Determinants of Voluntary Audit of Small and Medium Sized Enterprises: Evidence from Vietnam

Abstract

The paper investigates the factors that affect the demand for a voluntary audit of small and medium-sized enterprises (SMEs) in Vietnam. A structured questionnaire survey of 284 SMEs was employed, preceded by in-depth interviews with auditors and SMEs' managers. The research used logistic regression estimator to address econometric issues and to improve the accuracy of the regression coefficients. The results show that the degree of director's view on voluntary audit, related stakeholder, degree of recommendation, and firm size have a statistically significant positive effect on audit decisions of SMEs while degree of audit fee has a statistically significant negative effect, and degree of subjective norm does not affect. This indicated that SMEs are more likely to have an external audit if they have some typical features: it is becoming larger in terms of size, and the directors consider that the audit has a relative benefit outweighing its cost. The research results suggested that Vietnam Government should make a statutory audit of SMEs' financial statements rather than make it an option for SMEs. The auditing firms were also recommended to actively take their audit services to SMEs rather than waiting for the SMEs' managers to contact them for their services.

Risk Management Functions and Audit Report Lag among Listed Saudi Manufacturing Companies

“…Firstly, the Corporate governance control variables, namely, board of directors' effectiveness (BDE) and audit committee effectiveness (ACE); secondly, the firm characteristics control variables, namely, firm size (SIZE), firm performance (ROA), leverage (LEV), and firm age (AGE). Prior studies have uncovered that those variables are associated with audit report lag (Knechel & Sharma, 2012;Dao & Pham, 2014;Hassan, 2016;Meckfessel & Sellers, 2017;Samaha & Khlif, 2017, Habib & Muhammadi, 2018Farag, 2017;Wan Hussin, Bamahros, & Shukeri,2018;Abdillah, Mardijuwono, & Habiburrochman, 2019;Mathuva, Tauringana, & Owino, 2019;Aljaaidi, Omer, & Bagulaidah, 2019;Baatwah, Salleh, & Stewart, 2019;Chae, Nakano, & Fujitani, 2020;Ha, & Nguyen, 2020;.…”

Factors Influencing Voluntary Audit among SME Companies in Malaysia

“…The above is consistent with the study by Apadore et al ( 2019) that there is significant positive relationship of motivation for voluntary audit with the related stakeholder relationship which is derived from the ability of audit to provide assurance and enhance confidence level of third party. Ha and Nguyen (2020) in their study on SMEs in Vietnam also support their hypothesis on the likelihood of directors choosing a voluntary audit increase with perceptions that many related stakeholders affect them with significant positive relationship.…”

“…The companies voluntarily demand auditing to fulfil the requirement of the users of financial statements with perceptions that many related stakeholders will affect their companies (Ha and Nguyen, 2020). Related stakeholder of the firm are the users of the financial statements including owners, managers, shareholders, lenders, bankers, suppliers, creditors, and tax authorities who may also demand for an audited account (Weik et al, 2018).…”

Determinants of Trade Balance in Vietnam During 1997-2015

“…Their study indicates that the domestic financial liberalization could improve trade balance, while the capital account liberalization has an opposite effect. The work of Jang [16] on the factors affecting the current account balance and trade balance of emerging Asian countries shows that the impacts of several variables of NFA, trade open and real effective exchange rate (REER) on balance trade are very different across countries.…”

“…The rise in trade deficit is also derived from a rapid cut of the protection barriers since Vietnam integrated to ASEAN, joined free trade areas of ASEAN, ASEAN-China, ASEAN-India, ASEAN-Korea and negotiated to become an official member of WTO in 2007. The reseach of Nguyen et al [16] based on the cross-industry input/output (I/O) method, finds that the direct and indirect determinanst of trade deficit in Vietnam from 2000 to 2009 are not the final consumpton demand but the weaknesses and inefficiency in manufacturing industries. These manufacturing industries have been pramperd by the government's policy over a long period and mostly engaged in either outsourcing activities with foreign companies or manufacturing with the majority of imported inputs and machines.…”