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Wollega University

College of Business and Economics

 

Research Paper on ‘Factors Affecting the Adoption of Accounting Practices of Micro and Small Enterprises (The case of Wollega Zones)

 

                                                   Abstract

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In order to guarantee proper financial management in Medium and Small Enterprises (MSEs) proper books of accounts and sound accounting practices should be kept. Due to this, the importance of maintaining proper books of accounts and sound accounting practices has been emphasized in ensuring proper financial management in MSEs. The overall objective of this study was to investigate into the factors affecting the adoption of accounting practices by MSEs in four towns of Wollega Zones through data based on responses to a structured and unstructured questionnaire, interview and document analysis from 94 MSEs operating in Wollega Zones. It is reported that the majority of MSEs fail to keep complete accounting records as they assume there is no need to keep accounting records and it requires technical skills and knowledge. The study also found that it is equally possible that the medium and small category of firms do not find the need to keep formal accounting records since they are mostly controlled by family members Thus, the study suggests that training programmes must be organized to sensitize owners and managers on the need to keep proper books of accounts. The government should also declare the necessary legal instruments publicly to make the preparation of proper books of accounts mandatory in order to improve MSEs practice of accounting in four towns of Wollega Zones.

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