The Crucial Role of Financial Reporting for SMEs in Nigeria

Financial reporting is critical for accountability and transparency in business organizations, including Small and Medium Enterprises (SMEs). Financial reporting plays a vital role in enhancing the sustainability, financial performance, and credibility of SMEs in Nigeria. Uniform financial reporting standards such as GAAP and IFRS have a significant impact on global business practices. SMEs contribute to economic growth and employment across different regions, particularly in Nigeria, playing a pivotal role in the economy. Despite the benefits, Nigerian SMEs face significant challenges in adopting effective financial reporting practices due to limited resources, lack of awareness, and insufficient accounting expertise. The research recommends strategies to improve financial reporting among SMEs, including education, policy support, and the adoption of digital tools, to enhance their access to finance and strategic decision-making capabilities.