Accounting information system, financial reporting quality and financial performance of small and medium enterprises in Accra Metropolis

Abstract

The primary emphasis of this investigation was centered on accounting information systems (AIS), the veracity of financial reporting, and the financial efficacy of small and medium-sized enterprises (SMEs) situated within the Accra metropolitan area. In accordance with the aims of the study, an explanatory research framework employing a quantitative methodological paradigm was implemented. A meticulously structured questionnaire was employed to execute the survey among 249 randomly chosen managers and owners of SMEs. The hypotheses were scrutinized through a reflective model definition utilizing structural equation modeling within the SMART PLS framework. The results demonstrated that alterations in AIS—characterized by the quality of information, quality of service, quality of systems, and user satisfaction—resulted in a modest enhancement of financial performance. Furthermore, it was elucidated that the proprietors and administrators of small and medium-sized enterprises (SMEs) within the Accra Metropolis have reported an augmentation in financial information, which can be largely attributed to the implementation of accounting information systems. The improvement in financial performance was determined to be significantly influenced by the caliber of financial reporting. The findings suggested that the predictive correlation between accounting information systems and financial performance was markedly mediated by the quality of financial reporting. The survey emphasized the imperative for SMEs in the Accra Metropolis to prioritize the allocation of resources towards the establishment of robust accounting information systems. This investment ought to primarily concentrate on critical components of accounting information systems, encompassing the enhancement of customer satisfaction, the elevation of service quality, the advancement of system quality, and the refinement of information quality. It is essential for proprietors and managers of SMEs to undertake a comprehensive assessment of their existing systems and pinpoint areas that require improvement.