THE IMPACT OF ACCOUNTING PROCESS DIGITALIZATION ON FINANCIAL REPORTING QUALITY AND THE PERFORMANCE OF SMALL AND MEDIUM-SIZED ENTERPRISES IN KOSOVO
DOI:
https://doi.org/10.58885/ijllis.v14i1.68fxhbKeywords:
accounting digitalization, financial reporting quality, accounting information systems, SME performance, digital transformation, KosovoAbstract
The digitalization of accounting processes has become an increasingly important factor of modernization of business operations and financial management. Small and medium-sized enterprises (SMEs) constitute a large part of economic activity in developing and transition economies, and are becoming increasingly reliant on accounting information systems, cloud accounting, electronic invoicing, automated bookkeeping, and other digital technologies. The paper analyzes the influence of accounting processes’ digitalization on the quality of financial reporting and the performance of SMEs in Kosovo. The study is based on the premise that digitalization can improve the accuracy, timeliness, relevance, completeness, and accessibility of financial information and also can contribute to the improvement of managerial decision-making and organizational performance. This relationship is not automatic because the benefits from digital accounting are linked to human capital, digital proficiency, internal controls, organizational capabilities and regulatory conditions. This paper develops a conceptual framework in which the independent variable is accounting process digitalization, the outcome and potential mediating variable is financial reporting quality and the dependent variable is SME performance. Based on prior empirical research, four hypotheses are proposed regarding the direct effects of digitalization on financial reporting quality and SME performance, as well as the mediating role of financial reporting quality. The paper argues that the Kosovo SMEs could gain a lot from the digitalization of accounting, particularly in terms of the quality of information and decision-making, but these gains must be backed up by investments in the skills of employees, internal control systems and digital infrastructure.
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