Abstract

The rapid digital transformation of business practices has increased the importance of digital competencies in accounting, particularly for Micro, Small, and Medium Enterprises (MSMEs). This study aims to examine the effect of digital accounting literacy on the financial reporting quality of MSMEs in Central Java. The research adopts a quantitative approach using survey data collected from MSME owners and financial managers. Data were analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM) to evaluate the proposed research model.
The results indicate that digital accounting literacy has a strong and positive influence on financial reporting quality. MSMEs with higher levels of digital accounting literacy are better able to utilize accounting applications, record financial transactions accurately, and produce financial statements that are timely, reliable, and compliant with accounting standards. These findings suggest that digital accounting literacy plays a critical role in enhancing the quality of financial information in the MSME sector.
This study contributes to the accounting and MSME literature by emphasizing the importance of accounting-specific digital competencies rather than general digital literacy. Practically, the findings provide valuable insights for policymakers, educational institutions, and professional bodies in designing digital accounting training programs aimed at improving MSME financial transparency and sustainability.