The Impact of Financial Reporting on Financial Management of Small and Medium Enterprises in Sokoto

ABSTRACT
Small and medium enterprises (SMEs) play a crucial role in economic development by generating employment, fostering innovation, and contributing to the GDP. This study investigates the impact of financial reporting on the financial management of SMEs in Sokoto metropolis. The research aims to assess the importance of financial reporting in enhancing financial management, identify challenges SMEs face implementing effective reporting systems, evaluate the role of financial reporting on decision-making and explore the influence on access to external financing. Using a descriptive research design, data were collected from 150 SMEs across various sectors using stratified random sampling. A structured questionnaire was administered, and the data analyzed using descriptive and inferential statistics. The findings reveal that financial reporting significantly improves cash flow management, decision-making, and financial transparency, while enhancing access to loans and investments. However, SMEs face challenges such as limited accounting expertise, high cost of hiring professionals, and complex financial reporting systems. The study concludes that effective financial reporting positively impacts financial management, promoting sustainability and growth. It recommends enhancing financial literacy, adopting simplified financial tools, and increasing government support to address barriers faced by SMEs. These measures can improve financial transparency and enable SMEs to make informed decisions crucial for their success.