accounting ethics and its impotant role for reduction of accounting fraud an empirical in hanoi

ACCOUNTING ETHICS AND ITS IMPOTANT ROLE FOR REDUCTION OF ACCOUNTING FRAUD AN EMPIRICAL IN HANOI By NGUYEN DUC THUAN Student ID: E0700273 Graduation Project Submitted to the Department of Business Studies, HELP University College, in Partial Fulfillment of the Requirements for the Degree of Bachelor of Business (Accounting) Hons October 2011 2 Declaration of Originality and Word Count DECLARATION I declare that this graduation project is based on my original work except for quotations and citation which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other courses/degrees at HELP University College or other institutions. Word Count: 10006 NGUYEN DUC THUAN 17 OCTOBER 2011 3 ACKNOWLEDGEMENT In order to finish the project, I take a lot of assistance, support and guidance of many people. So I wish to give to thank to all of the people who have helped me during the process of the research. Firstly, I would like to express my deep gratitude to my supervisor Dr Nguyen Hong Quan, who is auditor from the State Audit Office of Viet Nam. He has kindly helped me and supported me all the way Secondly, I also would like to express my thank to Ms. Sumathi and Ms. Shenba, Help University College, who initiated the project and give so much instruction and support. Thirdly, I give to thank to interviewers who accepted joining my interview Finally, I want to thank to all the respondents who have helped me complete the survey with their enthusiastic. 4 TABLE OF CONTENT DECLARATION 2 ACKNOWLEDGEMENT 3 TABLE OF CONTENT 4 LIST OF TABLE 6 LIST OF ABBREVIATIONS 8 ABSTRACT 9 CHAPTER I : INTRODUCTION 10 1.1.Research Background 10 1.2 Accounting fraud in Vietnam 11 1.3. Problem statement 12 1.4 Objectives and sphere of research 14 1.4.1 Objectives of Research 14 1.4.2 Sphere of research 14 1.5 Research Methods 15 CHAPTER 2: LITERATURE REVIEW 16 2.1 Business Ethics: an overall view 16 2.2 Accounting ethics 17 2.3 Conflict of interests 17 2.4 Accounting Fraud 20 2.4.1 Issue 20 2.4.2 Driven by profit management 22 2.4.3 Corporate governance 22 2.5 Code of Ethic for Accounting Professionals 22 5 CHAPTER 3: RESEARCH METHOLOGY 25 3.1 Research Objectives 25 3.2 Research Method 25 3.3 Data source 27 3.4.1 Primary data 27 3.4.2 Secondary data 27 3.5 Research tool 28 3.5.1 Questionnaire 28 3.5.2 Personal interview 29 3.6 Sampling 30 CHAPTER 4: ANALYSIS AND FINDING 31 4.1 Collection of Questionnaires 31 4.2 Description of Result 31 4.3.1 Age 32 4.3.2 Gender 33 4.3.3 Question for accountants 35 4.3.4 Question for auditors: 41 4.4 Interview analysis 46 CHAPTER 5: CONCLUSION AND RECOMMENDATION 48 5.1 Conclusion 48 5.2 Recommendation 50 5.3 Limitations 51 REFERENCE 52 APPENDIX 1 55 APPENDIX 2 57 6 LIST OF TABLE Figure 1: activities and situations on holding potential for conflicts of interest for public official 19 Figure 4: external activities and situations on holding potential for conflicts of interest. 20 Table 1: Age of accountants 32 Table 2: Age of auditors 33 Table 3: Gender of accountants 33 Table 4: Gender of auditors 34 Table 5: Answers for question 1 of first system question 35 Table 6: Answers for question 1 of first system question 35 Table 7: Answers for question 2 of first system question 36 Table 8: Answers for question 2 of first system question 36 Table 9: Answers for question 3 of first system question 37 Table 10: Answers for question 3 of first system question 37 Table 11: Answers for question 4 of first system question 38 Table 12: Answers for question 4 of first system question 38 Table 13: Answers for question 5 of first system question 39 Table 14: Answers for question 5 of first system question 39 Table 15: Answers for question 6 of first system question 40 Table 16: Answers for question 6 of first system question 41 Table 17: Answers for question 1 of second system question 41 Table 18: Answers for question 1 of second system question 42 Table 19: Answers for question 2 of second system question 42 7 Table 20: Answers for question 2 of second system question 43 Table 21: Answers for question 3 of second system question 43 Table 22: Answers for question 3 of second system question 44 Table 23: Answers for question 4 of second system question 44 Table 24: Answers for question 4 of second system question 45 Table 25: Answers for question 5 of second system question 45 Table 26: Answers for question 5 of second system question 46 8 LIST OF ABBREVIATIONS WTO: The World Trade Organization IFAC: International Federation of Accountants AGA: Advancing Government Accountability GAAP: General Accounting Accepted Principal ACCA: Association of Chartered Certified Accountants IESBA: International Ethics Standards Board for Accountants 9 ACCOUNTING ETHICS AND ITS IMPOTANT ROLE FOR REDUCTION OF ACCOUNTING FRAUD AN EMPIRICAL IN HANOI By NGUYEN DUC THUAN October 2011 Supervisor: Dr Nguyen Hong Quan ABSTRACT Viet Nam is in the process of integrating in the international economic. Especially, Viet Nam becomes members of The World Trade Organization (WTO). Thus, there are many opportunities as well as threats for companies. Along with new economic, Vietnam's accounting system has been profoundly modified to approach and integrated the principles, practices and common standards of the world. In recent year, many accounting frauds have occurred; they have great affect on the economic. Thus, the objective of the research is to analyze the importance of accountants and auditors in accounting fraud, and to find the solution to reduce accounting fraud. 10 CHAPTER I : INTRODUCTION 1.1 Research Background In dynamic global society, building business ethics with own features will contribute to the economic integration under the phase of the life and global politics. In business environment, ethics has now increasingly become an important factor, which has great effect on not only consumers‟ decision but also company‟s success. Ethics in business is not just a slogan to please consumers. It is also the tools to maximize profits and to strengthen the brand. Because the reputation of firms originally come from the ethical behavior bring higher customers‟ recognition, ethical business behavior should to be paid greater attention in the future. In particular link to the accounting, ethical practices can make benefit for all market participants and stakeholders that lead to rise investor confidence in global capital markets. Accounting ethic will instill a public trust in the fairness of markets, allowing it to function efficiently. In fact, the accountants also faced with many issues which relates to competition, outstanding figures, good financial statement, commissions and etc. The pressure of the accountants is time restriction and costs controlling. Each customer has different requirement and purpose on the financial condition. When the market has increasingly competed to day, companies always want to pay only lower tax rates. As a result, accountants can create the dilemmas of ethical issues when firms have encountered financial problems. In addition, the life of an accountant is filled up with accounting rules and the numbers should be calculated correctly. Consequently, the accountant must comply with the rules of ethics which guide their responsibilities to customers and toward the interests of the community. However, there are many scandals relate to accounting in recent years. [...]... the moral standards of the accounting, staff should have a clear understanding and distinguish under the term of ethical behavior and unethical to avoid the accounting fraud As the result, the society is more and more developing; ethic is cared more and more In this study, I will analyze the importance of accounting ethics and prove its role in reducing accounting fraud 1.2 Accounting fraud in Vietnam... oversight and control plan 2.5 Code of Ethic for Accounting Professionals Business ethics is more and more vital to the firm‟s sustainability due to the increasing demand of customers and investors in the globally changing market The scandals of Enron and WorldCom have attracted more attention from stakeholders The ethics in accounting is now an urgent issue that needs managing carefully Therefore the International... of accounting, information security is considered the standard of conduct of accountants Accountants were not allowed to disclose or use information outside of business because the accounting information is very important information For instance, if disclosing to competitors would lead to losses for company even bankruptcy In fact, the collapse of major financial companies in Viet Nam and in the world... questionnaires and interview because this method is very cheap I divide the questionnaire into 2 types, which are given to two patterns They are accountants in private and public companies in Hanoi, and auditors in the public companies and private companies The content of the questionnaire include impact of ethics on accounting, the issues of fraud in accounting and the method to reduce in accounting fraud. .. result an increase in salaries and commissions They are in the daily operations and therefore have a competitive advantage to access the internal and confidential information to get the benefits Relate to personal benefit, accountants have all of information of the company They can support information for the competitors That is called insider trading 2.4.3 Corporate governance A number of financial scandals... light suggesting that fraud occurs in all types of businesses and in all areas On November 25th 2008, in Hanoi, the State Audit held a 20 public press conference and revealed some results of the audits in 2008 for the following units: Electricity of Vietnam, Ho Ta Trach project and the procurement and management of assets used in the project management boards of a number of ministries and geographical... definitions, methods, presentation and the information required to present in the financial statements Vietnam accounting systems only take care of information of the financial statements for investors, not focus on internal management information There is significant difference with accounting standards issued by the International Accounting Standards Board (IASB) That was prepared and published under the very... the information and financial statements are, the more successful stakeholders make decisions We can see that the importance of accounting is quite clear Therefore, the accounting ethics has been given out and argued worldwide Accounting ethics in the field of accounting refers to the guidelines (consisting of judgments and moral values) that a professional needs to follow while practicing accounting. .. Due to the conflict of interest in management, many directors and chief accountants have collaborated to create the misleading and totally wrong information and financial statements For instance, Anderson Arthur-one of big independent auditors had been revealed the unethical activities in Enron collapse In recent years in Vietnam, a series of economic and commercial fraud on the financial reports is... the purpose of the research 3.5.1 Questionnaire The questions will be covered in 3 categories: + Impact of ethic on accounting + The issues of fraud in accounting + The method to reduction in accounting fraud I have two question systems for two patterns of survey which are accountants working in public and private companies and auditors working in public companies and private companies in Ha Noi I . ACCOUNTING ETHICS AND ITS IMPOTANT ROLE FOR REDUCTION OF ACCOUNTING FRAUD AN EMPIRICAL IN HANOI By NGUYEN DUC THUAN Student. 9 ACCOUNTING ETHICS AND ITS IMPOTANT ROLE FOR REDUCTION OF ACCOUNTING FRAUD AN EMPIRICAL IN HANOI By NGUYEN DUC THUAN October