Designing of Accounting Information System for Small and Medium Enterprises : Application of PLS-SEM

Accounting information system is a complex and subjective concept that lacks a comprehensive conceptual framework. Previous AIS studies focused on the context of information systems and its benefit. Moreover, existing studies have revealed contradictory results. Some authors argue that full AIS adoption is necessary for all organizations, regardless of their size. Others proposed a reduced level. Nevertheless, they have not confirmed a subsystem of AIS that proclaimed as less important for SMEs. In response to this gap, the present study has attempted to design an AIS framework for SMEs. As such, this research aims to decompose and identify the important sub-systems that constitute AIS. To fulfill this purpose, the research employed an exploratory research design that used the Partial List Squire-Structural Equation Model. Primary data were collected from eighty SMEs. The study result confirmed that the transaction-processing subsystem has the largest importance index followed by the reporting subsystem. Even though internal control is the least important, it was statistically significant in designing of AIS for SME. In the context of reporting, managerial reports (Budget preparation, variance analysis) are more important than financial accounting reports (FSEU). Regarding technology, whether IT is designed as simple as a manual system or as complex as EP, its effect on management decisions is minimum. Likewise, the internal auditing practice of SMEs has a very small impact on AIS alignment with accounting information users’ satisfaction. Collectively, the study confirmed that all subsystems of AIS are significantly important in the designing of the AIS conceptual framework for SMEs