(Luận văn thạc sĩ) the effect of audit quality offered by audit firms on client satisfaction , luận văn thạc sĩ

INTRODUCTION

Background to the research

Understanding service quality and client satisfaction is crucial for companies aiming to remain competitive and achieve growth In the current global market, delivering high-quality service is essential for business success Consequently, service quality and client satisfaction have emerged as significant topics of research in both marketing literature and practical applications.

In the auditing industry, the quality of audits and client satisfaction are crucial for success High audit quality from firms leads to increased client satisfaction and a greater likelihood of repurchase Following notable audit failures, such as those involving Arthur Andersen at Enron and Deloitte & Touche at Adelphia Communications, audit firms are prioritizing quality to enhance client satisfaction and encourage repeat business.

Vietnam's accession to the WTO has significantly boosted its economic development, leading to an increased demand for precise and transparent financial information from investors As a result, both audit and non-audit services provided by audit firms have become essential However, recent financial scandals in Vietnam, including the fraudulent financial reporting by Bach Tuyet Cotton Corporation, have resulted in the bankruptcy of several listed companies and substantial losses for stakeholders.

In Vietnam, numerous auditing firms, including those for Vien Dong Pharma JSC, Toan Cau Insurance, and Kinh Do Corporation, have faced criticism for failing to meet client expectations regarding audit quality, leading to decreased client satisfaction and frequent changes in auditors A 2010 inspection by the Vietnam Association of Certified Public Accountants (VACPA) revealed widespread violations of auditing standards among firms, with only 6 out of 15 firms rated as qualified in a subsequent 2012 quality assurance review Reports indicated that many firms submitted financial statements with significant errors, highlighting a lack of understanding of current accounting standards among auditors and boards of directors Additionally, the State Security Commission noted that many auditors inadequately assessed risks in clients' financial statements, resulting in discrepancies between reported and actual business results High-profile scandals in 2012, involving companies like Quoc Cuong Gia Lai Corp and VietinBank, further underscored these issues VACPA's general secretary emphasized that many firms prioritize sales over operational investment, while some auditors may truncate necessary auditing procedures, ultimately compromising audit quality Thus, it is crucial to evaluate and enhance the quality of audits conducted by these firms.

12 effects of audit quality provided by audit firms on client satisfaction in Vietnam, where the audit firms are still young and inexperienced.

Research motivation

Audit services play a crucial role in our economy by ensuring the accuracy and transparency of financial information in the market, which in turn protects the health and stability of economic development However, in recent years, many enterprises have encountered significant challenges due to the effects of the global financial and economic crisis.

Audit firms face significant pressure in assessing and opining on financial statements, particularly in light of the credit crisis and economic downturn, which challenge their ability to evaluate a client’s going concern status and the fair value of assets Additionally, the demand for higher service quality from both the market and client firms necessitates that auditors prioritize audit quality to enhance client satisfaction and navigate the current challenging landscape effectively.

Numerous studies have explored the impact of audit quality on client satisfaction, particularly in developing countries Various models have been employed to assess the quality of audits provided by firms, including SERVQUAL (Parasuraman, Zeithaml, and Berry, 1991) and AUDITQUAL (Duff, 2004, 2009) Additionally, models that focus on specific audit quality attributes have been utilized, such as those developed by Schroeder et al (1986) and Carcello et al (1992) Notably, Schroeder et al (1986) investigated perceptions of 15 attributes, encompassing six factors related to the audit team.

Research has identified key factors influencing audit quality, with Carcello et al (1992) highlighting 12 factors related to both audit firms and audit teams Their findings emphasize that audit team factors play a more crucial role in ensuring audit quality than those associated with the audit firm itself Building on the SERVQUAL model, studies by Ismail (2006), Morton and Scott (2007), and Turk and Avcilar (2009) explored the connections between audit service quality, client satisfaction, behavioral intentions, and loyalty, utilizing five dimensions of service quality and a 22-item SERVQUAL scale Additionally, Duff (2004) introduced the AUDITQUAL framework, which encompasses nine dimensions to effectively assess audit quality.

The AUDITQUAL model, developed by researchers such as Butcher, Harrison, and Ross (2013), has seen limited application in Vietnam, where both audit and non-audit services are relatively underdeveloped This study aims to explore the impact of audit quality on client satisfaction within Vietnamese firms, focusing on client perceptions The findings will benefit audit firms by clarifying client needs and identifying key factors influencing satisfaction, enabling them to enhance service delivery, foster client loyalty, and add value Additionally, client firms can provide feedback on audit quality, helping audit firms to recognize and address their weaknesses, ultimately leading to improved audit services over time.

Research objective

This thesis aims to assess the impact of audit quality on client satisfaction in Vietnam, focusing on the perceptions of client firms through the AUDITQUAL model Specifically, the study seeks to analyze the relationship between audit quality and client satisfaction levels.

• Examine the relationship between reputation of the audit firm and client satisfaction

• Examine the relationship between capability of the audit firm and client satisfaction

• Examine the relationship between expertise of the audit firm and client satisfaction

• Examine the relationship between experience of the audit firm and client satisfaction

• Examine the relationship between responsiveness of audit firm and client satisfaction

• Examine the relationship between client service of the audit firm and client satisfaction

• Examine the relationship between empathy of audit firm and client satisfaction h

Research scope and methodology

The survey for this study was conducted in Ho Chi Minh City, Binh Duong, and Dong Nai province, targeting CFOs, chief accountants, and general accountants with experience working alongside auditors The data collection process comprised two stages: initially, a pilot study involved interviews with nine accountants to refine a draft questionnaire based on their feedback, leading to the final version In the main study, data was gathered from 380 respondents, and the analysis was performed using SPSS version 20.0 The reliability of the measurement scale was assessed using Cronbach’s alpha, while exploratory factor analysis (EFA) was employed to validate the scale Additionally, multiple linear regression was utilized to test the proposed hypotheses of the research.

Structure of the study

This study is structured into five chapters, beginning with an overview of audit service and client satisfaction, alongside the context of audit quality in Vietnam, and outlining the research objectives and significance Chapter 2 delves into key concepts such as audit quality, client satisfaction, and their interrelationship, while also presenting the research model and hypotheses The methodology is detailed in Chapter 3, which includes the development of the questionnaire, a pilot study, and the main study's sampling and data analysis methods Chapter 4 focuses on data analysis, utilizing Cronbach’s alpha for scale reliability, exploratory factor analysis (EFA) for measurement validity, and multiple regression for hypothesis testing Finally, Chapter 5 summarizes the study's findings, discusses its limitations, and offers suggestions for future research.

LITERATURE REVIEW

Introduction

This chapter examines key studies on audit quality and client satisfaction, highlighting their interrelationship While various perspectives on measuring audit quality exist, this research specifically emphasizes the AUDITQUAL framework Additionally, the chapter will outline the research model and hypotheses guiding this study.

Audit quality

Numerous researchers, including Kell et al (1986), Defliese et al (1988), and Gill et al (1999), align with the American Accounting Association's (AAA) 1973 definition of auditing as "a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria." Similarly, Arens et al (1997) describe auditing as the process by which a competent, independent individual gathers evidence about quantifiable information related to a specific economic entity, aiming to determine and report on the alignment between that information and established criteria.

Audit quality remains a contentious topic, with no universally accepted definition among researchers Sutton (1993) attributes this lack of consensus to the conflicting roles of key participants in the audit market, which include external users, clients, and auditors Consequently, audit quality is perceived differently by each group, emphasizing that it is subjective and varies based on individual perspectives The article further explores various definitions of audit quality to illustrate these differing viewpoints.

Audit quality, as defined by DeAngelo (1981), is the market-assessed probability that an auditor will identify and report material misstatements in a client’s financial statements This definition emphasizes two key components: the auditor's technical competence to detect misstatements and their objectivity in reporting these errors Building on this, Palmrose (1988) articulated audit quality in terms of the level of assurance provided Ultimately, the primary role of an audit is to assure stakeholders that financial statements are free of material misstatements, making high audit quality essential for users of financial information.

Researchers have linked "poor audit quality" to negative outcomes, defining it primarily through instances of audit failure Casterella et al (2009) noted that poor audit quality becomes evident in hindsight, particularly when an audit leads to litigation or malpractice claims against the auditing firm Essentially, an audit failure is characterized by the auditor's failure to adhere to legal and professional standards.

There is currently no universally accepted definition of audit quality, as stakeholders have varying perceptions that may affect the indicators used to assess it.

2.2.2 Research on measurement of audit quality

Audit quality has been explored from multiple perspectives in the auditing literature, employing various models for measurement Behavioral studies focus on the perceptions of attributes linked to audit quality, often analyzing combinations of key factors deemed significant in shaping these perceptions.

2007) The review of behavioural studies in this section focused on three typical models to measure audit quality Firstly, this was the model using audit quality attributes (Mock and Samet,

1982, Schroeder et al., 1986, Carcello et al., 1992) Next, SERVQUAL (Parasuraman, Zeithaml, and Berry, 1991) was used to measure audit quality in researches of Ismail et al., (2006), Morton h

17 and Scott (2007), Turk and Avcilar (2009)… Lastly, the recent model named AUDITQUAL (Duff, 2004) was used to assess audit quality in nine dimensions

In their 1982 study, Mock and Samet identified key attributes of audit quality by surveying U.S auditors, resulting in a comprehensive 32-item questionnaire Their research revealed five critical dimensions of audit quality: planning, administration, procedures, evaluation, and conduct.

In their 1986 study, Schroeder, Solomon, and Vickery built upon the work of Mock and Samet (1982) to explore how audit committee chairpersons and audit partners perceive factors influencing audit quality Participants evaluated the significance of 15 factors, categorized into six audit team factors—such as partner attention, audit planning, communication, independence, skill mix, and interactions with the audit committee—and nine audit firm factors, including technical updates, quality control, regulatory expertise, firm reputation, office size, team rotation, litigation experience, peer review outcomes, and professional fees The findings revealed that audit committee chairpersons prioritized audit team factors over firm-wide factors, a sentiment echoed by the audit partners.

Carcello, Hermanson, and McGrath (1992) conducted a study to assess audit quality through the perspectives of auditors, financial statement preparers, and users Building on the attributes identified by Schroeder et al (1986), they developed a comprehensive questionnaire featuring 41 audit quality attributes Utilizing exploratory factor analysis (EFA), they distilled these attributes into 12 key factors The researchers identified four critical factors influencing audit quality: the experience of the audit team and firm with the client, industry expertise within the audit team, responsiveness to client needs, and adherence to generally accepted auditing standards (GAAS).

According to Schroeder et al (1986), a study revealed that auditors, financial statement preparers, and external users prioritize characteristics of the audit team over those of the audit firm when assessing audit quality Additionally, the research identified significant differences among these groups concerning specific aspects of audit quality.

Duff (2009) highlighted that previous models of audit quality, such as those by Schroeder et al (1986) and Carcello et al (1992), were developed in isolation, despite sharing similar attributes The SERVQUAL and AUDITQUAL models addressed this limitation by integrating these attributes into comprehensive, structured frameworks The original SERVQUAL model, introduced by Parasuraman et al (1985), identified ten dimensions of service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding, and tangibles Subsequent research by Parasuraman et al (1988, 1991) refined these dimensions to five—reliability, assurance, tangibles, empathy, and responsiveness—and established a 22-item scale to effectively measure them.

In the context of auditing, Ismail et al (2006) utilized the SERVQUAL model to evaluate audit service quality and its impact on client satisfaction and loyalty among Malaysian public listed companies Similarly, Morton and Scott (2007) identified key components of audit quality, including credibility, reliability, control, and ancillary services, and created a 28-item measure based on behavioral audit literature and the SERVQUAL scale Furthermore, Turk and Avcilar (2009) affirmed that the five-factor construct of SERVQUAL is effective for assessing the perceived service quality of audit firms.

The most recent model to measure audit quality is AUDITQUAL suggested by Duff

(2004, 2009) Like the SERVQUAL model, Duff (2004, 2009) investigated the AUDITQUAL model which integrates the attributes from the prior audit quality literature into a h

The AUDITQUAL model is a multidimensional framework encompassing nine dimensions: Reputation, Capability, Responsiveness, Independence, Non-audit services, Empathy, Client service, Expertise, and Experience These dimensions can be distilled into two primary factors: technical quality and service quality Technical quality, which reflects the auditor's competence and objectivity, is defined by Reputation, Capability, Independence, Expertise, and Experience In contrast, service quality encompasses Responsiveness, Non-audit services, Empathy, and Client service A survey utilizing a 56-scale questionnaire was conducted among auditors, auditees, and external users to assess their perceptions of audit quality.

He found that the AUDITQUAL model fitted the data well for each of the three samples

Many researchers have utilized the five-dimensional SERVQUAL model to assess audit quality due to its simplicity in service firms However, critics argue that merely revising SERVQUAL items is insufficient for measuring service quality across diverse sectors, particularly in professional services like auditing, which differ significantly from others such as hospitality or travel Ladhari (2008) emphasized that industry-specific measures are often more suitable than a generic scale Consequently, the AUDITQUAL model, specifically designed for auditing services, is more appropriate for capturing audit quality This model has been empirically validated by various researchers, making it a fitting choice for measuring audit quality in the Vietnamese context.

Client satisfaction

Client satisfaction is a crucial concept in marketing, defined as the emotional assessment of the gap between expectations and actual performance of a product or service According to Oliver (1980), satisfaction occurs when the performance exceeds customer expectations, leading to a positive after-purchase evaluation This highlights the significance of aligning product performance with consumer expectations to enhance client satisfaction.

Customer satisfaction is crucial, as it directly influences their loyalty and perception of a brand According to Zeithaml and Bitner (2000), client satisfaction is defined as the assessment of a product or service based on whether it meets their needs and expectations When customers are satisfied, they are more likely to remain loyal, seek services more frequently, be less sensitive to pricing, and share positive experiences about the company Conversely, a lack of satisfaction can lead to disappointment and potential loss of business.

Client satisfaction is crucial in the auditing industry, as dissatisfied customers may switch auditors or harm the auditor's reputation Research by Behn et al (1997) indicates that audit quality directly impacts client satisfaction, a sentiment echoed by Carcello et al (1992), who found a significant positive correlation between various audit quality attributes and client satisfaction.

Research framework and hypothesis development

The original AUDITQUAL model comprises nine dimensions: Reputation, Capability, Responsiveness, Independence, Non-audit services, Empathy, Client service, Expertise, and Experience However, this study narrows its focus to seven key dimensions—Reputation, Capability, Responsiveness, Empathy, Client service, Expertise, and Experience—excluding Non-audit services and Independence These two dimensions were deemed the least important by all respondent groups, as highlighted in Duff’s research (2004).

2.4.1 Audit quality dimensions and Client satisfaction

Numerous studies in marketing literature highlight the crucial link between service quality and client satisfaction, with researchers like Oliver (1980), Bitner (1990), and Parasuraman et al (1988, 1991, 1996) emphasizing that higher service quality is essential for enhancing client satisfaction This correlation is also evident in auditing literature, where multiple studies support the relationship between audit quality and client satisfaction, reinforcing the importance of maintaining high standards in service delivery.

(2006) examined the relationship between audit quality and client satisfaction and indicated a positive relationship between audit quality and client satisfaction Similarly, other scholars (e.g h

Research by Behn et al (1997), Carcello et al (1992), and Samelson, Lowensohn, and Johnson (2006) highlights the significant relationship between audit quality and client satisfaction This study aims to explore how various dimensions of audit quality influence client satisfaction levels.

Abd-El-Salam, Shawky, and El-Nahas (2013) emphasize that a corporation's image and reputation are vital in assessing an organization, as highlighted by various studies (Bitner, 1990, 1991; Gronroos, 1984; Gummesson and Gronroos, 1998; Andreassen and Lanseng, 1997; Andreassen and Lindestad, 1998; Kandampully and Hu, 2007; Sarstedt et al., 2012) The strength of these factors lies in how customers perceive and remember the organization's name (Fombrun, 1996; Hatch et al., 2003; Nguyen, 2006; Bravo et al., 2009).

A study by Nedal Sawan and Ihab Alsaqqa (2013) highlighted that Libyan oil companies prefer to engage reputable audit firms, such as the Big Four, due to their superior resources, technical expertise, and global reach, which enhance the effectiveness of the audit process and client satisfaction Chun (2005) noted that a strong reputation for quality attracts more customers, reduces dissatisfaction, and increases profitability Furthermore, Andreassen (1994) established a positive correlation between reputation, satisfaction, and loyalty, while Helm et al (2010) identified corporate reputation as a key factor influencing consumer satisfaction Based on this literature, the hypothesis can be formulated as follows:

H1: There is a positive relationship between reputation of the audit firm and client satisfaction

Audit quality, as defined by DeAngelo (1981), refers to the likelihood that an auditor will identify and report material misstatements in a client’s financial statements The auditor's active and direct involvement throughout the audit process plays a crucial role, as the probability of detecting violations is significantly influenced by the auditor's technical expertise.

Auditor capability, defined as the ability to effectively conduct audit work, plays a crucial role in determining audit quality and performance Ismail (2010) highlighted that client satisfaction with audit teams improves when auditors actively engage in the process, perform fieldwork properly, uphold high ethical standards, and possess strong accounting and auditing knowledge Therefore, the study proposes the following hypothesis: enhanced auditor capability leads to increased client satisfaction.

H2: There is a positive relationship between capability of the auditor and client satisfaction

Audit firms with multiple clients in the same industry possess a deeper understanding of unique audit risks, leading to enhanced audit quality, as noted by Kilgore (2007) and supported by Dies and Giroux (1992) In contrast, firms with fewer industry clients may struggle to stay current with industry developments Meyer (2009) highlighted that industry specialist auditors leverage their specific knowledge to deliver superior audit quality compared to non-specialists Numerous studies have confirmed the positive correlation between industry expertise and client satisfaction, including research by Lowensohn, Johnson, and Elder (2007), which found that auditor specialization significantly boosts client satisfaction in local government audits Similarly, Behn et al (1997) and Yuniarti and Zumara (2013) affirmed this significant relationship Therefore, we propose the hypothesis that industry expertise correlates positively with client satisfaction.

H3: There is a positive relationship between expertise of the audit firm and client satisfaction h

According to Gul et al (1994), audits must be conducted and reports prepared with due professional care by individuals possessing sufficient training, experience, and competence in auditing Prachsriphum, Jantarajaturapath, and Napat (2010) further emphasized the significance of knowledge and experience for success in the auditing profession Experience is gained through a combination of accumulated audit tasks and continuous training throughout one's career, leading to the conclusion that auditors with greater experience tend to demonstrate superior performance.

Research has shown that clients are more satisfied with auditors who have long-standing relationships with them, as these auditors possess valuable prior audit experience that enables them to better understand the clients’ accounting systems and business environments Ismail (2010) highlighted a significant positive correlation between client satisfaction and the prior audit experience of the audit team, a finding supported by other studies, including Behn et al (1997) and Yuniarti and Zumara (2013) Based on this body of literature, the following hypothesis is proposed.

H4: There is a positive relationship between experience of the audit firm and client satisfaction

Responsiveness, as defined by Parasuraman et al (1991), refers to the willingness to assist customers and provide timely service In the auditing context, Duff (2009) adapted this concept, defining responsiveness as the auditor's ability to customize their services to meet the specific needs of the auditee Audit clients have particular requirements, such as meeting deadlines, timely release of audit reports, and effective communication, which they expect the audit firm to fulfill Therefore, responsiveness to client needs plays a crucial role in enhancing client satisfaction Numerous studies, including those by Behn et al (1997), Ismail (2010), and Yuniarti and Zumara (2013), have confirmed a significant positive relationship between responsiveness and client satisfaction in the audit field This leads us to the following hypothesis: h.

H5: There is a positive relationship between responsiveness of the audit firm and client satisfaction

2.4.1.6 Client service and client satisfaction

In AUDITQUAL model, Duff (2009) described client service as “those processes the auditor has in place to assure a high quality audit” We noted that client service was labeled

The role of auditors is to ensure that financial statements are free from material misstatements, which is crucial for maintaining high audit quality Client service, a key factor in this process, significantly contributes to client satisfaction Research by Yuniarti and Zumara (2013) highlights a positive correlation between audit quality commitment and client satisfaction, while Ismail (2010) supports this by indicating that an audit firm's commitment to quality is also significantly related to client satisfaction Therefore, we hypothesize a positive relationship between the client service provided by audit firms and client satisfaction.

H6: There is a positive relationship between client service of the audit firm and client satisfaction

Empathy is crucial in the relationship between audit firms and their clients, as it involves understanding and addressing the specific needs of customers (Parasuraman et al., 1988, 1991) In the auditing context, Duff (2009) describes empathy as the auditor's ability to comprehend the challenges faced by the audit client Clients expect auditors to actively engage with their needs, which allows auditors to significantly contribute to managerial decision-making by providing valuable information, guidance, and recommendations This empathetic approach not only enhances service quality but also strengthens the relationship between audit firms and clients, leading to increased client satisfaction (Aga & Safakli, 2007) Therefore, we propose the hypothesis that empathy is a key factor in improving client satisfaction within professional accounting firms.

H7: There is a positive relationship between empathy of the audit firm and client satisfaction

Based on these above literatures, the relationship between dimensions of audit quality and client satisfaction is briefly described in the Figure 2.1:

The hypotheses are tested in this study as follows:

Hypothesis 1: There is a positive relationship between reputation of the audit firm and client satisfaction

Hypothesis 2: There is a positive relationship between capability of the audit firm and client satisfaction

Hypothesis 3: There is a positive relationship between expertise of the audit firm and client satisfaction

Hypothesis 4: There is a positive relationship between experience of the audit firm and client satisfaction

Hypothesis 5: There is a positive relationship between responsiveness of the audit firm and client satisfaction

Hypothesis 6: There is a positive relationship between client service of the audit firm and client satisfaction

Hypothesis 7: There is a positive relationship between empathy of the audit firm and client satisfaction.

Conclusion

This chapter explores the relationship between audit quality and client satisfaction, highlighting that previous research generally supports the notion that higher audit quality correlates with increased client satisfaction Various attributes have been utilized to assess audit quality, but this study employs the AUDITQUAL framework, which encompasses seven dimensions: Reputation, Capability, Responsiveness, Empathy, Client Service, Expertise, and Experience The methodology for this research will be detailed in Chapter 3.

METHODOLOGY

Introduction

This chapter provides a concise overview of the research methodology employed in this study, detailing the research process, the design of the questionnaire, the sampling method, the data collection techniques, and the methods used for data analysis.

Research process

Questionnaire design Pilot SurveyMain Survey

The research design process for this study is illustrated in Figure 3.1 It begins with identifying the research problem and objectives, followed by a literature review An initial questionnaire was created based on measurements from relevant prior studies This questionnaire was then refined into a draft version through a back-translation process The research design consists of two key sub-steps.

A pilot study involving interviews with nine chief and general accountants was conducted to evaluate the content, quantity, and structure of questions in a draft questionnaire This process aimed to assess the clarity and meaning of the measurement scales used Based on the feedback received, the author revised the responses and finalized the questionnaire.

• Main survey: Final questionnaires were launched via email or sent the hard copy directly to clients of audit firms Data collection was done in one month

In the data analysis phase, the collected data underwent a cleaning process before evaluating the reliability and validity of the measurement scales using Cronbach's alpha coefficient and Exploratory Factor Analysis (EFA) Subsequently, the author employed multiple regression analysis to test the study's hypotheses.

The final step, we reported and discussed the findings based on the results of data analysis step.

Questionnaire development

This study utilizes Duff's (2004) AUDITQUAL model to assess audit quality from the perspective of customers Originally, Duff's model employed a 56-item questionnaire to gather insights from auditors, auditees, and external users regarding their perceptions of audit quality In this research, 44 items are used to evaluate seven of the nine dimensions of AUDITQUAL, which include Reputation, Capability, Client Service, Responsiveness, Expertise, and Experience The measurement employs a five-point Likert scale, ranging from strongly disagree (1) to strongly agree (5) Table 3.1 presents the measurement scales for all independent and dependent variables within the model.

Table 3.1: Items to measure audit quality (Draft questionnaire to measure audit quality)

Reputation 1 The audit firm is highly competent Beattie & Fearnley (1995)

2 The audit firm operates to the highest standards of integrity

3 The audit firm has rarely been found negligent in litigation against it – alleging inadequate audit performance

4 The audit firm is objective Warming – Rasmussen &

5 The audit firm is conscientious Warming – Rasmussen &

6 The audit firm is credible to third parties Duff (2004)

7 The audit firm enjoys a good reputation Beattie & Fearnley (1995)

8 The audit firm is independent of the board of directors

Capability 9 The engagement partner is highly competent Parasuraman et al (1991)

10 The engagement partner has high ethical standards

11 The engagement partner is actively involved in the engagement beginning with the initial planning and throughout the audit process

12 The engagement partner has financial statement users’ best interests at heart

13 The engagement partner is keen to understand what is happening within the client’s organization

14 The audit team staff are highly competent Beattie & Fearnley (1995) h

15 The audit team staff operate to high ethical standards

Responsiveness 16 The audit firm is skillful in devising accounting treatments that generate results management wishes to obtain

17 The audit firm is willing to provide detailed cost information

18 The audit firm is willing to be flexible when scheduling the timing of audit visits

19 The audit firm’s office are geographically close to the client

20 The engagement is easily contactable Duff (2004)

21 There is a ‘good fit’ between the personality of the engagement partner and the finance director

22 The relationship between the engagement partner and finance director is relatively informal

23 Audit team staff create the minimum of disruption so far as practically possible

24 The audit team develops stringent time budgets for each audit area and expects people to meet them

Empathy 25 The audit team provides the client with personal attention

26 The engagement partner provides the client’s finance director with individual attention

27 The engagement partner has the client’s best interests at heart

28 The engagement partner is pro-active and Duff (2004) h

31 contributory (e.g suggests potential acquisition targets)

Client Service 29 The audit firm regularly conducts client service review meetings

30 The engagement partner arranges regular meetings with the client’s key staff to identify issues of concern

31 The engagement partner regularly identifies examples of added value to the client

32 The engagement partner and senior manager make frequent visits to the audit site for technical review purposes

33 The audit team are willing to provide guidance on accounting principles

34 There is frequent communication between the audit team and the audit committee

35 There is frequent communication between the audit team and executive management

Expertise 36 The audit firm has other clients in the same industry

37 The audit firm undertakes research into the client’s industry

38 The engagement partner is subject to internal review during the audit by other partners of the audit firm

39 The engagement partner is very knowledgeable about the client’s industry

40 The client has a knowledgeable and active audit committee

41 The senior manager and manager assigned to the audit are very knowledgeable about the client’s industry

Experience 42 The engagement partner has been performing the audit for the past three years

43 The manager of the audit firm has been performing the audit for at least two years

44 The senior manager of the audit firm has been performing the audit for at least two years

45 The overall client satisfaction with the audit quality offered by audit firms

Pilot study

A pilot study, as outlined by Malhotra (2004), serves to evaluate a questionnaire on a limited group of respondents, aiming to identify and eliminate potential issues This preliminary testing enhances the reliability of the data collection instrument and ensures its suitability, as noted by Wong and Ko (2009).

To prepare for this study, a draft questionnaire was utilized to interview nine chief and general accountants from client firms, specifically those who collaborated with the audit firm and team during the 2012 financial year The participants represented existing clients from a diverse range of sectors, including both manufacturing and service industries, encompassing local and foreign companies The audit firms involved were Deloitte and Ernst & Young, representing the Big Four, along with Auditing & Consulting Co., Ltd as a leading local firm, and Thuy Chung Audit Company as a smaller audit firm Respondents assessed the questionnaire's effectiveness in measuring each dimension of the AUDITQUAL model in Vietnam and provided feedback on its suitability.

Based on feedback, 12 items were removed from the draft questionnaire, leading to a final version consisting of 33 items The deletions occurred because respondents either lacked the information to answer certain questions or found them inappropriate for measuring audit quality Duff (2004) originally developed measurement scales for a survey targeting three respondent groups—auditors, auditees, and investors—using the same questionnaire, which may explain the presence of items that are relevant for one group but not for another Additionally, since the questionnaire was created over a decade ago in a developed country, some items may no longer be suitable for the Vietnamese market The results of the pilot study are detailed in Appendix A.

Main study

This research focuses on companies in Vietnam that have utilized audit services from various audit firms For convenience, the selected companies are located in Ho Chi Minh City, Binh Duong Province, and Dong Nai Province.

In a comprehensive survey conducted in 2012, 380 responses were gathered from professionals including chief accountants, general accountants, and CFOs who collaborate with audit firms Questionnaires were distributed via email to 250 respondents sourced from the State Securities Commission of Vietnam (SSG) database Additionally, auditors from various auditing firms in Ho Chi Minh City assisted by directly delivering 130 questionnaires to their clients, ensuring a robust data collection process.

According to DeCoster (2004), the minimum sample size for statistical analysis should be at least five times the number of variables, with a minimum threshold of 100 participants to ensure reliable results This can be expressed as n > 0 and n ≥ 5k, where k represents the number of variables.

We have 33 variables in this research, thus, the minimum sample size required to run EFA is: h

Besides, the requested sample size for regression is more than 50+8m (Tabachnick, 2001) where m is the number of independent variables

Apply this formula for 7 independent variables in this research, we need 106 samples (nP+8*7) for a minimum sample size

This research involved 33 observed variables and 7 independent variables, necessitating a minimum of 165 samples for exploratory factor analysis (EFA) and regression A total of 380 surveys were distributed, yielding 170 usable responses, which successfully met the required sample size.

The questionnaire comprised two sections: the first focused on assessing audit quality and client satisfaction, while the second gathered demographic information about respondents and their client firms This included details such as the duration of audit service usage, the business industry, total equity of the client firm, the respondent's position, and their work experience.

In 2012, a survey was conducted targeting finance and accounting professionals, including CFOs, chief accountants, general accountants, and auditors, who had experience working with audit firms The author distributed questionnaires to 130 respondents in hardcopy format, leveraging personal connections with auditors Additionally, a Google Doc version of the questionnaire was created and shared via email with 250 potential respondents sourced from the State Securities Commission of Vietnam's company database To encourage participation, the author followed up with phone calls and emails, ultimately collecting 52 completed responses.

250 distributed online questionnaires and 125 responses over 130 delivered hardcopy questionnaires h

Data analysis method

A statistical package for social sciences (SPSS) version 20.0 was used to analyze the collected data Process of analysis is carried out as follows:

Firstly, descriptive statistics was performed to describe the general view of the sample characteristics

Cronbach’s Alpha was employed to assess the reliability of measurement scales and to remove unsuitable components A Cronbach's alpha value exceeding 0.60 signifies satisfactory reliability (Nunnally & Bernstein, 1994), while the item-total correlation should be above 0.30 According to Leech et al (2007), specific guidelines for interpreting the Cronbach’s alpha reliability coefficient are outlined in Table 3.4.

Table 3.4: Cronbach’s alpha reliability coefficient (Leech et al., 2007)

Cronbach’s alpha Internal consistency α ≥ 0.7 Excellent

Exploratory factor analysis (EFA) was employed to evaluate the validity of measurement scales, following the guidelines of Hair et al (1998) This process involves determining the factor loadings for each variable, which indicate the corresponding factor to which the variable belongs It is essential that the factor loading exceeds 0.40; therefore, any items with a factor loading below this threshold should be excluded from the scale, as noted by Clack & Watson.

The KMO measure is essential for evaluating the suitability of Exploratory Factor Analysis (EFA), with a recommended value greater than 0.70, while values below 0.50 are considered inadequate (Leech, Barrett, & Morgan, 2005) Additionally, the Bartlett test must yield a significance value of less than 0.05, indicating sufficient correlation among variables to support factor analysis Eigenvalues serve as a standard criterion for determining the number of factors to extract.

In our analysis, we included only those factors with Eigenvalues exceeding 1.0, as values below this threshold indicate that the factors account for less variance than individual items (Leech, Barrett & Morgan, 2005) Additionally, we accepted a total extracted variance greater than 50% to ensure the model's robustness (Hair et al., 1998).

In accordance with the recommendations of Leech, Barrett, and Morgan (2005), multiple regression analysis is suitable when examining the impact of two or more independent variables on a single normal (scale) dependent variable This study performed a multiple regression to assess the influence of various independent variables identified in the exploratory factor analysis (EFA) on client satisfaction, the dependent variable Pallant (2005) outlines specific conditions that must be met to validate the results of multiple linear regression.

• The sample size is n > 50 + 8m ( where m is the number of independent variables)

• No outliers are found or in case they are, no significant impact of outlier is found

• Normality and linearity should exist

The adjusted R squared value indicates how much of the variance in the dependent variable was explained by the model.

Conclusion

This chapter outlines the research methodologies employed in this study, consisting of four key sections: the development of the questionnaire, a pilot study to finalize the questionnaire, the main study, and the data analysis methods Additionally, the impact of various dimensions of audit quality on client satisfaction will be discussed in Chapter 4.

DATA ANALYSIS

Introduction

This chapter utilizes SPSS version 20 to examine the impact of audit quality dimensions on client satisfaction It is structured into four key sections: the first section provides a description of the sample, the second section presents Cronbach's alpha reliability analysis, the third section conducts Exploratory Factor Analysis (EFA), and the final section employs multiple regression analysis to test the established hypotheses.

Sample description

This study gathered survey data from a convenient sample of 380 respondents Concretely, questionnaires were sent via email to 250 respondents, and distributed directly in hard copies to

A total of 130 respondents, including Chief Accountants, General Accountants, and CFOs, participated in the study After one month, 177 responses were collected through both online surveys and hard copies Ultimately, 170 valid responses were analyzed, as 7 were deemed invalid due to participants selecting the same option for all questions Detailed sample characteristics can be found in Table 4.1 in the Appendix.

The samples shows that there are 4 companies using audit service of the audit company in

1 year (2,4%), 5 companies using audit service from the same audit company continuously in 2 years (2,9%), 14 companies using audit service continuously in 3 years (8,2%) and 147 companies using audit service continuously in over 3 years (86,5%)

In terms of business industry, there are 15 agriculture, forestry and fishing companies (8,8%), 81 industry and construction companies (47,6%), 74 trade and services companies (43,5%)

In 2012, the balance sheets of six companies showed total equity of under VND 10 million, accounting for 3.5% of the total, while 16 companies reported equity between VND 10-20 million, representing 9.4% Additionally, 14 companies had total equity ranging from VND 20-50 million, which is 8.2%, and 50 companies recorded equity between VND 50-100 million, making up 29.4% of the total equity distribution.

84 companies with above VND 100 million (49,4%)

Regarding position, 3 respondents are accountant (1,8%), 47 people are general accountant (27,6%), 105 people are chief accountant (61,8%) and 15 people are CFO (8,8%) h

In the surveyed group, 36 respondents (21.2%) possess 3 to 5 years of experience in the accounting and finance sector, while a significant majority of 134 respondents (78.8%) have more than 5 years of experience This indicates that the participants have substantial knowledge and expertise to provide informed opinions on audit quality.

Reliability Analysis

To assess the reliability of the scales, Cronbach's alpha coefficients were calculated for each variable A scale is considered reliable if the Cronbach's alpha exceeds 0.60, and the corrected item-total correlation is above 0.30 Items with a corrected item-total correlation that is negative or below 0.30 should be removed to ensure the integrity of the scale.

Table 4.2 presents the findings from the initial reliability analysis, revealing a Cronbach’s alpha score of 0.853 for the Reputation scales Notably, the item labeled Reputation 8 exhibits a corrected item-total correlation of less than 0.30, indicating the necessity to remove this item for improved reliability.

The Empathy scales have Cronbach’s Alpha score unsatisfactory (0.554) because of the low corrected item-total correlation variable If we deleted item named Empathy 4, the Cronbach’s alpha will increase to 0.888

The item labeled Client_Service1 exhibits a negative corrected item-total correlation, which significantly lowers the Cronbach’s alpha of the Client_Service scales to an unsatisfactory level of 0.560 To improve the reliability of the scales, it is essential to remove this item and recalculate Cronbach’s alpha.

Table 4.2: Cronbach’s Alpha reliability results of first analysis

Scale Variance if Item Deleted

Cronbach's Alpha if Item Deleted Reputation: Cronbach’s Alpha = 0.853

After removing 3 items with low corrected item-total correlation, we performed reliability analysis again The final result of reliability analysis for 29 remaining variables was shown in table 4.3 h

Table 4.3: Cronbach’s Alpha reliability results of final analysis

Measures Number of items Cronbach's Alpha Status

The results indicate that the Cronbach’s alpha reliability test is satisfactory, with scores ranging from 0.786 to 0.894 and corrected item-total correlations exceeding 0.3 Therefore, the AUDITQUAL scale is deemed effective for measuring dimensions of audit quality.

Exploratory factor analysis (EFA)

The study focuses on the reliability and validity of independent variable measurements, as the dependent variable consists of only one measurement item To assess reliability, the author employed Cronbach’s alpha coefficient, followed by exploratory factor analysis (EFA) to examine the underlying factor structure of the observed variables without any preconceived notions This approach, as outlined by Child (1990), aims to identify the latent factors influencing the data.

“principal component analysis” with rotation “Varimax”

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .845

Extraction Method: Principal Component Analysis

Rotation Method: Varimax with Kaiser Normalization a Rotation converged in 6 iterations h

The results of the Exploratory Factor Analysis (EFA) indicate a KMO value of 0.845, surpassing the acceptable threshold of 0.7, suggesting that the dataset is suitable for factor analysis Additionally, Bartlett’s Test shows a significance level of 0.000, which is below the 0.05 threshold, confirming that the correlation matrix is not an identity matrix and that significant correlations exist between the variables These findings collectively affirm the appropriateness of the data for conducting factor analysis.

EFA result proved the measurement scales of audit quality with 7 factors, including: Reputation (7 items), Capability (5 items), Client_Service (4 items), Expertise (4 items), Empathy

The research model comprises three independent variables: Responsiveness, Experience, and Expertise, each represented by three distinct items Notably, the item labeled EXPERTISE3 exhibited a loading of 0.643 on the Expertise factor and a lower loading of 0.3 on the second factor Given that the difference in factor loadings exceeds 0.3, the discriminant validity is confirmed, ensuring that EXPERTISE3 is appropriately classified under the Expertise factor, which has the higher loading (Jabnoun, 2003).

The total variance extracted was 69.282%, exceeding the required threshold of 50% (see Appendix D: Total Variance Explained) All items demonstrated satisfactory factor loading, with values greater than 0.5 Consequently, the results fulfilled all criteria set by the Exploratory Factor Analysis (EFA) method, leading us to conclude that seven factors are both acceptable and hold practical significance.

Hypotheses testing

Before running multiple linear regression, we need to test the correlation between the dependent variable and each independent variable to assure that they really had the correlation

Table 4.5 Pearson Correlation coefficients between Satisfaction and other independent variables

SATISFACTION REPUTATION CAPABILITY RESPONSIVENESS EMPATHY CLIENT_SERVICE EXPERTISE EXPERIENCE

** Correlation is significant at the 0.01 level (2-tailed)

* Correlation is significant at the 0.05 level (2-tailed)

Pearson correlation coefficients range from -1 to +1, with a value of 0 indicating no relationship between two variables, while values close to ±1 signify a very strong correlation (Pallant, 2011) In this study, the Pearson correlation coefficients among the variables were generally below 0.6, except for the correlation between Satisfactory and Experience, which exceeded 0.6, indicating a significant relationship between these two variables.

44 other words, there were linear relationship between all independent variables and dependent variable

4.5.2 Testing assumptions of Multiple Regressions

The actual sample size of this research (170 samples) was larger than the minimum required sample size for multiple regression (106 samples) Hence, the sample size met the requirement

According to Pallant (2005), the standard cut-off points for identifying multicollinearity among independent variables are a Tolerance Value of 0.1 or a Variance Inflation Factor (VIF) value of 2.0 The coefficients table demonstrates that all independent variables had Tolerance values exceeding 0.1 and VIF values below 2.0, indicating the absence of multicollinearity.

B Std Error Beta Tolerance VIF

The histogram presented in Appendix E indicates a reasonable normal distribution for all variables, with a mean close to 0 and a standard deviation of 0.979, confirming that the assumption of normality is upheld.

Normal P-P Plot figure in Appendix E is rather straight line from the bottom left to top the right indicated the linear relation between independent variables and dependent variable

As all the assumptions of multiple regression were met, the regression results was conducted further to test the research hypotheses

The multiple regression result of 7 independent variables and dependent variable with Enter method are as follows:

Std Error of the Estimate

Model Sum of Squares df Mean Square F Sig

Total 114.824 169 a Dependent Variable: SATISFACTION b Predictors: (Constant), EXPERIENCE, RESPONSIVENESS, CAPABILITY, EXPERTISE, CLIENT_SERVICE, EMPATHY, REPUTATION h

The adjusted R-squared value of 0.665 indicates that seven independent variables—Reputation, Capability, Responsiveness, Empathy, Client Service, Expertise, and Experience—account for 66.5% of the variance in the dependent variable, Satisfaction, with a significant p-value of 0.000, as shown in the ANOVA table.

The analysis presented in Table 4.8 indicates that all seven independent variables—Reputation, Capability, Responsiveness, Empathy, Client Service, Expertise, and Experience—positively influence client satisfaction, with significance levels below 0.05 Consequently, the research hypotheses H1 through H7 are fully supported, suggesting that enhancements in these factors will lead to increased client satisfaction with audit services.

The analysis of standardized coefficients beta reveals that Experience has the most significant impact on client satisfaction, with a coefficient of β = 358 Following Experience, Capability (β = 206), Responsiveness (β = 185), and Expertise (β = 151) also contribute positively to satisfaction Additionally, Empathy (β = 130), Client Service (β = 121), and Reputation (β = 115) have a lesser, yet notable, influence on client satisfaction.

Discussion of research findings

The regression analysis in this thesis reveals that seven key dimensions of audit quality—reputation, capability, expertise, experience, responsiveness, client service, and empathy—are positively correlated with client satisfaction.

The experience of auditors significantly impacts client satisfaction, more so than their capabilities This correlation is logical, as both experience and competence are crucial for delivering high-quality audit services, which in turn enhances client satisfaction Favere and Marchesi (2000) highlighted that greater auditor competence increases the likelihood of identifying errors in financial statements, ultimately leading to more accurate audited reports that satisfy clients In Vietnam, auditors must meet specific qualifications, including a relevant bachelor's degree and CPA certification, and audit firms provide ongoing training to ensure their staff possess the necessary knowledge and skills However, the key differentiator between qualified auditors is their experience Groveman (1996) noted that audit failures often stem from inexperienced staff, reinforcing the critical role of experience Even capable auditors may encounter challenges if they lack familiarity with their clients.

Key dimensions of audit quality that influence client satisfaction include responsiveness, expertise, empathy, client service, and reputation Clients tend to feel more satisfied when audit firms are responsive to their needs and demonstrate an understanding of their challenges Expertise plays a crucial role, as firms with specialized knowledge are more likely to identify fraud and material misstatements According to Wooten (2003), audit firms serving multiple clients within the same industry gain a deeper understanding of unique audit risks, thereby enhancing audit quality and client satisfaction Additionally, clients expect high service quality, making it essential for auditors to implement supportive processes that ensure superior audit quality.

Regular meetings with key client staff are essential for identifying issues and enhancing service value, ultimately boosting client satisfaction A highly reputable audit firm is motivated to deliver superior audit quality, leading clients to prefer such firms for their services Therefore, a firm's reputation significantly influences client satisfaction.

The finding of this study is consistent with some previous study Yuniarti and Zumara

Research indicates that factors such as prior auditing experience, industry expertise, responsiveness to client needs, proper conduct of audit fieldwork, and a commitment to quality play a crucial role in enhancing client satisfaction Additionally, the auditor's knowledge of accounting and auditing, along with the empathetic approach of the audit team, significantly influences client perceptions Corporate image and reputation further contribute to overall client satisfaction This evidence supports the literature on audit quality, reaffirming the positive correlation between seven dimensions of audit quality and client satisfaction within the Vietnamese context.

Conclusion

In this chapter, data analysis was conducted using SPSS version 20, revealing satisfactory Cronbach’s alpha reliability and confirming the validity of the measurement through exploratory factor analysis (EFA) The multiple regression analysis supported all hypotheses, establishing a significant relationship between Reputation, Capability, Responsiveness, Empathy, Client Service, Expertise, Experience, and Client Satisfaction, as summarized in Table 4.9.

Table 4.9: The summary of hypotheses testing results

There is a positive relationship between reputation of the audit firm and client satisfaction

There is a positive relationship between capability of the audit firm and client satisfaction

There is a positive relationship between expertise of the audit firm and client satisfaction

There is a positive relationship between experience of the audit firm and client satisfaction

There is a positive relationship between responsiveness of the audit firm and client satisfaction

There is a positive relationship between client service of the audit firm and client satisfaction

There is a positive relationship between empathy of the audit firm and client satisfaction

CONCLUSION AND IMPLICATION

Conclusion

This study aimed to explore the connection between client satisfaction and seven dimensions of audit quality: Reputation, Capability, Expertise, Experience, Responsiveness, Client Service, and Empathy Utilizing Duff’s (2009) AUDITQUAL measurement, the research assessed audit quality and hypothesized a positive relationship between each dimension and client satisfaction, based on marketing literature Empirical tests supported the theoretical framework presented in Chapter 2, confirming that the hypothesized model is satisfactory.

The regression analysis in this thesis highlights seven key dimensions of audit quality—reputation, capability, expertise, experience, responsiveness, client service, and empathy—that positively influence client satisfaction Notably, auditor experience has the greatest impact on client satisfaction, followed by capability, responsiveness, expertise, empathy, client service, and reputation In Vietnam, audit clients prioritize auditors with relevant experience and emphasize the auditor's ability to conduct audits effectively, respond to client needs, and understand their specific demands Additionally, industrial expertise serves as a significant advantage for audit firms in meeting client expectations High audit quality assurance is crucial, making client service a vital aspect, while reputation has the least effect on client satisfaction.

Managerial implications

The result of this study confirms that seven dimensions of audit quality including Reputation, Capability, Responsiveness, Empathy, Client service, Expertise and Experience have h

51 the positive effects on client satisfaction These findings have some important implications for audit firms in Vietnam

This study aims to enhance audit firms' understanding of the dimensions of audit quality that influence client satisfaction, revealing that all seven dimensions significantly impact this satisfaction Experience is identified as the most influential factor, followed by Capability, with Responsiveness, Expertise, Empathy, Client Service, and Reputation having lesser effects Therefore, audit firms should prioritize Experience and Capability by implementing regular training and development programs for auditors, facilitating experience sharing, and creating a database for audit opinions Additionally, firms must focus on improving responsiveness to client needs, industry expertise, empathy, service quality, and reputation Suggested solutions include conducting industry research to better understand clients' business environments and challenges, arranging regular client meetings, and upholding high standards of integrity and objectivity These strategies are essential for enhancing audit quality and, consequently, increasing client satisfaction.

Limitation and suggestion for future research

This study has notable limitations, primarily due to the data collection survey being restricted to Ho Chi Minh City, Dong Nai, and Binh Duong Province, focusing solely on clients of select audit firms Consequently, the findings may not accurately reflect the entire financial market in Vietnam Future research should aim to include a broader range of audit firms across the country to enhance the reliability and generalizability of the results.

Due to time constraints and challenges in accessing client firms, the participant pool for this research is relatively small, which may affect the overall quality of the study To enhance the reliability of future research, it is recommended to expand the sample size in the main study.

This study primarily examines client firms' perceptions and satisfaction regarding audit quality, emphasizing the direct relationship between audit firms and key financial officers such as chief accountants and CFOs The feedback from investors and shareholders on audited financial statements is crucial in assessing whether the audit quality aligns with market demands Future research should expand to include the perspectives of investors, shareholders, and fund managers, allowing for a comparative analysis of audit service quality across these different respondent groups.

The study by Abd-El-Salam, Shawky, and El-Nahas (2013) examines how corporate image and reputation influence service quality, customer satisfaction, and customer loyalty in an international service company It highlights the mediating role these factors play in enhancing customer experiences and fostering loyalty The findings suggest that a strong corporate image significantly contributes to improved service quality and higher levels of customer satisfaction, ultimately leading to increased customer loyalty.

Aga, M & Safakli., (2007) An Empirical Investigation of Service Quality and Customer

Satisfaction in Professional Accounting Firms: Evidence From North Cyprus Problems and Perspectives in Management, 5(3), pp 84-98

Angelova, B., & Zekiri, J (2011) Measuring Customer Satisfaction with Service Quality Using

American Customer Satisfaction Model (ACSI Model) In International Journal of

Academic Research in Business and Social Sciences, 1(3), 232-258

Arens, A A., Peter, J B., Gregory, E S., & James, K L (1997) Auditing in Australia: An integrated approach (9 th ed) Australia, Prentice Hall

Andreassen, T W (1994) Satisfaction, Loyalty and Reputation as Indicators of Customer

Orientation in the Public Sector International Journal of Public Sector Management,

Audit firms’ still falling to add up Retrieved Sep 30, 2013, from http://www.vacpa.org.vn

Audit quality assurance review result 2012 Retrieved Sep 30, 2013, from http://www.vacpa.org.vn

In their 1997 study, Behn et al examined the factors influencing audit client satisfaction among clients of the Big 6 accounting firms, highlighting key determinants that affect client perceptions and experiences Similarly, Bitner (1990) explored how service encounters are evaluated, emphasizing the significance of physical surroundings and employee responses in shaping customer satisfaction Both studies underscore the critical role of service quality and environmental factors in enhancing client relationships and overall satisfaction in professional services.

Bolton, R., & Drew, J.H (1991) A multistage model of customers’ easements of service quality and value Journal of Consumer Research, 17(4), 375-384

Butcher, K., Harrison, G., & Ross, P (2013) Perceptions of Audit Service Quality and Auditor

Retention International Journal of Auditing, 17(1), 54-74

Carcello, J.V., Hermanson, R.H, & McGrath, N.T (1992) Audit quality attributes: The perceptions of audit partners, preparers, and financial statement users Auditing: A

Casterella, J., Jensen, K., &Knechel, W (2009) Is self-regulated peer review effective at signaling audit quality? The Accounting Review, 84(3), 713–735

Child, D (1990) The essentials of factor analysis (2 nd ed.) London: Cassel Educational Limited Chun, R (2005) Corporate reputation: Meaning and measurement International Journal of

Clark, L.A & Watson, D (1995) Constructing validity: basic issues in objective scale development Psychological Assessment, 7(3), 309-319

DeAngelo, L (1981) Auditor size and audit quality Journal of Accounting and Economics, 3(3),

Defliese, P.J., Murray B., Jaenicke, Henry, R., O’Reilly Hirch, P (1988) Auditing (11 th ed.) John

Deis, D.R.Jr., & Giroux, G A (1992) Determinants of Audit Quality in the Public Sector The

Duff, A (2004) AUDITQUAL: Dimensions of Audit Quality, Edinburgh Institute of Chartered

Duff, A (2009) Measuring audit quality in an era of change: An empirical investigation of UK audit market stakeholders in 2002 and 2005 Managerial Auditing Journal, 24(5), 400–

Favere-Marchesi, M (2000) Audit quality in ASEAN International Journal of Accounting, 35(1),

Gheorghe, T I (2009) New Challenges For The Financial Audit In The Context Of Measures To

Surpass Economic-Financial Crisis Annals of Faculty of Economics, 3(1), 379-383

Gill, G.S., & Cosserat, J (1996) Modern Auditing in Australia (4 th ed.) Australia , John Wiley &

Gill, G.S., & Cosserat, J., Leung, P., & Coram, P (1999) Modern Auditing (5 th ed.) Australia ,

Gill, G.S., & Cosserat, J., Leung, P., & Coram, P (2001) Modern Auditing and Assurance

Services (5 th ed.) Australia , John Wiley & Sons

Groveman, H (1996) How Auditors Can Detect Financial Statement Misstatement Journal of

Gul, F A., Hai, Y., Teoh, Beer, A.H., & Schelluch, P (1994) Theory and Practice of Australian

Auditing (3 rd ed.) Nelson, an International Thomson Publishing Company, Australia Hair, Jr J.F, Anderson, R.E, Tatham, R.L and Black, W.C (1998) Multivariate Data Analysis

(5th ed) Upper Saddle River Prentice- Hall

Helm, S., Eggert, A., & Garnefeld, I (2010) Modeling the impact of corporate reputation on customer satisfaction and loyalty using Partial Least Squares Handbook of Partial Least

Ismail, I., Haron, H., Ibrahim, D N., & Isa, S.M (2006) Service quality, client satisfaction and loyalty towards audit firms’ perceptions of Malaysian public listed companies

Iskandar, T M., Rahmat, M M., &Ismail, H (2010) The Relationship Between Audit Client

Satisfaction and Audit Quality Attributes: Case of Malaysian Listed Companies

International Journal of Economics and Management, 4(1), 155 – 180

Kell, W G., William C., Boynton, Ziegler, R (1986) Modern Auditing (3 rd ed.) Canada, John

Kilgore, A (2007) Corporate Governance, Professional Regulation And Audit Quality

Ladhari, R (2008) Alternative measure of service quality: a review Journal of Managing Service

Leech, N L., Barrett, K C., & Morgan, G A (2005) SPSS for intermediate statistics use and interpretation Mahwah, NJ: Lawrence Erlbaum

Lowensohn, S., Johnson, L.E., Elder, R.J., Davis, S.P (2007) Auditor Specialization, Perceived

Audit Quality, and Audit Fees, in the Local Government Audit Market Journal of

Leech, N L., Barrett, K C., Morgan, G A (2007) SPSS for Intermediate Statics: Use and

Interpretation (3 rd ed.) New Jersey Routledge Academic

Loan Nguyen Thi Bich & Duong Nguyen Gia (2013) Information Disclosure Critical Issues in

Vietnam Stock Market Finance Accounting Research Journal 8, 30-33 (in Vietnamese)

Malhotra, N K (2004) Marketing Research: An Applied Orientation (4th ed) NJ: Prentice Hall h

Meyer, K (2009) Industry Specialization and Discretionary Accruals for Big 4 and Non-Big 4

Auditors A Ph.D Thesis Department of Accounting The Florida State University

Morton, A., & Scott, D.R (2007) The association between perceived audit firm service quality and behavioural intentions Journal of Contemporary Issues in Business & Government,

Mock, T.J., & Samet, M (1982) A Multi-attribute Model for Audit Evaluation Proceedings of the VI University of Kansas Audit Symposium

Nunnally, J C., & Bernstein, I H (1994) Psychometric theory (3rd ed.) New York: McGraw-

Oliver, R.L (1980) A cognitive model of the antecedents and consequences of satisfaction decisions Journal of Marketing Rerearch, 17(4), 460-469

Parasuraman, A., Zeithaml, V.A., & Berry L.L (1988) SERVQUAL: A multiple-item scale for measuring consumer perceptions of service quality J Retailing, 64(1), 12-40

Parasuraman, A., Zeithaml, V.A., & Berry L.L (1991) Refinement and reassessment of the

Palmrose, Z (1988) An Analysis of Auditor Litigation and Audit Service Quality The Accounting

Pallant, J (2005) SPSS Survival Manual, A step-by-step guide to data analysis using SPSS for

Windows (Version 12) Australia, NSW Crows Nest 2065

Pound, G., Willingham, J., &Carmichael, B (1997) Auditing Concepts and Methods (3 rd ed.)

Australia, The McGraw Hill Companies Inc

Rust, R.T., & Oliver, R.L (1994) Service Quality: New Directions in Theory and Practice

California, Thousand Oaks, SAGE Publication h

Samelson, D., Lowensohn S., & Johnson, L E (2006) The Determinants of Perceived Audit

Quality and Auditee Satisfaction in Local Government Journal of Public Budgeting,

Sawan, N., & Alsaqqa, I (2013) Audit firm size and quality: Does audit firm size influence audit quality in the Libyan oil industry African Journal of Business Management, 7(3), 213-226

Schroeder, M S., Solomon, I., & Vickery, D (1986) Audit quality: The perceptions of audit- committee chairpersons and audit partners Auditing: A Journal of Practice & Theory,

Sutton, S G (1993) Toward an Understanding of the Factors Affecting the Quality of the Audit

Tabachnick, B G., & Fidell, L S (1991) Using Multivariate Statistics (3rd ed.) NY,

Taylor, S A., & Baker, T L (1994) An assessment of the relationships between service quality and customer satisfaction in the formation of consumers’ purchase intentions J Retailing,

Turk, Z., & Avcilar, M Y (2009) The Effects of Perceived Service Quality of Audit Firms on

Satisfaction and Behavioural Intentions: A Research on the Istanbul Stock Exchange Listed Companies Research Journal of Business Management, 2(1), 36-46

Wong, S C K & Ko, A (2009) Exploratory Study of Understanding Hotel Employees’

Perception on Work–life Balance Issues International Journal of Hospitality Management,

Wooten, C (2003) Research about audit quality The CPA Journal, 73(1), 103-148 h

Yuniarti, R., & Zumara, W M (2013) Audit Quality Attributes and Audit Client Satisfaction

International Journal of Humanities and Management Sciences, 1(1), 96-100 h

APPENDIX A: THE FINDINGS OF PILOT STUDY

Table 3.2: Deleted items in pilot study

10 The engagement partner has high ethical standards

Assessing the ethics of an engagement partner can be challenging, as it often relies on client perception However, adherence to ethical standards is mandatory for all engagement partners For instance, each partner is required to complete a minimum of 8 hours of ethical standards training annually Additionally, the principles of independence, integrity, and objectivity for engagement partners are outlined in the Vietnamese Audit Law of 2012 This underscores that compliance with ethical standards is uniform across all engagement partners.

15 The audit team staff operates to high ethical standards

Excluded The reason is the same with explanation of item 10 above Ethical standards compliance is not different for all audit team staff in any audit firm

16 The audit firm is skillful in devising accounting treatments that generate results management wishes to obtain

Respondents emphasize that audit firms must adhere strictly to Vietnamese accounting standards and auditing regulations, making it nearly impossible for them to create accounting treatments that align with management's anticipated outcomes.

17 The audit firm is willing to provide detailed cost information

Excluded because in Vietnamese audit context, it is impossible for audit firms to give detail cost information Most audit firms do not have a specific cost budget which h

The total proposed audit fee is primarily determined by a basic calculation of 61 However, disclosing detailed cost information can diminish the competitive edge in audit fees Furthermore, clients typically prioritize the overall audit fee for the engagement, showing little interest in the specifics of the cost breakdown.

19 The audit firm’s office is geographically close to the client

In today's world, accessing an audit firm's office has become effortless due to advanced transportation options, making geographic location less significant for audit quality Additionally, clients can maintain regular communication with their audit firms through email and phone, ensuring a seamless exchange of information.

21 There is a ‘good fit’ between the personality of the engagement partner and the finance director

Respondents were excluded due to insufficient information to answer the question Nonetheless, they expressed confidence that audit firms operate with objectivity and integrity Consequently, they argued that the compatibility between the engagement partner's personality and the finance director is not a relevant measure of audit quality, particularly regarding responsiveness.

22 The relationship between the engagement partner and finance director is relatively informal

Respondents indicated that a long-standing relationship between the engagement partner and the finance director exists, but this connection does not influence audit quality Therefore, this factor is not a suitable measure for assessing audit quality.

23 Audit team staff creates the minimum of disruption so far as practically possible

Excluded due to it is difficult to understand and not reflect the important role in client perception about the responsiveness of client’s needs

32 The engagement partner and senior manager make frequent visits to the audit site for technical review

The lack of awareness among respondents regarding the technical roles of audit engagement partners and senior managers has led to their exclusion from the study Additionally, the audit landscape in Vietnam exhibits significant weaknesses, resulting in limited implementation of engagement audits in the region.

34 There is frequent communication between the audit team and the audit committee

Excluded due to many audit firms in Vietnam do not have audit committee per se Thus, this item is not appropriate in Vietnam audit context

38 The engagement partner is subject to internal review during the audit by other partners of the audit firm

Excluded because respondents have no information about the internal activities of audit firm Through the perception of client firm, they do not care about this activity

40 The client has a knowledgeable and active audit committee

Excluded This item is difficult to understand and inappropriate to measure audit quality in Vietnam

Respondents proposed that it is impossible for client firm to have a audit committee and actually, they do not have

Table 3.3: Final questionnaire used in main study

1 1 The audit firm is highly competent

2 2 The audit firm operates to the highest standards of integrity

3 3 The audit firm has rarely been found negligent in litigation against it – alleging inadequate audit performance

4 4 The audit firm is objective

5 5 The audit firm is conscientious

6 6 The audit firm is credible to third parties

7 7 The audit firm enjoys a good reputation

8 8 The audit firm is independent of the board of directors h

9 9 The engagement partner is highly competent

11 10 The engagement partner is actively involved in the engagement beginning with the initial planning and throughout the audit process

12 11 The engagement partner has financial statement users’ best interest at heart

13 12 The engagement partner is keen to understand what is happening within the client’s organization

14 13 The audit team staffs are highly competent

18 14 18 The audit firm is willing to be flexible when scheduling the timing of audit visits

20 15 20 The engagement is easily contactable

24 16 24 The audit team develops stringent time budgets for each audit area and expects people to meet them

25 17 25 The audit team provides the client with personal attention

26 18 26 The engagement partner provides the client’s finance director with individual attention

27 19 27 The engagement partner has the client’s best interests at heart

28 20 28 The engagement partner is pro-active and contributory (e.g suggests potential acquisition targets)

29 21 The audit firm regularly conducts client service review meetings

30 22 The engagement partner arranges regular meetings with the client’s key staff to identify issues of concern

31 23 The engagement partner regularly identifies examples of added value to the client

33 24 The audit team is willing to provide guidance on accounting principles

35 25 There is frequent communication between the audit team and executive management h

36 26 The audit firm has other clients in the same industry

37 27 The audit firm undertakes research into the client’s industry

39 28 The engagement partner is very knowledgeable about the client’s industry

41 29 The senior manager and manager assigned to the audit are very knowledgeable about the client’s industry

42 30 42 The engagement partner has been performing the audit for the past three years

43 31 43 The manager of the audit firm has been performing the audit for at least two years

44 32 44 The senior manager of the audit firm has been performing the audit for at least two years

45 33 The overall client satisfaction with the audit quality offered by audit firm h

My name is Hoang Thi Kim Thuan, a student of MBA program at International School of

Business (ISB) – University of Economics Ho Chi Minh City I am conducting the research on the effects of audit quality offered by audit firm on client satisfaction

This questionnaire aims to gather your feedback on the quality of audit services and your satisfaction with the audit firm in 2012 Your input is crucial for the completion of this study.

Sincere thanks for the support of Ladies and Gentlemen

Part I: Measurement of audit quality and client satisfaction

Please indicate the level of agreement of the following statement by ticking in the appropriate box corresponding to: 1- Strongly disagree, 2- Disagree, 3- Neutral, 4- Agree, 5- Strongly agree

1 The audit firm is highly competent 1 2 3 4 5

2 The audit firm operates to the highest standards of integrity 1 2 3 4 5

3 The audit firm has rarely been found negligent in litigation against it – alleging inadequate audit performance

4 The audit firm is objective 1 2 3 4 5

5 The audit firm is conscientious 1 2 3 4 5

6 The audit firm is credible to third parties 1 2 3 4 5

7 The audit firm enjoys a good reputation 1 2 3 4 5

8 The audit firm is independent of the board of directors 1 2 3 4 5 h

9 The engagement partner is highly competent 1 2 3 4 5

10 The engagement partner is actively involved in the engagement beginning with the initial planning and throughout the audit process

11 The engagement partner has financial statement users’ best interest at heart 1 2 3 4 5

12 The engagement partner is keen to understand what is happening within the client’s organization

13 The audit team staff are highly competent 1 2 3 4 5

14 The audit firm is willing to be flexible when scheduling the timing of audit visits 1 2 3 4 5

15 The engagement is easily contactable 1 2 3 4 5

16 The audit team develops stringent time budgets for each audit area and expects people to meet them

17 The audit team provides the client with personal attention 1 2 3 4 5

18 The engagement partner provides the client’s finance director with individual attention

19 The engagement partner has the client’s best interests at heart 1 2 3 4 5

20 The engagement partner is pro-active and contributory (e.g suggests potential acquisition targets)

21 The audit firm regularly conducts client service review meetings 1 2 3 4 5 h

22 The engagement partner arranges regular meetings with the client’s key staff to identify issues of concern

23 The engagement partner regularly identifies examples of added value to the client 1 2 3 4 5

24 The audit team are willing to provide guidance on accounting principles 1 2 3 4 5

25 There is frequent communication between the audit team and executive management

26 The audit firm has other clients in the same industry 1 2 3 4 5

27 The audit firm undertakes research into the client’s industry 1 2 3 4 5

28 The engagement partner is very knowledgeable about the client’s industry 1 2 3 4 5

29 The senior manager and manager assigned to the audit are very knowledgeable about the client’s industry

30 The engagement partner has been performing the audit for the past three years 1 2 3 4 5

31 The manager of the audit firm has been performing the audit for at least two years 1 2 3 4 5

32 The senior manager of the audit firm has been performing the audit for at least two years

33 The overall client satisfaction with the audit quality offered by audit firms 1 2 3 4 5 h

1 How long has your company used the financial statement audit service of the audit firm? a 1 year b 2 years c 3 years d Above 3 years

2 What is the business industry of your company? a Agriculture, forestry and fishing b Industry and construction c Trade and services

3 Total equity reflected in the Balance Sheet for the year 2012 of your company is: a Below VND 10 million b From VND 10 to 20 million c From VND 20 to 50 million d From VND 50 to 100 million e Above VND 100 million

4 What is your position in the company? a General Director b Director/ Chief Financial Officer c Chief Accountant d General Accountant h

5 How many year have you worked in the financial/ accountant field? a From 1-2 years b From 3-5 years c Above 5 years

THANKS YOU VERY MUCH FOR YOUR SUPPORT h

Tôi là Hoàng Thị Kim Thuận, hiện đang theo học cao học tại Viện đào tạo quốc tế thuộc Trường Đại học Kinh tế Thành phố Hồ Chí Minh Đề tài nghiên cứu của tôi tập trung vào "Ảnh hưởng của chất lượng dịch vụ kiểm toán đến sự hài lòng của khách hàng", nhằm khám phá mối liên hệ giữa chất lượng dịch vụ kiểm toán từ các công ty và sự thỏa mãn của khách hàng.