Revolutionizing Financial Reporting Practices: Overcoming Challenges in Kurdistan's Small and Medium Enterprises

Abstract

This research seeks to unravel the complexities of this issue by examining the interplay between financial literacy, technology adoption, and access to financial expertise, and their collective impact on the effectiveness of financial reporting practices. A multiple regression model was estimated using 180 questionnaires collected from CFOs, accountants, bookkeepers, financial technology personnel, general managers, and SME owners of 30 SMEs in Erbil. The findings showed that higher financial literacy levels among SME owners and managers lead to more effective financial reporting practices. It was also established that an improvement in the adoption of accounting technology significantly enhances the effectiveness of financial reporting practices. The research findings underscore the critical role of financial expertise in enhancing the effectiveness of financial reporting practices. Since higher levels of financial literacy enhance the effectiveness of financial reporting practices, SMEs should invest in financial literacy programs for owners, managers, and key personnel. SMEs should prioritize investing in financial literacy programs for owners, managers, and key personnel, alongside training programs focused on the adoption and effective use of accounting technology.