Accounting Information Systems (AIS) in SMEs

DOI: 10.4018/IJABIM.2020040104

International Journal of Asian Business and Information ManagementVolume 11 • Issue 2 • April-June 2020

Copyright©2020,IGIGlobal.CopyingordistributinginprintorelectronicformswithoutwrittenpermissionofIGIGlobalisprohibited.

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Accounting Information Systems (AIS) in SMEs:Towards an Integrated FrameworkFahmi Ibrahim, Universiti Teknologi Brunei, Bandar Seri Begawan, Brunei Darussalam

Diyana Najwa Haji Ali, Universiti Teknologi Brunei, Bandar Seri Begawan, Brunei Darussalam

Nur Suaidah Awang Besar, Universiti Teknologi Brunei, Bandar Seri Begawan, Brunei Darussalam

ABSTRACT

Small-mediumenterprises (SMEs)havealwaysbeenconsidered tobe thebackboneofBrunei’seconomy.AspublishedbytheOECDin2006,SMEsconstituteahighpercentageofbusinesses,wheretheyaccountfor98%ofallactivebusinessenterprises,andcontributeabout92%oftheemploymentintheprivatesector,andatleast66%oftheGDPwithinthenon-oilsectoroftheeconomy.SinceSMEsareconsideredtobesignificantfortheeconomy,theyareencouragedtoimprovetheirbusinessperformanceinordertosustaintheirbusinessdevelopmentbyenhancingtheiraccountinginformationsystem.ThisarticlewillfocusonthecurrentaccountingpracticesinwhichBruneiSMEshavebeenimplementedbyMMACubeStoresasacasestudy.Ascubeshopbusinesseshavebeengrowingalloverthecountry,itissignificanttocarryoutthisresearchasitmayapplytotheothersimilarbusinessinBrunei.ReasonablerecommendationsareincludedinthisarticlefortheaugmentationoftheaccountingsystemamongBruneiSMEs.

KEywoRdSAccounting Information Systems, Brunei, Integrated Framework, SMEs

1. INTRodUCTIoN

Smallandmedium-sizedenterprises(SMEs)haveplayedakeyroleineconomicgrowthandequitabledevelopmentindevelopingcountries(OECD,2006).InBrunei,SMEsaccountfor98percentofallactivebusinessenterprisesandhavecontributed58%oftotalemploymentand22%ofGrossDomesticProduct(GDP)(AssociationofSoutheastAsianNations,2011).Thus,smallandmediumenterprises(SMEs)areconsideredtobetheoneofmaincontributortotheeconomyofBruneiDarussalam.Foralmostadecade,HisMajestytheSultanandYangDi-PertuanofBruneiDarussalamhasbeenhighlightingtheimportanceofSMEsinhisTitahastheircontributioninprovidingsecondarysupportand income to the country’s economicgrowth is important as ever (Anwar, 2007).Whilemanysmall-mediumenterprises(SMEs)haveencounterednewobstacles(Chan&Qi,2003;Yunisetal.,2013),thereareseveralsuccessfactorsthatmaycontributetothesuccessandfailureofSMEs.The

Thisarticle,originallypublishedunderIGIGlobal’scopyrightonApril1,2020willproceedwithpublicationasanOpenAccessarticlestartingonFebruary1,2021inthegoldOpenAccessjournal,InternationalJournalofAsianBusinessandInformationManagement(con-vertedtogoldOpenAccessJanuary1,2021),andwillbedistributedunderthetermsoftheCreativeCommonsAttributionLicense(http://creativecommons.org/licenses/by/4.0/)whichpermitsunrestricteduse,distribution,andproductioninanymedium,providedtheauthorof

theoriginalworkandoriginalpublicationsourceareproperlycredited.


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criticalofsuccessfactors(CSFs)forSMEscanbecategorisedintothreemaintypes;entrepreneurial,enterpriseandbusinessenvironment(Simpsonetal.,2012;Rutherfordetal.,2000;Gibb,2000).Inviewofthischapter,accountingsystempracticesandinformationsystemsareidentifiedintheliteratureascontributingsuccessfactorsundertheproxyofEnterprise-StrategicPlanningandBusinessEnvironment-Technological.Accountingsystemistheformofstrategicplanningofanorganisationwithtechnologicalofinformationsystemsthatmustgowell toensurethesuccess.However, thearticlewillfocusononeofthefactorswhichistheaccountingsystempracticesofsmallandmediumenterprises(SMEs)inBruneiusingonecompanyasacasestudy.

AccountingInformationSystems(AIS)isavitalresourcefortoday’sSMEsasithastheabilitytofacilitatetowardsaneffectivedecisionmaking,planningandcontrollingactivitiesofanorganisation.SMEsarehighlyrequiredtomanagetheiraccountingandfinancesefficientlyinordertomaintainandimprovetheirbusinesssinceoneoftheaimsofrunningabusinessis“profitability”.Financeingeneral(butcashinparticular)iscriticalissueforgrowingbusinesses(Carpenter&Peterson,2002;Sextonetal.,1997).Hence,adequateandhigh-qualityaccountinginformationsystemsiscrucialtoachievethisgoal.Thisisbecausethelackofaccesstoinformation(Islam,Abdullah&Salleh,2001)andproperaccountingrecordsmaycontributetothefailureofSMEs.Moreover,previousresearchdiscoveredthatpoorinformationqualitymayleadtonegativeeffectsonthedecisionmaking(Huang,Lee&Wang,1999;Clikeman,1999).

Ithasbeenemphasisedthatentrepreneursshouldbeawaretheimportanceofbookkeepingandaccountingtokeeptheirfinancesin-checkedbecausemaintainingefficientaccountingrecordscanhelpbusinessgrowth.Obviously,somenewentrepreneursdonotkeeprecordsofhowmuchtheyspendandtheyareunsureiftheirbusinessismakingprofitsorlosses(Zaili,2015).Inaddition,theBruneigovernmenthasprovidedfinancialaidsforthelocalSMEstoenhancetheircapabilitiesinprovidinggoodservicesandproductsthroughprogramssuchasthe8thNationalDevelopmentPlan.Thisprogramis for the localentrepreneurs toparticipate further in theeconomicdiversificationofthecountry(Anwar,2007).Inviewofthis,PehinOrangKayaLailaSetiaDatoSeriSetiaHajiAwangAbdulRahmanbinHajiIbrahim,theformerMinisterofFinanceadvisedSMEentrepreneurstohavea“highlevelofpersonalintegrityandadoptastrongcapacitytowardsbusinessmanagement,particularlyonfinancialdiscipline.Thisisbecauseatrueunderstandingandstrictdemonstrationoffinancialdisciplinewouldalwaysunderpinasuccessfulbusiness”(Anwar,2007).Certainly,itshowsthatSMEsentrepreneursshouldbeawareoftheimportanceofefficientbusinessmanagementandfinancialwheregoodaccountingrecordpracticesareessential.

For instance, anonlineaccounting systemcalled“Ikhlas”hasbeen introduced toSMEs forentrepreneurstouse.ItshowsthesignificantofInformationTechnology(IT)orInformationSystem(IS)shouldnotbeneglectedanymorebytheSMEsastheirimplementationcanbeseeninvariousformsofbusinesspractices.Nevertheless,thereiscriticismthatIThasbecomecommoninSMEswhichisnolongerseenasanadvantagebecausealmosteveryorganisationisusingit(Chen&Hamdan,2014).

2. wHy ACCoUNTING INFoRMATIoN SySTEMS (AIS) IS SIGNIFICANT?

According to Gilantier and Underdown (1981), accounting is moving away from its traditionalprocedurebase,encompassingrecordkeepingandrelatedworksuchasthepreparationofbudgetandfinalaccounts,towardstheadoptionofarole,whichemphasizesitssocialimportance.Ontheotherhand,InformationTechnology(IT)andInformationSystems(IS)arenotnew.Theyhavealwaysexistedinorganisations(Galliersetal,1999)providingforthecapture,storage,processingandtransmissionofinformationforcommunication,enhanceddecision-makingandforcompetitivegainortobeusedasacompetitiveweapon.Basically,technologyhasdramaticallychangedtheaccountingprofession(Fowzia&Nasrin,2011).OneresponsetothischangeisthedevelopmentofaccountingprogramsthatemphasiseAIS(Strongetal,2006).


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Nevertheless,AISisdefinedasacomputer-basedsystemthatprocessesfinancialinformationandsupportsdecisiontasksinthecontextofcoordinationandcontroloforganizationalactivities(Nicolaou,2000).TheconceptofAISisquitewellestablishedandnumerouscommercialpackagesaswellas tailor-madesystemshavebeendeveloped. ‘Off theshelfaccountingsoftware isquicksolutionformostcompanies,reasonableandcosteffective.Tonameafew:FreshBooks, Sage 50cloud, NetSuite ERP, FreeAgent, Xero, QuickBooks Enterprise and FinancialForce Accounting,arethetopbestaccountingsystemsforbusiness(www.financesonline.com).However,usercompanieshavetoacceptthefactthat‘offtheshelf’softwarecanonlymeet65%-85%userrequirement(Yau&Ayeung,2000).Incomparison,tailormadesoftwaremayincreasethefunctionalitiestomeetspecificuserrequirements.However,thebusinessworldisbestbyaccountingsystemsthathavevaryinglevelsofefficiencyandexcessivecostsforsuchinformation(Yau&Ayeung,2000).

MarriotandMarriot(2000)alsostatethatfinancialawarenessamongmanagersofSMEsvariesconsiderablyandthattheuseofcomputersforthepreparationofmanagementaccountinginformationshouldbeatitsfullpotential.Salehietal.(2010)alsoconfirmedintheirstudythatsophisticatedAISimproveaccountingperformance.AccordingtoMcBride(2000),computerisedpackagescanquicklygeneratealltypesofreportsneededbymanagementforinstancebudgetanalysisandvarianceanalysis.Dataprocessingandanalysisarefasterandmoreaccuratewhichmeetsthemanagersneedforaccurateandtimelyinformationfordecisionmaking.However,researchershavefoundoutthatmanyorganisationarestrugglinginexploitingthefullfunctionalityoftheirIS(Newell&Galliers,2010).ItisalsoclearthatIS,ifpoorlymanaged,canbecostlyorevendestroyorganisationsbypreventingthemcarryingouttheirprimefunctionsandprocesses.Itisevidentthatbenefitsfrominformationsystemusedoariseautomatically;theyhavetobeactivelymanaged(Grantetal,2010).

Primarily,anunderstandingofthefundamentalcharacteristicsofSMEsandhowthesemaydifferfromlargerorganisationsisrequiredasstartingpointbeforefocusingonIS/InformationManagement(IM)inparticular(Grantetal,2010).Typically,SMEshavearelativelyflatorganisationalstructure(Levy&Powell,2005)whichiscentralisedastheowner(s)andmanager(s)(whomaybethesameindividual(s)maycarryoutmultipleroles.Theowner/managertakingmultiplerolesinthedailyrunningofanSMEmayenableittobemoredynamic(Levy&Powell,2005)andtooutperformlargeorganisationsintermsofresponsivenesstocustomerneeds,flexibility,theabilitytoidentifyandexploitopportunitiesandtoadoptnewtechnologies(Jeal&Wroe,1999).Besidesthat,SMEslacksoninternalexpertiseIS/ITaswellashavingaresourcepoverty,thus,SMEsareadvisedtoacquireanexternalexpertiseandskills inorder to lessentheir internalgapsandlimitations inplanning,implementingandmanagingtheirIS/ITresources(Caldeira&Ward,2003;Peppard&Ward,2004;Duncanetal.,2010,pp173).

Adoption and development of information systems (IS) in SMEs are mainly driven byimprovementinefficienciesaswellascostreduction(Levy&Powell,2005;Harindranathetal.,2008).Yet,theadoptionmaybeintervenedbytheexistenceofinhibitorswhichencompassthecost,management,securityandtechnologicalfactors(Levy&Powell,2005).InthecontextofBrunei,itwasdemonstratedthatthereislessadoptionofAISamongBruneiSMEsbasedonthestudy“AnExploratoryStudyofInformationTechnologyAdoptionbySMEsinBruneiDarussalam”byChenandHamdan(2014).Thehighlightwasafour-factormodelnamedas“TIMEModel”toillustratetheITusageamongSMEsinBruneiasshowninFigure1.

TIME is T - training, I - infrastructure, M – money and E- employee. From these factors,thereareinter-relatedtoeachother.MoneyaffectstheutilisationofIT.Thisisduetothebudgetofpurchasingthesystem,trainingthestaffandhavingtheemployeetouseit.Infrastructurepurchaseoravailabilitywilldependonthemoneythatisavailableforit.Trainingwilldependonthemoneyavailabletopurchasethesystem,employeesavailablefortoutilisethesystemandthetrainingoftheemployees.Employeesarerelatedtothepaymenttheyget,andthismightbeaffectedbythemovingtootherbusinessduetohigherpay.TheTIMEmodelechoedbytheanalysissuggestedthatSMEsin


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Bruneirequiredacomprehensivepackage-intergratedapproachtoencountermanydifficultiestheyencounter(Islam,KarimandSalleh,2001).

Asignificantinvestmentisalsoessentialintheuseofinformationsystemsandtechnologyinordertoassistthebusinessindeterminingthesuccessofvirtuallyeveryofitsbusinessoperation(Benson&Tribe,2008).Thus,theimplementationofAIScanbeaverycostlyprocess,whichrequiressignificanteffort,timeandmoneyateverystageofthesystem’slifecycle.AlthoughtheISbenefitsarerelativelyalongwaytogo,thesubstantialbenefitsshouldnotbeunderestimatedasithasbeenrevealedthatinoverall,“ITwasregardedasanenablerofbusinessgrowth”(Duncanetal.,2010).Severalstudieshaveshownthatthefitbetweenaccountingandcontextualfactors,orbetweenIS/ITandcontextualfactorshavesignificantimpactonperformance(Bharadwajet.al,1999,Melinda&Stephen,2001,Holden&El-Bannany,2004,Ismail&King,2005).

Therefore,itisnecessaryforallorganisationstohaveobjectivesfortheiractions.ForIS,theseobjectiveswillderivefromthebusinessstrategyandfromtheinformationsystemsstrategy.ISstrategydefinestheorganisation’srequirementof‘demand’forinformationandsystemstosupporttheoverallstrategyofthebusiness(Grantetal,2010).ThiswasalsosupportedbyLevyandPowell’swherebytheauthorsclaimedthattheISSframeworkorsimplycalledasinformationsystemsstrategyissaidtobespecificallysuitedforSMEsinaligningtheuseofIS/ITwiththebusinessstrategyaswellasleveragingtheIS/ITbenefits(Earl,1989;Walsham,1993;Levy&Powell,2005,pp113).Thus,withouttheobjectivesitisimpossibletosaywhetheranysystemisworthinvestingin.Thisisbecause,organisationsareoftendisappointedbytheactualbenefitstheyrealise,especiallywhencomparedtothoseanticipated(Grantetal,2010).Hence,anITapplicationshouldbedrivenbystrategy.

Moreover,according toWardandPeppard(2003),asuccess implementationonIScanalsobeachievedbyaligningtheISdemandtothebusinessstrategyand,atthesametime,searchingforopportunitiesforIS/ITtoimprovetheoverallcompetitivenessofthebusiness.WardandPeppard(2003) andBannister andRemenyi (2005) argue that alignment is about achievingapurposefulconnectionbetweenstrategy,organisation,processes,technologyandpeople.ResearchbyWagnerandWeitzel(2006)concludesthatstrategicITbusinessalignmentandoperationalalignmentarebothpositiveinfluencersofcompetitiveadvantage.

Furthermore,acontinuousandcomprehensivesetofeffectiveinvestmentappraisaltechniquesorevaluationprocessesarevitaltoevaluateandmanagethecost-benefitoftheoperatedISalongitslifecyclephases.ThisapproachwhichalsoreferstoasBenefitsRealizationApproach(Thorp,1998)isespeciallyimportancefortheSMEs,astheyareexperiencingalimitedresourcebaseorsocalled‘resourcepoverty’(Levy&Powell,2005).Theessentialityofcost-benefitmanagementisalsoevidentbyLoveandIrani(2004)wherebyevaluationprocessadoptedbyconstructionSMEsisusedforbothcontrolandlearning.TheauthorsalsostressedthatitisanintegralforSMEstoincorporatetheappraisalprocessaspartoftheirbusinessstrategyinordertoleveragetheITbenefits.

Figure 1. TIME Model Source: Source: Adapted from Chen and Hamdan (2014) “An Exploratory Study of Information Technology Adoption by SMEs in Brunei Darussalam”


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However,SymonsandWalsham(1998)arguedthatIS/ITevaluationisdifficultbecauseofthemulti-dimensionalityofcauseandeffectandmultiple,oftendivergent,evaluatorperspectives.Thiswasbecausetheassociatedbenefits thoughhavemanyperspectives(Grantetal,2010).Hence,thebenefitsofAIScanalsobeevaluatedbyitsimpactsonimprovementofdecision-makingprocess,qualityofaccountinginformation,performanceevaluation, internalcontrolsandfacilitatingcompany’stransactions(Bolon,1998).Besidesthat,informationsystemssuccessalsoneedstobeconsideredintermsoftheperspectivesofstakeholderssuchasusers,developers,sponsorsandseniormanagementallofwhomwillhavedifferentviewsofwhatconstitutessuccessandmayviewthissuccessfromdifferentstandpoint–technical,use,effectsandresults(Grantetal,2010).Basically,thebenefitsofhavingIScanonlybeestablishedthroughtheusebythebusinessorganisation(Tiernan&Peppard,2004).

Avison(2010)alsostressedthatinformationsystemsdevelopment(ISD)anditsmaintenancearethekeyelementsinsupportingthebusinessandorganisationalstrategyusingIS/IT.Moreover,theIS/ITinvestmentcontributestotheorganisation’ssubsequentlong-termproductivityandprofitabilityonly if there isaneffectiveprojectmanagement insystems implementationsandproper trainingandskillsenhancementfor thesystemsusers(WynnandMaldonado,2007).Thus, therolesandcompetenciesofIS/ITstaffaswellastopmanagementperspectivesandattitudes(Caldeira&Ward,2003)areverycriticaltowardsmaintainingthecapabilitiesoftheISforachievingtheorganisationalgoals.Nevertheless,WagnerandNewell(2007)hasrecognisedthe‘post-implementation’periodastheessentialfactorinISdevelopmentasitistrulyprovidesacrucialsupportforpractice-basedlearningandtrainingforusersinunderstanding‘theirjobsbetter’withtheuseoftheactualsystem(Newell&Galliers,2010).

However,thereisaverylimitedresearchinrespecttotheimplementationofaccountingsystemwhichmaybeinmanualorautomatedsysteminthecountry.Hence,thisstudyseekstoexaminethepracticesofaccountingsystemintheBruneiSMEs.Also,thepaperwillevaluatethecurrentpracticesoftheiraccountingsystemonitsnetbenefitsorcontributiontotheorganisation.

3. RESEARCH METHodoLoGy

Theresearchmethodologyanddesignwerebaseduponaninductiveapproachofasinglecasestudywithaimfortheorydevelopment(seeFigure2).ThisapproachwasusedasitissuggestedbyRyan,ScapensandTheobald,(2002),thatadescriptivecasestudycanassistindescribinganaccountingsystems,techniquesandprocedureusedinpractice.Thisstudyresearchedonlyoneselectedcubeshopwithanobjectivetoprovideadescriptionofaccountingsystempracticeanditschallenges.Togainin-depthinformationinrespecttothestudyarea,theaccountmanager/owneroftheenterprisewasselectedastherespondentinthisstudyforaninterview.Giventhatthecompanyissmallwhichislessthanfiveemployeeswiththeowner/managerplaysindifferentrolesinmanagingthebusiness,onerespondentwasconsideredadequatetohavehighdegreeofdatavalidity.

Semi-structuredinterviewwasusedasitismoreopenandflexibleapproachwhichcouldhelpingeneratingmoreadditionalinformationaswellasgainingathoroughopinionsorfeedbackfromtheinterviewee.Astheaimwastodiscovernewfacts,theinterviewstylehastobestructuredinaflexiblemannerandthewayinwhichthequestionsareplacedcouldbechangedoradaptedtothecourseoftheconversation.Inaddition,thisenabledtheinterviewertochangethewordingofthequestionoraskinanotherwayifsomethingwasnotclear.Likewise,additionalquestions,whichhadnotbeenpreparedpriortotheinterviewwasalsobeenaskedtoprovideareasonableaidanddiscussionforthispaperduringtheinterview.Thus,thismethodofferedaninsightontheextentto which the current system or processes are being used, challenges faced and thoughts aboutoptimisingthecurrentsystem.Aqualitativeresearchapproachwasusedinthiscasestudytoallowinterpretingandexplainingphenomenawithwords.Inaqualitativeinterviewlikethisinterview,themostchallengingpartistheinterpretationoftheinformationgatheredfromtheinterviewee.There


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arenospecificinstructionshowtheinterpretationsshouldbemade,butitshouldbenoticedthattheanswersarejustpersonalopinionsoftheinterviewee.

4. BACKGRoUNd oF THE CoMPANy ‘MMA CUBE SToRE’

MMACubeStoreisafamily-ownedsoleproprietorshiptypeofbusinessestablishedon3rdJanuary2015.Therearecurrentlythreefulltimeemployeeswhichincludeanaccountmanager,twosalespersons(onefulltime-oneparttime).Themainbusinessactivitiesarerentalservicefortheircube,tradingactivitiesof thevendors’ itemsand inventorymanagement service for thevendors’.Theaimof thebusiness is tomaximiseprofit,developmorebranchesand toencourage thespiritofentrepreneurshipamongBruneianswhiletoinspireyouthstostartingupanewbusinesswiththeopportunitiesthemarkethasoffered.

5. FINdINGS ANd dISCUSSIoNS

The findings section discusses skills and abilities of the owner-entrepreneur, an analysis theawarenessontheimportanceofaccountinginformationsystems,itscurrentaccountingsystempracticesandtheperceptionoftherespondentswithregardstotheimprovementoftheenterprise’scurrentaccountingsystem.

5.1. Skills and CapabilitiesOneofthedistinguishedcharacteristicsistheofSMEsistheskillsandabilitiesoftheowner-entrepreneur.Giventhat‘entrepreneurialfactors’issignificanttothesuccessofthecompany,itmayaffectthebusinessgrowthandevenmayleadtobusinessfailureshouldtheentrepreneurlacksofknowledgeandunfamiliarwithaccountingprocesses.Theowner-entrepreneurhasmorethanayearworkingexperience.Itisclaimedthattheskillsandknowledgeofaccountingoperationalisationlargelyfrompreviousexperiences.Allaccountingdocumentsarekeptforrecords.However, itwasrevealedthatstandardrecordkeepinginaccountingbookssuchasledgerwasnotimplemented.OnlybasicsimplerecordingsystemusingMicrosoftExcelwereusedmonthlyforrentalreportingpurpose.

Sincethebusinessprovidestradingactivitiesforvendors,recordkeepingonsalestransactionformonthlysalesreportisrequiredskills.Nevertheless,therespondentexpressedtheconcernoflackofadvancedaccountingknowledgeworkingexperiencetoperformthenecessarytask.Itwasmentionedqualificationalongwithinternshipexperiencecanonlyprovidethebasicabilitytoperformenterprise’saccountingpractices.ThisdemonstratestheneedofAISeitherofftheshelfsoftwareortailor-madethatcanfacilitatetheowner-entrepreneurtoevaluatecompany’sperformancewitheffectiveaccountingsystems.Refertoliterature,accountingshouldbemovingawayfromitstraditionalprocedurebase,encompassingrecordkeepingandrelatedworksuchasthepreparationofbudgetandfinalaccounts(GilantierandUnderdown,1981).

5.2. Awareness on the Need of Accounting Information Systems (AIS)Basically,respondentsareawarethatAISisconsideredtobeimportantforthebusiness.AccordingtoliteraturethepurposeofAISistocollect,store,andprocessfinancialandaccountingdataandproduceinformationalreportsthatmanagersorotherinterestedpartiescanusetomakebusinessdecisions. The findings demonstrate for instance, that sales data are important to the enterprisebecauseoftworeasonswhichincludefortrading,i)thereisaneedtocreateamonthlysalesreportforeveryvendor.Also,ii)theuseofsalesdataonrentalserviceisbeneficialtocreateamonthlyrentalincomereportfortheirbusiness.


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We need to create a sales report for every vendor which we provide them in monthly. And we also need our rental services’ sales information to create a monthly report for our rental service, so that we know our sales revenue every month. (Interviewee)

Moreover,theintervieweealsoclarifiesthattheenterprisetrackstheirexpensesthroughtheircashoutflowwheretheykeepallthetransactiondocumentsontheirMicrosoftExcel“Expense”file.

We still can track our expenses from our cash outflow because the transaction is not much (too many). Besides we also keep all the transaction documents on our ‘Expenses’ file like stationeries, wages and our ordered rental and sales receipts book for our reference. (Interviewee)

Basedontheresponsesabove,itshowscomputerisedpackagescanquicklygeneratealltypesofreportsneededbymanagementforinstancebudgetanalysisandvarianceanalysis(McBride,2000).Dataprocessingandanalysisarefasterandmoreaccurateandtimelyinformationfordecisionmaking.

Inaddition,theintervieweerespondedtotheawarenesstocomplywiththeGovernmentRegulationonRecordkeeping(2015).However,therespondentclaimedthatnofinancialplanning,budgetingactivitiesandanalysisoncostandrevenueinplaceeither.Itcouldbeproblematicbecause,ingeneral,theanalysisofcostandrevenueisconsideredtobevitalinsustainingcompany’sbusinessgrowth.This was verified from the literature that financial awareness among managers of SMEs variesconsiderablyandtheuseofcomputersforthepreparationofmanagementaccountinginformationshouldbeatitsfullpotential(MarriotandMarriot,2000).AlthoughAIScanbea‘manualsystem’,theneedofAIS-computer-basedisinevitable.ItisalsoconfirmedintheirstudythatsophisticatedAISimproveaccountingperformance(Salehietal.,2010).

InviewoftheneedofAIS,itisimportanttonotethatthereiscriticismonthebenefitsofexisting‘basic’accountingsystemswhichclaimedtobe‘neutral’withoutaddedvalueasmentionedbytherespondent:

I rate this system as ‘neutral’ in terms of the information’s quality which is the sales report. Microsoft Excel can still generate an up-to-date output reports. The inaccuracy and irrelevancy are mainly based on human error in recording the inputs or calculation. (Interviewee)

I rate this system as ‘neutral’ in terms of giving benefits in reducing operating costs, improving the quality of information, improving decision making, and improving our business sale profits as I unsure it can produce financial reports which provide an overview of business performance.

Fromtheresponses,itcanimplyinbroaderpicturethatthesuccessofISincludingforaccountingdependsontheperspectivesofstakeholderssuchusersofwhomwillhavedifferentviewsofwhatconstitutessuccessandmayviewthissuccessfromdifferentstandpoint–technical,use,effectsandresults(Grantetal,2010).Further,theresponseimpliedthatorganisationsareoftendisappointedbytheactualbenefitstheyrealise,especiallywhencomparedtothoseanticipated(Grantetal,2010).

5.3. MMA’s Current Accounting SystemIn view of the need of AIS, the current accounting system were analysed as presented infollowingsection.

1. FilingSystem

Theintervieweeisaskedtodescribetheirfilingsystem.Forinstance,onhowtheykeepandfilingtheiraccountingdocuments.Basedontheresponse,mostoftheirbusinesstransactionsand


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supportingdocumentsarekeptandmanagedmanuallyinfilesandcabinetandinMSExcel.Theintervieweealsosharesalltheirrelevantfileswhichinclude:rental,vendors,expenses,payrollandinventory.Besidesthat,somedocumentsinwhichtheymaintainare;payroll,rental,vendors,stock-restockformandsalesreport.

Rental file (for rental receipts and contract), merchants or vendors file (for sales report), expenses file (for stationery, receipt book and rental receipt book), and payroll file (for payroll slip) and inventory file (for stock-restock form or vendors’ inventories information which is a part of our inventory management activities)… Some documents like payroll, rental, vendors, stock-restock form and sales report are also produced and stored in the laptop via Microsoft Excel document for our soft copy reference. (Interviewee)

This implies SMEs are highly required to manage their accounting and finances efficientlyalthoughthrough‘manuallysystem’inordertomaintainandimprovetheirbusinesssincefinanceingeneralarecriticalissuesforgrowingbusinesses(CarpenterandPeterson,2002;Sextonetal.,1997).TheperilisbecausethelackofproperaccountingrecordsmaycontributetothefailureofSMEs.Moreover,previousresearchdiscoveredthatpoorinformationqualitymayleadtonegativeeffectsonthedecisionmaking(Huang,Lee&Wang,1999;andClikeman,1999).

2. RecordkeepingSystems

In businesses particularly in SMEs, accounting may be either managed internally orexternally(outsourcing)thatlinkedto‘resourcepoverty’claimedbyCaldeiraandWard,(2003);PeppardandWard,(2004);Duncanetal.,(2010,pp173)intheliterature.ForMMA’s,theiraccountingismanagedinternallyandmostoftheircurrentpracticesinmanagingaccountinginformationaredonemanually.ForinstanceMicrosoftExcelareutilisedforrecordkeepingpurposeforsimplecalculationfor theirbusinessrental incomeandvendor’ssalesrevenue.TherespondentclaimedExceliseasytouseforbasiccalculationanditisreadilyavailableeventhoughitisnotsophisticatedaccountingsoftware.

We just do simple record in Microsoft Excel to calculate the total of our monthly rental income… As we also provide trading activities for our vendors, we also do recordkeeping for our vendors… I will retrieve on later date and input them in spreadsheet which is Microsoft Excel, for preparing and generating the enterprise and vendor’s monthly sales reports. This help use to provide each vendors’ with their sales revenue in every month. (Interviewee)

I am just feel assure that by improving to an advanced computerised system which linked to the Points of Sales (POS) machine, this may improve the productivity of our service in terms of eliminating the process of recording the details by hand-typing. Further, this will also improve the quality of our service in generating fastest response and more accurate information. (Interviewee)

ItshowsclearlywithbasicITpackagerespondentstillnotabletoexploitthefullfunctionalityoftheirIS(Newell&Galliers,2010).Thesefindingssuggestedbenefitsfrominformationsystemusedoariseautomatically;theyhavetobeactivelymanaged(Grantetal.,2010).Withtheintentiontoenhancetheiraccountingpractices,therespondenthasplannedtogetsupportfromtheexternalexpertise,suchastheexternalsourcesi.e.businesssolutioncompany.Itisbelievedshouldtheyadoptcomputerisedaccounting system, itwould improve theproductivity andqualityof their service,responsivewithaccurateinformationanddata.


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3. ReportingSystem

Intermsofreportingsystem,asimplemonthlyrentalincomereportfortherentalserviceandmonthlysalesreportareproducedfortheirvendorsbyusingMicrosoftExcelwhicharevitalfortheiroperationalpurposes.

I will retrieve on later date and input them in spreadsheet which is Microsoft Excel, for preparing and generating the enterprise and vendor’s monthly sales reports… We prepare and generate a simple monthly rental income report for our rental service and monthly sales report for the vendors. (Interviewee)

Therespondentdescribedfurtherthe‘operation’ofreportingsystemofthebusinessactivitieswhichislargelybasedonmanualsystems.

For trading, we just use a manual way which is using a calculator to compute the total costs, and record them in a ‘sales receipt’ book. The first receipt will be given to the customer, while the second receipt will be put into a rack called as ‘receipt locker’. The purpose of this rack (which has more than 200 slots) is to help us in organising the right sale receipts for the right cube code (which represent a vendor). Organising this sales receipts on their right slots are time consuming especially during peak hours and pay days. (Interviewee)

The response demonstrates basic ‘AIS’ has been adopted by the company and shows asignificantinvestmentisalsoneededintheuseofinformationsystemsandtechnologyinordertoassistthebusinessindeterminingthesuccessofvirtuallyeveryofitsbusinessoperationassuggestedbyBensonandTribe(2008).PerhapsforSMEstheimplementationofAIScanbeaverycostlyprocess,whichrequiressignificanteffort,timeandmoneyateverystageofthesystem’slifecycle.Nevertheless,MMAshouldtakeanapproachthatIT/ISareregardedasanenablerofbusinessgrowth(Duncanetal.,2010).

5.4. Challenges in Current Accounting SystemMostofthechallengesofMMAcurrentaccountingsystemismoretowardsoperationalissuesthatisalignedtotheirbusinessstrategy.Forexample,therespondentstatedoneofthemainproblemsisrelatedtoduplicationofdata,inaccuracyofdataaswellasthedifficultyinaccessingthedata;specificallyinretrievingthemandwhichisineffectiveandtimeconsuming.WhileitistimeconsumingandineffectiveitisrevealedthattheirreportingsystemwithusingMicrosoftSExcelhasinabilitytoproducetheactualfinancialperformanceoftheirbusinessinsteadestimatedprofitsforeachmonth.

The reason for using the Microsoft Excel which is to generate the monthly sales report is basically to improve our sales quality where, vendors would know their sales performance in each month this can also help us to track our own business performance. (Interviewee)

The use of Microsoft Excel in generating the sales report can also help us to manage the inventory. (Interviewee)

InBrunei,different typesofaccountingsoftwarearestillquiteunknownand themostusedaccountingsoftwareamongthebusinessesinBruneiisUBS(Chen&Hamdan,2014).AsforSMEs,itisclearthatmanyarestilldependentonMicrosoftExcelanduseitastheir“computerisedaccountingsystem”.However,MicrosoftExcelisnotadequateaccountingtoolbecauseitisstillconsideredasa


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manualsystemwherethelayoutsofaccountingprocessesaremanuallytypedonthecomputerwhichisobviouslyverytime-consuming.

TheresponseaboveshowsthechallengeofaccountingpracticecanbeimprovedbyaligningwiththebusinessstrategytoincreasesalesofbusinessperformanceandcontrolcostinmanaginginventorywithadoptionAIS.Moreover,accordingtoWardandPeppard(2003),asuccessimplementationonIScanalsobeachievedbyaligningtheISdemandtothebusinessstrategyand,atthesametime,searchingforopportunitiesforIS/ITtoimprovetheoverallcompetitivenessofthebusiness.WardandPeppard(2003)andBannisterandRemenyi(2005)arguethatalignmentisaboutachievingapurposefulconnectionbetweenstrategy,organisation,processes,technologyandpeople.ResearchbyWagnerandWeitzel(2006)concludesthatstrategicITbusinessalignmentandoperationalalignmentarebothpositiveinfluencersofcompetitiveadvantage.

Inviewofalignmenttowards‘people’,thechallengeistoovercometothelackofexpertiseinmanagingoranalysingaccountingdataandinformation.ThiswashighlightedinliteraturetherolesandcompetenciesofIS/ITstaffaswellastopmanagementperspectivesandattitudes(Caldeira&Ward,2003)areverycriticaltowardsmaintainingthecapabilitiesoftheISforachievingtheorganisationalgoals.However, the respondenthas the intentionofundertakingmore training i.e short trainingsessionofspecialcourse,aseminarande-learningonaccountingpracticestohavebetterknowledgeandunderstandingoftheaccountingsystemandtobeabletoanalysetheircostandrevenues.

Yes, I am really keen to gain more knowledge and develop my expertise in this area to help manage the business more effectively. (Interviewee)

I would like to attend any short training session, special course or classroom training or e-learning and seminar or workshop specifically on this management and accounting areas. (Interviewee)

TheresponsesarerelatedtoliteraturestatesthatIS/ITinvestmentcontributestotheorganisation’ssubsequentlong-termproductivityandprofitabilityonlyifthereisaneffectiveprojectmanagementinsystemsimplementationsandpropertrainingandskillsenhancementforthesystemsusers(WynnandMaldonado,2007).Whileskillsandknowledgeofthepeopleshouldbetakenintoconsideration,thefindingshavedemonstratedthelimitationofbudgetbecomeoneofmainobstaclestoimplementAIS.

I have a desire to adopt advance system, for example using a bar code which connects to the accounting system. However, the price is very expensive, maybe around $10,000 plus, which we absolutely could not afford it at the moment. (Interviewee)

The main issue is due to inability to select an appropriate software which fits for small business as we also have inadequate budget. (Interviewee)

Insummary,thechallengesoftheofthecurrentMMA’saccountingsystemarestrategyalignmentwithoperationalissue,peoplefactorandlimitationofbudgetforAISinvestment.

6. dEVELoPMENT ANd dESCRIPTIoN oF PRoPoSEd SP2I FRAMEwoRK

ThissectiondrawsonthemainfindingsoftheresearchtodevelopaSP2iConceptualFrameworkinordertoprovideinsightfulframeworkunderstandingofAISfunctioninfacilitatingoperationalaccountingprocess,itsrelatedfactorsandtheaddedvalue.Theframework(S–Strategy;P–People;i-(1)Investment;i-(2)Infrastructure)providesasenseofunderstandingtheAISfunctionanditsaddedvaluebyshowingthe interrelationshipmechanismsbetweenstrategy,AISimplementation


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factors;people,investmentandinfrastructure.TheillustrationoftheframeworkshowninFigure2isonlyconceptualbasedoninterpretationsfromthefindingsoftheinterviews.

Asastartingpoint,theorganisationshouldhaveastrategytoachievethecompany’sobjectivethroughadoptionofAIS.Thestrategyshouldbemadevisibletoallemployeessoastomakeoperationalofaccountingpracticesdirectlypartofbusinessstrategy.Itwasdiscoveredfromthefindingsthatlackedofalignmentofbasicaccountingsystemstowardsstrategicendeavourtoachievebusinessobjectives.ThisisbecauseitisthealignmentofbothbusinessandISstrategycanactasadrivertoimprovetheSMEsefficiencyoreffectivenessinmaintainingitsaccountingandfinances.

ThestrategywillthenlinkuptothefunctionofAIS,whichistranslatedintospecificfactors,people,investmentandinfrastructurewherethecoreofaccountingpractices-operationsintheheartofthetriangle-diagram.ForPeople-SMEsownersandmanagersareencouragedtobeabletostrengthentheirmanagementskillsandaccountingskillstosupporttheimplementationofAIS.Basically,theymustbeawareoftheimportanceofaccountinginformationanddataandasthisiscrucialpartofrunningabusiness.IfacompanyweretodeveloptheAISinfrastructurebyimplementingspecialisedaccountingsoftwareforitsaccountingactivities,theownerormanagershouldbeabletoevaluatetheconditionoftheirenterprise,whethertheyhaveadequateinvestmentandresourcesfortheAISadoptionor implementation.Fullunderstanding these factors is significantbecause it assists thebusinessownerormanagerforaneffectivedecisionmakingsothattheimplementationofinformationsystemmaybecomebeneficialtothebusiness.Thus,SMEsshouldhaveasolidobjectiveonwhyAISshouldbeimplemented.

It was highlighted from findings that the operationalisation of accounting; filing system,recordkeepingsystemandreportingsystempracticesarerelated to‘foundation-ecosystem’factors;people,investmentandinfrastructure.ThisprocessrequiresthecapabilityofAIStoconvertit intoadded-valuewhichisbeneficialtoorganisation.Fromthefindings,theframeworkconsolidatestheaddedvaluethancanbecategorisedinto;efficiencyandeffectivenessofaccountingpractices,costreduction,projectionofsalesandfinancialperformance.TheillustrationofFigure2ismeaningfulasitintegratestheinterrelatedfactorswithabalancedviewofaddedvaluesingleframework.ThisframeworkhascontributedtoextendtheexistingknowledgetoimproveBruneiSME’sincludingtechnologicalandchangeandaccesswithintegratedapproachproposedbyIslam,Abdullah&Salleh,2001).

Figure 2. SP2i framework


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7. CoNCLUSIoN

In conclusion, it canbe claimed thatAISplays a significant function in addingvalue toMMAcompany. This study is able to contribute through the development of a conceptual frameworkfortheunderstandingofthefunctionofAISthroughitspracticalmanifestationsandnatureofitsimplications.Theframeworkdeveloped in thisstudyhas thepotential toprovideaguidelineforpractitionersnotonly to succeed in implementingAISbut to secure theaddedvaluewhichwascriticisedasmultidimensionalandindirect.Accordingly,theproposedframeworkisintendedtobeservedasausefulguidelinefordrawingattentiontothetheoreticalunderpinningsoftheconceptofAISandthecharacteristicsofthefactors,understandingtheinterplaybetweentheseandstrategyandthenatureofaddedvalue.Thisstudyisnotfreefromlimitations.SincethepaperisbasedonasinglecasestudyresearchsettinginthecontextoftheBruneiSME,thefindingshavepotentiallimitationsintermsofgeneralisability.Nevertheless,astheconceptof`theoreticalgeneralisation’wasapplied,therewasnointentiontogiveafalseimpressionoftheresults.Aswithotherqualitativeresearchapproaches,theemphasisofthispaperisontheperceptionsoftheparticipantwhichisalwaysopentomultipleinterpretations.


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Fahmi Ibrahim is an Assistant Professor of Strategic Management in School of Business, Universiti Teknologi Brunei. His research focus is on strategic management, knowledge management, intellectual capital management, and MIS.

Diyana Najwa obtained her bachelor’s degree in Business Information System and master’s degree in Management and Technology at Universiti Teknologi Brunei. She is currently a PhD candidate at Universiti Teknologi Brunei.

Nur Suaidah has graduated from Universiti Teknologi Brunei for her undergraduate and master’s degree. She is currently joining an apprenticeship programme and has served as an IT and media officer at Halal Food Control Division, Ministry of Religious Affairs.

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Accounting Information Systems (AIS) in SMEs

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