summary of doctoral thesis research on factors affecting audit quality of financial statements of listed companies in the vietnamese stock market

1

INTRODUCTION

2

2. Literature review
Review of Literature that have been conducted in oversea and

1. The necessity of the thesis

Vietnam

Auditing plays an important role in maintaining and issuing financial

Applied research methodologies

reports with high quality. However, the bankruptcy of Enron Corporation, one

Research questions and findings

of the leading energy corporations in the US in 2001, resulting in the downfall

Research questions and findings focus on the main point, which is

of Arthur Andersen, a world-class prestigious auditing firm in 2002, raised the

evaluating perception of survey objects about the impact level of factors

concerns about audit quality. A series of scandals about audit quality of
independent auditing firms was disclosed after that has involved incorrect

opinions about financial reports like in the bankruptcy cases of Worldcom or
Kmart corporations. In Vietnam, the incident of Bach Tuyet Cotton
Corporation in 2008 became a focal point for Vietnamese stock market when

affecting audit quality; identifying important factors affecting audit quality by
using a scale of evaluation as from 1 to 5 or 7, from “very low” to “very high”.
Representative researches are from Schroeder et al (1986); Carcello et al
(1992), Aldhizer et al (1995); Warming-Rasmussen & Jensen (1998); Chen et
al (2001); Augus Duff (2004); Kym Boon (2007), Kym Boon et al (2008).
3. Research objectives and questions

disputes arose concerning audited business results in its 2005 and 2006

The overall objective is to identify factors affecting audit quality and

financial reports. Other cases relating to the reliability of information in

evaluate the influence of each factor to audit quality of financial statements

audited financial statements also caused financial loss to investors.

of listed companies in the Vietnamese stock market at present, which serves

Financial reports of listed companies in the Vietnamese stock market
receive much attention from different groups. Among which, the most

as the basis for proposing solutions.
Research questions: In order to achieve the research objective, research

popular and sensitive group is the group of investors. Financial statements

questions are given accordingly and suitable in research framework.

can be distorted for the sake of companies managers and financial report

4. Research objects and dimension

preparers, not for the sake of investors. Auditors are responsible for ensuring
the reliability of financial reports, which displays audit quality.
However, it is not easy to evaluate or recognize audit quality.

The topic’s focus is to identify factors affecting audit quality of
financial reports of listed companies in the Vietnamese stock market by
independent auditing firms. The research objects are joint stock firms with
securities (stocks and bonds) listing on the Ho Chi Minh City and Hanoi

Evaluation criteria for audit quality can show audit quality but they do not

Stock Exchanges.

demonstrate which factors resulting in such quality and, more importantly,

5. Research methodology

basing on what basic can audit quality be improved. Therefore, the thesis’s

- Analytical and statistical methods: Basing on secondary of

topic, namely “Research on factors affecting audit quality of financial

domestic and international resources available and analysis of real situation

statements of listed companies in the Vietnamese Stock Market”, reflects

in Vietnam to identify factors/criteria for factors affecting audit quality of

the necessity of this issue and aims to clarify the issue of interest.

financial statements.


3

- Survey method (survey, interview & observation)

4

7. Research framework and structure

Basing on the system of factors determined in the theoretical

In addition to Introduction and Conclusion, the thesis is designed

framework, the author designs the Questionnaire for auditors working for

scientifically with 4 chapters as illustrated in the framework diagram below:

independent auditing firms which are approved to audit financial reports of
listed companies about the influence of factors affecting audit quality of
financial reports of listed companies in the Vietnamese stock market (via

evaluation criteria for factors).
The author carries out direct interviews with a number of specialists as

Chapter 1:
Theoretical framework on
factors affecting audit quality
of financial statements of listed
companies in the Vietnamese
stock market

representatives of managers and leaders in auditing firms, institutional
investors to discuss about survey results and relies on observation of
secondary data to further clarify survey results, which serves as the basis for
proposing solutions.
- Data processing method: After getting survey results, the author
processes the data on SPSS 18 software to analyze the reliability of factors
and evaluation criteria for factors. The author also applies descriptive

Chapter 2:
Analyzing reality and
identifying factors affecting
audit quality of financial
statements of listed companies
in the Vietnamese stock
market

Answering research question 1:
Which factors and evaluation criteria
for factors are identified as having
important impact on audit quality of

financial reports of listed companies
in the Vietnamese stock market?

statistics for summing up and comparison with a view to quantifying the
impact level of factors affecting audit quality of financial reports of listed
companies in the Vietnamese stock market.
Data resources are collected including primary and secondary data.
6. New contribution of the thesis

Chapter 3:
Research results about
factors affecting audit quality
of financial reports of listed
companies in the Vietnamese
stock markets.

Answering research question 2:
Factors with the most important
impact as well as the order of
impact level of each factor to the
audit quality of financial reports of
listed companies in the Vietnamese
stock market at present?

Chapter 4:
Recommendations and
proposals to improve audit
quality of financial reports of
listed companies in the
Vietnamese stock markets

Answering research question 3:
Key solutions to improve audit
quality of financial reports of
listed companies in the Vietnamese
stock market?

In a theoretical view, the topic sums up theories with a deep view into
systemizing factors (evaluation criteria of factors) affecting audit quality of
financial reports of listed companies.
In a practical view, the topic evaluates influence of factors to audit
quality of financial reports of listed companies in the Vietnamese stock
market from auditors’ viewpoint and proposes key solutions in line with
Vietnam’s real situation.


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CHAPTER 1: THEORETICAL FRAMEWORK FOR RESEARCH ON
FACTORS AFFECTING AUDIT QUALITY OF FINANCIAL
STATEMENTS OF LISTED COMPANIES ON THE VIETNAMESE
STOCK MARKET

6

1.1.1.3. Functions of the stock market
Functions of the stock markets display its role in the economy,
specifically: Capital mobilization; encouragement of savings and
investment; investment transferring tool; encouragement of competition;
reflection of economic health; and integration tool into global economy.

1.1. Stock market and listed companies on the stock market
Characteristics of stock markets and listed companies influence
characteristics of their financial reports. From that, we can see the
necessity and important role of independent auditors with the reliability
of information in financial reports, which contribute to stock market’s

1.1.1.4. Classification of stock market
The stock market is classified differently basing on different criteria:
stock circulation process, transaction method and transaction period.
1.1.1.5. Characteristic of the stock market

transparency and to investor’s protection. Contents presented below aim

Three basic characteristics of the stock market help to create its

at clarifying theoretical framework about the stock market, listed

attractiveness and draw interest of individual and institutional investors.

companies and financial statements of listed companies from the

However, the transparency of information in the stock market, which

auditors’ viewpoint.

requires the role of auditors to ensure information reliability, is a matter

1.1.1. Stock market

of crucial concern to protect investors.

1.1.1.1. Establishment history of the stock market

1.1.1.6. Participants in the stock market

The history of stock market has a close connection with the
commodity economy. In Europe, the stock market appeared in the
beginning of sixteenth century. Up to now, the stock market has become
a high form of financial market with strong development and high
attractiveness for investors in developing and developed countries.
1.1.1.2. Definition of stock market
Stock market is viewed as an organized market where securities of
listed companies in the market are traded. It is a high form of financial

The most popular participants that create the excitement for the stock
market are joint stock companies and investors. Joint stock companies issue
and list securities- the important source of commodity with overwhelming
trading volume while investors carry out trading transaction in the stock
market.
1.1.2. Listed companies in the stock market
1.1.2.1. Definition of listed companies

market where investors always need transparent financial information to

A listed companies is a listed entity in the stock market, a joint stock

make their economic decisions and they can suffer heavy losses if

firms eligible in terms of capital, business operation, financial capability,

financial information upon which they rely for decision making do not

number of shareholders or owners to list shares in the stock market (on

ensure reliability.

the stock exchange or securities trading center).


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1.1.2.2. Characteristics of listed companies
Five basic characteristics of listed companies are analyzed from the

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of listed companies in the stock market is compulsory and is carried out
by independent auditors.

viewpoint of auditors and investors, which influence the characteristics

1.2.2. The role of independent audit of financial reports of listed

on financial statements of listed companies with distinctive features of

companies

joint stock companies, owners/shareholders, business scope and fields

Independent audit of financial reports of listed companies helps to

under strict legal regulations.

enhance reliability of information in financial reports and transparency in

1.1.3. Characteristics of financial reports of listed companies

the stock market. This aims at protecting investors and other beneficiaries

Firstly, financial reports require high level of reliability and
sensitivity.
Secondly, financial reports monitor and reflect many distinctive
features.
Thirdly, financial reports demonstrate a large volume of complicated
transactions.
Lastly, financial reports of listed companies comply strict

of audit results, helping listed companies to improve their management
capability and reputation as well as assisting authorized agencies in
issuing appropriate legal documents.
1.2.3. Types of audit reports for financial reports of listed companies
1.2.3.1. Audit process for financial reports of listed companies in the
stock market
Audit process for financial reports of listed companies in the stock

requirements of the stock market, one of which is audit requirement.

market ensure compliance to standard audit procedures.

1.2. Audit of financial reports of listed companies

1.2.3.2. Types of audit reports for financial reports of listed companies

1.2.1. Concept and classification of auditing
1.2.1.1. Definition of audit
An independent audit of the financial report of a listed companies is
where auditors from independent firms (eligible for auditing reports of

Audit reports include the following types of opinions: unqualified
opinion & not unqualified opinion (qualified opinion, adverse opinion,
and disclaimer of opinion).
Of all these opinions, unqualified opinion is the best result that listed

listed companies) attest and give their opinions about the true and fair

companies and investors in the stock market expect.

view, in all material aspect, of the financial statements of the listed

1.3. Factors affecting audit quality of financial reports of listed companies

companies.
1.2.1.2. Classification of audit

1.3.1. Users of audit quality of financial statements of listed companies
Researches about audit quality show that audit quality attracts

Audit is classified according to functions, objects and obligation with

attention of many users, especially institutional investors (securities

both pros and cons for each type. Independent audit for financial reports

companies, investment funds & others) and individual investors (from


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10

different classes). This group of interest in audit quality displays the most

Industry expertise

distinctive features in the stock market. This group usually faces risks
from unreliable financial reports. Therefore, these users always want to
receive high quality financial statements from auditors, which serve as the

Experience
Technical competence

Group of factors related
to auditors/auditor
councils

basis for their investment decision. They are entitled to sue auditors if
audited financial reports still contain material misstatements that cause
financial losses to their investment decisions.

Independence
Perception of standard compliance

1.3.2. Viewpoints about audit quality of financial reports of listed
Due care

companies
Until now from literature review, two main viewpoints from
researches about independent audit quality of financial reports, with

Filed work conduct
Other factors

practical viewpoint about satisfying users of audit service and scientific
viewpoint

about

the

ability

to

discover

and

report

major

misinterpretations in audited financial statements.

Audit fee
Firm’s size

Evaluating audit quality according to satisfaction level of users is not
simple at all because users of audit results can not directly observe audit
activities. Therefore, in evaluating audit quality, researchers normally

Group of factors related
to auditing firms

Audit approach
Quality control system

assess the ability to discover and report material misstatements of
auditors via identifying and measuring influencing factors.
1.3.3. Factors affecting audit quality of financial reports of listed

Other factors

Legal environment

companies
According to the diagram, research results show differences in
impact levels of factors. They are categorized into three groups of factors

Auditees

Group of external
factors

Other external factors

with the highest influence on audit quality of financial reports of listed
companies. Details of factors/groups of factors are presented as follows:

Diagram: Groups of factor affecting audit quality of financial report of
listed companies


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1.3.3.1. Groups of factors relating to auditors

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The fifth factor of Compliance of ethical standards: High level of

The first factor of Level of an industry expertise: With the

compliance of ethical standards from auditors/auditor councils means high

distinctive role of audit in the stock market, the required level of industry

audit quality because they are able to discover and report errors and unusual

expertise is often higher. Industry expertise also have more important impact

problem with little possibility of compromise during the audit process.

on the audit quality of financial reports of listed companies because the

The sixth factor of Due-care attitude: Due to widespread impact of

complicated nature of these reports as well as the quantity and capability of

audit quality of financial statements of listed companies, due-care attitude

objects of interest in audited financial reports will increase the risks of audit.

of auditors is considered an important factor, especially for audits of

The second factor of Auditor/Council experience: Due to distinctive

financial reports with many provisional items or when there are doubts

characteristics of financial reports of listed companies in the stock market,

about the continuous operational activities of listed companies. Due to

audit risks for these reports are often higher than those of non-listed

higher level of risk for audit of financial reports of listed companies, due

companies. Therefore, similar to industry expertise, experience factors also

care is even more required when determining material misstatements.

have high influence in audit quality. Consequently, complicated and risky

The seventh factor of field work conduct: Even though field work

audit cases should be given to auditors/auditor councils with a lot of industry

conduct is not considered the most important factor in researches, attention

experience.

is required on this factor for audit of financial reports of listed companies

The third factor of Technical competence: It is considered the
minimum requirement for auditors/auditor councils for an audit case of
financial report for any customer in general and for listed companies in
particular.

due to high pressure and industry expertise requirements.
Other factors related to auditors.
1.3.3.2. Group of factors related to auditing firms
The first factor of Audit fee: The stock market requires higher audit

The fourth factor of Independence: Researches all point out that

quality TTCK, which goes in line with higher audit risks. Therefore, audit

auditors’ independence from their customers means the possibility of an

fee is an important factor affecting audit quality, especially for financial

audit case with better quality. Especially for the assurance of audit quality

reports of listed companies.

of financial reports of public firms (including listed companies in the stock

The second factor of Auditor’s size: Most researches show that size

market), independence becomes more and more important. Otherwise, even

of auditing firms is an factor affecting audit quality. Listed companies in the

if major misinterpretations are discovered by auditors, they may not be

stock market normally accept high audit fee for auditors in big auditing

reported because auditors may join hands with customers or serve the

firms to increase their own reputation.

interest of certain groups of shareholders/individuals

The third factor of Audit Approach: For audit of financial reports for
listed companies, due to its higher risk, an effective audit approach is


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14

required to assist auditors in carrying out their audit practices in a more

CHAPTER 2: ANALYSIS OF REAL SITUATION IN RELATION WITH

professional way and to better evaluate risks of listed companies. Therefore,

IDENTIFYING FACTORS EFFECTING AUDIT QUALITY OF

it is considered as an important factor affecting audit quality of financial

FINANCIAL STATEMENTS OF LISTED COMPANIES IN VIETNAMESE
STOCK MARKET

reports in general and financial reports of listed companies in particular.
The fourth factor of Internal quality control system: Highly

2.1. Overview of Vietnamese stock market and listed companies

appreciated in most countries, this factor is considered compulsory according to

The real situation of the Vietnamese stock market and listed

audit standards and is treated as one of criteria to evaluate whether an auditing

companies’ characteristics are clarified in relation with identifying factors

firm is eligible for auditing listed companies in the stock market.

affecting audit quality of financial statements of listed companies.

Other factors related to auditing firms
1.3.3.3. Group of external factors
External factors have distinctive characteristics for each country, including:
legal environment, listed companies, external control and other factors.

2.1.1. The development of Vietnamese stock market and listed companies
It is divided into two main periods: from 2000 to 2005 and from 2006
to now.
2.1.2. Listing requirements for companies in the Vietnamese stock
market

Conclusion of chapter 1
Chapter 1 provides an overview of theoretical framework about the

As stipulated in Decree No.58//2012/Nð-CP dated Sept 15, 2012 on
guiding the implementation of the Law on Securities.

stock market, listed companies, characteristics of financial statements of

2.1.3. Characteristics of listed companies in the Vietnamese stock market

listed companies affecting audit quality of financial reports. The outstanding

affecting audit

results of chapter 1 is deeply systemizing factors affecting audit quality of

From the audit viewpoint, besides general characteristics, listed

financial report of listed companies in the stock market. According to this,

companies in the Vietnamese stock market also have distinctive features of a

there are three groups of factors affecting audit quality of financial reports,
including group of factors relating to auditors, auditing firms and groups of
external factors.
Theoretical framework and overview about these groups of factors will

fledging stock market, which have an impact on the roles and factors affecting
audit quality of financial reports in the following points: Firstly, listed
companies are joint stock companies eligible for listing according to
regulations; Secondly, listed companies have diversified business scopes with
many complicated transactions arising; Thirdly, listed companies normally

serve as an important premise for empirical surveys to identify influencing

have big companies size and dispersed organization structure; Fourthly, a lot

factors and evaluate their level of impact on audit quality of financial

of shortcomings still exit in the internal control systems of listed companies;

statements of listed companies in the Vietnamese stock market.

Fifthly, listed companies must comply with requirements about disclosing
financial report information.


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2.2. Audit of financial reports of listed companies in Vietnamese stock

16

audit quality of financial statements of listed companies in the Vietnamese

market

stock market.

2.2.1. Characteristics of independent auditors approved to audit listed

2.3.1. Group of external factors

companies

2.3.1.1. Legal environment for audit activities of financial reports of listed

The real situation of the audit is analyzed pertaining to identifying
factors affecting audit quality of financial statements of listed companies in
the Vietnamese stock market with the focus in the following aspects: The
establishment and development of independent audit in Vietnam; legal basis
for operation of independent audit of financial reports of listed companies
and characteristics of auditing firms for financial reports of listed companies

companies (Legal environment): three evaluation criteria for the legal
environment includes: (1) sufficiency; (2) conformity; (3) sanctions.
2.3.1.2. Customer as listed companies: with 6 evaluation criteria for
customers as listed companies.

2.3.1.3. Others external factors: including three evaluation criteria: (i)

in the Vietnamese stock market.

Macroeconomic environment; (ii) Cultural environment, habits of audit

2.2.2. The role of auditing financial reports of listed companies

service users; (iii) The role of external quality control of financial reports of

Analysis about discrepancies in data of annual financial reports before and
after audit, in data of semi annual financial reports and analysis about types of
auditors’ opinions concerning financial reports of listed companies in
Vietnamese stock market show the direct role of audit, which helps to make
information in financial reports of listed companies more true and transparent

listed companies.
2.3.2. Group of factors relating to auditors
Eight factors and thirty two evaluation criteria related to auditors are
identified as having impact on audit quality of financial reports of listed
companies in the Vietnamese stock market as follows:

and help investors to trust as well as take caution with data in financial reports.
2.2.3. The real situation of evaluating audit quality of financial reports of
listed companies
In Vietnam, evaluation of audit quality of financial reports of listed

2.3.2.1. Ensuring independence: with 4 evaluation criteria.
2.3.2.2. Technical competence of auditors/auditor council: with 3
evaluation criteria.

companies is carried out by auditors themselves (through their internal quality

2.3.2.3. Industry expertise of auditors/auditor council: with 3 evaluation

control systems) and by authorized agencies ( mostly the Vietnam Association

criteria.

of Certified Public Accountants - VACPA) via external quality control
activities. Investors are unable to evaluate by themselves; they can only trust
auditors’ opinion until there are consequences arising.
2.3. Identifying factors affecting audit quality of financial reports of
listed companies in the Vietnamese stock market
Through analyzing the real situation in Vietnam, 16 factors (under 3
groups) and 62 criteria have been identified as having important impact on

2.3.2.4. Audit experience of auditors/auditor council: with 2 evaluation
criteria
2.3.2.5 Work attitude (due care and skepticism) of auditors/auditor
council: with 6 evaluation criteria.
2.3.2.6. Field work conduct of auditors/auditor council: with 6 evaluation
criteria.


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2.3.2.7. Compliance to ethical standards: with 3 evaluation criteria.
2.3.2.8. Pressure of busy seasons on auditors/auditor council: with 4
evaluation criteria.

2.3.3. Group of factors related to auditing firms
Five factors with eighteen evaluation criteria are identified as having

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CHAPTER 3: RESEARCH RESULTS ABOUT FACTORS AFFECTING
AUDIT QUALITY OF FINANCIAL STATEMENTS OF LISTED
COMPANIES IN THE VIETNAMESE STOCK MARKET
3.1. Data collection and methodologies

3.1.1. Design of questionnaires

impact on audit quality of financial reports of listed companies in the

3.1.2. Selection of survey objects

Vietnamese stock market as follows:

3.1.3. Research methods and collection of questionnaires

2.3.3.1. Size of auditing firms: with 4 evaluation criteria.

3.1.4. Description of questionnaires’ object

2.3.3.2 Reputation of auditing firms: with 3 evaluation criteria.
2.3.3.3 Working conditions of the firms for auditors/auditor council: with

3.1.5. Data sources
3.1.6. Description of steps for producing research data
Step 1: Digitalizing and input data in SPSS.

5 evaluation criteria.
2.3.3.4. Audit fee/ completion time of audit report: with 2 evaluation
criteria.

Step 2: Re-digitalizing measurement index into 3 levels: 1. From Very
low -> Low; 3. Normal; 5. High-> Very high.
Step 3: Checking measurement index for suitable results of criteria

2.3.3.5. Internal quality control system of auditing firms: with 5
evaluation criteria

Step 4: Checking measurement index for each group of factors;
handling data in SPSS with the end result of 14 factors and 60 evaluation

Conclusion of chapter 2
Basing on the above-discussed domestic and international literature, 16

criteria affecting audit quality of financial reports of listed companies in the
Vietnamese stock market
Step 5: Statistical description (results are shown in 3.2)

factors criteria under 3 groups are identified as having impact on audit
quality of financial reports of listed companies in the Vietnamese stock

3.2. Analyzing results of impact level of factors to audit quality of

market: groups of external factors; groups of factors relating to auditors and

financial reports of listed companies

group of factor related to auditing firm. The research also clarifies the
detailed contents of 16 factors via 62 evaluation criteria. These 62 criteria
are identified from international researches coupled with analysis of current
situation and they are considered to be in line with the real situation in
Vietnam.

Table about impact level of 3 groups of factors affecting audit quality
Code

Symbol

Group of factors
affecting audit quality

1. Nhóm B
2.Nhóm A
3.Nhóm C

NhomKTV
Nhombenngoai
NhomCTKT

Group of auditors
Group of external factors
Group of auditing firms

No of
observation
138

138
138

Mean
4.2375
3.9710
3.9504

Standard
deviation
0.63702
0.70978
0.70491

(Source: Research results on level of impact of factors affecting audit quality of
financial reports of listed companies in the Vietnamese stock market)


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20

Below is detailed analysis of impact level of factors taken from research
results of 3 groups of factors (external, auditors, auditing firms). The following
tables are arranged with average value in decreasing order of impact level.
3.2.1. Group of external factors
There are 3 factors in the group of external factors affecting audit
quality with 12 evaluation criteria.

3.2.3. Group of factors related to auditing firms

There are 5 factors in this group with 18 evaluation criteria.
Table showing the influence of group of factors relating to auditing
firm on audit quality of financial reports of listed companies
No

Code

Symbol

Table showing impact level of group of external factors to audit quality
of financial reports of listed companies in the Vietnamese stock market
No Code
1

Symbol

External factor

BC2 DNNY

Listed companies
Legal environment for
2 BC1 MoitruongPL audit of financial report of
listed companies
3 BC3 Ngoaikhac
Other external factors
Group A Nhombenngoai Group of external factors

No of obserStandard
Mean

vation
deviation
138
4.1401 0.81730
138

4.0628

0.96201

138
138

3.7101
3.9710

1.00350
0.70978

(Source: Research results on level of impact of factors affecting audit quality of
financial reports of listed companies

No of
Group of factors related to
obserauditing firms
vation

Mean

Standard

deviation

1

BC16 KiemsoatCL

Quality control system of
auditing firms

138

4.2870

0,89343

2

BC14

DKLV

Working conditions of
auditors/auditor council

138

4.0145

0,85209

3

BC15

Phi

Audit fee and completion
time for financial reports

138

3.9420

1,18240

4

BC13

Danhtieng

Firm’s reputation

138

3.8309

1,10389

5

BC12

Quimo

Firm’s size

138

3.6775

1,02131

Group of factors related to
auditing firms

138

3,9504

0.70491

Group C

NhomCTKT

(Source: Research results on level of impact of factors affecting audit quality of
financial reports of listed companies

3.2.2. Groups of factors related to auditors

There are 6 factors in this group with 30 evaluation criteria.
Table showing impact level of group of auditor factors to audit quality
of financial reports of listed companies in the Vietnamese stock market
No Code
1

Symbol

BC6 Chuyensau

Factors in the group of auditor

Expertise of auditors/auditor council
Compliance and attitude of
2 BC10 Ythuc
auditors/auditor council
3 BC9 Chuyennghiep Conduct of auditors/auditor council
Pressure of busy seasons for
4 BC11
Apluc
auditors/auditor council
5 BC4
Doclap
Independence of auditors/auditor council
6 BC5
Trinhdo
Competence of auditors/auditor council
Group B NhomKTV Group of auditors

No of

observation
138

Conclusion of chapter 3
After survey and collection/handling of survey results, it is shown from

Mean

Standard
deviation

survey results which factor and group of factors have the most impact as

4.4551

0.74550

well as order of impact for each factor (including 3 external factors, 6 factors

138

4.4251

0.79001

relating to auditors and 5 factors related to auditing firms) and 60 evaluation

138

4.3768

0.86187

criteria to the audit quality of financial reports of listed companies in the

138

4.2754

1.05863

Vietnamese stock market.

138
138
138

4.2065
3.6860
4.2375

0.88319
1.08948
0.63702

(Source:Research results on level of impact of factors affecting audit quality of
financial reports of listed companies)


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CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS TO IMPROVE

4.3.1. Improving management role of competent authority: State
Securities Commission (SSC), VACPA, the Ministry of Finance
Ministry
of Finance

COMPANIES IN THE VIETNAMESE STOCK MARKET

4.1 The necessity for improving audit quality of financial reports of
listed companies in the Vietnamese stock market

SSC

AUDIT QUALITY OF FINANCIAL STATEMENTS OF LISTED

From the viewpoint of auditors, survey results show that 65.9% of
auditors in the survey thinks audit quality of financial reports of listed

Auditing
firms

companies in the Vietnamese stock market is only average; while 26.1%
thinks the quality is at low or very low level. Therefore, it is necessary to
have solutions to improve audit quality of financial statements of listed
companies in the Vietnamese stock market at present.

results, observation and interview of specialist, including:

1. Quality
control system

2.Working
conditions
(audit approach,
tool)

4.2. Solutions for improving audit quality of financial reports of listed
companies in the Vietnamese stock market
The diagram below shows 3 groups of solution basing on research

VACPA

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Sufficiency,
Compliance,
Sanction

Listed
Companies

Legal
environment

4.2.1. Group of solution to improve quality of auditors
Improving industry expertise, compliance and attitude, field work
conduct of auditors; groups of solutions to reduce pressure and ensure
independence of auditors.

4.2.2. Group of solutions to improve quality of auditing firms

1. Experience,
expertise

3. Conduct

4. Pressure

Firstly, improving quality control system of auditing firms; Secondly,

2.
Compliance

5.
Independence

improving working condition with the focus on designing professional
audit approach and tools.
4.2.3. Group of solutions to improve legal environment
Firstly, continue to improve new audit standards; Secondly,
continue to improve accounting standards and practices.
4.3. Some recommendations for improving the feasibility of solutions

Auditors/
Auditor
council

- Compliance
- Recruitment/training

- Encouragement/Sanction

Diagram: Recommendations to improve audit quality of financial
reports of listed companies in the Vietnamese stock market


23

4.3.2. For listed companies: Recommendations to reduce negative impacts

24

- Basing on identified factors, the author carries out survey and collecting

for listed companies to audit quality.

opinions of 138 auditors eligible to audit financial reports of listed companies

4.3.3. Notes of caution to investors while using audit reports of financial

in the Vietnamese stock market. According to survey findings, 14 factors (with

reports: Some notes of caution to investors are proposed regarding types of

60 criteria) affecting audit quality of financial statements of listed companies

auditor comments about financial reports of listed companies.

in the Vietnamese stock market are divided into 3 groups with different level
of impact, specifically: 6 factors in the group of auditors with decreasing

Conclusion for Chapter 4

impact including: Experience and industry expertise; compliance, conduct,

Chapter discussed about the real situation of factors affecting audit

pressure, independence, competence; 3 factors in the group of external factors:

quality of listed companies in the Vietnamese stock market from the

Listed companies, legal environment and external control; 5 factors in the

viewpoint of auditors; thus presenting 3 groups of solution. To improve

group of auditing firm with decreasing impact including: Quality control

feasibility of these solutions, the author gives some recommendations to

system, working condition (mostly about method and process), audit fee,

authority and listed companies. In addition, there are notes of caution to

reputation and size of firms.

investors about risks when using audited financial statements.

- From survey results about impact level of these factors and interviews of
a number of specialists, the author presents 3 groups of solutions, including:

CONCLUSION

enhancing the quality of auditors, auditing firms and legal environments.

New contributions of the topic are as follows:

Some recommendations are given to authority, listed companies and investors.

- Collecting and developing theory with a deep view into factors affecting

These solutions are useful for auditing firms and auditors, management

audit quality of financial statements of listed companies in the Vietnamese

agencies of audit quality of financial reports and especially for users of

stock market. Through detailed analysis of domestic and international

financial reports. They contribute to the sound development of the stock

literature, a theoretical framework is established; 3 groups of factors affecting

market and help investors to improve their understanding about risks as well as

audit quality audit quality of financial statements of listed companies are

benefits of using audited financial reports.

systemized and classified.
- In analyzing reality in Vietnam, identifying 16 factors under 3 groups as

having impact on audit quality of financial statements of listed companies in
the Vietnamese stock market: group of external factors, group of factor related
to auditors and group of factor related to auditing firms. The research also
explains in details the content of these 16 factors via 62 evaluation criteria.

The topic of research will serve as important premise to identify
evaluation attributes of audit quality of financial statements of listed
companies in the Vietnamese stock market.