accounting ethics and its important role for reduction of accounting fraud an empirical study in hanoi

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Declaration of Originality and Word Count


DECLARATION
I here by declare that the graduation project is based on my original work except for
quotations and citations, which have been duly acknowledged. I also want to declare
that it has not been previously or concurrently submitted for any other
courses/degrees at HELP University College or other institutions. The word counts is
9932 words












HOANG VAN THU
DATE: 17/10/2011

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ACCOUNTING ETHICS AND ITS IMPORTANT ROLE FOR REDUCTION
OF ACCOUNTING FRAUD: AN EMPIRICAL STUDY IN HANOI


By

HOANG VAN THU
October 2011

Supervisor: Dr. Nguyen Hong Quan

ABSTRACT
As we know that ethic can be defined as many way, but in this part I just want to
mention that it is a set of principle of right conduct or set of moral values help by
individual or group. By other way, ethic refer to the standard of right or wrong,
which prescribe what humans ought to do, usually in term of rights, obligation,
benefits to society, fairness. We can see that example of ethic as link to those
standards, which impose the reasonable obligation to refrain from stealing, murder,
and fraud. With these above mentioned ethics as a sensitive norm that related to
business, especially in accounting fields. Nowadays, the code of ethics for
professional accountant is providing for all people who work in this field. However,
its still have some problem that relate to accounting fraud in the world. We can ask
question that how can help us to reduce accounting fraud in business today. It is not
easy to have perfect answer of this question. However, in this study we can see that
the significant of ethic in accounting fields. And the way that help to reduce
accounting fraud in environmental accounting today. In this part, I would like to
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show that sample of survey on accounting fraud in Hanoi. This survey carried out
100 accountants who are work in accounting fields. In additional, they are separate
into two groups. The first group include people who less experience in accounting
than other. The second group includes people who have experience and less
possibility to break the rule in accounting standard. Moreover, ethic also relate to
other factor as suppliers, customer, investor and other relation in business. So to keep
the ethical for the accountant, who depend on individual or group of accountant who
have responsibilities in this field. To reduce the fraud in accounting field, we need to
apply the GAAP (General Accepted Accounting Principal) in the system effectively.

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ACKNOWLEDGEMENT


With the position as a student I always consider that learn and collect information
from the teacher or supervisor. Basing on this factor, we can expand knowledge or
other significance problems. There are still having any people, who help me to
complete this project. However, I would like to thank to guiding me the right way to
for this part and motivate me to complete its.
Firstly, I would like to say thank you to my supervisor Mr Nguyen Hong Quan for
his support, guidance, and vision for all my study
Secondly, I would like to say thanks you to Ms Sumathi from Help University
College, for instruction and support for my project
Thirdly, sincere thanks to Mr Hoang Van Nam for helping me to perform the survey

effectively.










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TABLE OF CONTENT PAGE


DECLARATION 1
ABSTRACT 2
ACKNOWLEDGEMENT 4
TABLE OF CONTENT 5
CHAPTER 1: INTRODUCTION 7
1.1 Research and background 7
1.2 Problem and statement 9
1.3 The objective and sphere of research 11
1.3.1 Objective of research 11
1.3.2 The sphere of research 11
1.4 Research method 11
1.5 Structure of research 12
CHAPTER 2: LITERATURE REVIEW 13
2.1 Definition of Ethics 13
2.2 Code of Ethics for Professional Accountant 14

2.3 The Factors that Contribute to Accounting Fraud 16
2.3.1 Conflict of interest 16
2.2.2 Driven by profit management 17
2.3.3 Corporate transparency 18
2.3.4 Money Culture 19
2.4 The role of Accounting ethic that help to reduce Accounting Fraud 20
3.1 Research Objectives 23
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3.2 Research Method 24
3.3 Sources of Data and Sample Selection 25
3.3.1 Collecting Data 25
3.3.2 Sample Selection 25
3.4 Scope of study 26
3.5 Hypothesis Statement 26
CHAPTER 4: ANALYSIS AND FINDING 28
4.1 Collection of Questionnaires 28
4.2 Description of Result 29
4.2.1 Part 1 29
4.2.2 Part 2 33
4.3 Result Analysis 34
4.3.1 Hypothesis 1 34
4.3.2 Hypothesis 2 35
4.3.3 Hypothesis 3 35
4.3.4 Hypothesis 4 36
CHAPTER 5: CONCLUSIONAND RECOMMENDATION 37
5.1 Conclusion 37
5.2 Recommendation 38
5.3 The limitation of study 39
5.4 The ideal or suggestion for research in the future 40
REFERENCE 41

APPENDICES 43


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CHAPTER 1: INTRODUCTION


1.1 Research and background
As we know that, ethics refers to the sensitive concept with any field in business in
society, in particular link to the accounting. Besides that it refers to “the critical,
structured examination of how we should behave — in particular, how we should
constrain the pursuit of self-interest when our actions affect others”. Moreover, ethic
also reflects a personal set of value and used by individual to guide their actions and
to recognize any obligation, it is not a objective, but a subjective for individual”.
And it relate to the code of conduct dependence upon circumstance and the life
experience of the individual. “The ethic also relates to accounting and it has
difference way to define ethics. We can understand that it is one of the first field
applied ethic in systems. There are several factor that have been applied in
accounting as moral value, judgments”
We know that accounting has their own definition of ethics, which is primarily a field
of applied ethics, the study of moral values and judgments as they apply to
accountancy.
It can be considered as an example of professional ethics. We have to consider the
code of ethics for profession accountant and some factor that relate to the accounting
fraud. According to the recent survey about 150 accountants in Vietnam. All of them
divided into two types. They are both from public and private companies. This result
of the survey shows that, accountants who have more experience also less objectivity
rather than accountant with less experience. However, there is no doubt that they are
more possible to break the rule in accounting or culture rather than the one who have
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more experiences. There are many ways that raise the risk in accounting ethics such
as customers, suppliers, and other individual who have relationship with the
organization within ethical problems. Next, I would like to introduce some problem
that link to accounting ethic, specialty in Vietnam.
In 2005, the Ministry of Finance of Vietnam makes the decision for auditing and
accounting through professional ethical standard. There are some standard that
getting from the basis of “integrity, objectivity, confidentiality, expertise and
prudence, occupational status, compliance with professional standards.”
All of these standards give us above are the reach and character of accounting
activities should be provided in an ethical. However, we cannot exist accountant do
the right way as the standards above. We know that Vietnam’s economy is
increasingly and integrated with worldwide. For instance, Vietnam was joined in
WTO in 2006, becoming a 150th member of WTO. When Vietnam take part in this
organization, there are many enterprise may have opportunities as well as face with
difficulties and challenges to compete with other rival com from other countries.
Moreover, World Trade Organization will be taking to effort of Viet Nam to reach
the global trading market, enhancing the position of Vietnam in the international
trade market, creating a premise integration and economic development.
With the member of WTO the Vietnam’s economy, particular some industries as
banks, finances, services, which need to be more develops than other industries. As a
result, when the demand rising, that means the quality of accountants are need to
improve and upgrade to suitable with the quality of accounting in the world. To
conclude, I am going to analyze the accounting ethic and its role for reduction of
accounting fraud in this project.

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1.2 Problem and statement
Nowadays, the ethics has been played a vital role in accounting major as well as
other industries in the business. Recent year, accounting fraud is increasing more and
more and it means that the important of accounting ethic is rising. As we know that,

to reduce the accounting fraud in Vietnam likewise other countries in the world,
which very difficult to solve its. This research about accounting ethics in Hanoi is
less than this one in Vietnam, so the project will contribute to reduce the accounting
fraud in Vietnam. The purpose of this research that analyze accounting ethics and its
role to reduce accounting fraud in Vietnam.
So the first problem that I want to mention: What does the important role of ethic in
accounting?
To answer this question, we need to understand that professional accountant must
follow the guideline of judgments and moral values in practicing accounting.
Professional accounting also need to consider ethic as the first thing to be strictly as
well as the professional in the field of medicine and law. With respect of customer,
“they also want to receive the service of accounting professional not only rely on his
skill and ability, but also on his professional integrity”. It leads to customers, who
used the service of professional accounting also need to follow the ethic followed
them. So the code of ethic for professional accounting needs to be developed under
these above reasons. Beside that the professional accountant must be followed them,
that mean they respect customers. They have high degree responsibility of code of
ethic. So accounting ethic assurance that the objectivity and integrity in this major.
Now, I would like to mention that the role of ethic in accounting. It can be
considered as the way for accountant to follow certain rule, when they perform their
works at the right ways. Furthermore, the ethic help professional accountant have
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confidence while they are doing in the public or in their own fields. According to the
recent big trouble happen in business, which relate to the role of ethic in accounting,
for instance, Enron, WorldCom and Global Crossing in the USA. Almost these
companies also have problem with ethic in accountant. In the case of Enron
Corporation, they are concentrating on preparing for the good finance practices.
Since, investors and other stakeholders rely heavily on the financial statements of a
company. And they need the information of the financial statement, in order to make
good decision in business. So the ethic has been played a vital role for profession

accountant.
Next, the second problems: How does accounting ethic help to reduce the accounting
fraud. As we know, accounting fraud can be defined as “deliberate and improper
manipulation of the recording of sales revenue and/or expenses (with a purpose of
making a company’s profit performance look better than it actually is) is qualified as
accounting fraud.”
There are some several actions that consider as accounting/bookkeeping fraud:
-“Not listing prepaid expense or other type of assets”
- “Collapsing short-term and long-term debt into one amount”
- “Not showing certain classification of current assets or liabilities”
So, it is not easy to reduce the accounting fraud in Vietnam likewise other countries
in the world. For example, “
According to Nguyen Phuong Mai, chief of the representative office of the UK-based
Association of Chartered Certified Accountants (ACCA) in Vietnam, it is difficult
for training ethic for accountant. In order to reduce the accounting fraud, we need to
apply the rule of General Accepted Accounting Principal (GAAP). Under this rule,
we can prevent the accounting fraud effectively. Since any professional accountants
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also must follow the rule of its. We can assume that if they fail to report financial
statement, they have responsibility with its. Moreover, if they do not follow the rule
of GAAP, they will respond to the sanctions of accountant. Next, we can prevent
accounting fraud by disclosure on all reporting. And all the transaction must be
reviewed and properly documented through accounting staffs. Furthermore, any
companies must disclose the policy to inform their employees of consequence relate
to accounting fraud.
1.3 The objective and sphere of research
1.3.1 Objective of research
 To verify about apply the code of ethic for professional accountant in
Vietnam
 To describe some factors that add to accounting fraud in Vietnam

 To give an important role of ethics inside company or group to control
accounting fraud for stakeholder or enterprise
1.3.2 The sphere of research
 Place of performing this research: Hanoi National University, International
School, Hanoi capital, Vietnam
 Purpose of research: accountants, students who are learning accounting major
at other Universities in Hanoi.
 Companies in process of research: public companies and private companies
in Hanoi, Vietnam
 Time period of conducting research: from 18 July 2011 to 17 October 2011
1.4 Research method
There is no doubt that to bring the successful for any research, it is difficult for
student. However, in this research, the method to study, which very important to me.
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There are several methods for me to choose. But, I will choose the qualitative and
secondary data to use. As we know, qualitative method show that attitudes, behavior
and experiences through such methods as interviews or focus groups.
This research aim at people, who are accountants and work for public or private
company. Besides that students who are study at university as well as student
studying master degree in Hanoi, Vietnam. In this research, I will be used
questionnaires, in order to measure through the process. We also know that this
research used knowledge and information in the past. There are two part, which be
used in this research as questionnaire and qualititative method. With the qualititative
method, I will choose the sample size as n=100. Besides several aspect as follow
“ages, gender, and experiences or the accountant” are significance factor to answer
the questionnaire. Next, student or researcher need to be based on some other factor
to gather information or data. Moreover, they have to see how accountants receive
about ethical problems. In the process of research, the researcher will be used chi-
square test. This helps them to analysis as well as estimating after gathering
information. Basing on the historical data in the past research, which help new

researchers have significance information to analysis.
1.5 Structure of research
There are five chapters in this research.
Chapter 1: Introduction
It represent about background of research, concepts, and the purpose of
research
Chapter 2: Literature Review
Chapter 3: Research Methodology
Chapter 4: Result Analysis
The result will be reflect through information and data collected
Chapter 5: Conclusion and Recommendation
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CHAPTER 2: LITERATURE REVIEW


2.1 Definition of Ethics
Accounting has been played a vital role and its part of our businesses and financial
words. However, the accounting ethic needs to be kept in mind through all
transaction. The terminology “Ethics” is sourced from the Ancient Greek “ethikos”
that means the background and habits. Besides that it consider as a major component
of philosophy, which is the study of values and customs of a person or group and
covers the analysis and employment of concepts such as right and wrong, good and
evil and do's and don'ts (Ghazala Saeed). Furthermore, accounting ethic relate to
primarily a field of applied ethics, the study of moral values and judgments as they
apply to accountancy. It consider as an example of specialized ethics. Besides that
Luca Pacioli was introduce ethic in earlier pass. And it has been expanded by the
government, professional organizations, and independent companies in the world.
We can define ethic by difference ways. For instance, “it refer to the human duty, or
body of rule drawn from science, particular system of principle and rules concerning
duty, whether true or false, rule of practice in respect to a single class of human

actions”
There are many ways to define ethics such as the science of human duty; the body of
rules of duty drawn from this science; a particular system of principles and rules
concerning duty, whether true or false; rules of practice in respect to a single class of
human actions.
Business ethics is the subset of overall ethics term. It is related to the conduct of
ethics and moral conducts when managing and controlling the business. It is vital to
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the companies and its stakeholders. And the most important aspect of business ethics
is accounting ethics. Wikipedia defines accounting ethics as “the primarily a field of
applied ethics, the study of moral values and judgments as they apply to
accountancy. It is an example of professional ethics.” These are the strict rules,
which people in the accounting and business-handling department of a company
must comply to. Since the diverse range of accounting services and recent corporate
scandals, ethics issues are paid more attention within the accounting profession.
Stakeholders make investment decisions based mainly on the accounting information
and financial statements. Therefore it is the responsibility of the accounting
professionals to stick to the code of ethics, i.e. this is the role of ethics in accounting,
so that nobody loses confidence given information. The essence of accounting ethics
is in the maintenance of professional objectivity and integrity.

2.2 Code of Ethics for Professional Accountant
When I mention about the rule for Professional Accountant, I always consider the
code of ethic, GAAP (General Accepted Principal) for professional accountant. Both
of them are essentials part for this research. According to my research, the
International Ethics Standards Board for Accountant (IESBA) was created the Code
of Ethic for Professional Accountant. This organization also depend on the IFAC.
Out of these aspect, its include ethical requirement and present a conceptual
framework for professional accountant. Moreover, it contain five principle of
professional ethics such as “integrity, objectivity, professional competence and due

care, confidentiality and professional behaviors”. Next, I will state these five
principles following part.
.
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 Integrity: A professional accountant must be simple in any situations, be
honest through every professional and business relationship
 Objectivity: There are some factor that need to be consider as bias, conflict
of interest, inserted through other person or overriding are not accepted for
professional accountant.
 Professional Competence & Due Care: To maintain professional
knowledge, skill, in order to solve or ensure every trouble when customer needs
them. That is the obligation of professional accountant. And they need to be
diligently in any easy or difficult situation to provide professional service.
 Confidentiality:
The confidentiality often requires respect of professional accountant. Beside
that they cannot provide or disclose any information to the outside when they do not
have proper and specific authority. Unless there is still have the right or legal, duty to
disclose its to other. And professional cannot use information for personal advantage
 Professional Behavior: A professional accountant should follow the
relevant laws and regulations and should avoid any action that discredits the
profession.
With these all principles, professional accountant can apply in practice at any field of
business. There is no doubt that this framework, which effective for professionals’
accountant. Five principles as I mention earlier, help them to limit the risk or fraud in
accounting. Basing on them, they can make better decision for any accounting
transactions. Besides, they can determine the threats to these fundamental principles
and, if there are threats, apply safeguards to ensure that the principles are not
comprised.

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2.3 The Factors that Contribute to Accounting Fraud
Nowadays, we are often hearing information about accounting fraud through the
media as television, newspaper, and the Internet. However, we do no know how its
still alive in business does today. Besides that a major part of businesses also want to
know why increasing cheating and committing fraud. According to many experts in
the world, they realize that it derived from misleading auditors, auditors looking the
other way, disguising transactions, withholding information, providing unbalanced
advice, and misusing insider information. We also know that the accounting fraud
lead to diminish the integrity and reliability of accounting and financial information.
And accounting fraud originally from these factors as follow: conflict of interest,
driven by profit management, corporate transparency, money culture.
2.3.1 Conflict of interest
According to may research, conflict of interest occur when an individual or group
involved in multiple interest between them. Another way to define its as follow a
situation in which a person has private or personal interest sufficient to appear
influence objective exercise of his or her official duties. The conflict of interest is
becoming one of major part of global concerning today
.
In business, it refer to a
situation that when employees personal financial interest or fiduciary duties owed to
third parties. Next I would like to mention about conflict of interest in manner of
business as it is “a major cause behind recent corporate governance shortcomings”
(Bertok, 2003) likewise it is able to cause the serious damages to the integrity of
organizations. In my research, there are some reasons that lead to conflict of interest
as the financial and pecuniary interest. Basing on the view of government and law, it
often cannot consider as wrong and fraud, in some circumstance. Since, it also
depend on the estimate of regulation likewise laws. For example, “first seeking or
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accepting gift. Acceptance of a valuable gift or service from an organization with
which the University is has or will be negotiating an agreement or conducting

business, would be a conflict of interest. Gift does not include a breakfast, luncheon,
dinner, or other refreshments consisting of food and beverage provided for
immediate consumption.” However, in general situation, conflict of interest consider
as a matter of legal when an individual intentionally (successful or not) in affecting
the outcome of a decision, for personal gain. Beside that someone accused of a
conflict of interest may deny that a conflict did not happen whereas he does not do
any harmful actions. In fact, conflicts of interest may exist even if there is no harm
behavior. In additional, the conflict of interest also contains agency problems and
insider trading in business. In real business, such as big organization or enterprise
the owners always authorize the activities for the manger and they do not involve in
managing the daily operation activities. But the owner always wants to maximize the
shareholder wealth. With the position of managers, they often consider their own
benefit such as bonus, salary, as well as promotion to new position. These benefits
above, that is not easy for them to achieve. However, they used their own way to
perform business by not maximize the shareholders wealth. And they argue with the
owner that they always do the right thing together with there is not still have conflict
of interest here. Therefore, this is not true whereas managers ignore the most
important objective is to maximize overall wealth rather than the ability to maximize
profit.
2.2.2 Driven by profit management
As I stated in earlier chapter that the manager sometimes do not make decisions
based on the best interest of shareholders or for the enterprise but his own. Some
circumstance that happen in the past, manager often give their own benefit first
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before they do anything for other or especially for enterprise. Also, the managers or
employees can also make personal decisions that result an increase in salaries and
commissions. With this aspect both of them always find the shot way, in order to
promote or increase salaries. Moreover, they are in the daily operations and therefore
have a competitive advantage to access the internal and confidential information to
get the benefits. Insider trading is one of these frauds can be realized in this factors.

Since, insider trading can help them to get their own benefit effectively through
negative way, but their co-worker or the owners do not know how to get its.
2.3.3 Corporate transparency
We know that if we have weakness in corporate governance and lack of transparency
in our system. This reason can be considered causes of the financial crisis, and the
subsequent events of corporate collapses and accounting fraud.
An organization lacks of transparency in their financial report leading to stakeholder
"especially investors" unsure decisions about an organization's real fundamentals.
Besides, they will be worried about risk likewise reduces the decision usefulness of
organization’s reports. I would like to give an example as follow, a firm's growth
prospects will be related to how it invests. It depends on the way that manager apply
in the system. It's difficult if not impossible to evaluate a company's investment
performance if its investments are funneled through holding companies, hiding from
view. Another issues, which I want to mention that lack of its. Corporate
transparency may also obscure the company's level of debt. If a company hides its
debt, investors may face challenge as difficult to estimate their exposure to
bankruptcy risk. Thus, if the organization wants to maintain and develop their
economic activity, they must restore the confidence of investors in the financial
report. In the United State, after the bankruptcy of Enron and Worldcom, the
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requirement of transparency was concerned more. These companies and some
organizations have secret books of accounts repairs. It is a reason leads to bankrupt
of Enron and WorldCom. As a result, workers lose their jobs as well as lose all
pensions and savings. Therefore, the government stated: "If companies do not
voluntarily disclosure information in a transparent manner, the government will set
out the rules to force companies to implement".
2.3.4 Money Culture
Nowadays, money has played a vital role in the world. Since we cannot assurance
our life, if we are run out of money as well as shortage its. Following my research
money can be defined as a medium of exchange and standard of value in the modern

economy today. In additional, it is easily to know that the important role of money in
business. It can be estimated from several ways, but in this part I just want to
mention some factor that affect on its as follow Volume of production; the Direction
of production; Pattern of consumption; Method of distribution; Direction and volume
of exchange; and last but not least the Rate of saving and investment in the country.
Besides that if there is shortage of money, we may face with problem to have any
resources for upgrade and grow as well as cannot have a comfortable life.
In reality, money and standard of value also go together and help out have anything,
which is needed. Moreover, two factor money and standard of value prove our to
become active rather than in the past such as take part in active environmental
business in the world. There exists a question that how does behavior of people
change their attitude when the value of money changes over time. For example,
Embezzlement at Thanh Pho Ho Chi Minh Water Draining Supplying Joint Stock
Company. The fact of this is that: on 14
th
August 2003, Nguyen Duc Toan (treasurer
of Thanh Pho Ho Chi Minh Water Draining Supplying Joint Stock Company) took
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over 6 billion the funds of company. Before, Nguyen Duc Toan confessed Mrs
Suong (Chief Accountant of the company) is taking 3.5 billion of company to buy
land in District 2. Mrs. Suong check the funds again and she found that Toan take
more than 2 billion and use these amounts for personal purpose Since, Mrs Suong
fears of responsibility, she did not report for board of directors.
2.4 The role of Accounting ethic that help to reduce Accounting Fraud
First of all we need to understand the ethic in accounting. As I mentioned in earlier
part, ethics likewise set of principles that guide person or groups behaviors.
Moreover, it also includes the value as fairness, honesty, and responsibility that is
the standard form for basis of ethic in business likewise accounting. Nowadays,
there are many companies are face with accounting fraud from their staffs. For
examples, the case of Enron Corporation is. It is a multinational enterprise that not

reported a true and fair view of financial statement for all stakeholders in several
years. The reason that relate to Enron Corporation, which is investor and other
stakeholders rely heavily on financial statement of this firm. Furthermore, their
decisions also have impact on the financial statement. Although investor used their
money with the wrong purpose, in order to use for their own purposes. This example
brings a good implication for other companies in business. We see that accounting
ethic cannot bring all benefits, in order to prevent fraud or briber. However, it can
play vital role to help reduce accounting fraud in accounting environmental today.
There are several scandal related to accounting fraud as Nugan Hand Bank,
Worldcom, AIG. All of these scandals relate to creating new accounting, misleading
financial analysis likewise bribery.
Now, I want to mention some factors that can help reduce accounting fraud as
follow: First, it can be called as “Forensic accounting” it helps to deal with financial
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facts of legal problems. Moreover, forensic accountant, who have both side as
proactive and reactive one. However, the main function of it’s to prevent fraud and
corruption in the areas of accounting and finance and reduce the losses resulting
from fraud and corruption. In additional, there are some professional accounting
requires certification and degree in accounting matter, each member is supposed to
abide by a code of ethics as specified by such organizations. . Another ways to help
reduce accounting fraud as most companies also make it mandatory for its
employees to abide by the code of ethics for professional accounting put down by
the company. Some factor that inside the code of ethic for professional for
accountant as integrity, objectivity, professional and due care, professional
behaviors. With these factor, company can apply into their system as the tool to
prevent accounting fraud effectively. Basing on these factors, company can give the
sanction, if their staff break the rule as well as do the wrong in the code of ethic.
Moreover, the ethics in accounting, which help accountant, learn more about
behavior in any situation of business through the code of ethics. The last but not
least important, which help ethic to reduce fraud as used corporate governance in

accounting system. According to my research corporate governance can be defined
as the framework of rule and practice by which a board of directors ensure
accountability and fairness, transparency in any enterprises or company’s
relationship with its all stakeholder as investors, customer, manager, government
and community. In order to have good accounting standard, we also need to have
good corporate governance. It need to be assurance that in a corporate set up leads to
maximize the value of the shareholders legally, ethically and on sustainable basis,
while ensuring equity and transparency to every stakeholders as the company’s
customer, investor, employees, vendor-partners, the government of the land and the
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community ( Murthy, 2006). With good corporate governance, the accounting fraud
can be reduced. The last but not least important, I would like to recommend that
with the new major of accounting scandal that mean new regulation or together with
higher education must be introduced in order to combat the danger of unethical
behavior in accounting. With the role of ethics in this part, we need to training or
open program for new accountants before they are in workplace. For instance,
through require higher education, or initial training at company. This action can help
to improve the credibility of the accounting profession together with reduce
accountant who break the rule of accounting standard. All of these above-mentioned
that reflect the role of ethic help to reduce accounting fraud. Although not there is
not enough factors, but it can help to diminish accounting fraud environment
accounting.




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CHAPTER 3: RESEARCH METHOLOGY

3.1 Research Objectives
. The code of ethic for professional accountant can be considered as general rule for
all professional accountants in country, where apply its in the world. In real business
world, there is still having many accountants that not consider the important role of
code of ethic for them. And they often breaks the rule or do not follow the principle
for professional accountant. That means lead to many frauds occur during the
business operation of large company or group in the world. In other points, I would
like to mention the difference of accounting fraud in difference countries in the
world. As we know that, each country in the world, accounting fraud occurs in
different circumstances. Therefore, each country must apply code of ethics for
professional accountant in different ways, in order to get the effective of its. Since
the accounting fraud also relate to a lot of problems behind its. We know that my
research just concentrate on accounting fraud in Vietnam. In this research, there are
three main objectives. Based on the past research, some new researches will be
applied in order to help researcher can reach these objectives above. The first
objective of this research is to identify how Vietnam’s organization applies code of
ethics for professional accountant as follow “integrity, objectivity, professional
competence and due care, confidentiality, and professional behavior”. And the
second objective is to determine the factors that contribute to accounting fraud
(driven by profit management and bad economy, money culture). The last objective
but not least important, which is the researcher wants to give some suggestions for
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Viet Nam’s organization to help them reduce accounting fraud. Since the accounting
fraud are raising in this country.
3.2 Research Method
These method are using in this research include questionnaires and measurement.
Firstly, with questionnaire method, which it consisting of multiple-choice questions
was designed with the purpose of clarifying some aspects in accounting ethics?
Secondly, the data obtained were analyzed by statistical technique in terms of chi-
squared test for hypothesis testing as well as prediction or forecast of the result.

Additional, …guided the sample computation as the following: “Chi-square is a
statistical test commonly used to compare observed data with data we would expect
to obtain according to a specific hypothesis. The form of Chi- square test equation as
follow:

Where:
X
2
: the value of the test statistic
k, i: The outcome of each trial can be classified into one of k categories,
called cells
o
i:
The observed frequency


e
i =
np
i
, where n is a fixed number of trials, p is the probability that the
outcome will fall into cell i remains constant for each trial. Moreover, p
1 +
p
2 + … +
p
k

= 1”.
Each trial of the experiment is independent of other trials

The computation will be done by entering the necessary data and solving by
computer. It is available in the following chapter.
- 25 -
3.3 Sources of Data and Sample Selection
3.3.1 Collecting Data
For my research, there are still having two types of collect data as primary data and
secondary data. Both of them have their own significance that help researcher to
collect data effectively. But in this research, I would like to use primary data as the
main way to collect information from the societies. Up to the primary data,
researchers are collecting information for the specific purposes of their study. They
can do that through doing questionnaire and multiple choice questions. It can be
liked that since they will get specific purpose of clarify any aspect. Moreover, it may
reflect, the character of accountant and factor contribute to accounting fraud. For this
research the survey focuses on investigating among accountants in public and private
company as well as students in accounting major in Hanoi, Vietnam. Furthermore,
the researcher or students can gather data from themselves by using survey, interview
and direct observation. There is no doubt that primary data have negative impact or
bring insufficient for the research. In this situation, we can be used secondary data to
analyze research. There are many secondary data, which provide for us. And with the
high-technology today such as the Internet (email, facebook, message, newspaper),
people easily find and collect data from these factors.
And they also help the researcher have many ideals to complete good research.
3.3.2 Sample Selection
The sample selection can be considered as the research basing on its estimation or
judgment. In this research, student or researcher should be considered investigation
through wider areas. However, student or new accountant may face with some
problems in Hanoi. For instance, the cost or limitations of time are challenges for
them to complete research. In this research, I choose the small sample in Hanoi.