The Impact of Computerised Accounting Systems on Financial Reporting in Maldives SMEs

Running head: THE IMPACT OF COMPUTERISED ACCOUNTING SYSTEMS (CAS) IN
THE FINANCIAL REPORTING AMONG SMES IN MALDIVES
The impact of using computerised accounting systems (CAS) in financial reporting among SMEs
in Maldives
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Name of the University:
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THE IMPACT OF COMPUTERISED ACCOUNTING SYSTEMS (CAS) IN THE
FINANCIAL REPORTING AMONG SMES IN MALDIVES
Abstract
This paper is related to having an understanding of the impact of “Computerised Accounting
Systems” in the financial documentation among the SMEs in Maldives. Computerised
Accounting Systems are a new tool and technology that are available to the organizations with
the help of which companies are able operate their business in a much better way create financial
statements that are ideal for the companies in order to keep track of all their records and
transactions and assist in the process decision making for the business. The objective of the paper
has been fundamental in understanding the aspects with regards to which the results will be
attained. In the same manner, data has been collected and thereafter data analysis process has
been undertaken with the help of which effective level of results are obtained for this paper. The
results that have been obtained expresses that “Computerised Accounting System” has a positive
effect on the financial reporting of the SMEs in Maldives and effective supervision and
maintenance can enhance the activities of the process in the SMEs as well as in the other
industries in Maldives in the future.

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THE IMPACT OF COMPUTERISED ACCOUNTING SYSTEMS (CAS) IN THE
FINANCIAL REPORTING AMONG SMES IN MALDIVES
Table of Contents
Chapter 1: Introduction....................................................................................................................6
1.1 Background of the Study.......................................................................................................6
1.1.1 Computerised Accounting System.................................................................................8
1.1.2 Quality of the Financial Reports.....................................................................................9
1.1.3 Effect of Computerised Accounting System on the Financial Report Quality.............10
1.2 Statement of the Problem.....................................................................................................11
1.3 Research Objectives.............................................................................................................12
1.4 Research Question...............................................................................................................12
1.5 Significance of the Study.....................................................................................................13
1.6 Scope and Limitations of the Study.....................................................................................13
Chapter 2: Literature Review.........................................................................................................14
2.1 Related Studies....................................................................................................................20
2.2Small and medium enterprises in Maldives..........................................................................22
2.3Factors that influence computerised accounting system......................................................25
2.4 Conceptual Framework........................................................................................................26
2.5 Summary of the Literature...................................................................................................27
Chapter 3: Research Methodology................................................................................................28
3.1 Introduction..........................................................................................................................28
3.2 Research Philosophy............................................................................................................28

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THE IMPACT OF COMPUTERISED ACCOUNTING SYSTEMS (CAS) IN THE
FINANCIAL REPORTING AMONG SMES IN MALDIVES
3.3 Research Approach..............................................................................................................29
3.4 Research Design..................................................................................................................31
3.5 Quantitative Data.................................................................................................................32
3.6 Primary Data........................................................................................................................32
3.7 Sample Size.........................................................................................................................33
3.8 Access to the respondents....................................................................................................33
3.9 Data Analysis.......................................................................................................................34
3.10 Ethical Considerations.......................................................................................................34
Chapter 4: Data Analysis and Discussion......................................................................................35
4.1 Introduction..........................................................................................................................35
4.2 Frequency Analysis.............................................................................................................35
Answer to Question No 1......................................................................................................36
Answer to Question No 2......................................................................................................36
Answer to Question No 3......................................................................................................37
Answer to Question No 4......................................................................................................38
Answer to Question No 5......................................................................................................39
Answer to Question No 6......................................................................................................40
Answer to Question No 7......................................................................................................41
Answer to Question No 8......................................................................................................42
Answer to Question No 9......................................................................................................43

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THE IMPACT OF COMPUTERISED ACCOUNTING SYSTEMS (CAS) IN THE
FINANCIAL REPORTING AMONG SMES IN MALDIVES
Answer to Question No 10....................................................................................................44
Answer to Question No 11....................................................................................................45
Answer to Question No 12....................................................................................................46
Answer to Question No 13....................................................................................................47
Answer to Question No 14....................................................................................................48
Answer to Question No 15....................................................................................................49
Answer to Question No 16....................................................................................................50
Answer to Question No 17....................................................................................................51
Answer to Question No 18....................................................................................................52
Answer to Question No 19....................................................................................................53
4.3 Descriptive Statistics...........................................................................................................54
4.4 Correlation...........................................................................................................................57
4.5 Discussion............................................................................................................................59
Chapter 5: Conclusion, Recommendation and Future Work.........................................................61
5.1 Conclusion...........................................................................................................................61
5.2 Addressing the Objective.....................................................................................................62
5.3 Recommendation.................................................................................................................63
5.4 Future Work.........................................................................................................................63
Reference List................................................................................................................................64
Questionnaire.................................................................................................................................73

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THE IMPACT OF COMPUTERISED ACCOUNTING SYSTEMS (CAS) IN THE
FINANCIAL REPORTING AMONG SMES IN MALDIVES
Section A...................................................................................................................................74
Section B....................................................................................................................................75
Section C....................................................................................................................................78

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THE IMPACT OF COMPUTERISED ACCOUNTING SYSTEMS (CAS) IN THE
FINANCIAL REPORTING AMONG SMES IN MALDIVES
Chapter 1: Introduction
The changes that are taking place in the global economy have steered to the development
of innovative technologies, which are helpful in the development functional activities of a
company. There are numerous computerised accounting systems that have been helpful in
ascertaining the financial transactions. The maintenance of the financial transactions can be
helpful in creating the financial statements that can be used in the future course of time and
thereby understand the financial scenario of an organization. The incorporation of the
computerised accounting system is a process with the help of which financial reporting can be
done in a precise manner and even reduces the chances of any miscalculations if done manually
(Ismail and King, 2014). This research thesis is therefore constructed in order to have an
understanding of the effect of the “computerised accounting system” in the financial
documenting of the small and medium enterprises in Maldives. There are several small and
medium companies available in the economy of Maldives and therefore impact on the financial
reporting of these companies by making use of the computerised accounting system can be
understood. A total of five small and medium enterprises of Maldives have been taken into
consideration who have incorporated computerised accounting system in order to have
knowledge of the effect of financial reporting in these organizations.
1.1 Background of the Study
Accounting has been looked upon as a key part of any business that is useful for small
and large profit making organizations. There are several organizations that undertake their
process of accounting manually and even feel satisfied. The other companies may be looking for
computerised accounting process as the software related to accounting are reasonable and
affordable (Diatmika, Irianto and Baridwan, 2016). The computerised and manual system of

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THE IMPACT OF COMPUTERISED ACCOUNTING SYSTEMS (CAS) IN THE
FINANCIAL REPORTING AMONG SMES IN MALDIVES
accounting basically performs similar mechanisms, the accounting concepts and principles are
even similar with the difference being in the process technicalities (Smith and BintiPuasa, 2016).
It is seen that the computerised accounting system is a bit expensive in accordance to manual
accounting process bit their advantage is reliant on the speed and thereby being able to record
and gather information.
“Small and Medium Enterprises” (SMEs) are accounted for by deciding the number of
employees and the amount of revenue generated by a company. In order to define a small and
medium enterprise, these two factors must come under a specific standard that is held by the
respective nation. The small and medium enterprises do not have adequate amount of resources
unlike the large organizations, the essence being entrepreneurial and hence they are significant to
the development and innovation of the economy of the country (Seethamraju, 2015). This is due
to the fact that the SMEs have less capital in accordance to the companies that are functional at a
beiger stage and therefore have the ability to incorporate changes and develop their business
accordingly.
Over the previous decade, there has been remarkable development of SMEs in the
developing countries. There are several researchers who have looked at SMEs as an effective
substitute to the governmental agencies in receiving the assistance and the services to the ones
who are in need of it especially in the nations that are pressured by the political corruption and
favouritism (Azmi et al., 2016). These activities have been fundamental in the development of
the SMEs and the influence of the SMEs to incorporate new and innovative computerised
accounting services.
In accordance to Azmi et al., (2016 p: 13). Accountability explains the scenario within
which the function holder provides account to the other so that decisions may be undertaken