An investigation of internal accounting control in microcomputer-based small business accounting systems

This project investigates internal accounting control in microcomputer-based small business accounting systems. Two research objectives are addressed by the study. The first objective assesses internal accounting control in microcomputer-based small business accounting systems. The second objective analyzes small business characteristics that are associated with the level of internal accounting control.;The data to analyze these two objectives was collected from a random survey of 4,273 small businesses and from data provided by the Price Waterhouse study. The sampled population was obtained from the vendors of 24 accounting software packages. The response rate from the survey was 13.9 percent, with a usable response rate of 11.5 percent.;The first objective is tested by using descriptive and empirical analyses. The descriptive analysis addresses the internal controls that have been implemented by small businesses. The empirical analysis tests four hypotheses that address the issues of the (1) awareness of software program controls, (2) implementation of software program controls, and (3) role of vendor support in control awareness and implementation.;The results for the first objective indicate that (1) internal accounting control can be improved and that the areas where improvement is needed most are controls relating to separation of duties and access, (2) awareness of software program controls is relatively high, (3) implementation of software program controls is relatively high, and (4) awareness and implementation of software program controls are dependent upon software type.;The second objective is tested by using descriptive and empirical analyses. The descriptive analysis identifies small business characteristics that are associated with the control index. The empirical analysis tests four hypotheses regarding the relationship between the control index and three common characteristics (accounting knowledge of management, number of accounting employees, and quality of vendor support).;The results for the second objective indicate that the three common characteristics and 12 additional small business characteristics are significantly associated with the control index. Additionally, the results indicate that transformations for the number of accounting employees, the experience surrogate for the accounting manager, the courses surrogate for the accounting manager, and the adequate vendor support surrogate are significant predictors of the control index.