Các nhân tố tác động đến chất lượng kiểm toán của các doanh nghiệp kiểm toán việt nam theo định hướng tăng cường năng lực cạnh tranh trong điều kiện hội nhập quốc t e

MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS HO CHI MINH CITY
------------------------------------By

Phan Van Dung
THE FACTORS AFFECTING AUDIT QUALITY
OF AUDIT FIRMS IN VIETNAM
ORIENTED TO STRENGTHEN COMPETITIVE CAPABILITY
IN INTERNATIONAL INTEGRATION CONDITIONS

Major: Accounting
Code: 62.34.03.01

ECONOMICS PHILOSOPHY DOCTOR THESIS

PROFESSIONAL ADVISER
ASSOCIATE PROFESSOR, PHD MAI THI HOANG MINH
Ho Chi Minh City - 2015


This thesis is made at:
University of Economics Ho Chi Minh City
Professional adviser:
Associate Professor – PhD Mai Thi Hoang Minh
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This thesis will be presented to the Thesis Committee at ...........

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INTRODUCTION
The urgency of research
Quality in general and Audit quality in particular is always the top concern of many
objects. Several researchers have tried to define the audit quality for more than 30 years; the
ways of measurement these factors affect quality, and the impact of quality to competitive
capabilities. However, so far, these concepts have not been united yet and researches on this
topic are continued. This caused because audit quality is a multifaceted concept, difficult to
observe and measure, depends on feeling and judgment of each individual, therefore it is
difficult to have a unified viewpoint.
Vietnam officially joined WTO, and is a member of TPP, ASEAN Economic
Community (AEC); According to the committed roadmap, Vietnam officially open all
financial services from 2015; In the trend of globalization, the success of Audit Firms in
Vietnam depends much on Audit quality and Competitive Capabilities in the market.
Meanwhile, according to the Ministry of Finance: "The size and quality of independent
auditors have not reached the expectation yet and are also struggling to be recognized by
regional and international , the competition among the auditing firms derive from local
interests, arising unhealthy competition such as reducing audit fees that leads the auditquality uncertainty ". This situation requires more researches on Audit quality oriented
enhance the competitive capability of Audit Firms in Vietnam in terms of economic
integration that is increasing intensive now.
In order to meet the above requirements, based on the theoretical gaps in previous
studies, economic integration requirements and the status of Audit quality and the
competitive capability of Audit Firms in Vietnam, the author conducted the research with
theme named: "The factors affecting Audit quality of Audit Firms in Vietnam oriented
to strengthen competitive capability in international integration conditions". The

research results are expected to contribute more in terms of theory and practice in order to
contribute to the development of independent auditing activities in Vietnam.
Research objectives
- Discover and measure factors affect Audit quality of Audit Firms in Vietnam.
- Discover and measure factors affect the competitive capability of Audit Firms in Vietnam.
-

Discover and measure the impact of Audit quality to competitive capability to

Audit Firms in Vietnam.
i


Research questions
To achieve the research objectives, the research questions include:
Q1: What factors affect Audit quality and competitive capability of Audit Firms in
Vietnam in the current economic integration period?
Q2: Does Audit quality affect the competitive capability? Which Audit quality factors
affect the competitive capability of Audit Firms in Vietnam in the current economic
integration period?
Q3: The impact level of these factors on the audit quality, the impact level of these factors
on the competitive capability of Audit Firms in Vietnam in the economic integration period?
Q4: The impact level of Audit quality and factors of Audit quality on competitive
capability of Audit Firms in Vietnam in the current economic integration period?
Research’s objects
Research’s objects in this thesis are the factors affect Audit quality, the competitive
capability of Audit Firms in Vietnam which oriented to strengthen Competitive capability in
the context of international integration.
Research’s scope
Scope of the research: The research was conducted on the independent Audit Firms in

Vietnam, not including foreign auditing firms as Big Four and other foreigners firms in
Vietnam. Scope of the research does not include auditing activities such as State Auditing,
Internal Auditing.
Research methodology
Research methodology used in this thesis is mixed and discovered research methods,
combine research methods in qualitative and quantitative. In particular, qualitative research
methods aimed at exploring the factors that impact on Audit quality and competitive
capability, the impact of Audit quality and Audit quality factors on competitive capability of
Audit Firms in Vietnam. Quantitative research methods were implemented in the next step
to measure the impact of each factor on the audit quality and the competitive capability of
Audit Firms in Vietnam.
Significance of the research
- Scientific significance

The Thesis discovered factors affect Audit quality, competitive capability and audit
quality factors which impact on competitive capability of Audit Firms in Vietnam and also
show the level as well as sequences of audit quality factors on competitive capability of Audit
Firms in Vietnam. Audit Firms in Vietnam Audit Firms in Vietnam

ii


- Practical significance

Base on the factors affect Audit quality, competitive capability, and the impact of
Audit quality factors on the competitive capability of Audit Firms in Vietnam which are
discovered and presented in a systematic way, the Thesis could be a reference material for
organizations and individuals who study independent auditing activities in Vietnam.
New contributions of this thesis
In comparison with other studies, the results of this thesis reflect the following innovations:

Regarding the content, the thesis has combined different studies, viewpoints, schools
of audit quality, competitive capability; research models of factors affect audit quality and
competitive capability of audit firms. This is an important theory foundation for further
researches in the context of economic transit.
Regarding methodology, the thesis has used different methods to solve the set
objectives. The author’s approach has created the quantitative method in auditing in Vietnam.
Regarding the results, the thesis has developed 3 models of factors affect audit quality,
competitive capability and the impact of audit quality on competitive capability. These
researches prove scientific hypothesis developed by the author in the context of Vietnam.
In the domain of theory, learning and New contributions concluded from the research
In particular:
 In the domain of theory and learning
+ Firstly, the thesis was to synthesize and develop theory by deepen the factors that affect
Audit quality in Audit Firms in Vietnam who oriented to strengthen competitive capability
in the process of international integration.
+ Secondly, the author has provided the Audit quality model and competitive capability of
Audit Firms in Vietnam based on the results of research analysis on Audit quality and
competitive capability in the conditions of Vietnam socio-economic and Audit Firms in
Vietnam characteristics.
+ Thirdly, through the impact model of Audit quality and Audit quality factors on
competitive capability, authors have shown the impact of Audit quality on competitive
capability. This bullet point proves the research targets the service of business activities of
Audit Firms in Vietnam.
+ Fourthly, the thesis has clarified in theory, the role of Agency theory and theory of
Supply and Demand on the Audit quality.
iii


New contributions concluded from the research
+ Firstly, the definition of Audit quality and competitive capability of Audit Firms in Vietnam

+ Secondly, Discovering the factors that affect Audit quality of Audit Firms in Vietnam
+ Thirdly, Discovering the factors affect the competitive capability of Audit Firms in Vietnam
+ Fourthly, the most important finding of this research is to explore the impact of Audit
quality and Audit quality factors on the competitive capability of Audit Firms in Vietnam.
+ Fifth, based on quantitative findings, the author has measured the impact level of factors
on the audit quality of Audit Firms in Vietnam and identified 6 factors already impact on
Audit quality with 24 criteria to measure.
+ Sixth, Measuring the impact of these factors on the competitive capability of Audit Firms
in Vietnam: based on results of quantitative research, there are 5 factors were identified that
impact on competitive capability, with 16 measurable criteria.
+ Seventh, measuring the impact of Audit quality to the competitive capability of Audit
Firms in Vietnam.
+ Eighth, measuring the impact level of Audit quality factors on the competitive
capability of Audit Firms in Vietnam. According to results of quantitative research, there are
six audit quality factors were identified that impact on the competitive capability with 24
criteria of measurement.
+ Ninth, Introducing model of Audit quality and model of Competitive capability, Model of
the factors that impact the quality of the audit to the competitive capability of Audit Firms in
Vietnam. Thereby, it’s shown the correlation and the degree of correlation between the factors
of Audit quality, Competitive capability to Audit quality and Competitive capability.
+ Finally, recommending a framework for analysis of Audit quality factors.
Structure of the thesis
In addition to the Introduction, the thesis is divided into 5 chapters which are presented
in order with the main contents as follows:
Chapter 1 - Overview of previous studies.
Chapter 2 - Theoretical basis of the factors that affect Audit quality of Audit Firms in
Vietnam oriented to strengthen Competitive capability in the context of international integration.
Chapter 3 – Research methods.
Chapter 4 - Results of research and inference.
Chapter 5 - Conclusion and policy implications.

This thesis consists of 159 pages, with 22 tables, 58 figures and 20 appendices.
iv


CHAPTER 1
OVERVIEW OF PREVIOUS STUDIES
This chapter systemizes the previous studies relating to factors affecting Audit quality,
Competitive capability and impact of Audit quality to Competitive capability in recent years
in Vietnam and overseas, analyzes, assesses what the previous researchers have done on the
factors that affect Audit quality and impact of Audit quality to Competitive capability of
Audit Firms in Vietnam to identify theoretical gaps and issues that require further research.
1.1. Overview and analysis of the results of previous studies.
1.1.1. The research on factors affecting Audit quality
1.1.1.1. The foreign researches on factors affecting Audit quality
(1) Some viewpoint in Audit quality
Audit quality is a complex and multifaceted concept; therefore, many researches have been
done, in order to define Audit quality, factors affecting Audit quality as well as measure
Audit quality. However, according to the International Auditing and Assurance Standards
Board, the concept of Audit quality has reached no consensus; many studies are continuing
to be done. Although there are many different ways to approach Audit quality, all the global
researchers in recent years mainly focused on three main points:
(i) Opinion that Audit quality is the level of guarantee the ability to detect and report
errors on financial statement. This view is derived from the definition of DeAngelo (1981):
"Audit quality as the market – assessed joint probability that a given auditor will both
discover a breach in the client’s accounting system, and report the breach" the researcher
represents the view is Titman & Trueman (1986), Palmrose (1988), Beatty (1989), Knechel
(2009), Defond & Zhang (2014);
(ii) Opinion that Audit quality is the Level of Compliance with auditing standard
In the early 1990s, from impact of the economic - financial crisis and auditing
scandals, some researchers suggest that the definition of DeAngelo does not fully grasp the

potential conflicts of various persons in the audit market. Moreover, this definition is
limited to specialization, not considering the aspects of the independence and influence of
customers to the opinion of Auditor (Sutton, 1993). According to the researcher protecting
this perspective, the suitable level of Auditing standard reflects the degree of Audit quality.
Typical representative of this view is McConnell & Banks (1998), Aldhizer & et al (1995),
Krishnan & Schauer (2001).

1


(iii) Opinion combining level of compliance with standards and the level of assurance
about the ability to detect and report on essential errors in the financial statement.
Recently, the global economy faces more and more challenges related to financial
markets. Besides the intervention of the State, the responsibility of the auditor has been
extended to ensure Audit quality (Defond & Zhang, 2014). The researchers have reviewed
Audit quality based on the combination of Auditing standard levels of compliance and the
ability to detect errors, report misstatement on financial statement as Skinner & Srinivasan
(2012), Tritschler (2013).
(2) The tendency to research the factors affecting Audit quality
Although there are many different studies about Audit quality and factors affecting Audit
quality, these studies generally can be grouped into the following major trends:
(i) Audit quality research based on directly measurement methods from the results of
the audit (Dechow et al, 1996), (Krishnan & Schauer, 2000), (Geiger & Raghunandan,
2002) or indirectly measurement through sizes of Auditing firms, audit fees, (DeAngelo,
1981), (Wooten, 2003), (Lawrence et al, 2011).
(ii) Research based on Source of Differentiation: differences between national
institutions, the audit office and the specialized level (Francis, 2004), (Ettredge et al, 2008).
(iii) Research relies on output, process and input, context and interaction between
objects related to this process (Duff, 2004), (Francis, 2011), (Defond & Zhang, 2014).
(iv) Research based on Organizational Aspects as Auditing firms, audit groups. Audit

quality firms belong to Big Four and non - Big Four. (Schroeder et al, 1986), (Carcello et al,
1992), (Sun & Liu, 2011).
(v) Research based on Behavioral Perspectives and Auditor Quality, characters of leaders and
auditor staff (Rayburn & Rayburn, 1996), (Carcello et al, 1992), (Daniels & Booker, 2011).
(vi) Research based on Different Perception of Audit Quality (Warming - Rasmussen &
Jensen, 2001), (Duff, 2004).
(3) The research results have made about factors affecting Audit quality
 The models researching Audit quality published
In the research of factors affecting Audit quality in the past decades, the model of
findings that affect the change of the regulations on Independent auditing in many countries
and used as platform for research on Audit quality. Typically: Audit quality model of
Wooten (2003), Audit quality Model of Duff (2004), Globe of Audit quality model of
Tritschler (2013). In addition to the above models, the researchers evaluating Audit quality
2


according to the audit process involve three issues: technology, quality of Auditors and
organizational characteristics of Auditing firms (Manita & Elommal, 2010). Based on the
review Audit quality through input and output of the audit process, Defond & Zhang (2014)
presented an Audit quality Framework that shows the relationship between demand and capacity
of customers, capacity to supply of Auditing firms, intervene and regulate of functional agencies.
 Results of research on the factors affecting Audit quality through previous studies
As stated above, in the past 3 decades, many research results on Audit quality have
been published in multiple views and different perspectives, but high achievement can be
categorized and aggregated by affective subjects as follows:
 Group of factors on part of Auditors/ Auditor Groups: Methodology and personality of
the Auditor; Qualifications, the professional in Auditing; Independence; Auditing tenure.
 Group of factors on part of Auditing firms: Size; Industry, client/audit experience.
 Group of external factors: Audit fees; Legal liability, learning & education, external
quality control.

1.1.1.2. The national studies on factors affecting Audit quality
Compared with countries with developed Independent auditing activities, the Independent
auditing in Vietnam is still quite young. Therefore, the research of Audit quality, factors
affecting Audit quality is not much, and has just appeared in recent years. Factors affecting Audit
quality mentioned in their research works of Vietnamese researchers are listed as follows:
+ Group of factors on part of Auditors includes 5 Factors: Methodology and personality of
the Auditor; Professional skepticism; Auditor's perception about compliance standards of
professional ethics; The independence of the Auditors; The experience and the professional
of the Auditors; The tenure of the auditor.
+ Group of factors on part of Auditing firms includes 4 factors: Auditing fees; Size,
professional degree of Auditing firms; Strategy of Auditing firms; Internal Quality Control.
+ Group of external factors includes 4 factors: The cost of the auditing; The impact of the
legal system; Audit quality personnel training; External Quality Control.
1.1.2. The researches carried out on the factors effect on the Competitive capability of Auditing firms
1.1.2.1. The foreign researches on the factors affecting the Competitive capability of Auditing firms
 The foreign researches on the factors affecting the Competitive capability of Auditing firms
Compared with the "explosion" of studies of the Competitive capability of Auditing
Firms in Independent auditing, the research of factors affecting the Competitive capability
of Auditing firms as well as the impact of the factors of Audit quality to the Competitive
capability of Auditing Firms still limited. The typical studies of the Competitive capability
of Auditing firms include:
3


Findings of Maijoor & Witteloostuijn (1996) show that imperfections of AccountingAuditing services market create high penetration of the external Auditing firms to the
Auditing market in countries with the restrictions on the ability and quality of audit services.
Therefore, the quality of audit services is a competitive factor affecting the Competitive
capability of Auditing firms.
Lian Kee et al (2011) have developed the research of Newbert (2008) and made five
key resources that can create Competitive capability of Auditing firms including financial

resources, human resources, intellectual resources, and organizational Source and material
resources. Lian Kee et al also suggested that in order to improve the Competitive capability
of small and medium Auditing firms, it needs to make the connection with the other
international Auditing firms through network of member firms or associations, which takes
the experience, technology and training by the international auditing firm.
1.1.2.2. The national researches on the factors impact on the Competitive capability of Auditing firms
Compared to the long-term development of the Independent auditing on the world, the
Independent auditing of Vietnam still is young. Views on competition in the field of
auditing still have different recognitions. In Vietnam, there are only a few studies on the
impact on the Competitive capability of the Audit Firms in Vietnam. The research has set
out a number of factors creating the Competitive capability of Auditing firms such as
business strategy, business size, the qualifications to hold executive business management,
leadership, ability of information capture, the ability to cooperate with relevant businesses,
maintain the integrity of business, quality of workforce and manager staff, the cost of
business and entrepreneurial culture in the auditing firms.
1.1.3. The researches on the impact of Audit quality to the Competitive capability of Auditing Firms
As per Cronin & Taylor's research (1994), Taylor & Baker (1994) showed a positive
impact of Audit quality on the Competitive capability. Audit quality relates positively with
customer’s satisfaction.
Higher Audit quality services can bring greater customer’s loyalty, attract new customers,
employee engagement, enhance auditing firms’ image and increase business efficiency. Therefore,
commitment to quality service has clear benefits for the Competitive capability of Auditing firms.
Research on aspects of Audit quality of Duff (2004) showed that the quality of service
can be a source of Competitive Advantages, a sustainable means to provide customers what
they want or need, better and more effectively.
In Vietnam, some researches on Audit quality of Pham, H., Amaria, P., Bui, T., &
Tran, S. (2014) also found that competition affects Audit quality, besides impact of auditing
tenure, change of senior personnel; competitive factors also affect negatively to Audit
quality of Audit Firms in Vietnam.
4

1.2. The results obtained from previous studies and further research issues
- The results obtained from previous studies:
Overall, in recent years the researchers have made many efforts in identifying the
factors that affect Audit quality and Competitive capability of Auditing firms to provide
solutions to improve Audit quality and Competitive capability of Auditing firms under
many different angles and have achieved some positive results, especially for the research of
Audit quality and factors affecting Audit quality.
Audit quality, Competitive capability is a multifaceted concept, difficult to measure.
Depending on the difference in economic conditions as well as the characteristics of
Independent auditing activities in each country, there still exist some problems that need to
be further researched and done in the thesis.
 The issues that need further research and made in thesis
Firstly, there is no consensus on definition and views on over the world about Audit
quality. Therefore, there should be views, definition of Audit quality matching characteristics
and conditions of each particular country.
Secondly, there is not any qualitative research that was conducted to explore the
factors affecting Audit quality, Competitive capability and their impact on the Competitive
capability of Auditing firms in the conditions of Vietnam. Therefore, qualitative research on
the factors affecting audit quality is needed as foundation for further studies.
Thirdly, In Vietnam there is not quantitative research measuring the impact of
Competitive capability and Audit quality based on findings of factors affecting Audit
quality, Competitive capability in conditions of the market economy and characteristics of
auditing firms of Vietnam. Hence research in special conditions is needed in order to see the
difference and select an appropriate orientation.
Fourthly, no study at home and abroad about Audit quality aims to improve the
Competitive capability of Audit Firms in Vietnam in the process of economic integration.
Therefore research towards business goals of auditing firms is especially needed to meet the
needs of the current economic integration.

Last but not least, previous studies tend to focus on Audit quality in Financial statement
listed by an auditing firms or auditing firms in general, regardless of domestic and overseas as the
Big Four. While Audit quality of these two objects has a big difference, it affects the objectivity
of the research results. On the other hand, the scope and surveyed subjects of previous studies
usually focus on a certain area and surveyed people mainly Auditors while Independent auditing
in general and Audit quality in particular related to many other objects. The restriction of the scope
and object of this survey also somewhat affect the objectivity of the research results. Therefore,
there should be research on each subject in a full range of perspectives related to the objects.
5


Conclusion of Chapter 1

In Chapter 1, the author has systematized previous studies on the factors affecting
Audit quality, Competitive capability, and the impact of these factors to Auditing firms. The
summary of the researches on the factors affecting current Audit quality shows there are still
many different views on a definition of Audit quality. The impact of Audit quality and
Competitive capability to the Auditing firms has also been shown through research results
of the author.
Through a system of prior studies have done in this chapter, the thesis determines gaps
in research gap is the lack of research to discover and measure factors affecting Audit
quality, Competitive capability conditions in the Audit Firms in Vietnam. In Vietnam, there
are not research on the impact of factors to Audit quality and Competitive capability of
auditing firms of Vietnam. Therefore, it is necessary to conduct research exploring
combinations and measurement of impact factors of the Audit Firms in Vietnam oriented
enhance Competitive capability conditions in world economic integration, in order to
answer the question of urgency is in place today. The results of Chapter 1 will be
preconditions for the next research step of the thesis.

6

CHAPTER 2
THEORETICAL BASIS OF THE FACTORS AFFECTING AUDIT QUALITY
OF AUDIT FIRMS IN VIETNAM ORIENTED TO STRENGTHEN
COMPETITIVE CAPABILITY IN INTERNATIONAL INTEGRATION CONDITIONS
This chapter presents a number of general issues of auditing, Audit quality,
Competitive capability and some provisions of the International Federation of Accountants
(IFAC) on Audit quality such as: the International Standards on Quality Control (ISQC1),
the International Auditing and Assurance Standards Board (IAASB) on Audit quality. Next,
the thesis will introduce theoretical basis related to the factors affecting Audit quality:
Agency theory, theory of supply and demand, competition theory and the basic theory for
explaining the effects of Audit quality to Competitive capability of audit firms such as
competitive theory, competitive theory on anticipatory future; Competitive theory based on
enterprise’s resources; The theory based on the enterprise’s capacity, to introduce the
concept Audit quality, Competitive capability and determine models used in the research.
2.1. Overview and theoretical basis related to factors affecting Audit quality
2.1.1. Some general issues on Auditing and Audit quality
 Definition of auditing
 Characteristics of auditing
 The quality and characteristics of quality
 The Audit quality
According to DeAngelo (1981), Audit quality is the evaluation of the market on the
possibility of an auditor to detect essential misstatements and report them.
According to Titman & Trueman (1986), Beatty (1989), Davidson & Neu (1993),
Audit quality is the accuracy of information provided by the auditor. Meanwhile,
According to Dopuch & Simunic (1982), Simunic & Stein (1987), Audit quality is a
degree of assuring a probability that the Financial statement which is audited will not
contain omissions or misstatement.
According to the International Auditing Standards Committee: Audit quality is a

complex issue. Up to now, there is no definition or analysis that is commonly recognized.

7


Audit quality terminology includes the key elements to create an environment that
maximizes the ability that Audit quality is made based on a consistent basis (IAASB, 2011).
According to Defond & Zhang (2014), due to Audit quality being a multidimensional
concept, Audit quality should be observed under many different aspects, as well as a
combination of methods, different criteria to measure levels of Audit quality.
Based on the definitions of Audit quality from previous studies, combined with
economic characteristics and management requirements for Audit Firms in Vietnam Audit
quality, according to the author, Audit Firms in Vietnam’ Audit quality is the degree of
compliance with Auditing standards and degree of insurance to detect errors, report them in
the Financial statement.
 International Standard of Quality Control (ISQC1)
 IAASB about Audit quality
2.1.2. Basic theories of factors affecting Audit quality
2.1.2.1. Agency theory and factors affecting to Audit quality
According to Healy & Palepu (2001), the audit is an essential element in monitoring
relations of authorization and disclosure of information arising from the asymmetry of
information and conflicts of interest between the principal and The agent.
Starting from disagreement over the authorization, the higher the conflict of
authorization, the higher the demand on levels of guarantee for third parties, Audit quality
requirements will also be higher, this requirement is an important direction for the needs
of customers on Audit quality showed via choosing auditing firms who are large,
reputable, with qualified, experienced and highly specialized auditors. In response to this
need, audit fees also have an impact on the selection of auditors who are qualified and
professional, planning and performing work to detect critical errors in the Financial
statement, especially also affect the independence of the auditor in reporting errors

(Wooten, 2003). The above statement shows that the Agency theory not only explains
auditing needs, it also is a basis for explaining the need for Audit quality as well as
research on the factors that affect Audit quality.

8


2.1.2.2. Theory of Supply and Demand and factors affecting Audit quality
The Impact of relationship of demand and supply in Audit quality between auditing
firms and customers has set out a requirement for audit firms must improve Audit quality to
satisfy customer needs and the ability to provide of the Auditor, auditing firms. Needs and
abilities influenced by factors both on the supply side (Auditing firms and Auditor) and
demand side (customers).
2.1.3. Research model of factors affecting Audit quality used in thesis
Authors select Globe Model of factors affecting Audit quality of Tritschler (2013).
This model was developed based on research model of Wooten (2003) explains quite
adequate and reasonably about the factors affecting Audit quality.

+

+

Learning &
Education

Audit tenure
+

+

Industry/client/
audit experience

+

Non – audit
Services

+
Audit firm size
+

Accounting and
audit knowledge
+

Independence

+

Audit Quality

+

-

+

-

+
Audit methodology
& tools

+

Legal liability
+

Audit fees

+
+
Audit effort &
resource mix

+

+

Figure 2.2: Globe of Audit quality
Source: Tritschler (2013)
9


The choice of Globe of Audit quality model of factors impacting Audit quality is from
the fact that the model can give an overview of all factors affecting Audit quality which
were identified in previous researches. This outlines the directions of different factors
affecting Audit quality of Auditing firms. This will help to observe and enhance Audit
quality for better outcomes. In addition, the model shows the sources of factors impacting

Audit quality, and this will help to analyze, evaluate the roles of each factor in a series of
factors that can make an impact on Audit quality.
2.2. Overview and theory basis relating to factors affecting to Competitive capability of
Auditing firms
2.2.1. Overview relating to Competence and Competitive capability
 Definition of Competence
 Characters of Competence
 Competitive capability
According to Henricsson et al (2004), the concept of Competitive capability is still much
debated among policy planners, the economists, and the researchers in many countries.
Although there are many different views, but it can be understood that the Competitive
capability is the ability to maintain and expand market share in order to achieve high
profitability of the auditing firms.
Peters defined Competitive capability ans an integration of capabilities and internal
resources to maintain and grow market share, profitability and positioning the competitive
advantage of firms in the market (Peters, 1995).
According to Sanchez & Heence (1996, 2014), Competitive capability of an auditing
firms is the ability to combine the resources.
Derived from the definition of Competitive capability of previous studies and
combined with practical work independent auditing in Vietnam, according to the author, the
Competitive capability of auditing firms is an ability to use and combine resources
effectively, capture and respond promptly to the needs of customers with high efficiency
and high quality.
2.2.2. Theoretical basis related to the impact on the Competitive capability and their impact
to Competitive capability of auditing firms
In the market economy, competition is a common phenomenon with important
implications for economic development in the world. The research of the phenomenon of
10

competition is long-standing and competition theory also appeared very early with many
different views. Within the scope of the thesis, the theoretical basis for the research includes:
Competitive theory, Competitive theory on anticipatory future; Competitive theory based on
enterprise’s resources (RBV); The theory based on the enterprise’s capacity (CBV).
2.2.3. Model of factors affecting Competitive capability used in thesis
The author selects Model APP of Flanagan et al (2005) as a research model for the
research of factors affecting the Competitive capability of auditing firms. This model is shown
in Figure 2.6:

Figure 2.6: Main factors of APP Model
Source: Flanagan et al. (2005)
2.2.4. Research model in Audit quality and factors affecting Competitive capability
The Author selects Motive-Capacity Model of Teece (2014) as research model in
Audit quality and factors affecting Competitive capability of the thesis.

Figure 2.7: Model of Motive-capacity
Source: Teece (2014)
11


Conclusion of Chapter 2

Chapter 2 presents a number of general issues and theoretical basis related to the
Audit, Audit quality and Competitive capability of Auditing firms: the necessity, objective
and role of the audit, the concept and characteristics of auditing, audit quality and
Competitive capability. Therein, the author has focused on analyzing the relationship
between the Agency theory, theory of demand and supply with needs on Audit quality and
factors affecting Audit quality, Competitive theory, Theory of Competition anticipatory
future with Competitive capability and factors affecting Competitive capability, competitive
theory based on enterprise resources (RBV), competitive theory Based on business

capabilities (CBV) with the impact of Audit quality and factors of Audit quality affecting
Competitive capability, as the basis for determining the factors affecting Audit quality and
Competitive capability of Auditing firms. Besides researching the theories, the research
platform requires the provisions on principles, framework and Audit Standards for Audit
quality also mentioned to clarify the role and importance of Audit quality and Competitive
capability. From the results of analyzing theoretical platform combining with the results
from previous studies in experimental models which are published in conjunction with
economic characteristics, management requirements and characteristics of the Audit Firms
in Vietnam, author gave definition of Audit quality, Competitive capability, effect of Audit
quality to the Competitive capability of Audit Firms in Vietnam.
Findings in this chapter are basis for building models and research methods in Chapter 3:
"Research Method".

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CHAPTER 3: RESEARCH METHOD
This chapter describes the chosen research method which is presented in
acknowledgment. Firstly, this chapter introduces research methods and sources to select
research methods. Next, this chapter presents process of data collection and data analysis in
step of qualitative and quantitative research. Finally, introducing models and generalized
regression equation which will be applied in the research.
3.1. Research method and process
3.1.1. Research method
Research method used in the thesis is discovery mixed method; the first approach is
qualitative research to explore factors of Audit quality and Competitive capability, then
quantitative research to measure the impact of factors of Audit quality and Competitive
capability.
3.1.2. Research process
On the basis of discovering mixed methods, research process in the thesis includes the

following steps:
Step 1: Review of previous studies related to Audit quality, Competitive capability
Step 2: Qualitative research methods using in-depth interviews in the form of one-on-one
interviews with experts
Step 3: Check the results of qualitative research
Step 4: Collect data and perform quantitative research
3.2. Data sources and methods of collecting and analyzing data in qualitative research
 Data for research includes secondary data and primary data:
- Secondary data: from the final reports, journals, thesis, scientific studies published.
- Primary data: from analysis, synthesis, results obtained through in-depth interviews with

experts specialized in auditing who are divided into 4 groups: State Management Agency,
vocational association, Directors of Auditing firms/ Auditor and researchers, teachers in the
field of auditing.

13


 Process of analyzing qualitative data
Step 1:
Arrange and prepare data

Note, analyze data collected from interviews.


Step 2:
Re-read all data

This process should be done many times. Then, plan idea formed from interviews.


Arrange data in paragraph as per idea and connect to a concept, term. Arrange concepts, terms to each
Step 3:
Encode data

theme similar with factors in the applied research model. These factors will be encoded and arranged to
column appropriate with degree of general: a factor explain for a factor or a group of factors.


Step 4:
Synthesize factors

Synthesize all encoded data.


Present all interviewed ideas appropriate with each group which is encoded in step 3 to connect all

Step 5:
Connect all factors

discovered factors to make model.


Step 6:
Analyze and explain factors in model

Compare all discovered factors with previous studies and results obtained in actual research.


Step 7:

Test the reliability of result

Test the reliability of quantitative research by a questionnaire related to discovered factors and assess via
statistics method with large sample and vary objects.

Figure 3.2: Process of analyzing qualitative data
Source: Author’s development
 Method of analyzing qualitative data
Analytical format method is used to determine the level of factors that have an impact
on Audit quality and Competitive capability. Depending on the information of data provided
and the nature of these factors, the data will be sorted to extract, classify and encrypt to
three levels: Group of factors (level 1), Factor (level 2), and elements constituent factor
(level 3). In which, each level encrypted will be detailed by the lower level.
3.3. Database and data collection methods in quantitative research
Database used in quantitative research: the data are collected directly, via letter or email
from the survey has been cleaned.
Processes and methods of quantitative data analysis:
Step 1: Design a questionnaire
Step 2: Select survey samples and determine surveys’ format
Step 3: Send questionnaire and get answers
Step 4: Handling of raw data
Step 5: Accredit size (Cronbach's alpha)
Step 6: Explore factors Analysis EFA
Step 7: Recommend research model and method for multiple regression analysis
Step 8: Model regression Assessment (MRA)
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3.4. Research model and generalized regression equation
3.4.1. Research model

 Research model of factors affecting Audit quality

Audit quality
Factor

Auditor
Audit quality
Factor
Audit quality
Factor

Audit firms

Audit quality

Audit quality
Factor

Audit quality
Factor
Audit quality
Factor

Outside
factors

Figure 3.4: Research model of factors affecting Audit quality of Audit Firms in Vietnam

 Research model of factors affecting Competitive capability

Competitive
capability
factor
Competitive
capability
factor

Auditor

Competitive
capability
factor

Audit firms
Competitive
capability
factor
Competitive
capability
factor
Competitive
capability
factor

Competitive
capability

Outside
factors

Figure 3.5: Research model of factors affecting to Competitive capability of Audit Firms in Vietnam

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 Research model of Audit quality and factors of Audit quality affecting to
Competitive capability
Audit quality
factor

Auditor
Audit quality
factor
Audit quality
factor

Audit firms

Audit quality

Audit quality
factor

Competitive
capability

Audit quality
factor

Outside factor

Audit quality
factor

Figure 3.6: Research model of Audit quality and factors of Audit quality affecting to
Competitive capability of Audit Firms in Vietnam
3.4.2. General regression equation
Linear regression equation shows the impact of these factors on the dependent variable:
Y = β0 + β1X1 + β2X2+ β3X3 + … + βiXi
Conclusion of Chapter 3
In this chapter, the author went deeply into analyzing research method and
establishment to select research method. In this research, it was applied mixed research
method combining between qualitative research and quantitative research. All steps and
methods applied in the collection and processing of data have been presented in this
Chapter, in which, qualitative research method is a method of in-depth interview through
one-on-one interview with qualified and experience Experts in the field of auditing.
Resulting in discovering factors affecting Audit quality, Competitive capability, the impact
of Audit quality and audit quality factors on Competitive capability which are tested by
statistics. For quantitative research, The process of data processing is done through a
software named IBM SPSS Statistics 22. The method of Exploratory factor analysis (EFA)
was used in this research to extract the factors. The result of multiple regression model used
to estimate the research model, this model after being determined will be assessed the level
of appropriateness, multi-collinearity phenomenon, the phenomenon of self-correlation and
covariance of the changed remainder.
Research method selected and researched sequence designed as well as data processing
methods selected in this chapter will be important grounds to do actual research in order to
achieve practical research results presented in Chapter 4: "Research result and inference".
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CHAPTER 4

RESEARCH RESULT AND INFERENCE
This chapter presents the research results achieved on the basis of research objectives
set out in the Introduction and research method defined in the previous chapter. The
research results include: (i) Results of research on status and assessment of Competitive
capability and Audit quality of Audit Firms in Vietnam; (ii) qualitative research results and
(iii) quantitative research results on factors affecting Audit quality, Competitive capability,
and the impact of these factors of Audit quality to the Competitive capability of Audit Firms
in Vietnam in the context of international integration. Then, the inference problems will be
given on the basis of research results.
4.1. Research results on the activity status of Independent auditing, Audit quality and
Competitive capability of Audit Firms in Vietnam
4.1.1. Situation of Audit quality and Competitive capability of Audit Firms in Vietnam
In this section, the author focuses on analyzing the environmental factors affecting
Audit quality and Competitive capability of Audit Firms in Vietnam through statistical
tables for the period from 2010 to 2015.
4.1.2. Evaluation of Audit quality and Competitive capability of Audit Firms in Vietnam
 About Audit quality: In general, the Audit quality of audit firms is still low and has not
reached regional and international level. An audit quality firm is not synchronized and has
large differences compared to foreign auditing firms.
 Competitive capability of Audit Firms in Vietnam is still limited, management and
administration capabilities has not yet reached the level of management in regional
countries. Many auditing firms don’t have any long-term business strategy and corporate
culture aimed at developing a sustainable business.
Audit Firms in Vietnam need to overcome these limitations, especially in the period of
world economic integration.
4.1.3. Reasons of this actual situation
Because of the transition to a market economy under socialist orientation, it should not
avoid the initial difficulties, legal systems of Independent auditing not being synchronized, the
size of the auditing market not being consistent with the potential of economic development,
auditing firms being less focused on developing strategies and improving Audit quality and

Competitive capability,etc.
4.2. The results of qualitative research to explore the factors impact on Audit quality and
Competitive capability of Audit Firms in Vietnam
4.2.1. Method and process
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4.2.2. Result of qualitative analysis
By means of Grounded Theory method, through the Outline of inference with experts by
form analytical method according to King (2004) and analysis process of Cresswell (2003).
Qualitative research results are as follows:
 There are 13 factors that affect Audit quality of Audit Firms in Vietnam in the period of
economic integration in the world, are shown in Table 4.7.
 There are 12 factors that affect Competitive capability of Audit Firms in Vietnam in the
period of economic integration in the world, are shown in Table 4.8.
 The result of qualitative research also explored Audit quality and factors of Audit quality
which impact on Competitive capability of Audit Firms in Vietnam. This is also the main
objective of the research.
The author has discovered four new elements on Audit quality and 12 factors of
Competitive capability are shown in Table 4.7 and Table 4.8:
Table 4.7: Factors affecting to Audit qualityof Auditing firmsin Vietnam
No.
Code
Factors affecting to Audit quality
Properties
1
CLCK
Business strategy
New findings
2

CLCP
Audit cost
New findings
3
CLQM
Size, professional level of auditing firms
Inherit
4
CLPP
Auditing methodology
Inherit
5
CLNT
Perceptions of auditor, directors of auditing firms
Inherit
6
CLCM
Professional degree in auditing
Inherit
7
CLĐL
Independence
Inherit
8
CLNK
Auditor’s tenure
Inherit
9
CLGP
Audit fees

Inherit
10
CLBT
Internal quality control
New findings
11
CLBN
External quality control
New findings
12
CLPL
Effect of legal liability
Inherit
13
CLĐT
Learning & education
Inherit
Table 4.8: Factors affecting to Competitive capability of Auditing firms in Vietnam
No.
1
2
3
4
5
6
7
8
9
10
11

12

Code
CTQT
CTQM
CTCL
CTTC
CTLĐ
CTVH
CTCN
CTDV
CTGI
CTTH
CTNL
CTQH

Factors affecting to Competitive capability
Management capacity
Size of auditing firms
Business strategy of auditing firms
Financial capacity
Quality of human resources and managers
Enterprise Culture
Applied technology and information technology
Service quality
Competitive capability on fees
Business’s brand
Human resource
Capacity of relationship development

Properties
New findings
New findings
New findings
New findings
New findings
New findings
New findings
New findings
New findings
New findings
New findings
New findings
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4.2.3. Check the results of qualitative research
To ensure the objectivity of qualitative research results, result of statistical test showed
that all factors identified in the qualitative research have reached consensus over 50%. This
shows the considerable objectivity and reliability of research results.
4.2.4. Inference of qualitative research results
 For factors affecting Audit quality: Compared with the Globe of audit quality model of
Tritschler (2013) used in the research, there are four new factors affecting on Audit quality
detected include: business strategy, auditing cost, internal quality control, external quality
control. Besides from that, there are two factors that affect Globe of Audit quality model of
Tritschler not appear in the results of research: Factor of non-audit services, Audit effort &
resource mix. This shows that starting from the characteristics of the market economy under
Socialist orientation in Vietnam, the State consider independent auditing as a tool to directly
manage independent auditing operations, due to limitations on management capacity and
sense of assurance in Audit Firms in Vietnam, it should have led to tighter controls on the

audit from the State management and the auditing firms. Moreover, due to the size and
capacity of the enterprise still being limited, non-audit services in Vietnam are almost little
attended. The support of other related industries such as the expansion of market size from
the State and VACPA is still limited; the supply of manpower for independent auditing in
Vietnam has yet met with high demand on Audit quality.
 For factors impacting Competitive capability of Audit Firms in Vietnam, in
knowledge of the author, there hasn’t any no qualitative research results on factors
impacting Competitive capability been announced. Therefore it can only refer to the
publishment of the World Economic Forum - WEF (2004) on factors affecting
Competitive capability of the businesses in general. Although the primary objective of
the research was to determine the factors affecting Audit quality of Audit Firms in
Vietnam to strengthen Competitive capability, but the findings of the factors affecting
the Competitive capability identified in the thesis can be considered as the basis for the next
research step. Factors of Competitive capability of Audit Firms in Vietnam are explored in
the qualitative research results which are consistent with the recommendations of the WEF
(2004), and the research results of the author Doan Xuan Tien (2006).

19