The Use of Computerised Accounting Systems in Small Business

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16th Annual Conference of Small Enterprise Association of Australia and New Zealand, 28 September – 1 October 2003

The Use of Computerised Accounting Systems in Small Business A paper for the Small Enterprise Association of Australia and New Zealand 16th Annual Conference, Ballarat, 28 Sept-1 Oct, 2003.

Ass. Prof. John Breen
Associate Professor and Head of School Email: John.Breen@vu.edu.au

Dr. Nick Sciulli
Senior Lecturer – Accounting

Cheryl Calvert
Lecturer - Accounting

Victoria University School of Accounting and Finance PO Box 14428 Melbourne City Mail Centre 8001

Abstract This paper is based on a research project which was designed to investigate small business usage of a computerised accounting system (CAS) to ascertain if there are obstacles that prevent small businesses from migrating to such a system. Two groups of small businesses are surveyed. Those that currently use a CAS and those that do not. The purpose of this comparison is to determine what were the major influences in their decision to use or not use accounting software for their business. A secondary objective was to learn more about the influence and role (if any) played by their accountant in their decision. The development of an understanding of the obstacles that inhibit the use of a CAS will be useful in the building of strategies to encourage greater efficiency in small business record keeping.

Hosted by University of Ballarat, Ballarat, Australia

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16th Annual Conference of Small Enterprise Association of Australia and New Zealand, 28 September – 1 October 2003

1. Introduction The traditional view of small business record keeping suggests that it is paper based and filed in a shoe box until such time that it is placed in the hands of the accountant for the preparation of the annual taxation return. Over the years the accounting profession and small business training providers have been trying to change the approach to record keeping adopted by small business operators, with a view to them holding better records and ultimately improving the management of their business. With the introduction of lower-cost and more user-friendly computerised accounting systems (CAS) there appears to be fewer obstacles to improved record keeping practices. This paper reports on the findings of a study that investigated small business usage of CAS. It begins with a review of the literature on the adoption of Information Technology (IT) and then considers the findings of the study in the context of the adoption factors identified. It concludes with a discussion of the issues that are associated with the usage of CAS and provides some direction for those organisations involved in advising small business operators about their record keeping.

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Literature Review

The motivating factors for IT adoption in small business is a widely researched topic. While there is much research on the overall adoption of IT, there is little research focused specifically on the motivating factors for adopting computerised accounting systems (CAS) in small business. Small business accounting software, however, is an important sub-set of overall small business IT research. In many studies of small business IT usage, accounting software was the predominant application package used and the driving factor behind the IT hardware acquisition decision. For example, in Australia the Yellow Pages (1997) reported that 76% of the small businesses surveyed had at least one computer and 75% of these used accounting software. Burgess (1998) in a review of IT adoption by Australian small businesses concluded that the main software application package used was accounting (see also Burgess 1997, and Wenzler 1996). To investigate the motivating factors for adopting accounting software, it would be reasonable to first review the more comprehensive literature on overall IT adoption. This literature review, therefore, begins with a discussion of the studies of...
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