Using accounting information systems to benefit micro businesses : A thesis submitted in partial fulfilment of the requirements for the Degree of Doctor of Philosophy at Lincoln University

Abstract

Ninety percent of all businesses in New Zealand are micro businesses, defined as having zero to five employees. This sector is critical to New Zealand’s economy. Micro businesses create opportunities for new entrepreneurial talents, provide employment and offer consumers choice and variety including specialist goods and services. Central to all businesses is the need for information, managed by the accounting information system (AIS). The AIS supports decision-making, achieving business objectives and managing limited resources. Prior studies and government reports call for further research of micro businesses so that this sector of the economy can be strengthened. This research addresses this call by exploring the benefits of using AIS in micro businesses using multiple methods, including desk-based research, semi-structured interviews with professional accountants, a survey of micro business and finally semi-structured interviews of micro business owners. Findings show that a variety of tools are used, ranging from manual record keeping, to spreadsheets, to computerised AIS, and including a mixture of these tools. The majority of microbusinesses use computerised AIS tools, of which two software providers dominate. Some accounting firms specialise their practice either through industry or choice of AIS. Other accountants accommodate any AIS approach, focusing on the individual micro business needs. AIS use by micro businesses is primarily focused on monitoring cash flow, sales and income activities and compliance reporting (GST and income tax). The greatest utilisation of computerised AIS and add-on tools are observed with these activities. Micro businesses could utilise other features more, especially reporting, as a basis for decision-making. The decision to adopt computerised AIS includes factors affecting the individual business owner (generation, individual knowledge and skill and personal attitude to technology), internal business factors (financial costs, time costs and the business purpose and future) and external business factors (supply chain, regulatory bodies and supporting services). The benefits of using computerised AIS include connectivity, autofill, automated calculations and drilldown. Connectivity through cloud technology provides accessibility to a single version of the data between users regardless of location. Autofill populates data entry screens with information previously captured, reducing the need for typing. Automated calculations automatically completes basic arithmetic in the creation of invoices, supplier bills and reports. Finally, drilldown enables direct access to supporting detail for information provided on screen. These benefits may not be available in older versions of computerised AIS, or versions that only include a subset of the features. This research increases the understanding of factors impacting micro businesses in their decision to implement computerised AIS, and the benefits from doing so. The findings support accountants, government agencies and AIS software developers to devise strategies to support micro businesses. Findings from this research are applicable to micro businesses throughout New Zealand and more globally and will benefit other small businesses outside of the micro definition, both locally and globally.