprises (SMEs) to help produce relevant and faithful representation of financial report for both management and external users for decision making at all time. The uniqueness of small and medium size enterprises call for careful consideration in the design of accounting systems   Olatunji,

1. E (2013). According to Grande (2011), he claimed that accounting information uses formalised categories for collecting and reporting information that creates a common language with which members of the organisation can communicates. Technology has contributed to the advancement of fields. On the other hand, accounting has become one of the essentials tools in information and technology which is not only focused on financial controls but also has established an enormous impact on the performance management. Al-Delawi, A. S, & Ramo, W. M. (2020).

Accounting information system (AIS) is vital to all organisations Curtis (1995), Wilkinson, Cerullo, Rava and Wong-On-Wong (2000). It is a structured approach which provides organisation past, present and future accounting information to support the functions of the organisation and to assist in taking appropriate administrative decisions. Moreover, it varies from one organisation to another and from time to time depending on the beneficiary and the purpose of the system. The success of accounting information system would lead to the success of the organisation in    achieving its objectives Khan,

1. (2017). Using AIS supports knowledge by allowing managers to develop their businesses using techniques, skills and processes in AIS correctly. Moreover, the usage of AIS reflects how SMEs use these systems to manage their transaction effectively to help grow their ability to manage and understand their operations in order to meet challenges in the business environment. Furthermore, managers and owners can obtain operational clarity using AIS. Thus, the current result can help them make strategic decision which are reflected in firm performance (Kareem, Haitham Mohsin, et al., 2021)

Furthermore, accounting information system combines the methodologies, control and accounting techniques to track financial transaction and to provide internal and external reporting data as well as helping the preparation of financial statements with capabilities to improve on organisational performance.

Perez et al., (2010). Similar views has been echoed by some scholars Markus and Preffer (1983) and Collier (2015) that the successful application and implementation of accounting information system needs and appropriate fit among three factors such as “perception of the organisation concerning the situation, the accounting system must fit when problem are normally solve, and the accounting system must fit with the culture that is, the norms and value system that characterised the organisation”.

Grand et al. (2011) contended that IT is readily available and using them gives no competitive advantage for accomplishing better outcomes. They claimed that many firms have invested in IT but failed in achieving the established performance goals. Hence indicating that AIS can only be beneficial in organisational operations only when appropriate factors are put in the right place and operated harmoniously.

According to Welsch and short (1987), an accounting system regardless of the size of the organisation, it is designed to collect, process and report periodic financial information about an entity. Ultimately, information provided by computerised accounting systems must possess the basic attributes recognised under a generally accepted accounting principles (GAAP) as those of any good accounting information. Therefore, it is generally expected that with the increase in investment in AIS, there is  a wide range of benefits that accrue to the concerned of the organisation as a whole in the long run. These benefits emanate from AIS increase processing power, generating  of vital information and reports on timely manner as well as reduction of associated operational costs. As such, AIS reduces the human interference with the financial and her transactional records, hence improving the credibility and reliability of the result generated. Bilal Khalid and Michal Kot (2021).

1.2 Problem Statement

AIS act as one of the essential tools in all organisations. It is seen to be an important system that has a crucial role as an important source of internal information which has  a great potential to enhance the success of decision-making process of small and medium size enterprises as well as enabling the achievement of their goals and objectives. It is seen to be an impact in order to better their performance and effectiveness.

However, many previous researches have been conducted and discussed the accounting information system and its impact on organisational performance. Trabulsi, R. U. (2018) studies focused in investigating of such issue within the context of large organisation. The value of AIS in SMEs has been doubted as investment in AIS has been difficult to be justified from the owners’ point of view.

Ismail (2005) revealed that small size enterprises have difficulties in managing their accounting information and poor control and decision making is mostly on informal basis. Following the significant contribution of SMEs in the world economies in general and Cameroon in particular precisely Buea, there is a dire need to ensure optimal performance in financial management of these SMEs and this depends on an efficient financial reporting system by these  SMEs.

Additionally, previous research, including those by Romney et al. (2015), demonstrated the importance of the accounting information system in enabling the emhancement of company performance (Gelinas et al., 2014). This goal can be obtained by businesses that are open to natural changes, especially in IT. In today’s world, most firms use IT to some extent, making it very challenging to a competitive edge and succeed in the market without it.

Curtis (1995) mentioned that it is also hard to determine, to what extent its adherence to laid down accounting procedure is strictly maintained. Oladipupo and Ajase, (2013) also mentioned that difficulty exist in determining how far non-recognition of the necessity of accounting to continued existence and growth, low educational background of entrepreneurs and employment of un-skilled accounting staff, have affected the overall performance of SMEs.

Nevertheless, accounting information derived from daily transaction is actually an important consideration in the overall performance of SMEs. Audit of small and medium size enterprises have proven to be among the most worrisome for professional accountant because of the inadequacy of the internal controls. Except for statutory demands, yet the inadequacy and ineffectiveness of accounting processes have been responsible for untimely collapse of some enterprises Mukaila and Adeyemi, (2011).

1.3 Research Questions

1. What are the specific challenges faced by SMEs in the implantation of accounting software packages in the Buea Municipality?
2. To what extent does the usage of accounting software packages (MS Excel, Sage and QuickBooks) have on the financial reporting within SMEs in Buea Municipality?
3. To what extent does the integration of AIS affect the growth potentials of SMEs in Buea Municipality?

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