Accounting Information System and Performance of Small Businesses: The Mediating Role of Internal Control

Abstract

This study sought to examine the mediating role of internal control systems on the relationship between accounting information systems and the performance of a small businesses. The researcher developed two hypotheses to guide the study. The study adopted the explanatory design to research. Data for the study was sourced from a sample of 327 small firms in Sunyani. The sample size was determined using Krejcie and Morgan (1970) table. Data were obtained from respondents using a questionnaire designed based on research objectives. The dependent variable was small business performance while AIS effectiveness and ICS effectiveness were independent and hypothesized mediating variables respectively. The data was analysed using descriptive statistics and inferential statistics. Multiple regression analysis and the Sobel test was performed to test the significance of the mediating variable. The study found that the effectiveness of the internal control systems affects significantly the effectiveness of the accounting information system of small businesses in Sunyani. Moreover, findings from the study indicated no statistically significant direct effect of AIS effectiveness on firm performance. However, The Sobel test showed a significant indirect effect of AIS effectiveness on small business performance through the internal control system. The study recommended that small firms have in place a robust system of internal controls that is effective since it is through the internal control systems that accounting information system affects their performance.