The impact of accounting information systems on financial performance of small and medium enterprises :

Abstract

This study planned to discover the impact of accounting information system (AIS) on financial performance of small and medium enterprises in Lugazi Municipality. Accounting information system was observed in three-dimensional construct consisting of perceived usefulness (PU), perceived ease of use (PEOU) and attitude towards use (ATU). Financial performance on the other hand was viewed in terms of profitability, liquidity and sales returns. The specific objectives were to determine the effect perceived usefulness, perceived ease of use and attitude towards use of AISs and role modeling on performance of SMEs in Lugazi Municipality. The study was anchored on the theory which include technology acceptance model which put the emphasis on the dimensions of accounting information system. Furthermore, empirical literature reviewed scholarly studies on perceived usefulness, perceived ease of use and attitude towards use of AISs and their impact on financial performance of SMEs. The study used a combination of cross sectional, descriptive and a descriptive research design. The population of study was the all recognized owned enterprises in Lugazi Municipality. This consisted of 92 respondents out of 120 target population who were the proprietors of the enterprises. The primary data was collected by use of self-administered questionnaire. A response rate of PU was realized. Data analysis was done by use of descriptive statistics such as frequencies, percentages, with the aid of SPSS and presented through tables, frequencies and percentages. The results of the study established that all three dimensions of accounting information system have a positive and significant relationship with financial performance; PU (r=.617, p<.01), PEOU (r=.616, p<.01) and ATU (r=.696, p<.01). The study therefore concluded that a change in AISs triggers a change in financial performance. Basing on the conclusion, the researcher recommends that SME owners should adopt and use AISs to enable then track financial transactions of the business for proper accountabilities. In addition, mangers of SMEs should encourage training of their workers to equip them with the knowledge of using information systems to increase productivity.