Luận văn thạc sĩ UEH determinants of an effective internal control , a study of firms in vietnam

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

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------

NONG QUANG THANH

DETERMINANTS OF AN EFFECTIVE

INTERNAL CONTROL:

A STUDY OF FIRMS IN VIETNAM

MASTER THESIS OF BUSINESS ADMINISTRATOR

HO CHI MINH CITY – 2013

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MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

------
------

NONG QUANG THANH

DETERMINANTS OF AN EFFECTIVE

INTERNAL CONTROL:

A STUDYOF FIRMS IN VIETNAM

Subject: Master of Business Administrator

Code: 06.34.01.02

MASTER THESIS OF BUSINESS ADMINISTRATOR

SUPERVISOR:

DR. NGUYỄN THỊ NGUYỆT QUẾ

HO CHI MINH CITY – 2013

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I

ACKNOWLEDGEMENT

I would like to take this opportunity to express my gratitude to all those who

have helped and supported me during the time I conducted the study.

Firstly, I would like to express my deepest sincere gratitude to my

supervisor, Dr. Nguyen Thi Nguyet Que for her patient and invaluable advices to

my thesis. Without her support, the thesis could not have been completed.

Secondly, I would like special thanks to all instructors and lecturers in

eMBA course for their teaching invaluable knowledge and experience to me. I am

very great honor to introduce with my relationships that I have been participated in

eMBA program of Economic University, Ho Chi Minh City.

Many thanks to Mr Cao Quoc Viet, as well as the other classmates in eMBA

K19 class for their sharing valuable knowledge to me to complete this research

study.

I also wish to thank my friends, external auditors in KPMG and A&C as well

as other respondents. Without them, my thesis could not have been conducted.

Lastly, I would like to send the deepest and most special thanks to my

beloved parents, my wife and my family members who encourage me to overcome

all difficulties to complete this course.

Nong Quang Thanh

Ho Chi Minh, September 2013

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II

COMMITMENT

I hereby would like to commit that the thesis, “Determinants of an effective

internal control: a study of firms in Vietnam”, was accomplished based on my

independent and serious studies and researches. The data was collected in reality

and it has clear origins. In addition, the data would be trust-worthily handled and it

has never been released in any menu.

Nong Quang Thanh

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III

TABLE OF CONTENTS

ACKNOWLEDGEMENT................................................................................... I

COMMITMENT ................................................................................................ II

TABLE OF CONTENTS ................................................................................. III

LIST OF FIGURES ............................................................................................ V

LIST OF TABLES ............................................................................................ VI

ABBREVIATIONS ......................................................................................... VII

ABSTRACT ......................................................................................................... 1

CHAPTER 1: INTRODUCTION ....................................................................... 2

1.1. Introduction ........................................................................................... 2

1.2. Background to the research ................................................................... 2

1.3. Research problems ................................................................................ 3

1.4. Research objectives ............................................................................... 4

1.5. Research questions ................................................................................ 4

1.6. Research methodology and scope .......................................................... 5

1.7. Thesis structure ..................................................................................... 6

CHAPTER 2: LITERATURE REVIEW ........................................................... 7

2.1. Introduction ........................................................................................... 7

2.2. Internal control components .................................................................. 7

2.3. Internal control effectiveness ............................................................... 11

2.4. Gaps in the literature ........................................................................... 13

2.5. Research hypotheses and theoretical model ......................................... 14

2.6. Summary ............................................................................................. 19

CHAPTER 3: RESEARCH METHODOLOGY ............................................. 20

3.1. Introduction ......................................................................................... 20

3.2. Research process ................................................................................. 20

3.3. Questionnaires design .......................................................................... 21

3.4. Operationalisation of measures ............................................................ 22

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IV

3.5. Pilot test .............................................................................................. 25

3.6. Main survey ........................................................................................ 25

3.6.1 Sample design ................................................................................... 25

3.6.2 Survey method .................................................................................. 27

3.6.3 Data analysis techniques .................................................................. 27

3.7. Summary ................................................................................................ 28

CHAPTER 4: RESEARCH RESULTS ............................................................ 29

4.1. Introduction ......................................................................................... 29

4.2. Descriptive statistic of the study .......................................................... 29

4.3. Testing measurement scale .................................................................. 31

4.4. Testing the research model and the hypotheses .................................... 39

4.5. Summary ............................................................................................. 45

CHAPTER 5: DISCUSSION AND CONCLUSIONS ...................................... 47

5.1 Introduction ......................................................................................... 47

5.2 Discussion of findings ......................................................................... 47

5.3 Implications of the research ................................................................. 49

5.4 Limitations and recommendations ....................................................... 52

LIST OF REFERENCE .................................................................................... 54

APPENDIX 1 ..................................................................................................... 60

APPENDIX 2 ..................................................................................................... 66

APPENDIX 3 ..................................................................................................... 69

APPENDIX 4 ..................................................................................................... 72

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V

LIST OF FIGURES

Figure 2.1 Quantitative assessment of internal control framework ....................... 12

Figure 2.2: The relationship between internal control components and the

efficiency and effectiveness of operation ............................................................ 18

Figure 2.3: The relationship between internal control components and the

reliability of financial report ................................................................................ 18

Figure 2.4: The relationship between internal control components and the

compliance with laws and regulations ................................................................. 19

Figure 4.1 Respondent's age ................................................................................ 30

Figure 4.2 Respondent's experience ..................................................................... 31

Figure 4.3 Organization industry ......................................................................... 31

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VI

LIST OF TABLES

Table 2.1: Comparison of Control frameworks in the US ...................................... 8

Table 3.1: Measurement scale of internal control components ............................ 22

Table 3.2: Measurement scale of internal control effectiveness ........................... 24

Table 4.1: Sample characteristics ......................................................................... 30

Table 4.2: Reliability of measurement scales ....................................................... 32

Table 4.3-4.5: The EFA result for internal control components measurement

scales .................................................................................................................. 36

Table 4.6-4.8: The EFA result for internal control effectiveness measurement

scales ................................................................................................................... 38

Table 4.9: Correlation of constructs ..................................................................... 39

Table 4.10a-c: Summary of hypotheses testing results (Model I) ......................... 41

Table 4.11a-c: Summary of hypotheses testing results (Model II) ........................ 43

Table 4.12a-c: Summary of hypotheses testing results (Model III) ...................... 44

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