Computerized Accounting Information Systems and Small Businesses

Computerized AIS and Small Businesses
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Computerized AIS and Small Businesses
“Accounting Information Technology in Small Businesses: An Inquiry” by David Fordham and Carol Hamilton depicts that many small businesses use accounting practices that cannot be categorized as integrated computerized accounting information systems (AIS). Although the authors found no specific definition for a small business, they chose the criteria of firms with fifty employees and below. They preferred this definition since multiple studies used it, the Center for Entrepreneurship, Small Business Development Center, and the Institute for Entrepreneurship. Fordham and Hamilton found out that the dominant accounting system used by numerous small businesses was Intuit’s Quickbooks. The majority of small businesses used a word-processing template, pencil-and-paper processes, spreadsheets, and Excel, which do not qualify to be integrated software. Those using integrated systems had specific software packages to perform operations, not a general-purpose AIS, such as Quickbooks. The paper evaluates the findings from Fordham and Hamilton’s article and suggests more reasons why small firm owners are not using AIS in their businesses.
In-person interviews were used for 1,852 small businesses instead of surveys, which effectively gathers first-hand data from the participants. In particular, 107 small firms were excluded since they were franchise operations, used outside bookkeeping or accountant, or were outlets of bigger companies (Fordham & Hamilton, 2019). In 1,625 small businesses, owners were available and willing to answer various questions about their firms' accounting practices. Besides, 53 had family-member workers, the largest firms had 45 employees, and owners operated 174 without assistance from additional workers. The study had a positive response rate of about 93% (Fordham & Hamilton, 2019). For sure, the number of small companies with owners present was high, which facilitated a proper understanding of how such firms manage their accounting activities. The small businesses dealt with include dental practices, restaurants, gift shops, dry cleaners, tanning salons, and automotive mechanics. Others were gasoline pump repair shops, railroad signal repair, communication-tower erector, weekly newspaper vendor, a sign painter, and professional exhibition displays. Above one-third of small businesses, 578 of 1,625, did not use computer applications in bookkeeping and financial accounting (Fordham & Hamilton, 2019). In reality, not many small businesses use AIS since even owners do not understand how to use such systems in their accounting practices. Many small firms used handwritten check registers, checkbooks, sales tickets, manual purchasing records, spindles, and card inventory control systems.
Fordham and Hamilton’s findings show that 15 companies used pegboard billing systems. Approximately 88% of the small businesses interviewed used some type of technology for recordkeeping purposes. The common tools used were calculators, adding machines, vendor-provided credit-card readers, and simplistic cash ...