The paper aims to develop a framework for empirical research on factors affecting quality of
financial statement audit of FDI enterprises in Vietnam. The results show that there are nine over
eleven factors having positive influence on audit quality, say: Professional attitude, Experience and
Industry Expertise, Auditor’s independence, Audit process and quality control, Auditor
qualification, Audit time, Law system, Auditee’s characteristics, and Audit market. The findings of
this study provide recommendations for auditors and audit firms to improve the quality of financial
audit in Vietnam.
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d Quality control procedures.
Component 3 consists of variables: TDNN1, TDNN2, TDNN3, TDNN4, and
QTKT3. These variables initially belonged to two factors: Professional attitude and Audit
process. Based on the name of the variables, this factor is renamed Professional attitude
Component 4 includes variables: DLKT1, DLKT2, DLKT3, and DLKT4. These
variables originally belonged to the factor: Auditor’s independence. Therefore, this factor is
called Auditor’s independence.
Component 5 includes variables: HTPL1, HTPL2, HTPL3, and HTPL4. These
variables originally belonged to the factor: Law system. Therefore, this factor is called Law
system.
Component 6 includes variables: TDCM1, TDCM2, and TDCM3. These variables
originally belonged to the factor: Auditor qualifications and proficiency. Therefore, this
factor is called Auditor qualifications and proficiency.
Component 7 includes variables: TGKT1, TGKT2, and TGKT3. These variables
originally belonged to the factor: Audit time. Therefore, this factor is called Audit time.
Component 8 includes variables: DDDN1, DDDN2, and DDDN3. These variables
originally belonged to the factor: Characteristics of FDI enterprises. Therefore, this factor is
called Characteristics of FDI enterprises.
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Component 9 includes variables: TTKT1, TTKT2, and TTKT3. These variables
originally belonged to the factor: Audit market. Therefore, this factor is called Audit market.
Component 10 includes variables: BCKT2, BCKT3. These variables originally
belonged to the factor: Audit reports. Therefore, this factor is called Audit reports.
Component 11 includes variables: BCTC1, BCTC2. These variables originally
belonged to the factor: Audited financial statements. Therefore, this factor is called Audited
financial statements.
As a result, through the EFA, there are 11 components representing the factors
affecting the audit quality with 42 variables.
3.2. Adjusted Research Hypotheses
Based on the results of the exploratory factor analysis, the research model is adjusted
and the hypotheses are re-expressed as follows:
H1’: There is a positive relationship between Experience and Industry Expertise and
Audit quality
H2’: There is a positive relationship between Audit process and Quality control
procedures and Audit quality
H3’: There is a positive relationship between the Professional attitude and Audit quality
H4’: There is a positive relationship between Auditor’s independence and Audit quality
H5’: There is a positive relationship between Law system and Audit quality
H6’: There is a positive relationship between Auditor qualifications and proficiency
and Audit quality
H7’: There is a positive relationship between Audit time and Audit quality
H8’: There is a positive relationship between Characteristics of FDI enterprises and
Audit quality
H9’: There is a positive relationship between Audit market and Audit quality
H10’: There is a positive relationship between Audit reports and Audit quality
H11’: There is a positive relationship between Audited financial statements and Audit
quality
3.3. Linear Regression Analysis
Based on the adjusted model after EFA, linear regression results are presented as follows:
CLKT = β0 + β1 CSKN + β2 QTKS + β3 TDNN + β4 DLKT + β5 HTPL + β6
TDCM + β7 TGKT + β8 DDDN + β9 TTKT + β10 BCKT + β11 BCTC+ ε
✓ Dependent Variable: Audit quality (CLKT).
✓ Predictors: Experience and Industry Expertise (CSKN), Audit process and Quality
control procedures (QTKS), Professional attitude (TDNN), Auditor’s independence
(DLKT), Law system (HTPL), Auditor qualifications and proficiency (TDCM), Audit time
(TGKT), Characteristics of FDI enterprises (DDDN), Audit market (TTKT), Audit reports
(BCKT) and Audited financial statements (BCTC).
440
Table 7. Model Summaryb
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
Durbin-Watson
1 .709a .503 .482 .33827 1.395
a. Predictors: (Constant), BCTC, DDDN, TDNN, CSKN, HTPL, TDCM, QTKS,
TGKT, DLKT, TTKT, BCKT
b. Dependent Variable: CLKT
Table 8. ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression 30.756 11 2.796 24.434 .000b
Residual 30.438 266 .114
Total 61.194 277
a. Dependent Variable: CLKT
b. Predictors: (Constant), BCTC, DDDN, TDNN, CSKN, HTPL, TDCM, QTKS, TGKT,
DLKT, TTKT, BCKT
Table 9. Coefficientsa
Model
Unstandardized
Coefficients
Standardized
Coefficients t Sig.
Collinearity Statistics
B Std. Error Beta Tolerance VIF
(Constant) .708 .266 2.659 .008
CSKN .158 .026 .263 5.976 .000 .965 1.037
QTKS .096 .020 .217 4.863 .000 .940 1.064
TDNN .217 .026 .376 8.396 .000 .932 1.073
DLKT .104 .021 .227 4.982 .000 .900 1.111
HTPL .124 .027 .203 4.578 .000 .952 1.050
TDCM .084 .019 .208 4.368 .000 .824 1.213
TGKT .048 .021 .104 2.277 .024 .903 1.108
DDDN .064 .028 .102 2.300 .022 .953 1.049
TTKT .038 .019 .093 2.006 .046 .861 1.162
BCKT -.019 .023 -.041 -.840 .402 .774 1.291
BCTC -.022 .026 -.039 -.851 .396 .894 1.119
Source: SPSS 20.0
From the above results, it can be seen that:
Multi-collinearity testing: The VIF of all independent variables is less than 10, so the
multi-collinearity in the model is considered not to be serious.
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The Durbin Watson Test is a measure of autocorrelation (also called serial
correlation) in residuals from regression analysis. The Durbin-Watson value is 1.395
(between 1 and 3). Model does not have autocorrelation.
Result of ANOVA test with Sig. = 0.000 shows that the linear regression model was
constructed in accordance with the dataset and was usable.
The R2 (R Square) = 0.503 means that 50.3% of the variation in the audit quality of
financial statements of FDI enterprises in Vietnam will be explained by factors with
independent variables in the research model.
Results of regression analysis indicate that independent variables including CSKN,
QTKS, TDNN, DLKT, HTPL, TDCM, TGKT, DDDN, TTKT are statistically significant
(Sig. <5%) to CLKT. Thus, the research hypotheses H1’, H2’, H3’, H4’, H5’, H6’, H7’, H8’,
H9’, H10’ are accepted. However, with the data collected, we do not find significant effect
of BCKT and BCTC on CLKT (Sig.> 5%). Therefore, the research hypotheses H11’, H12’
are rejected.
Standardized regression equations are as follows:
CLKT = 0.263 CSKN + 0.217 QTKS + 0.376 TDNN + 0.227 DLKT + 0.203
HTPL + 0.208 TDCM + 0.104 TGKT + 0.102 DDDN + 0.093 TTKT
And the importance of each factor on audit quality is presented on the following table:
Table 10. The influence of the factors
Factor Beta Proportion
CSKN .263 14.67%
QTKS .217 12.10%
TDNN .376 20.97%
DLKT .227 12.66%
HTPL .203 11.32%
TDCM .208 11.60%
TGKT .104 5.80%
DDDN .102 5.69%
TTKT .093 5.19%
Total 1.793 100%
Source: calculates from the regression results
It can be seen from the Table 10 that among 9 factors affecting audit quality of
financial statement audit of FDI enterprises in Vietnam, the most impacted factor is TDNN
(20.97%), followed by CSKN on the second place (14.67%). On the third place are the
factors DLKT, QTKS, TDCM and HTPL with influence proportion from 11.32% to 12.66%.
The forth group is the lowest impacted factors including TGKT, DDDN and TTKT with
impact proportion between 5.19% and 5.80%.
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4. Conclusions
This study focused on the factors that affect the quality of financial statement audit of
FDI enterprises in Vietnam. The empirical research found out nine key factors affecting the audit
quality, namely: Experience and Industry Expertise, Audit process and Quality control
procedures, Professional attitude, Auditor’s independence, Law system, Auditor qualifications
and proficiency, Audit time, Characteristics of FDI enterprises, and Audit market.
The findings of the research provide recommendations for auditors and auditing firms
to improve quality of assurance services provided, such as: emphasizing on Professional
attitude (TDNN with β = 0.376 and impacted proportion 20.97%), Experience and Industry
Expertise (CSKN with β = 0.263 and impacted proportion 14.67%), Auditor’s independence
(DLKT with β = 0.227 and impacted proportion 12.66%), Audit process and Quality control
procedures (QTKS with β = 0.217 and impacted proportion 12.10%), and Auditor
qualifications and proficiency (TDCM with β = 0.208 and impacted proportion 11.60%).
The research findings are limited to the quality of audited financial statements of FDI
enterprises in Vietnam. However, they can be referred as a reference for other empirical
studies on quality of financial statement audit in Vietnam.
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