An examination of the Vietnamese emerging market economy: understanding how and why auditors have responded to the audit law reforms

Abstract

Using New Institutional Sociology (NIS), we seek to explain the variation between what was intended with the Vietnamese reforms to audit in 2011 and the actual practice, and why there is variation. This paper reports findings from interviews with 70 individuals representing identified groups of stakeholders in the market for audit and assurance services in Vietnam. Overall, the findings indicate that there still exist business risks for foreign companies that pursue trade and commerce in communist Vietnam, particularly where non-Big 4 audit firms are involved in the external audit function, as in some cases auditor independence is most likely compromised.

Intertwined institutionalization: pressures on Vietnam’s accounting profession during transition to IFRS

“…Albu et al (2014) find that local actors play an important role in organizational responses to global standards and that different local contexts, in particular emerging economies, are likely to foster better applications of IFRS. The communist legislative setting means the State has exclusive control of the economy (Nguyen and Rahman, 2019) and potential issues may arise if audit firms and the accounting profession do not have strong input into the process of accounting change (Nguyen and Kend, 2019). For example, auditor independence was reported to be compromised, particularly where non-Big Four audit firms were involved in the external audit function in Vietnam (Nguyen and Kend, 2019).…”

“…In the convergence from local rulebased accounting standards to principle-based IFRS, there is the potential for power imbalance among the multiple actors (Albu et al, 2014). In Vietnam, issues have been identified among parties including the Communist State-run Ministry of Finance (MoF), market (or business community) and the accounting profession (Nguyen and Kend, 2019;Nguyen and Rahman, 2019). Nguyen (2019b) calls for more investigation of the institutional environmentsthe habits, political environments and cultural beliefsthat potentially impact practices and the identity of accountants in Vietnam.…”

“…Nguyen (2019b) calls for more investigation of the institutional environmentsthe habits, political environments and cultural beliefsthat potentially impact practices and the identity of accountants in Vietnam. Further research is also required to support regulator and standard setter efforts to improve transparency, public integrity and accountability in Vietnam (Nguyen and Kend, 2019). Importantly, and the focus of this paper, is to explore the impact that power imbalances and accounting system changes might have on accounting manipulation and behavior that misrepresents company financial performance (Malikov et al, 2018).…”

Qualitative accounting research: special issue introduction

“…The three papers are all interesting and related as they examine how accounting is transitioning in Vietnam as the country moves from totalitarianism to capitalism. Each paper looks at a different aspect from an accountant's identity (Nguyen, 2019), responses to audit law reforms (Nguyen and Kend, 2019) and IFRS adoption (Nguyen and Rahman, 2019).…”

“…Nguyen (2019) The construction of accountant identity in a transitioning economy: the case of Vietnam Nguyen and Kend (2019) An examination of the Vietnamese emerging market economy: understanding how and why auditors have responded to the audit law reforms Nguyen and Rahman (2019) From totalitarianism to capitalismthe case of IFRS adoption in Vietnam Yang and Northcott (2019) How can the public trust charities? The role of performance accountability reporting Abhayawansa et al (2019) A practice theoretical analysis of the irrelevance of integrated reporting to mainstream sell-side analysts Rentschler et al (2019) A longitudinal study of Aboriginal images in annual reports: evidence from an arts council shaped by organisational strategy'; however, the more contemporary view is that the MCS 'shapes, and is shaped by, strategy'.…”