Effect of Accounting Software on Financial Reporting Quality in UK Small Businesses
Abstract
Accounting software adoption has become increasingly prevalent among small businesses in the United Kingdom (UK) as a means to improve financial reporting quality. This study aims to investigate the relationship between accounting software adoption and financial reporting quality in UK small businesses, identify the challenges faced in implementing and using accounting software effectively, and explore stakeholder perceptions on the impact of accounting software on financial reporting quality. The study employed a descriptive research design, with data collected through a combination of online and offline questionnaires and semi-structured interviews from a stratified random sample of small business owners, managers, accountants, and other relevant stakeholders in the UK. The data was analysed using descriptive and inferential statistical techniques, including correlation analysis, regression analysis, and structural equation modelling. The findings revealed that accounting software adoption (β=.783, p=0.000) and stakeholder perceptions (β=.652, p=0.000) were positively and significantly related to financial reporting quality, while challenges in implementation (β=-.314, p=0.001) were negatively and significantly related to financial reporting quality. The study concludes that effective accounting software should be user-friendly, cost-effective, and capable of producing accurate, timely, and relevant financial information to support sound decision-making and enhance the overall financial management of small businesses. The study recommends that UK small businesses carefully evaluate and select accounting software that aligns with their specific needs, invest in comprehensive training and support for employees, and establish clear policies and procedures for data entry, processing, and reporting. Furthermore, stakeholders should actively engage with small businesses to provide guidance and support, while policymakers should consider providing incentives and support mechanisms to encourage the adoption of accounting software among UK small businesses.
Keywords: Accounting Software, Financial, Reporting Quality, UK, Small Businesses
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