Management Decisions and Accounting Reports in Rural SMEs

• In Event: Financial Accounting and Reporting 6

Abstract

Small and Medium Enterprises (SMEs) are the cornerstone of today’s economy and are the engine of employment generation, in particular in the regional and rural areas. Therefore, survival and growth of SMEs in regional and rural areas is paramount in sustainability of regional economies. The need for strong financial information is exceptional in any business, as it is surely the key to success. Despite the importance of small businesses and accounting information, little research focus has been dedicated towards the use of financial reports of rural SMEs. This paper presents the findings of the usage patterns of various accounting reports by the rural business owners. The results show that there are three distinct patterns related to the types of accounting reports and the influence of organizational and owner characteristics. First, the majority of firms focused solely on using simple accounting reports such as the balance sheet and the income statement. Second, company size and the extent of planning used proved to be reliable in predicting the use of both simple and advanced accounting reports. Third, three noticeable groups of users emerged through the analysis of the data: nonusers, moderate users, and heavy users. Differences among these groups can be identified through owner characteristics (gender), and to a greater extent, firm characteristics (size and age).

Authors

• Kalinga Jagoda, Mount Royal University

• Desiree Zander, Mount Royal University