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Article
Publication date: 22 June 2010

Abdel K. Halabi, Rowena Barrett and Robyn Dyt

The purpose of this paper is to investigate the reality of financial and management accounting in a small group of small firms. Specifically, from the owner's perspective…

Abstract

Purpose

The purpose of this paper is to investigate the reality of financial and management accounting in a small group of small firms. Specifically, from the owner's perspective, an exploration is undertaken to see what financial information is collected, how it is used (or not) to make business decisions and evaluate the firm's performance, and the role played by the accountant in that process.

Design/methodology/approach

A phenomenological paradigm underpins this exploratory study. Semi‐structured interviews were undertaken with the owners of ten small firms, where the focus was on understanding what happens in an organisational setting, as opposed to theory and textbook practice.

Findings

The qualitative data supported prior research in other countries. The in‐depth analysis revealed a very basic understanding of accounting information and problems with the financial literacy amongst these small firm owners. Accounting reports were not widely produced or used, so an informal assessment, such as how much cash was in the bank, was the primary means of assessing business performance. Accountants were used for taxation services, although some owners sought more general business advice.

Originality/value

An understanding is developed of why there might be a gap between textbook rhetoric and reality of accounting practice in small firms. The conclusion is that accounting textbooks need to include more information about the reality of financial management in small firms.

Details

Qualitative Research in Accounting & Management, vol. 7 no. 2
Type: Research Article
ISSN: 1176-6093

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