Abstract
Access to bank financing is regularly rated as one of the biggest obstacles to SME sustainability. With the introduction of the independent review as an alternative to the statutory audit, banks may have inevitably lost their risk assessment reassurance that audits provided. Previous research found that banks have adjusted to this situation by no longer insisting on audited financial statements. The research undertaken in this study aims to, firstly, investigate SME owner/managers’ perceptions about what banks require when assessing bank loan applications; and, secondly, to gauge SME owner/manager’s attitudes towards the value they perceive accounting may contribute to their sustainability. It was found from an SME perspective, that although an independent review is the current way to go, many SME owner/managers consider their own accounting skills, as the language of business, to be lacking. This could potentially have repercussions in inadvertently promoting further asymmetric financial information, and thereby limiting successes in obtaining finance.
Highlights
Ask any business owner why he/she is in business, and you are likely to hear a hearty rendition of “Money makes the world go round”, as in the Broadway musical Cabaret (Kander, 1965)
The research undertaken in this study aims to, firstly, investigate SME owner/managers’ perceptions about what banks require when assessing bank loan applications; and, secondly, to gauge SME owner/manager’s attitudes towards the value they perceive accounting may contribute to their sustainability
The literature study undertaken brought to the forefront the dilemma the new Act has created for South African SMEs between choosing an expensive audit or a cheaper independent review alternative, perhaps at the peril of sacrificing a bank’s goodwill
Summary
Ask any business owner why he/she is in business, and you are likely to hear a hearty rendition of “Money makes the world go round”, as in the Broadway musical Cabaret (Kander, 1965). The plight of SMEs globally to attain and achieve sustainability is a much-explored topic and is often regarded as the entrepreneurial domain of the world economy (GEM, 2014). Professor, WorkWell Research Unit and NWU School of Business and Governance, North-West University, Potchefstroom, South Africa. Building on the above, according to Fatoki and Garwe (2010), the inaccessibility of finance opportunities is second only to (accounting) education and training when evaluating the reasons for low SME sustainability. Rajaram (2008) concurs and found that the lack of accounting skills is a contributing factor to the poor performance of SMEs in South Africa, and he postulates that possessing a basic accounting skill set may augment sustainability and profitability within the SME sector, to the extent that access to financing may become less arduous
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
