The factors that affect the auditor independence in financial statements audit in Vietnam

estigate differences in the views of the two groups on the extent to which factors influence their independence, the study used the Independent Sample T - test. With 95% confidence, Sig value. <0.05 is considered to be a difference in opinion between the two groups. Accordingly, the results show that there are 17 factors that differ from one another in the two groups in Table 3. Table 3. Results of t - test Factors Mean Std. Deviation Std. Error Mean TK1. Auditor has been auditing the client for more than 3 years Auditors 2,41 ,940 ,110 Users 2,22 ,815 ,115 TK2. Partner has been auditing the client for more than 3 years Auditors 2,42 ,956 ,112 Users 2,30 ,909 ,129 TK3. Audit firm has been auditing the client for more than 5 years Auditors 2,81 ,828 ,097 Users 2,34 ,917 ,130 DV1. Non-audit services fee from incubent >= 100% audit fee Auditors 1,92 ,662 ,077 Users 2,02 ,685 ,097 DV2. Non-audit services fee from incubent from 50% to 100% audit fee Auditors 2,29 ,905 ,106 Users 1,98 ,654 ,093 DV3. Non-audit services fee from incubent from 25% to under 50% audit fee Auditors 2,81 ,923 ,108 Users 2,14 ,833 ,118 DV4. Audit firms and auditors seek and appoint majority personnel for the client Auditors 2,38 ,892 ,104 Users 1,78 ,582 ,082 P1. Partner’s income depends on the retention of a specific client Auditors 2,34 ,853 ,100 Users 1,90 ,839 ,119 P2. >=10 percent of total firm revenues from one client Auditors 2,58 ,644 ,075 Users 2,16 ,792 ,112 QH1. The time lapse between auditing and working for a client firm <= 30 months Auditors 2,45 ,817 ,096 Users 2,32 ,819 ,116 QH2. The time lapse between auditing and working for a client firm <= 30 months Auditors 2,44 ,866 ,101 Users 2,34 ,798 ,113 QH3. The rank of the ex-auditor who accepts employment with a client firm Auditors 2,56 ,799 ,094 Users 2,64 ,776 ,110 UB. The existence of audit committee Auditors 3,89 1,048 ,123 Users 3,72 1,070 ,151 CT1. Competitive audit fee among audit firms Auditors 2,11 ,809 ,095 456 Factors Mean Std. Deviation Std. Error Mean Users 2,52 ,677 ,096 CT2. Auditor’s desire not to lose status by losing key client Auditors 2,47 ,668 ,078 Users 2,20 ,728 ,103 CT3. Competitive audit fee among audit firms Auditors 2,64 ,537 ,063 Users 2,22 ,840 ,119 CT4. Budget pressures imposed by audit firm on staff Auditors 2,18 ,839 ,098 Users 2,60 ,639 ,090 CT5. Being a big four international firm, being a big size company, being a member international audit firm Auditors 3,84 ,687 ,080 Users 3,92 ,724 ,102 CT6. Small local audit firm Auditors 2,37 ,717 ,084 Users 2,44 ,644 ,091 RR1. Risk of litigation against auditor Auditors 3,90 ,748 ,088 Users 4,18 ,720 ,102 RR2. Risk to auditor of disciplinary action by professional body Auditors 4,16 ,764 ,089 Users 3,84 ,792 ,112 RR3. Risk of damage to auditors’ reputation from public scandals Auditors 4,23 ,773 ,090 Users 3,90 ,707 ,100 RR4. Risk to auditor of loss of practicing certificate Auditors 3,77 ,698 ,082 Users 4,04 ,699 ,099 CK1. Disclosure of non-audit services Auditors 3,45 ,867 ,101 Users 4,08 ,853 ,121 CK2. Disclosure of audit fees Auditors 3,41 ,847 ,099 Users 4,16 ,681 ,096 CK3. Disclosure of non - audit fees Auditors 3,44 1,014 ,119 Users 4,10 ,909 ,129 In general, 17 factors have different viewpoints, there are 10 threatening factors and 7 factors that increase the auditor independence. Among factors that differ from one another, it is possible to see factors such as (TK 3), (P1), (P2), (DV3), (DV4), (CT1), (CT3), (CT4), (CK1), (CK2), (CK3) are the biggest difference with Sig value at T-Test <0.01. Users rated higher threat in 8 threatening factors of independence (TK3, DV2, DV3, DV4, P1, P2, CT2, CT3) and evaluated the higher increase in the five factors that increased independence from auditors (RR1, RR4, CK1, CK2, CK3). This difference can be explained by two reasons: firstly, is derived from the delegated theory; secondly, the characteristics of the 457 operations of Vietnamese audit firms, together with the qualifications and experiences of the surveyed subjects. Derived from delegated theory, because users are not directly involved in the process of auditing the financial statements of auditor, therefore, they found that the audit tenure of an audit firm for a client was too long (for over 5 years, auditors will become more comfortable with their clients, reduce their professional skepticism, and reduce their diligence in finding audit evidence ), non-audit services such as non-audit services fee from incubent over 25% or more audit fee (for the user is large, the auditor can defy to obtain this very high fee), audit fee (>=10 percent of total firm revenues from one client) or an audit firm providing human services (can dominate the audit) has a higher level of threat to independence. On the other hand, they also expect factors that increase independence higher than those of auditors. The five factors undermining independence are informations which users desired to be published so that the auditor independence can be considered and assessed more specifically, this can be a pressure on the auditors to ensure independence, to satisfy the requirements of the users. Derived from the characteristics of the operations of the Vietnamese audit firms, the pressures experienced by audit firms in the performance of their work such as budget pressures, competition among foreign enterprises .... This can cause unhealthy competition, reduce the auditor independence and reduce the quality of auditing financial statements. On the other hand, due to the level and experience of the respondents, the subjective assessment of factors may also make a big difference between the two groups. 5. Conclusions and Policy Implications In summary, by synthesizing and analyzing the results of the survey of factors affecting the auditor independence, the author gives some comments as follows: First, the H1a and H1b hypotheses are proven. Basically, both groups of respondents stated that there are 17 factors that threaten independence and 9 factors that increase independence in line with the hypothesis although there are differences in threat ranking or independence in each factor. Second, reject the H2 hypothesis. Independence testing with 95% confidence intervals showed a difference in viewpoint between the two groups of 17 factors (Sig <0.05), including 10 threat factors and 7 factors that increase the auditor independence. The most obvious difference was found in 11 factors with Sig value <0.01. In general, users rated higher levels of threat in 8 factors of independence and assessed the higher levels of increase in 5 factors of independence than those of the auditor. The study has possible practical and policy implications. Firstly, the results of the study can inform policy makers, governments, and professional accounting bodies in emerging markets in countries that share similar economic, political, and cultural environment on how policies and frameworks related to PAI can be structured to ensure adequate regulation of the capital market. Specifically: The 458 regulator should issue documents clearly regulating the rotation of auditors in line with the regulations in the world, it may be five years. Regulators may also issue documents requiring publicly audited non-audit services and specific fee rates for each service to manage and adjust in necessary cases, ensuring healthy competition; or for public interest entities, when disclosing financial statements, the audit fee should be clearly stated in the notes to the financial statements. There should be specific regulations on the implementation of annual audits on the quality of financial statements audited by audit firms. Selection criteria may be based on: the audit period in a company more than 03 years; the audit firm provides both audit service and non-audit services; ..... Secondly, the study serves to enhance the awareness of users and auditors about the contextual factors surrounding the role of an auditor, in addition to the possible threats and enhancement factors that affect PAI. For audit firm, when selecting audit team members, a commitment must be made to ensure the auditor independence; it is necessary to develop a specific basis for the calculation and determination of fees in accordance with audit and non-audit servicesFor users of financial statements, consideration should be given when choosing an audit and non-audit service provider, if possible choose two different companies to implement these two services; regularly reviewing and changing auditing companies over time in accordance with the law to ensure independence and quality of auditing. This study has several limitations. First, this study investigates the perceptions of the factors influencing PAI of five objects using financial reports. Other users, such as academics, financial analysts, economists, tax officials, policy makers are not covered in this study. Second, the samples were drawn only from institutions that were willing to take part. 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