Artificial Intelligence as an Enabler of Financial Reporting Compliance Amongst Malawian SMEs

The study examined compliance in financial reporting across small businesses. It focused on Nsungwi Market in Lilongwe, Malawi. SMEs account for approximately 40% of the GDP in the country. Nonetheless, the small businesses are vulnerable to a persistent compliance gap. This is manifested through poor record keeping and limited adherence to IFRS. Mixed Method was used, with a quantitative sample of 80 SMEs and qualitative sample of 20 participants. The study assessed the ability of AI powered features to help ascertain that transactions have been properly classified. It also evaluated the possibility of real-time anomaly detection. The quantitative analysis done with the help of SPSS indicated a 33% reporting accuracy improvement. This was made possible due to the use of AI features. In terms of qualitative analysis done with the assistance of NVivo software, AI was characterized as a digital guard for SMEs. It has been seen to address agency concerns and reduce internal fraud. AI also reduced information irregularities between stakeholders. Reported benefits included elevated level of trust. This led to better access to bank financing. However, the study identified constraints, especially high internet costs and a need for localised language interfaces.

Artificial Intelligence, Compliance, Financial Reporting, IFRS, SME

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