The adoption of e-commerce : implications on financial accounting and reporting

Abstract

PURPOSE: The way people conduct business has changed due to e-commerce. As a result, the focus of this study is to examine the adoption of e-commerce in local businesses as well as the implications of e-commerce on financial accounting and reporting. These implications relate to revenue and intangible assets, as well as transactions such as loyalty programmes and sales returns. DESIGN: This research followed a predominantly qualitative study, with semi structured interviews being implemented with certified public accountants from big-four firms, mid-tier accounting firms and small accounting firms. FINDINGS: The primary reason why local SMEs adopted e-commerce in their operations is due to the inability to operate during the COVID-19 pandemic. In fact, a lot of the interviewees exclaimed how they recommended their clients such option to safeguard their businesses. The impact of e-commerce on traditional accounting has centred on the need for additional real-time data to ensure that e-commerce systems operate efficiently. Furthermore, implications in relation to revenue recognition are not commonly experienced when accounting for these businesses. However, when it comes to intangible assets, the majority of interviewees raised concerns on the grey areas that exist in the determination of useful life of such assets rather than the initial recognition. CONCLUSIONS: The findings suggest that a lot of accountants do experience difficulties in relation to accounting for e-commerce businesses, however such difficulties are not termed as being too problematic. The majority of implications that accountants face is caused by a lack of guidance. Indeed, e-commerce has undoubtedly changed the way businesses function, requiring accountants to adapt and evolve in order to keep up with these changes. VALUE: This study examines the influence of e-commerce adoption among local SMEs on financial accounting and reporting, and thereby places emphasis on any implications that accountants experience due to lack of guidance.