The introduction of the Law on external audit and its impacts on the auditing profession in Vietnam

Nguyen, P 2016, The introduction of the Law on external audit and its impacts on the auditing profession in Vietnam, Doctor of Philosophy (PhD), Accounting, RMIT University.


Document type: Thesis
Collection: Theses

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Title The introduction of the Law on external audit and its impacts on the auditing profession in Vietnam
Author(s) Nguyen, P
Year 2016
Abstract The problem being researched in the current study is the audit reforms in Vietnam, in particular the Law on External Audit (2011). The current research attempts to identify the government’s motivations for the introduction of the Law on External Audit (2011) and how the audit reforms in the Law affect audit firms and auditors’ practice in a developing country, Vietnam.

The current thesis adopts a qualitative method. This thesis utilizes a triangulation method for data collection, which consists of interviews, archival records and secondary data. This study utilizes the thematic analysis approach for data analysis.

The major findings of the research are as follows. First, the internal motivation for the introduction of the Law by the Vietnamese government was to serve the public interest. The government’s external motivation was a result of the coercive pressures imposed by international organizations such as the World Trade Organization and World Bank. Second, the findings indicate that a significant number of small and medium-size audit firms have negatively responded to the new requirements for the audit of financial statements of public utility entities. A large number of research participants believe that the new conditions for conducting audit of public interest entities have resulted in an increase in audit market concentration in the public market.

In terms of the requirement for audit partner rotation, a number of audit firms regardless of size also oppose the requirement of audit partner rotation. Interestingly, most participants in the research concur that compliance with the audit partner rotation requirement in appearance is common in the Vietnamese context.

Audit firms, especially the non-Big Four firms, have made significant changes in response to the audit reforms. Small audit firms use mergers and increase their resources in response to the new regulations regarding the conditions for establishment of audit firms. Medium-sized audit firms also use consolidations as strategies in order to comply with the new conditions for conducting audits of public interest entities. However, some of these firms change in appearance only in order to appear to satisfy these requirements.

According to the participants, auditors’ practices have also been significantly influenced by the audit reforms. However, these audit reforms notably affected the practice of non-Big Four auditors rather than that of Big-Four auditors. There is a concurrence among non-Big Four auditors regarding the increased audit workload, the enhancement in audit documentation, and audit quality. In addition, non-Big Four auditors produce fewer qualified audit reports than prior to the audit reforms. However, a notable number of non-Big Four auditors concur that their changes in audit practice are mainly with the audit of pubic clients. A significant number of these auditors confirm that the audit practice of non-public clients does not change in reality.

This thesis makes a distinctive contribution to the auditing literature in developing countries through the use of a qualitative method, the application of Oliver (1991)’s framework to gain insights into the strategic behaviours adopted by various external audit firms in response to institutional pressures.
Degree Doctor of Philosophy (PhD)
Institution RMIT University
School, Department or Centre Accounting
Subjects Auditing and Accountability
Law and Society
Accounting, Auditing and Accountability not elsewhere classified
Keyword(s) Audit reforms
Audit regulations
Audit firms
Audit practice
Regulatory reforms
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Created: Fri, 17 Feb 2017, 08:30:50 EST by Adam Rivett
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