EVALUATING THE INFLUENCE OF ACCOUNTING INFORMATION SYTEM ON FINANCIAL PERFORMANCE OF SELECTED SMALL ENTERPRISES: BASIS FOR PROPOSED IMPROVEMENT PLAN

Abstract

Technological advancements have revolutionized Accounting Information Systems (AIS), transforming them into powerful tools that drive operational efficiency and support strategic decision-making. What once relied on manual bookkeeping has now transitioned to sophisticated computerized and cloud-based platforms, significantly reducing the risk of data loss and enhancing real-time access to financial information. Modern AIS seamlessly integrate key business processes—such as inventory management, billing, financial accounting, and order processing—into a centralized system. This integration not only improves accuracy and workflow coordination but also mitigates issues like inventory mismanagement and potential revenue loss, ultimately contributing to better financial control and organizational performance. This study adopts a descriptive quantitative research design, involving ten (10) employees selected through simple random sampling to ensure unbiased representation. Data collection is conducted using a carefully developed and validated survey questionnaire, which serves as the primary instrument. This approach facilitates the systematic and objective measurement of variables relevant to the study’s aims, enabling reliable and generalizable insights. The survey findings reveal that a substantial portion of respondents are aged 25 and above, comprising 48% of the sample, with most falling within the 25–34 age bracket. Age is identified as a significant demographic variable influencing customer behavior and usage patterns. In examining the challenges faced by medium-sized enterprises in implementing Accounting Information Systems (AIS), several critical factors emerged: the absence of reliable vendors, concerns regarding data security and privacy, inadequate training and professional development programs, the considerable cost associated with AIS software acquisition and deployment, and a general lack of technical expertise among employees.  Among these barriers, the predominant issue is the pressing need for enhanced employee training and competency development in AIS-related technologies. Although the high cost of AIS software and implementation remains a notable obstacle, it was reported as the least influential factor compared to others.  Table 3.2 presents data on factors affecting AIS adoption through the lens of Perceived Ease of Use. Respondents predominantly perceive AIS as facilitating task completion with minimal effort, attributing this to the system’s user-friendly interface. This underscores the importance of rigorous usability testing to ensure intuitive system design. Moreover, elements such as system usability, data accuracy, comprehensive training, and strong organizational support play pivotal roles in fostering user satisfaction and optimizing individual performance. The role of Accounting Information Systems (AIS) in shaping the financial performance of small enterprises has become increasingly pivotal within today’s dynamic and competitive business landscape. Small businesses, often constrained by limited financial and human resources, rely heavily on efficient financial management practices to sustain operations and foster growth. An effective AIS not only streamlines core accounting and operational workflows but also enhances the accuracy and reliability of financial reporting. Furthermore, it provides timely access to critical financial data, empowering business owners and managers to make informed, strategic decisions that can improve profitability, optimize resource allocation, and ensure long-term viability.