The Impact of Electronic Accounting on The Performance of Small and Medium Enterprises (SMES) in Iraq

Electronic accounting has emerged as a critical success factor influencing the growth and sustainability of small and medium enterprises (SMEs). It plays a central role in daily operations and managerial activities, surpassing many other information systems in its ability to support planning, organizing, controlling, and decision-making processes. By enabling the effective utilization of available resources, electronic accounting provides essential financial and managerial information that helps decision-makers assess past performance and design future strategies. Although prior studies have investigated the relationship between electronic accounting and internal control systems, limited attention has been given to examining how specific features of electronic accounting—such as information quality, cost efficiency, rapid decision-making, and ease of use—affect both internal control mechanisms and operational performance. Furthermore, there is a need for deeper exploration of how organizational structures shape these relationships. This study addresses these gaps by analyzing the connection between electronic accounting functions, internal control systems, and organizational efficiency. Using a sample of 345 accountants employed in Iraqi SMEs, the research model was tested through Smart PLS analysis. The findings confirm that electronic accounting significantly enhances both the effectiveness of internal control systems and overall business performance. These results provide valuable theoretical insights and practical implications, offering a clearer understanding of how SMEs can leverage electronic accounting to strengthen internal controls and improve operational outcomes.