Factors influencing the use of accounting services by small and medium enterprises in Kenya

Abstract

Use of accounting services by firms of all kinds is critical to their bottom line and profitability. This study was on factors influencing the use of the services with emphasis on SMES in Kenya. The objectives of this study were to determine how knowledge and competencies of the owner/manager, competition, legislation and size in terms of growth influences the use of such services by SMEs in Kenya. The study used descriptive research design. A survey was done to establish the factors among owners of SMES in Kenya. There are about 850 such establishments in Kenya of which a sample of 85 firms was taken using stratified random sampling. Data was collected by use of questionnaire method which had both structured and unstructured questions. It was analyzed mainly by use of descriptive statistics such as the mean and inferential statistics such as regression. Results indicated that knowledge and competence of the respondents was poor, there was high competition among the SMEs, the respondents had low levels of compliance with accounting legislation and the SME growth was low. In addition, the study findings revealed that there that the SMEs did not use accounting services. The study found that there was positive and significant relationship between knowledge and competence, competition, legislation and SME growth in size. The study recommended that training be emphasized as it has an effect on the use of accounting services. There is need to for management to emphasize on use of qualified accountants in order to face the competition facing the SMEs, the management should emphasize on good and proper book keeping of financial records and the SMEs to use services of qualified accountants so as to enhance growth of the business.