Antoni Antoni

The Effect of Accounting Competencies, Information Systems, and Compliance on the Quality of MSME Financial Reporting through Accountability

Introduction

The effect of accounting competencies, information systems, and compliance on the quality of msme financial reporting through accountability. Discover how accounting competencies, information systems, and compliance significantly boost MSME financial reporting quality, mediated by accountability. Improve financial governance.

Abstract

This study examines the influence of accounting competencies, information systems, and compliance on the quality of financial reporting in Micro, Small, and Medium Enterprises (MSMEs) with accountability as a mediating factor. Employing a quantitative approach, data were collected from 130 MSME respondents using a Likert-scale questionnaire (1–5). The analysis utilized Structural Equation Modeling–Partial Least Squares (SEM-PLS 3). The results reveal that accounting competencies, compliance, and information systems each have a significant positive effect on financial reporting quality. Compliance emerged as the strongest predictor, emphasizing the importance of adhering to regulations and standards in enhancing reporting credibility. Furthermore, the combined effect of these factors explained 71.8% of the variance in financial reporting quality, underscoring the integrated role of human resources, institutional legitimacy, and technological adoption. This study contributes both theoretically and practically by providing insights into strengthening MSME financial governance through improved competencies, compliance culture, and digital system utilization.

Review

This study critically examines the multifaceted influences on the quality of financial reporting within Micro, Small, and Medium Enterprises (MSMEs), focusing on accounting competencies, information systems, and compliance, with accountability posited as a mediating factor. Employing a quantitative research design, the authors utilized Structural Equation Modeling–Partial Least Squares (SEM-PLS 3) to analyze data collected from 130 MSME respondents. The core findings reveal that all three independent variables—accounting competencies, information systems, and compliance—each significantly and positively impact financial reporting quality. Compliance, in particular, emerged as the strongest predictor, and the combined model accounted for a substantial 71.8% of the variance in reporting quality. The paper addresses a highly relevant and practical issue, given the economic significance of MSMEs and their well-documented struggles with robust financial reporting. The chosen methodology, SEM-PLS, is well-suited for analyzing complex, multivariate relationships, providing a robust statistical foundation for the conclusions. A notable strength is the clear identification of compliance as the most significant driver of reporting quality, offering a targeted and actionable insight for MSME owners, policymakers, and standard-setters. The high explanatory power (71.8%) of the model further underscores the integrated importance of human capital, technological infrastructure, and adherence to regulations in fostering sound financial governance within MSMEs. Despite its valuable contributions, a significant limitation in the abstract is the complete absence of findings or discussion related to the mediating role of accountability, which is explicitly stated in both the title and introduction as a central focus of the study. This omission leaves a critical gap in understanding the full scope of the research and whether the proposed mediating mechanism was confirmed. Future iterations of the abstract should clearly state the results regarding accountability’s mediating effect or lack thereof. Additionally, while the quantitative results are robust, the abstract could benefit from a brief mention of the specific dimensions or indicators used to measure each construct, enhancing clarity and replicability. Future research could extend this work by incorporating qualitative methodologies to delve deeper into the 'how' and 'why' behind the observed relationships, or by employing longitudinal studies to capture dynamic changes in reporting quality over time.

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