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European Journal of Applied Sciences – Vol. 9, No. 4
Publication Date: August 25, 2021
DOI:10.14738/aivp.94.10651. Hartati, N., Wardani, A. K., Idrus, O., Margunani, Rachmadani, W. S., & Asari, A. (2021). Implementation Analysis of Integrated
MSMEs Financial Statement System (SILARUM). European Journal of Applied Sciences, 9(4). 172-184.
Services for Science and Education – United Kingdom
Implementation Analysis of Integrated MSMEs Financial
Statement System (SILARUM)
Noorina Hartati
Faculty of Economics, Universitas Terbuka Semarang, Indonesia
Amalia Kusuma Wardani
Faculty of Economics, Universitas Terbuka Semarang, Indonesia
Olivia Idrus
Faculty of Economics, Universitas Negeri Semarang, Indonesia
Margunani
Faculty of Economics, Universitas Negeri Semarang, Indonesia
Wulan Suci Rachmadani
Faculty of Economics, Universitas Negeri Semarang, Indonesia
Ayu Asari
Faculty of Economics, Universitas Negeri Semarang, Indonesia
ABSTRACT
Micro, Small, and Medium Enterprises (MSMEs) are vital to support the economy in
Indonesia. The flow of globalization and high competition has caused MSMEs to face
global challenges, such as improving product innovation, developing human
resources and technology, expanding the marketing area, and applying
professional management. The accounting recording system for MSMEs is found to
ignore financial accounting standards. Factually, accurate and standardized
financial reports will support MSME players in developing their business. This study
aims to design an integrated financial application as a solution for MSMEs and assist
them in applying financial accounting standards called SILARUM. Applying this
system, hopefully, MSMEs can make accountable and transparent financial
management systems for their business.
Keywords: MSMEs; Financial Reporting System; Integrated System
INTRODUCTION
MSMEs are playing a communal role in many industries as supporting organizations providing
more opportunities for vertical integration in rural, remote areas, and thus this sector
contributes tremendously to the nation's fiscal progress (Gade, 2018). However, economic
globalization has created many challenges for small and medium enterprises (SMEs) due to the
rapid increase in competition. Generally, MSMEs often develop their businesses slowly due to
various conventional problems that have not been resolved completely (closed-loop problems),
such as problems with human resource capacity, ownership, financing, marketing, and various
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Hartati, N., Wardani, A. K., Idrus, O., Margunani, Rachmadani, W. S., & Asari, A. (2021). Implementation Analysis of Integrated MSMEs Financial
Statement System (SILARUM). European Journal of Applied Sciences, 9(4). 172-184.
URL: http://dx.doi.org/10.14738/aivp.94.10651
other problems related to business management which make them difficult to compete with
large companies (Abor and Quartey: 2010). The role of MSMEs is important in supporting the
economy in Indonesia. Besides, most MSMEs also have weak managerial abilities, financial
management, standardized accounting records (In Indonesian called SAK, which stands for
Standard Akuntansi Keuangan or Financial Accounting Standard), and less capable human
resources unable to run their business properly. Jindrichovska (2013) states that poor financial
management is a critical and common cause of business failures in SMEs. Particularly lack of
financial management knowledge combined with the uncertainty of the business environment
often leads SMEs to face serious problems regarding financial and overall performances, which
can even threaten the enterprise's survival.
Small and medium-sized enterprises (SMEs) have an important position in the worldwide
economy, so the accounting information must have the same role (Sava et al., 2013). The MSME
bookkeeping system is generally simple and far from financial accounting standards despite its
benefit of being accurate and standardized. The accurate and standardized financial reports
will be helpful to develop business quantitatively and qualitatively. Therefore, the Indonesian
Institute of Accountants has prepared Financial Accounting Standard for MSMEs-SAK-ETAP
(Entities Without Public Accountability), officially effective on January 1, 2011.
It has been confirmed that one of the obstacles faced by MSMEs is the lack of expertise in
financial management. The information has misled them about its complexity. Therefore, it is
significant to create innovation to make financial reports applications simpler and easier by
integrating technology to ease the MSMEs. This study elaborates financial reporting application
system. It is an integrated web-based financial reporting application that is expected to apply
financial accounting standards.
The structure of this paper is as follows. Section 2 reviews the relevant literature. Section 3
analyses the methodology that has been used to conduct empirical research on the factors
affecting the Micro, Small, and Medium Enterprises. Sections 4 and 5 provide findings and
conclusions subsequently.
Signaling Theory
The signal theory clarifies the need for firms to provide their financial statement for external
parties. This theory aims to encourage corporates to provide current asymmetry information
between companies and external parties. It is expected that companies can attract other
prospects such as investors or creditors by providing financial statements well. Providing
reliable financial statements can avoid prospects in giving low value to the companies.
Therefore, companies can reduce information asymmetry, which signals the external parties by
providing them reliable financial information to reduce uncertainty regarding its future (Wolk
et al., 2000).
Principals Agency Theory
The agency model is considered one of the oldest managements and economics literature (Daily
et al., 2003; Wasserman, 2006). An agency relationship is a contract between the principal and
the agent. Agency theory discusses the problems that surface in the firms due to the separation
of owners and managers and emphasizes reducing this problem. This theory helps implement