Journal of Positive School Psychology http://journalppw.

com
2022, Vol. 6, No. 4, 1755 -1766

THE STATUS OF COMPUTERIZED ACCOUNTING SYSTEM ADOPTION

BY SMALL ENTERPRISES IN MOGADISHU
Ali Nur Dirie
Graduate studies SIMAD university Mogadishu Somalia. faahin150@simad.edu.so/alidirie150@gmail.com.
Ainon Ramli
Faculty of Entrepreneurship and Business Universiti Malaysia Kelantan, Malaysia. ainon@umk.edu.my.

A bstract

Financial data speed, precision, and dependability are advantages of a computerized

accounting system (CAS) over a manual one. Several studies on the implementation of
CAS have been done. The majority of the studies, however, took place in industrialized
countries. This study investigates the CAS adoption status by small enterprises in
Mogadishu, Somalia. This study employed quantitative approaches by using primary data
from a survey questionnaire. 124 questionnaires were distributed, with 118 usable
questionnaires returned, resulting in a 95% response rate. The quantitative data is analyzed
using SPSS version 20, and descriptive analysis is performed. The findings confirm small
firms' extensive use of CAS. However, the use and understanding of CAS are limited, with
just basic accounting modules being used.

Keywords: Small enterprise, Computerized Accounting System, Adoption of a computerized accounting

system

1.0 Introduction Adopting a CAS has been a crucial influence in

Accounting is a time-consuming process that achieving corporate objectives, such as fast
entails entering financial information into paper information management, massive data storage
books and records. As a result of technology capability, reduced paper works, and improved
improvements, financial management and customer satisfaction (Amanamah et al., 2016).
accounting software have experienced significant The CAS might be affected by the kind of
changes. A computerized accounting system business, location of the environment, a business
(CAS) has several advantages over a manual investment that could be including financial,
system, including financial data speed, accuracy, skilled staff (Mohd Sam et al., 2012).
and reliability (Osmond, 2011). The CAS as the
software supports businesses in managing Currently, the success of small businesses has
significant financial transactions, facts, reports, been harmed due to a lack of administration and
and statements with high efficiency, haste, and top management resources (Abdulle, A. S., Zainol,
accuracy (Abdulle et al., 2019). These systems Z., & Ahmad, H. 2019) As a result, many Somali
integrate technologies with methodologies, enterprises have not considered new technologies
controls, and accounting procedures to manage such as CAS in their operations (Abdulle, A. S.,
transactions to keep track of a company's or Zainol, Z., & Ahmad, H. 2019). Businesses
organization's financial activity. To affect should enhance their efficiency to be competitive
operational efficiency, providing internal and and profitable by assessing reasonable steps that
external reporting reports, financial statements, can be done to improve structural competitiveness
and pattern analysis capabilities. (Urquia, Perez & by using a computerized accounting system for
Munoz, 2011). small businesses. Therefore, this study aimed to
investigate computerized accounting system

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1756 Journal of Positive School Psychology

adoption by small enterprises in Mogadishu, stages involved. The final procedure is to close
Somalia. the books. Most companies now use computers
and electronic technology in their accounting
systems; computers allow them to calculate
millions of transactions per second (Jameel &
Ahmad, 2018). However, doing the work
manually is much longer than using computerized
programs.

2.0 Literature review A study by Abdulle et al. (2019) ran four

balanced scorecards that were investigated: (1)
2.1 Computerized accounting system financial,
Businesses use a method to log company (2) client, (3) operational excellence, and (4)
transactions, monitor financial statements, plan studying and progress perspectives. The case was
schedules, and assess variances, known as proved efficient and successful for small
computerized accounting systems (Saracina, businesses. It was recommended that CAS be
2011). Since it employs automated software, a adopted because of the high benefit and low cost
computerized accounting system allows for compared to analyzing financial statements
quicker generation of financial report results. paperwork. Bekele (2017) suggested as evidenced
Small business administrators should use an by the separation of accounting duties, the
effective computerized accounting system to cooperative learning of accounts and follow-up,
monitor and regulate short-term problems such as the computation of large amounts of financial
costing, spending, and cash flow (Sugut, 2015). It data, the strengthening of responsibilities and
also assists small businesses that operate in a fast- authority, and the higher reliability of the
paced, demanding market to incorporate company's current accounting results, CAS has
organizational requirements into long-term moderately aided small businesses in improving
growth strategies (Ababa, 2019). the system of internal control.
2.2 Importance of Computerized Accounting
Small businesses benefit from CAS because they System
provide accurate, timely, and detailed financial According to Abdulle et al. (2019), a CAS can
information and accounting records based on quickly produce all forms of management reports,
which small companies can assess the success of such as budget analysis and variance analysis. As
current activities and prepare for improved a result, data collection and interpretation become
performance by correcting any flaws in previous quicker and more precise, allowing managers to
action plans (Senik et al., 2012). Integrating a make better decisions based on accurate and
computerized accounting system into a small timely data. Klau (2015) agreed with the speed at
business's operations is critical for ensuring which accounting is done and mentioned that a
effective efficiency and contribution to the computerized accounting system could obtain
national economy, as it aids in assessing the balance sheets, financial information, and other
viability of alternate courses of action, evaluating accounting documents. He also agreed that
the status of companies in terms of profitability, adopting a computerized accounting system
assets, activity, and leverage, and making enables managers to identify and resolve issues
financial decisions (Kwak et al., 2013). swiftly.

Similarly, small businesses have indicated that Victor (2016) states that the computerization of
using a computerized accounting system accounting methods has resulted in a significant
improves their sales efficiency and helps them rise in business performance. It's a wholly
stay competitive (Ismail, 2009; Senik et al., 2012; automated implementation that combines
Rene, 2016). The analysis of transactions, the financial, inventory, auditing, and regulatory
recording of the performance, and the data procedures with performance-enhancing features.
collection used in the report are the four main The same study also suggests that a computerized
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accounting system facilitates the company's

access to information and decision-making while
further improving connectivity.

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Mohd Sam et al. (2012) stated that practically in charge of accurate and
administrators would struggle to meet regulatory knowledgeable business reporting. The
and contributor recording standards such as accounting software system is combined with a
benefit and damage accounts, financial position, better Information Management System, Multi-
besides personalized writing without consume lingual, and standardized reporting capacity to
computerized bookkeeping programs. However, help the company automate its business
this can be achieved quickly and with less activities efficiently and cost-effectively
difficulty now that the infrastructure operates. In (Sajuyigbe, 2014). According to
addition, computerized accounting programs Chun (2006), Tan (2006) and, Linlin (2001),
make auditing more accessible and offer greater Thottoli (2020), accounting is done on a
access to required records such as check computer.
amounts, receipts, and other expenses, reducing Information processing includes computer-
the time it takes to provide this information and assisted calculations, software data processing,
paperwork during an audit. fast response, and good reproducibility. A CAS
is employed instead of traditional manual
CAS simplify accounting functions (Afolayan et accounting to capture and process data. It uses
al., 2015). When using an automated accounting the original data coding technique to save
system to post businesses to the record, the storage capacity by shortening required data
concept of a double-entry system can be mainly lengths, enhancing accounting data processing
automated. Accounting administration is central accuracy. Computerized data handling is still a
to the small enterprise business's everyday mix of artificial computationally intelligence.
operations and management work; but, as time Businesses can manage their accounting
has progressed, the small enterprise business has statements by installing a computerized
been unable to follow standard accounting accounting system.
management, and socioeconomic growth has
been the norm, resulting in accounting A CAS can also help with management by
mismanagement and thereby impacting the small allowing quick updates to computer applications
enterprise business. and promoting and advancing system skills.
Sajuyigbe, (2014). The majority of CAS
The advantage of just using computerized requirements are to achieve digitalization of
accounting software to accomplish small accounting system work in a more standards-
business accounting systems and record crucial compliant, practical, robust, and secure
accounting data is that it is more convenient and accounting system, which leads to better services
less error-prone to complete small business for management decisionmaking to take
financial management and record relevant advantage of the benefits of computer-based
financial documents on a computer. Furthermore, accounting principles to eradicate all adverse
establishing a network by a small enterprise effects of the expansion of computer-controlled
business computerized accounting system accounting principles to gain the level of
modified the small enterprise business's previous computerized accounting principles to eliminate
artificial financial reporting and improved all negative impacts of the development of
management performance. As a result, computerized accounting principles to maximize
implementing a computerized accounting the benefits of computerized accounting
software system facilitates small enterprise principles to eradicate all adverse effects of
business growth and updates small enterprise something like the development of computerized
management (Victor, 2016). accounting principles to achieve the benefits of
2.3 Characteristics of Computerized computer.
Accounting 2.4 Adoption of a computerized accounting
All business processes, such as sales, financing, system (cas)
purchase, inventory, and production, are A CAS has concerns, such as data loss due to
automated and integrated using a CAS. It is power outages or diseases and the danger of data
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theft from hackers. Computer fraud is also an extent and IT preparedness of the organization,
issue. Therefore, consumers should establish a social conventions, and the traits of a prominent
system for controlling who has access to what personality, such as the proprietor, are all factors
information, mainly customer information. which play an essential character in CAS
Management may be held directly liable if data acceptance to the small enterprise business and
is lost due to a leak. The user must also confirm highlight other related factors. Bekele (2017)
that the data has been appropriately entered into pointed that small enterprise businesses' benefits
the system, as a single data entry error can result from CAS were not provided. The company
in the loss of a complete data collection cannot reap the benefits of CAS due to the
(Magolfu, 2013). absence of sufficient and vital technology
foundations, a robust, suitable internal
The advantages expected from introducing a controlling system, competence enough human
CAS provide both direct and indirect benefits to resource management capabilities, and the
small enterprise businesses. Immediate benefits platform's incompleteness with the required
include overhead costs, enhanced organizational accounting units.
functionality, improved decision-making,
performance, time savings, and increased 3.0 Methodology
profitability. Further, the benefits of improved The research population of this study is the small
customer loyalty through improved services, enterprise business in Somalia, whether
improved experience, and fulfilling their registered or not on the Somali yellow pages.
changing desires and lifestyles are indirect The survey is administered to 124 respondents
(Zerihun et al., 2015). after defining the sample size. The Slovene
2.5 Small enterprise business formulation for determining the minimum
A study by Munasinghe (2015) found that 40 per sample size was used to arrive at this figure.
cent of small enterprises use CAS to keep track That small enterprise business located in
of their accounting information. The same study Mogadishu Bakaro Market was selected at
reported that only the company's size, cost, and random from a list of 25 firms. However, the
external environment substantially impact CAS sample of this study will be 124 respondents.
usage, while demographic characteristics have This number was arrived at using Slovene's
little impact. As a result, development formula to determine the minimum sample size.
organizations should provide small enterprises We will distribute the questionnaires to each
with various options for reducing the cost of firm. The study will use a quantitative approach,
CAS software development. In addition, small in which numbers are used to measure variables.
enterprises' acceptance of new technologies This is because the researcher follows the
might be improved by raising their positivist theory, which states that knowledge
understanding of CAS’s competitive benefits. should be concrete, and the researcher was able
to clarify the issues under investigation using
Later, Darshi (2019) examined 118 small acceptable methods.
businesses from various industries, including 4.0 Results and Interpretation 4.1
manufacturing, commerce, and services, and Demographic profile
discovered that managerial support and the This study employed descriptive statistics to
firm's ability to absorb expenses are related to illustrate the key features of the respondents in
CAS implementation in small businesses. There this research. Every characteristic was summed
is a link between human resource knowledge and up straightforwardly to understand the sex, age,
perceived utility. There is a correlation between marital status, education qualification,
human resource knowledge and perceived utility. Responsibility at Business, past operation
experience of the Business, a total of employees,
Imre et al. (2016) suggested an energetic story of categories of yearly revenues, besides CAS
a small organization’s initial desire to adopt a Software experience.
CAS results in a collection of data about the
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Therefore, the following indicates that each demographic characterizes.

4.1.1 Gender
The table below shows that most respondents are male (78%), while only 22% were female.

Table 4.2 Gender Analysis

Frequency Frequency Per cent
M ale 92 78%
Female 26 22%

Total 118 100%

4.1.2 Age
years. Also, 30.5% of the respondents were
Table 4.3 indicated that 7.6% of the respondents between the ages of 31-40 years, and 10.2%
were between 21 years and below. The majority were 41 years and above.
(51.7%) of the respondents fell within 22-30

Table 4.3 Age Analysis

Age Frequency Per cent
21 years and below 9 7.6
22- 30 years 61 51.7

31- 40 years 36 30.5

41 years and above 12 10.2

Total 118 100.0

while 70 respondents (59.3%) were married. On
4.1.3 Marital Status the other hand, divorce and separated
The marital status of those who answered the respondents were 1 (0.8%) and 4 (3.4%)
questionnaire is also indicated in Table 4.4. It respondents, respectively.
shows that 43 respondents (36.4%) were single,

Table 4.4 Marital status Analysis

Marital status Frequency Per cent
Single 43 36.4
Married 70 59.3
Divorced 1 .8
Separated 4 3.4

Total 118 100.0

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4.1.4 Educational background followed by a master's degree with 26.3%. The

Concerning the education qualification of the least are secondary holders, representing 19.5%
respondents, Table 4.5 reveals that most of the of the respondents.
respondents (54.2%) had a bachelor's degree,

Table 4.5 Qualification Analysis

Educational Background Frequency Per cent
Secondary level 23 19.5
Bachelor degree 64 54.2
Master degree 31 26.3

Total 118 100.0

4.1.5 Responsibility at Business of the respondents were an employee. While

Regarding the responsibility at the business level 27.1% of the respondents were managers of the
of the respondents, Table 4.6 indicated that 54.2% business, and the business owners were 18.7%.

Table 4.6. Responsibility analysis

Responsibility at Business Frequency Per cent
Business Owner 22 18.7
Manager 32 27.1
Employee 64 54.2

Total 118 100.0

4.1.6 Past operation experience of the than three years, comprised of 25 respondents
Company (21.2%). The third, more than three years but
The measurement of the small enterprise less than five years, are 43 respondents (36.4%),
business life is divided into four categories. The and lastly, over five years are 36 respondents
first is less than one year, with 14 respondents (30.5%).
(11.9%). The second is between one year to less
Table 4.7. How many years has this business been operating?
Business Operating experience Frequency Per cent

Less than one year 14 11.9

More than one year but less than three years 25 21.2

More than three years but less than five years 43 36.4

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Over five years 36 30.5

Total 118 100.0

4.1.7 Number of Employees companies have six to ten employees. At the

Table 4.8 represents the total number of same time, 12.7 per cent of the companies have
employees, including full and part-time. The between ten to twenty-five employees. The
majority of the companies (39%) only have one balance of 16.9 per cent of the companies in this
to five employees, showing the small size of study has more than twenty-five employees.
their companies. Another 31.4 per cent of the

Table 4.8. Total employees of the Company (full and part-time employees)

Number of Employees Frequency Per cent

1 to 5 46 39.0
6 to 10 37 31.4
10 to 25 15 12.7
Over 25 20 16.9

Total 118 100.0

4.1.8 Annual revenues 24.6 per cent of respondents shared that the
Annual revenues (Table 4.9) of the respondents yearly revenues of their companies ranged from
were also revealed. The majority of respondents $50,000 to $100,000. The exact number of
(51.7%) confirmed that their companies only respondents (11.9%) had their companies’
make below $50,000 in annual revenues. annual revenues of $100,001 to $ 150,000 and
Another above $150,000.

Table 4.9. What category best describes the annual revenues of your Company?
Annual revenues Frequency Per cent
Under $50,000 61 51.7
$50,000 to $100,000 29 24.6
$100,001 to $150,000 14 11.9
Over $150,000 14 11.9

Total 118 100.0

4.1.9 CAS Software Experience 23 respondents (19.5%) have rated low, another
According to theexperience of using a CAS, the 50 respondents (42.4%) have rated middle, and
study asked respondents to share their expertise finally, 45 respondents (38.1%) have rated
related to the usage of CAS on low, medium, advanced knowledge in using a CAS.
and advanced scales. Table 4.10 presented those
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Table 4.10. How would you rate your computer skills or knowledge about computers?
CAS software experience Frequency Per cent

Low 23 19.5
Medium 50 42.4
Advanced 45 38.1

Total 118 100.0

108 (91.5%) sales, 108 (91.5%) account payable,
4.2 Descriptive analysis 107 (90.7%) profit and loss accounting, 107
Table 4.11 indicates the application accounts (90.7%) balance sheet, 103 (87.3%) General
used by the companies. The result of this study ledger, 98 (83.1%) Purchases, 67 (56.8%)
shows that 109 (92.4%) of the companies adopt Billing, 66 (55.9%) cash flow statement, 48
inventory and account receivables, followed by (40.7%) Payroll, and 39 (33.1%) budgeting.

Table 4.11. Total number of positive responses (Yes)

application accounts Frequency Per cent
General ledger 87.3

103
Payroll 48 40.7
Billing 67 56.8
Inventory 109 92.4
Accounting receivable 109 92.4
Account payable 108 91.5
Purchase 98 83.1
Sales 108 91.5
Budgeting 39 33.1
cash flow statement 66 55.9
profit and loss accounting 107 90.7
balance sheet 107 90.7

Table 4.13 discovered the types of computer 30 (25.4%) Peachtree, 11 (9.3%) Tally, 2 (1.7%)
applications. The small enterprises mostly (72 disease Software, 12 (10.2%), and 46(39%) HDS.
respondents @ 61%) adopted USB. Another 63 The adoption of external data mobilized and uses
(53.4%) with QuickBooks, whereby the other is software to modify the purchased packages or
followed by these respondents and percentages external custom-developed software.
Table 4.13. Types of computer applications
Types of computer applications Frequency Per cent

QuickBooks 63 53.4
Peachtree 30 25.4

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Tally 11 9.3
disease Software 2 1.7
Other software--(please specify) 12 10.2
USB 72 61.0
HDS 46 39.0

Total 118 100%

Table l4.14 shows the challenges facing small There were 72 (61%) companies that provided
enterprises in Mogadishu to adopt CAS. The management support for adopting the current
findings revealed that 102 (86.4%) respondents CAS, with 60 (50.8%) having security measures
have enough computers to implement the CAS; in the CAS to safeguard the assets. In contrast,
102 (86.4%) of them were found benefits from 60 (50.8%) have poor maintenance of CAS,
using the CAS; 99 (83.9%) respondents enjoy while 51 (43.2%) agreed that they have
using the current CAS. At the same time, 81 weaknesses in the internal control module in
(68.6%) companies provide training programs CAS. Finally, 49 (41.5%) provided on-job
for using the CAS. Another 72(61%) agree that training for accounting and finance staff related
they lack fixed asset management in CAS. to the CAS.

Table 4.14. Challenges (Yes)

Challenges Frequency Per cent

Have enough computers that contribute to implementing the computerized

accounting system 102 86.4

The company provide training programs for using the CAS 81 68.6
The company enjoy using the current CAS 99 83.9
The company benefit from using CAS 102 86.4
There is a lack of fixed asset management (vehicles, computers, furniture, and
machinery) in CAS 72 61.0

Believe there are inadequate security measures in the CAS to safeguard the
assets 60 50.8

There is inadequate on-job training for accounting and finance staff related to
the CAS used 49 41.5

There is adequate management support for adopting the current CAS 72 61.0
There is poor maintenance of CAS 60 50.8
There is a weakness in the internal control module in CAS? 51 43.2

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5.0 Discussion managers and company accountants receiving

5.1 Adoption of Computerized Accounting training on using computerized accounting
System software packages and security systems to
This study found that the status of CAS adoption minimize financial data loss or dishonesty risk
by small enterprises in Mogadishu is generally (Bahati, A. 2014). According to the findings,
adequate. This was evident in the overall decision-makers should adopt user-friendly CAS
selection of the three levels of measurement for usefulness in CAS because of their talents
percentage difference: low, medium, and and practical competence. Decision-makers
advanced. Using the experience of CAS, the should concentrate on (I) system design for, by,
adoption of the CAZ started time conformed and with users, (II) system design for, by, and
knowledge or skill of the software to know that with users, (III) system design for, by, and with
the study asked respondents by the low, medium, users, (IV) system design for, by, and with users,
and advanced. For example, in low 23 and (V) system design for, by, and with users,
respondents, and 19.5% percentage of the according to Swann (2004). The goals are
respondents, 50 respondents, and 42.4%, and increasing employee job satisfaction, adopting
advanced is 45 respondents and 38.1% of the technically efficient job satisfaction ways, and
rate of using a computerized accounting system making efficient judgments. Similar to Anaeli A.
that refers to high in the rating advance level in (2018) and others, the study's findings are
percentage 42.4%. consistent with the literature.
Table 4.9, the major respondents selected under 5.2 Challenges of Computerized Accounting
$50,000, 61 respondents and the percentage System
51.7%, the respondent of $50,001 to $100,000 Table 14.15 illustrates small enterprises’
are selected to 29 respondents, the percentage of challenges as they adopt CAS. For example,
the 24.60%, the respondents $100,001 to almost 58% of the respondents agreed that they
$150,000 are selected to 14 respondents and the do not receive adequate on-job training for
percentage 11.90%, and over $150,001 accounting and finance staff related to the CAS
respondents 14 and provided 11.90% the time of adopted. Moreover, therefore, they do not enjoy
closing. The result of this study shows that most and benefit from using CAS. Furthermore, 56.8%
companies do not adopt 9 (7.6%) inventory and of the respondents believe there is a weakness in
9(7.6%) account receivables followed by the internal control module in CAS, while 49.2%
10(8.5%) sales, 10(8.5%)) account payable, believe there are inadequate security measures to
11(9.3%) profit and loss accounting, 11(9.3%) safeguard the assets. In addition, 48.3% of the
balance sheet, 15(12.7%) General ledger, respondents complained about the poor
20(16.9) Purchas, 51(43.2%) Billing 52(44.1%) maintenance of CAS. 39% of the respondents
cash flow statement, 70(59.3%) Payroll, and complained that CAS lacks fixed asset
79(66.9%) budgeting. management modules (vehicles, computers,
Comparing the research findings on the status of furniture, and machinery). There is also
CAS adoption by small enterprises in inadequate management support for adopting the
Mogadishu with the one by other authors whose current CAS in their firms. Respondents also
works have been analyzed in this study, it can be complained about the lack of facilities to
said that the investigation in the case of selected implement CAS. For example, 13.6% of the
verify that CAS is widely used in a business respondents claimed that they do not have
(Ramli, A. 2015).However, the level to which enough computers to implement the
CAS is used is relatively modest, concentrating computerized accounting system.
on essential accounting elements and The studies revealed that the computerized
accounting-based presentations (Ramli, A. 2015). accounting system has a considerable impact on
Show that using CAS in accounting has both small enterprises’ presentation (Fagbemi, T. O.,
positive and negative implications. Small &Olaoye, J. A.2016). The study found that
businesses should continue to use CAS, with adopting a computerized accounting system
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increases small businesses' capacity to obtain ADOPTION AMONG SMALL AND MEDIUM
funds from small enterprises (Fagbemi, T. O., ENTERPRISES IN. 44–60.
&Olaoye, J. A.2016). The study's findings Abdulle, A. S., Zainol, Z., & Ahmad, H. (2019).
demonstrated that information technology Impact of Computerized Accounting Information
structure, fixing costs, and user perception System On Small and Medium Enterprises In
influence the adoption of CAS (Afolayan, A., Mogadishu, Somalia: The Balanced Scorecard
Plant, E., White, G. R., Jones, P., & Perspectives. 5, 159–165.
Beynon‐Davies, P. 2015). They adopted CAS to https://doi.org/10.35940/ijeat.E1023.0585C19
assist them in achieving organizational goals, Ackah, J., &Vuvor, S. (2010). The Challenges
including fast information management, large faced by Small & Medium Enterprises (SMEs)
data storage capacity, less administrative work, in Obtaining Credit in Ghana. Journal of Small
and greater customer satisfaction. To summarise, Business Management, 38(3), 53–66.
small enterprises' adoption of CAS has the Afolayan, A., Plant, E., White, G. R. T., Jones,
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a lack of education about the software's benefits, Technology Usage in SMEs in a Developing
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restricting its adoption (Amanamah, R. B., https://doi.org/10.1002/jsc.2023
Morrison, A., & Asiedu, K. 2016) Akhtar, M. I. (2016). Research design Research
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Computer systems are widely adopted in Interdisciplinary Perspectives, September, 68–
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in Small enterprises is undisclosed. This current Alfredy, F. S. (2013). A Study on the factors
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