CHALLENGES OF COST ACCOUNTING IN SMALL AND MEDIUM-SIZED ENTERPRISES IN THE MIDDLE EAST

Abstract

This article aims to diagnose the fundamental challenges (administrative, technical, and environmental) that hinder small and medium-sized enterprises (SMEs) in the Middle East from adopting modern cost accounting systems. Relying on a descriptive-analytical approach, the article demonstrates that continued reliance on traditional bookkeeping leads to the inflation of "hidden costs" and poor pricing accuracy, thereby threatening the competitive advantage of these enterprises. The article concludes that the literal replication of complex systems, such as Activity-Based Costing (ABC), is unfeasible given financial constraints, the scarcity of accounting competencies, and fragile technological infrastructures. The study recommends adopting simplified cost models, such as market-driven Target Costing and Time-Driven Activity-Based Costing (TDABC), coupled with a gradual transition toward cloud accounting to ensure economic sustainability and pricing efficiency.