INTRODUCTION
1.1 Background of the Study
Businesses are currently looking forward to have a viable advantage against the pressures
presented by digitisation. Due to the high capability requirements, most organisation aims to
put in place the kind of performance that can bring more profit. In order to do that, the workers
are required to perform well and improve their profitability (Osman, 2013). One of such
pressures on organisations as presented by digitisation is the innovation of Information and
Communication Technologies (ICT). To comply with this, the organisation needs to align
organisational profitability with new innovation technologies. The innovation of ICT has
drastically revolutionised the application of financial management and accounting practices.
ICT has become influential in providing a competitive edge for corporations, financial
institutions, manufacturing industries and specifically in the accounting profession. In
particular, ICT has been a major factor of efficient and reliable accounting system and hence
improved organisational profitability (Taiwo & Edwin, 2016).
Accounting is an integral part of any business, whether large or small entity. It has a major role
in measuring the profitability of a company’s activities during a course of a specified time. For
this reason, accounting plays a very important role in the management and success or failure
of present-day business-institutions (Gaffo, 2023). The American Accounting Association
appropriately defines accounting as “the process of identifying, measuring and communicating
economic information to permit informed judgments and decisions by users of the information”
(American Accounting Association, 2023). This definition highlights the core purpose of
accounting: to gather, analyse, and present financial data in a way that empowers users to make
sound judgments and navigate business complexities. Historically, accounting practices began
with rudimentary bookkeeping systems, as evidenced by Luca Paccioli’s work in the 1490s
(Mathews, 2015). Initially, records were painstakingly kept on rocks and later evolved into ledgers (Carruthers, 2017). While the manual system offered certain advantages, such as
affordability, ease of correction, and arguably lower data corruption risks (Lee, 2018), its
inherent limitations in efficiency and scalability were undeniable. Consequently, the emergence
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of computerised accounting systems (CAS) revolutionized the field. CAS offer significantly
improved speed, accuracy, data storage capabilities, and accessibility, contributing to their
widespread adoption. Despite the dominance of CAS, the manual system may still persist in
some small businesses due to its simplicity and perceived suitability for limited transactions
(Davis, 2022).
Therefore, it is convenient to set a computerised accounting system to record, analyse and
interpret financial or accounting information to management. This is due to the fact that CAS
enhances speed and efficiency by automating key tasks like data entry, calculations, and report
generation, significantly increasing speed and efficiency. This frees up valuable time for SMEs
to focus on core business activities while ensuring timely and accurate financial data is readily
available (Shiraj, & Ware, 2015). Studies have shown that CAS implementation can lead to a
reduction in accounting processing times by as much as 70% (Khan et al., 2019). CAS also
improved accuracy and data integrity that is with their automated calculations and data
validation features, such digital systems are capable of minimising the risk of errors and ensure greater data integrity. This improves the reliability of financial information, fostering better
decision-making and reducing the potential for costly financial discrepancies (Kumar & Bhatia,
2016). In a study of Indian SMEs, Mitra & Pal (2020) found that adopting CAS led to a 25%
reduction in accounting errors. CAS similarly enhanced financial analytics and reporting
through the provision of powerful tools for analysing financial data, generating accurate
reports, and identifying trends. This empowers SMEs to gain deeper insights into their financial
performance, make informed strategic decisions, and optimize resource allocation. They can
track key metrics like profitability, cash flow, and inventory levels in real-time, enabling
proactive adjustments to improve financial results (Johnson & Tannock, 2017). A study by
Adegbite & Ajagbe (2018) reported that SMEs using CAS experienced a 15% increase in
revenue due to improved decision-making based on financial analysis.
Notwithstanding, CAS also reduce operational costs and scalability. While the initial
investment in CAS might seem daunting, the long-term cost savings often outweigh the initial
outlay. CAS rationalise accounting processes, eliminate the need for manual data entry, and
reduce paperwork, leading to significant reductions in operational costs (Shiraj, 2015).
Additionally, CAS offer superior scalability, accommodating growth without requiring
additional manpower or resources. 

In Cameroon many SMEs have adopted the use of computers in many sections of their activities
such as recording of daily collections, recording of customer’s savings (account details),
preparation and presentation of their yearend financial reports etc. Therefore, the researcher
focuses on investigating the Effect of computerised accounting on the profitability of SMEs.
Profitability is a measure of the excess of a business’s revenues over its expenses. It can also
be used as a general measure of a firms overall financial health over a given period of time as
well as for 4 comparative purposes across sectors or industries. There are many ways through
which profitability can be measured, either taken singly or in aggregation. Small and mediumsized enterprises (SMEs) are the lifeblood of the global economy. Comprising over 90% of
businesses worldwide, they generate significant employment, drive innovation, and fuel
economic growth (World Bank, 2020). In Cameroon, this dynamic holds true as well, with
SMEs constituting over 95% of businesses, playing a vital role in national development
(International Trade Centre, 2021). Despite their undeniable importance, Cameroonian SMEs
face various hurdles, including limited access to finance, inadequate infrastructure, and
complex regulatory environments (African Development Bank, 2022). Among these,
inefficient financial record management remains a major obstacle. Traditional manual methods
are often time-consuming, error-prone, and hinder accurate financial reporting, ultimately
impacting informed decision-making and profitability growth (World Bank, 2020).
Computerised Accounting Systems in organisations would help to integrate, simplify and
streamline all the business processes and transactions cost effectively and efficiently (Indira
2008). It is for this reason that Institutions find it very essential to possess a sound and good
computerised accounting system hence, in Cameroon today, many SMEs have adopted and
implemented the use of Computers in most sectors of their business activities such as recording
of day-to-day transactions, recording of customer’s savings, preparation and presentation of
year-end financial reports for the purpose of improving on record keeping, proper maintenance
of data, mitigate the difference in cash balances and loss in accounting records or information.
In this light, the researcher seeks to examine the effect of Computerised Accounting System on the profitability of SMEs. This research aims to provide a comprehensive understanding of the
technology’s potential to empower Bamenda II’s SMEs and contribute to their financial success.
This knowledge can guide both SMEs in making informed technology investment decisions
and policymakers in formulating supportive initiatives for SME growth through digital
transformation.

1.2 Statement of the Problem
The use of Computerised Accounting Systems (CAS) within Small and Medium Enterprises
(SMEs) has attracted considerable research interest worldwide. A substantial body of literature
exists highlighting the numerous advantages of CAS for SMEs, including improved efficiency,
accuracy, and data security (Ullah et al., 2020; Chen et al., 2023). However, the specific impact
of CAS on the profitability of SMEs in Bamenda II remains under-investigated. This lack of
empirical evidence within the specific context of Bamenda II presents a significant research
gap. Addressing this gap can contribute meaningfully to the existing knowledge base by
providing valuable insights into the relationship between CAS adoption and the financial
performance of SMEs in the region. While the potential benefits of CAS are undeniable,
researchers have also identified potential drawbacks associated with their implementation in developing regions like Bamenda II. One significant challenge is the difficulty of accessing
data during power outages, considering the inherent dependence of CAS on a reliable internet
connection (World Bank, 2023). The prevalent issue of poor and unstable internet connectivity
in Bamenda II further intensifies this challenge, posing a significant hurdle for SMEs seeking
to leverage the full potential of CAS (Ako-Afacanyi et al., 2019).
It is important to acknowledge that some of the initial challenges identified in CAS
implementation, such as data accessibility during outages, have been addressed through
advancements in technology and system design. However, other challenges, like unreliable
internet connectivity, persist in regions like Bamenda II, hindering the seamless operation of
CAS. Consequently, SMEs in the region continue to struggle to pinpoint the exact influence of
CAS on their profitability due to the limited research available specifically examining this
aspect within the context of Bamenda II. The inherent lack of knowledge surrounding
Electronic Accounting Systems (EAS), which encompasses CAS, presents a significant
challenge for SMEs in effectively managing their financial records. This knowledge gap can
lead to inefficiencies in utilizing the functionalities of CAS, ultimately impacting the
profitability and overall financial performance of SMEs (Zakaria et al., 2011). This study aims
to bridge the existing knowledge gap by investigating the impact of CAS on the profitability
of SMEs in Bamenda II. By providing empirical evidence and insights, this study will empower
SMEs in the region to make informed decisions regarding the adoption and utilization of CAS.
By understanding the potential benefits and challenges associated with CAS implementation, SMEs can leverage these systems to enhance their financial management practices, ultimately
contributing to improved profitability and overall business success.
1.3 Research Questions
1.3.1 Main Research Question
What is the effect of CAS on the profitability of SMEs in Bamenda II?
1.3.2 Specific Research Questions
i. What is the effect of automation of routine accounting tasks on the profitability of
SMEs in Bamenda II?
ii. How does accuracy affect the profitability of SMEs in Bamenda II?
iii. To what extend does data security affect the profitability of SMEs in Bamenda II?
1.4 Research Objectives
1.4.1 Main Research Objective
The primary objective of this study to evaluate the effect of CAS on the profitability of SMEs
in Bamenda II
1.4.2 Specific Research Objective
i. To investigate the effect of Automation of routine accounting tasks on the profitability
of SMEs in Bamenda II.
ii. To analyse the effect of Accuracy on the profitability of SMEs in Bamenda II
iii. To examine the effect of Data security on the profitability of SMEs in Bamenda II.