THE IMPORTANCE OF IMPLEMENTING EMKM-BASED FINANCIAL ACCOUNTING STANDARDS (SAK) ON THE PREPARATION OF FINANCIAL STATEMENTS IN SHOP BUSINESSES IN SUKARAME DISTRICT

This study aims to determine whether the application of financial accounting standards by shop owners in Sukarame District is in accordance with the Financial Accounting Standards for Micro, Small, and Medium Enterprises (SAK EMKM). The research method used is quantitative. The sample size for this study was 103 shopkeepers who operate businesses such as grocery stores, clothing stores, and clothing stores located in Sukarame District. Purposive sampling techniques were used with certain criteria. The data needed is primary data, collected through distributing questionnaires to shop business actors in Sukarame District. Based on the results of the study, it can be concluded that the Financial Accounting Standards for Micro, Small, and Medium Enterprises (SAK EMKM) have not been fully implemented in the financial statements of SME shops in Sukarame District. MSMEs only prepare simple reports such as profit and loss statements. This is because MSME shops around Sukarame District do not know about the existence of Financial Accounting Standards for Micro, Small, and Medium Enterprises (SAK EMKM). They have never even heard of what SAK EMKM is. This is due to the lack of knowledge of business actors and the low level of government socialization of the preparation of financial statements for SMEs.


INTRODUCTION
Economic growth and development are important factors for the prosperity of a country, as good economic development ensures progress in a country. One sign of economic growth is the development of the business world in all sectors. Indonesia, being a developing country, must ensure economic growth to keep pace with other countries.
Although Law Number 20 of 2008 regarding Micro, Small, and Medium Enterprises exists, micro, small, and medium enterprises have not been able to fulfill their optimal role in the national business world of Indonesia. These enterprises are an integral part of the country's business landscape. As stated in the general explanation of Law No. 20 of 2008, micro, small, and medium enterprises are business activities that can create job opportunities, provide a wide range of economic services to the community, promote fair distribution of income, increase community income, drive economic growth, and ensure national stability (Nasrullah, 2022).
Small and Medium Enterprises (SMEs) are business activities formed by communities whose establishment is based on the initiative of an individual. SMEs have a fairly rapid development in various regions. One of the key factors contributing to the success of SMEs is good record keeping. Record keeping involves clerical work that usually involves several people in one or more departments to ensure the uniform handling of repetitive company transactions (Mulyadi, 2013). It is the creation of an orderly, chronological diary of events through a systematic and organized approach.
A company can be considered effective and efficient if it has implemented the preparation of financial reports in accordance with the procedures and steps set out in accounting. When a company's operational activities become more complex, it is necessary to prepare financial statements to be applied in the company. The preparation of financial statements is considered successful if the information can be used to show the financial condition of the company (Suhairi, 2012).
There are three reasons why developing countries must consider the importance of micro, small, and medium enterprises (MSMEs): first, micro, small, and medium enterprises tend to produce a productive workforce. Second, in addition to investment, micro, small, and medium enterprises often achieve increased productivity through technological change. And third, micro, small, and medium enterprises are often believed to have advantages in terms of flexibility compared to large businesses (Rahayu, 2022).
However, the main and most concrete problem faced in the development of small and medium enterprises arises from the SMEs themselves, where SMEs do not understand the importance of recording and preparing financial statements. SMEs rely more on memory, but recording and preparing financial statements are needed by SMEs to find out the financial position and performance of entities more accurately and relevantly. Financial statements provide information to users related to the condition of the company, and their purpose is to describe the state of the company and aid in decisionmaking. However, the existence of financial statements is not necessarily fully able to assess the entire performance of the company, and there must be an analysis of good and appropriate financial statements. Because every business that has been established has the principle to achieve certain goals, the principle of each establishment of a business generally has the same goal, only that its priorities differ (Mutiah, 2019).
In general, small micro-businesses engaged in trading businesses in stores in Sukarame sub-district have implemented financial record accounting, but it is still very simple and unsystematic. This happens because small micro-businesses engaged in trading do not understand the existence of an accounting system. Most small businesses engaged in trading only record the amount of money received and spent, the number of goods bought and sold, and the amount of receivables or payables. However, the recording is only a reminder and not in the format desired by the bank. Therefore, the Indonesian Institute of Accountants has issued the Financial Accounting St. Andar for Micro, Small, and Medium Entities (SAK EMKM). This Micro, Small, and Medium Entity Financial Accounting Standard applies effectively to the preparation of financial statements (Ernawati et al., 2016).
The IAI recognizes the significance of accounting for MSMEs and has developed specific accounting standards for these businesses through the Financial Accounting Standards Board (DSAK). Although SAK ETAP is an accounting standard for nonpublicly accountable entities, MSME players still find it challenging to apply. As a result, IAI created the Financial Accounting Standard for Micro, Small, and Medium Entities (SAK EMKM) which was ratified on October 24, 2016, and became effective on January 1, 2018. The implementation of SAK EMKM is expected to assist small and medium-  Hertati, 2021;Sularsih & Sobir, 2019).
SAK EMKM is a financial accounting standard that stands on its own and can be applied to entities that fit the definition of an entity without significant public accountability, as defined in SAK ETAP, and possess the characteristics specified in Law No. 20 of 2008 related to Micro, Small, and Medium Enterprises (MSMEs). The fundamental assumption of SAK EMKM is the concept of a business entity, which is explicitly described in the standard. As a result, for an entity to prepare financial statements based on SAK EMKM, it must be capable of differentiating the owner's personal wealth from the wealth and performance of the business entity, and distinguishing its own business/entity from other businesses/entities. SAK EMKM has been specifically developed to cater to the accounting needs of entities that are unable to fulfill the accounting requisites outlined in SAK ETAP. The financial statements of such entities that are prepared using SAK EMKM are premised on the fundamental principles of accrual and business continuity, which are extensively employed by micro, small, and medium entities, and incorporate the concept of a business entity. The primary objective of producing financial statements through the utilization of SAK EMKM is to furnish information regarding the financial status and performance of the entity that can be advantageous for making informed economic decisions.
However, small businesses still face various obstacles, such as lack of understanding of information technology and lack of reliability in preparing financial statements. One of the obstacles commonly found in the community is the lack of reliability of business actors in preparing financial statements, even though financial statements are crucial for the continuity of a business. Financial statements provide information on the financial position of SMEs that is useful for most users in making decisions and policies to maximize operating profits and show the performance that has been achieved. Therefore, it is important for SMEs to understand and apply financial statements with good quality to support their growth and success.
In preparing financial statements, they must meet the characteristics of financial statements in accordance with general Financial Accounting Standards (SAK). But in reality, the application of accounting to small businesses today is still very limited. There are many reasons why SMEs do not apply accounting in their financial statements, one of which is because SMEs are not accustomed to recording and preparing financial statements. Most business actors only record the number of money received and issued, the number of goods sold and purchased, the number of receivables and payables whose recording is only a reminder without any standard format. But it is undeniable that SMEs can find out the amount of profit received and the amount of final capital each year, which is almost the same amount if recorded in accordance with the accounting system.
Another reason business actors do not have financial reports is the lack of knowledge of SMEs on the applicable Financial Accounting Standards (SAK), and some even do not know at all. Even if there are SMEs who know about the existence of SAK, the lack of interest of SMEs is the reason for not preparing financial statements because they are considered burdensome and troublesome. Most business people think it's better to make simple and easy-to-implement notes. Especially if the business that is run, especially the financial part of the business, is handled by the business owner himself.
This study recognizes the importance of accounting for micro, small, and medium enterprises (MSMEs) and the challenges they face in applying financial accounting standards. One of the major obstacles is the lack of knowledge and understanding of applicable standards, which results in limited or inaccurate financial reporting. This study specifically focuses on shop owners in Sukarame District and aims to investigate whether their application of financial accounting standards aligns with the Financial Accounting Standards for Micro, Small, and Medium Enterprises (SAK EMKM). By examining the extent to which SAK EMKM is being adopted by shop owners and the challenges they face in implementing it, this study hopes to contribute to the development of financial reporting practices among MSMEs in Indonesia.

LITERATURE REVIEW 2.1. Accounting
In its essence, accounting involves a multifaceted process that encompasses recording, summarizing, classifying, managing, and presenting transactional data and other financial-related activities. This process enables accounting professionals to provide essential financial information that can be used to make informed decisions. Sumarsan (2018) posits that accounting is an intricate art that involves the collection, identification, and recording of financial transactions and events that culminate in the generation of financial information or statements for the benefit of interested parties. Accounting also serves as an information system that measures business activities, processes data into a report, and effectively communicates the results to decision-makers (Syafarudin & Hertati, 2020).
Accounting consists of three fundamental activities: recording, identifying, and communicating. These three activities are carried out by the organization and are addressed to all interested parties or those in need. Accounting is often referred to as a company language that provides information in the form of company financial data that can be used for decision making. To obtain this information, employers should keep regular records of transactions made by the company expressed in units of money.

Accounting Functions
The most important function of accounting is to provide financial data and information for decision-making. Here are the general functions of accounting: 1) Recording The accounting report serves as a record that systematically and chronologically records transactions.

2) Safeguarding and Protecting Property
Accounting serves to calculate the amount of depreciation that a company has in real terms and protects assets.

3) Legal Compliance
Accounting designs and develops systems for maintaining records and reporting results that meet legal requirements and activate ownership or authority to file various statements.

4) Classification
Accounting involves the systematic analysis and classification of recorded data.

SAK EMKM
EMKMs are entities that lack significant public accountability and fulfill the definitions and requirements of micro, small, and medium enterprises based on the laws and regulations in Indonesia for a minimum of two consecutive years, as stated in IAI SAK EMKM (Indonesia, 2016). SAK EMKM utilizes the term "entity" to represent a tangible unit that has the responsibility to produce financial statements (Lesi Hertati & Zarkasyi, 2015). The definition of MSMEs as per Law Number 20 of 2008 concerning Micro, Small, and Medium Enterprises can be elaborated as follows: a. Micro Enterprises are productive economic businesses owned by individuals and/or individual business entities that meet the criteria for micro enterprises as specified in this law. b. Small Businesses are productive economic businesses operating independently by individuals or business entities that are not subsidiaries or branches of companies that are owned, controlled, or a part, either directly or indirectly, of medium or large businesses that satisfy the criteria for small businesses as mentioned in this law. c. Medium Enterprises are productive economic businesses operating independently by individuals or business entities that are not subsidiaries or branches of companies that are owned, controlled, or a part, either directly or indirectly, with small businesses or large businesses that have a total net worth or annual sales revenue as mentioned in Law Number 20 of 2008.

Benefits and Objectives of SAK EMKM
As per SAK EMKM (Indonesia, 2016), the primary purpose of developing SAK EMKM is to aid EMKMs in creating financial statements that provide information about the entity's financial position and performance. This information is helpful for a vast range of users in making economic decisions, including resource providers such as creditors or investors, and it also demonstrates management's accountability for the entrusted resources. The standard was created to support the preparation of financial statements for EMKMs with the help of simpler accounting standards (Ilyas & Hertati, 2022).
The Indonesian Institute of Accountants (Indonesia, 2016) outlines that SAK EMKM's benefits and objectives are to develop accounting standards that meet the needs of EMKMs, especially by providing simpler accounting standards. Additionally, SAK EMKM can be utilized as an accounting guideline by EMKMs in conducting their business and gaining broader access to financing from the banking industry (Lesi Hertati, 2022). The utilization of SAK EMKM may lead to EMKMs being able to obtain financing more easily, enhancing their business operations and potentially promoting economic growth.

Financial Statements Based on SAK EMKM
According to the Indonesian Institute of Accountants (IAI) in their standard for micro, small, and medium enterprises (SAK EMKM) published in 2018, financial statements of an entity must include several accounts such as cash and cash equivalents, receivables, inventories, fixed assets, accounts payable, bank payable, and equity. The inclusion of an account or a portion of an account in the financial statement is based on its relevance to the understanding of the entity's financial position. The order or format of the accounts is not determined by SAK EMKM, but entities may choose to present asset accounts based on their liquidity and liability accounts based on their maturity.
In order to be included in the SAK EMKM standard, an entity must fulfill the following criteria and characteristics as outlined by IAI: no significant public accountability, issuance of financial statements for general purposes for external users, and not being a subsidiary or branch of a medium or large business owned, controlled, or part of directly or indirectly (not a subsidiary or associated entity) as defined in Article 1 of Law No. 20 of 2008. The purpose of these financial statements is to provide information on the financial position and performance of the entity that is useful for a wide range of users, including resource providers such as investors and creditors, while also demonstrating management's accountability for the resources entrusted to them.

Preparation of Financial Statements Based on SAK EMKM
In accordance with SAK (2017), financial statements are a methodical display of a company's financial position and performance. The creation of EMKM financial statements is outlined in SAK EMKM, which stipulates that the presentation must be thorough and coherent. The financial statements must consist of, at minimum, a statement of financial position (balance sheet) at the conclusion of the period, an income statement (income statement) for the period, and notes to the financial statements that contain additional details on relevant items.
The financial statements are vital for users such as investors, creditors, and other stakeholders, as they provide important information about a company's financial health and performance, which is crucial for decision-making. Therefore, it is critical to ensure that financial statements are accurately prepared in accordance with SAK EMKM to guarantee the information presented is dependable and valuable.

RESEARCH METHODS
The population in this study was shop businesses in Sukarame District, Palembang City, based on MSME data from the Cooperative and SME Office in 2021, totaling 4.950. The sample was determined based on the number and characteristics of the population, using purposive sampling method, which involves selecting certain data sources and considerations (Sugiyono, 2017). To facilitate the research within time constraints, a large population of SMEs exceeding 100 actors was included, and the slovin formula was used to determine the sample size. As a result, 103 respondents were selected.
In this study, the authors used qualitative methods and simple linear regression analysis techniques. The questionnaires filled out by the respondents were processed using SPSS version 25.0 to produce calculations that show the influence of the independent variable on the dependent variable. The data processing methods used in this study included data quality tests (validity and reliability tests), simple linear regression analysis, and classical assumption tests (normality tests, heteroscedasticity tests, and multicollinearity tests).  2) Classical Assumption Test Based on Table 3, the value of Asymp. Sig (2-tailed) is 0.130, which is greater than the significant level of 0.05. Thus, it can be concluded that the data are normally distributed or meet the assumption of normality for conducting the Kolmogorov-Smirnov normality test. To support this conclusion, the researchers also included the normality test results using the Probability Plot normal graph, which is shown in the graphic below: Based on normal graph images P-P Plot residual spread of data following normal lines. Thus, residual data are normally distributed and regression has satisfied the normality assumption.   Based on table 6, it shows that the value of the constant is 7.830 and the regression coefficient X is 1.858. Stating that every addition of 1 (unit) then the participation value increases by 1,858 which has a positive value. This indicates that significant values are 0.00 < 0.05.

Discussion
The results of this study were verified by a simple linear regression test which demonstrated a constant value of 7.830 and a regression coefficient X of 1.858, indicating that every increase of 1 (unit) in participation value results in a positive increase of 1.858. The significant values obtained were 0.00 < 0.05, suggesting a significant relationship between the variables. These findings were obtained after analyzing the application of financial accounting standards based on SAK EMKM. Therefore, it is necessary to discuss the implications of these research results, as highlighted by L. Hertati & Safkaur (2020).
This study was conducted to determine the importance of applying EMKM-based SAK in the preparation of financial statements carried out by MSMEs, and to assess whether the implementation of financial statements by MSMEs is in accordance with EMKM SAK, using a questionnaire as a measuring instrument. Based on the results of the study conducted on 103 respondents who were given the questionnaires, it was found that the respondents in this study were MSME actors or entrepreneurs running stores in Sukarame District. The respondents answered the questions based on the circumstances that occurred in their businesses, and it can be concluded that MSME actors still do not fully understand their accounting and financial management standards, although some of them have some knowledge. Therefore, MSME operators use the services of employees to record their business finances. However, they do not manage financial records further to ensure that they are based on the Financial Accounting Standards of Micro, Small, and Medium Entities (SAK EMKM), due to a lack of knowledge among MSME actors or employees who make financial records, resulting in financial statements that do not comply with SAK EMKM standards.
In the application of accounting carried out by MSMEs, the dominant method is still manually recording transactions, which is relatively simple. Only a few MSMEs use accounting software, which limits their ability to present comprehensive financial statements for their business. MSME actors tend not to use journals or ledgers in recording transactions, and income statements are the most commonly presented financial statement components, with few presenting balance sheets and equity changes. Moreover, no one prepares cash flow components and notes to financial statements.
It is crucial to assess the benefits that can be obtained from the application of accounting. For MSME actors who have not implemented accounting, starting to implement accounting in accordance with predetermined standards can result in higherquality financial statements. Increasing interest in learning about financial statements or hiring competent workers in the field of accounting can also be helpful (Hardianti, 2022). For example, MSMEs can utilize technological advances and accounting software to facilitate and speed up the process of recording and preparing company reports. SAK EMKM is essential for MSMEs as it can help business actors to compile financial statements more efficiently and improve their business growth.
Overall, the results of this study highlight the importance of implementing financial accounting standards based on SAK EMKM in MSMEs. The findings demonstrate that MSME actors still lack sufficient knowledge about financial management standards and often rely on manual recording methods or employee services, leading to financial statements that do not comply with SAK EMKM standards. Therefore, it is crucial for MSME actors to understand the benefits of implementing accounting and improving their financial statements' quality by utilizing technological advancements and hiring competent workers in the accounting field. By doing so, MSMEs can facilitate the process of preparing company reports, ultimately leading to improved business growth. These results have significant implications for policymakers and business owners, highlighting the importance of improving financial literacy and implementing accounting standards to support the development of MSMEs.

CONCLUSION
The study found that the application of financial accounting standards based on EMKM SAK is not being implemented properly by MSMEs in Sukarame District, as evidenced by the low constant value of 7.830 and regression coefficient of 1.858. Most MSMEs only prepare income statements and fail to keep journals or ledgers to record transactions. The non-implementation of MSME accounting records based on SAK EMKM is caused by both internal and external factors, such as low understanding, lack of motivation, and absence of socialization or training. Therefore, it is recommended that MSMEs start implementing accounting in accordance with predetermined standards to improve the quality of financial statements. Additionally, there should be an increased interest in learning about financial statements and seeking competent workers in the field of accounting. The use of technological advances and accounting software is also suggested to facilitate and speed up the process of recording and preparing company reports. For future researchers, this study can serve as a reference, and they are encouraged to delve deeper into the importance of EMKM-based SAK application in MSMEs.