The Role of Artificial Intelligence in Enhancing Financial Reporting Accuracy for SMEs: A Comparative Study Across Emerging Markets

Abstract

This study explores the role of Artificial Intelligence (AI) in enhancing financial reporting accuracy for Small and Medium-sized Enterprises (SMEs) across emerging markets. SMEs play a vital role in global economic development but face persistent challenges in maintaining accurate financial records due to resource constraints and limited expertise. AI technologies, including machine learning and predictive analytics, offer promising solutions to automate processes, reduce errors, and ensure compliance with regulatory standards. Using a mixed-methods approach, this research examines AI adoption among SMEs in Southeast Asia, Sub-Saharan Africa, and South America. The findings reveal that AI implementation significantly reduces error rates in financial reporting, with regional adoption rates and effectiveness influenced by factors such as technological infrastructure, government policies, and organizational readiness. Southeast Asia exhibits the highest adoption rate and improvements, while Sub-Saharan Africa and South America face barriers, including high implementation costs and insufficient digital literacy. This study emphasizes the need for tailored strategies and collaborative efforts among policymakers, technology providers, and SMEs to maximize AI's potential. Recommendations include the development of affordable AI solutions, capacity-building initiatives, and supportive regulatory frameworks. The findings contribute to the growing body of literature on AI applications in financial reporting and provide actionable insights for enhancing financial transparency and decision-making in emerging markets.