Enhancing financial data collection and reporting in small businesses through IoT integration: an exploration of IFRS standard.

Introduction: The adoption of Internet of Things (IoT) technology offers significant opportunities to improve financial data collection, reporting accuracy, and regulatory compliance in small and medium-sized enterprises (SMEs). Despite its growing use, limited research has examined IoT implementation from the perspective of International Financial Reporting Standards (IFRS) and its implications for financial reporting quality. Methods: This study employs a hybrid research approach combining a qualitative literature review with secondary dataset-based machine learning analysis using the CIC-IoT-2023 dataset. A structured review of peer-reviewed publications published between 2015 and 2024 was conducted using sources including Google Scholar, Elsevier, IEEE, and Springer. Selected case studies from retail, manufacturing, and agricultural SMEs were also analyzed to identify key factors influencing IoT adoption. Results: The findings indicate that IoT integration supports real-time transaction monitoring, automated financial reporting, and intelligent inventory management. Evidence from the reviewed literature suggests that IoT adoption is associated with reductions in operating expenses ranging from 35% to 40% and improvements in inventory accuracy of up to 85%. The study further demonstrates that IoT-generated data can enhance the qualitative characteristics of financial reporting defined by IFRS, including comparability, verifiability, timeliness, and understandability. However, several barriers to implementation remain, including cybersecurity risks, high initial investment costs, and inadequate technological infrastructure. Discussion: This study bridges the gap between IoT adoption research and IFRS-aligned financial reporting practices within resource-constrained SME environments. The proposed framework highlights practical implementation strategies and a phased adoption approach that can assist SMEs in leveraging IoT technologies while maintaining compliance with financial reporting requirements. The findings contribute to both academic research and managerial practice by demonstrating how IoT can support more efficient, transparent, and reliable financial management systems.