International Journal of Science and Research (IJSR) ISSN: 2319-7064 SJIF (2022): 7.942 Volume 13 Issue 8, August 2024 Fully Refereed | Open Access | Double Blind Peer Reviewed Journal www.ijsr.net The Role of Accounting Information System and Level of Reliability of Financial Reporting in Selected Small Business - Burao Somaliland Hamse Abdiwahab Abdilahi Accord University, Somalia Email: hamseabdiwahab77[at]gmail.com Abstract: Purpose: This study to determine the correlation between the role of accounting information system and reliability financial reporting in small businesses of Burao district, Somaliland. Methodology: The study adopted descriptive research design, specifically cross - sectional survey design using both the quantitative and qualitative methods of data collection. Descriptive study according to Gall et al (1996) enables the researcher to collect information from a cross section of a given population. This study design was used because it is the most used research method in social research, the target Population included a total of 50 participants from the owners and managers of the small and medium businesses of Burao downtown. Respondents were grouped into strata’s consisting of the top level, functional level and operational level and purposive sampling was conducted in each stratum to get relevant information for the study without any bias. Primary data was collected with questionnaires and in - depth interviews. Considering the nature of the data that was collected, it will be very appropriate to use Both quantitative and qualitative approaches to analyze the data. To analyze the data it was used SPSS, graphs and excel methods. Findings: The finding of this study in small businesses, accounting information systems play a critical role in financial management. These systems provide small business owners with the ability to track finances, monitor expenses, and make informed decisions about the business's future. Conclusion: Accounting information systems play a crucial role in small businesses as they enable them to manage their finances effectively. By providing accurate financial data, enabling financial analysis, and forecasting, and facilitating tax compliance, accounting information systems help small businesses make informed decisions and achieve their financial goals. Keywords: Accounting, Accounting Information System, Financial Reporting, Small Businesses, and Reliability. JEL Codes: M41, M42, M48 1. Introduction Accounting information system in modern computer age has evolved rapidly with the advent of the stages of computer development and it is still evolving with every advancement in current information technology marked by miniaturized chips and robotics Consequently, today’s accounting information system has improved significantly in many fronts including amongst others speed, accuracy, massive storage bandwidth, cloud - backup, security and remote functionality. Amid the computerization of accounting, there is strict adherence to international accounting principles, which may not be compromised hence, the first consideration for computerization of accounting system is ensuring that the system complies with accounting principles to enhance the reliability, fairness, and trustworthiness of accounting reports. In the physical accounting office – accountants operate in tandem to produce timely accounting information required by management and external users during the operating cycle, (Ngwakwe, 2022,) According to the World Bank report in 2015, accounting information system (AIS) is one of the major problems of SMEs in Ethiopia. It also asserted that most SMEs in Ethiopia do not maintain and practice complete AIS. (Minyahil Assefaa, 2020) However, for the case of Somalia, accounting information systems are not used in most of the organizations to guide managers in their decision making. In a national level of accounting information systems according to World Bank report on the Financial Structures in Sub Saharan Africa 2010 revealed that the Somali government has not accounted for majority of the revenues and donations it received in 2009 and 2010. The role of accounting information system on financial reporting was the main thing will focus on the study. Accounting information system is a system that operates functions of data gathering, processing, categorizing, and reporting financial events with the aims of providing relevant information for the purpose of storing information keeping inventories records and decision making, and also provides financial report on a daily and weekly basis. (Awosejo, 2013), Financial reporting is the way businesses communicate financial data to external and internal stakeholders. External stakeholders — like regulatory agencies, current and potential shareholders and investors, and lenders — use financial reports to draw conclusions about a company's current and future financial health. (Kristina, 2022). According to Somaliland Ministry of Finance report (2013) most businesses, Somaliland have poor quality accounting information systems, The current financial institutions in Somaliland have the task of building robust Accounting Information Systems and processes will be an essential step Paper ID: SR24803213041 DOI: https://dx.doi.org/10.21275/SR24803213041 363