BEHAVIOR OF FINANCIAL REPORTING PRACTICES AMONG INDONESIAN MSMEs IN THE CONTEXT OF THE GREEN ECONOMY AND BUDGET EFFICIENCY (A Survey Study of 137 Micro, Small, and Medium Enterprises in the Aceh and North Sumatra Regions)

Abstract

The transition toward a green economy requires Micro, Small, and Medium Enterprises (MSMEs) to adapt their accounting and financial reporting practices to account not only for profit but also for environmental impact and budget efficiency. This study aims to analyze the financial reporting behavior of Indonesian MSMEs within the context of the green economy and to formulate budget-efficiency patterns that can be implemented to support this transition. A descriptive quantitative approach was employed through a survey of 137 MSME actors spread across the Aceh and North Sumatra regions. Data were collected using a questionnaire covering accounting-practice characteristics, key factors in sustainable accounting models, willingness to adopt new reporting systems, and preferences toward a simple financial-reporting software integrating environmental and social aspects. The results show that the majority of MSMEs (70.1%) still keep records at a very basic level, only 37.2% report having applied green-economy principles in their business, and 38.7% have never recorded environmentally related costs or activities in their bookkeeping at all. Nevertheless, awareness of the importance of environmental aspects is relatively high: 59.1% of respondents consider environmental impact important to their business, and 94.2% expressed interest in a simple accounting software that integrates financial, environmental, and social reporting. As many as 93.4% of respondents were willing to use such software if provided for free or at low cost, and 78.1% were willing to become early (pilot) users. These findings indicate a gap between awareness and actual practice that can be bridged through a simple, mobile-based sustainable accounting model equipped with automated guidance and reinforced by direct mentoring/training. This study offers practical implications for the formulation of policies to empower green MSMEs, as well as academic contributions to the development of a sustainable accounting model contextualized to the characteristics of Indonesian MSMEs.